Applied Materials Poised for Tesla Chip Orders as ASML Premium Narrows to 17%
Tesla’s Terafab initiative has solicited equipment quotes and delivery timelines from Applied Materials as it aims to produce silicon by 2029, indicating potential new revenue streams for the supplier. Meanwhile, ASML’s valuation premium over Applied Materials has narrowed to 17%, even as Applied Materials shares have climbed over 50% year-to-date.
1. Tesla Engages Applied Materials for Terafab Chip Production
Tesla’s Terafab venture, backed by teams from Tesla, SpaceX, xAI and Intel, has reached out to Applied Materials for price quotes and delivery timelines on etching systems, deposition tools and testing equipment, laying groundwork to begin in-house silicon production by 2029. The early engagement with major suppliers suggests the project is moving beyond concept phase toward concrete sourcing decisions.
2. ASML Valuation Premium Narrows as Shares Rally
ASML’s forward price-to-earnings ratio stands at roughly 37× estimated next-12-month earnings, a 17% premium over Applied Materials’ valuation—the smallest gap since 2014. Applied Materials shares have surged over 50% year-to-date, outpacing ASML’s 36% rally and reflecting strong demand for semiconductor equipment driven by AI deployments.