Mike Splinter, executive chairman of Applied Materials, made his first transistor — the on-off switches of digital electronics — when he was 18 years old. Now he makes them by the billions on a single semiconductor chip. That’s a testament to a career spent on furthering Moore’s Law, the foundation of the $1 trillion electronics sector and the promise that the number of transistors would double every couple of years.

Splinter received the chip industry’s highest honor, the 2013 Robert N. Noyce award, last week at the Semiconductor Industry Association’s annual award dinner. His company makes the manufacturing equipment that goes into multibillion-dollar factories such as those built by Intel. After a decade at the head of Applied, Splinter gave up the chief executive title in September. But he is going out with a bang. He helped orchestrate the purchase of Japan’s Tokyo Electronic, the No. 2 chip equipment maker, in a deal that will create a $29 billion industry giant.

We caught up with him last week. Here’s an edited transcript of our interview.

VentureBeat: I take it you’re active. You’re not retiring just yet.

Mike Splinter at SIA dinner.

Above: Mike Splinter at SIA dinner.

Image Credit: Dean Takahashi

Mike Splinter: [laughs] No, I’m not.

VB: You have a pretty big undertaking right now, the merger with Tokyo Electron.

Splinter: Yeah, we do. But most of the recipients—I think they gave this to Rich Templeton and to John Kelly as well. They’re still both alive and actively working.

VB: What do you view as some of your accomplishments, especially the kind that you think may have led to this recognition?

Splinter: Seriously, longevity has to be one of those. [laughs] When I look back on a long period in history—In the ‘90s, when I was running Intel manufacturing, we really pressed the whole “copy exactly” idea. Most fabs weren’t thought of as “let’s try to be modular and incrementally add.” We changed that way of thinking during the early and middle ‘90s. And then certainly being able to have the opportunity to lead Applied Materials over the last 10 years to growth and some new endeavors. Seeing how the company has progressed is quite pleasing.

VB: I noticed Intel’s market cap was $120 billion and Applied’s is about $20 billion. Do you feel like that’s grossly unfair?

Splinter: [laughs] Well, the revenue ratio is about 10:1 or 9:1, so we’re not doing badly if market cap is 6:1. If you think about the electronics industry as a whole and you look at the profitability stack, I do think that there is a lot of work for equipment suppliers to do to improve their portion of the overall profitability. Today it’s about two percent of the total of that stack.

I think that when you assess the contributions that are truly enabling, what Applied Materials does and is going to do in the future is that we emphasize precision materials engineering. There’s an opportunity to expand that, our share of the overall profitability in the supply chain.

President Obama visit Applied Materials with Mike Splinter.

Above: President Obama visit Applied Materials with Mike Splinter.

Image Credit: Applied Materials

VB: It almost seems like there might be an underappreciation of what Applied does. Do you try to get that across to people in some way when they don’t understand?

Splinter: We certainly talk a lot about it internally. I do think that there is not an appreciation. As you move further away from the basics of the electronics, up into the device makers and those people who are providing the devices for this mobility revolution, it’s less and less appreciated, where a good share of that technology to reduce power and improve performance and enable the capabilities that the industry enjoys today comes from. We try to talk about those things on our analyst days, certainly with our customers, and an awful lot internally. How do we capture the real value that we’re delivering to our customers?

VB: You mentioned a couple of milestones at Intel. Do you feel like you’ve been through a couple of milestones at Applied as well?

Splinter: I think so. We’ve had a lot of different milestones. If I work backward from today, getting this merger announced, I don’t think there’s any bigger milestone in the history of Applied. This is one that changes the shape of the industry. Between the Tokyo Electron executives and Gary and myself, we worked hand in hand to accomplish this. If we’re able to get approval and execute this merger, it will be a huge positive.

One of the things I look back on as a real roller coaster is our decision to go into solar. It’s had great years and very tough years in a market that I don’t think anybody could have predicted. One of the things I always emphasize is that you have to have courage and be willing to take a risk. This risk was worthwhile to take. The scope and the status of the current market feels pretty bad, but we had some great years in solar.

Ultimately, you have to say, “Does Applied Materials have the ability to move into new markets? Do we have the courage and understanding of how to move our core engineering, our precision materials engineering into other fields?” At a very fundamental level in the company, we have that capability today.

Even the Tokyo Electron merger is about capabilities that we’ve built up over a period of time to be able to even consider doing a merger of this magnitude. We’ve acquired quite a number of companies over the last 10 years, the largest of which was Varian. The integration of Varian and Applied Materials couldn’t have done any better than it was done. Having Gary end up as the CEO is a testament to how well that has gone through.