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                                                                    EXHIBIT 99.2

July 19, 1999

Dear Applied Materials Stockholder:

        In order to preserve and maximize the long-term value of Applied
Materials, Inc., your Board of Directors has approved a new stockholder rights
plan (the "Plan"). The Plan is designed to prevent or deter coercive or unfair
takeover tactics and to strengthen your Board's ability to respond to an
unsolicited takeover bid. Enclosed is a summary description that outlines the
principal features of the Plan. We urge you to read it carefully.

        Your Board first adopted a stockholder rights plan ten years ago. This
plan recently expired. Your Board of Directors adopted the new Plan after
carefully considering the current takeover environment, including takeover
activity in the high technology industry. We continue to believe that a
stockholder rights plan is extremely valuable in helping the Board maximize
stockholder value in the event that Applied Materials receives a takeover bid.
We also continue to believe that a stockholder rights plan is necessary to
discourage unfair takeover tactics.

        Consistent with the commitment we made in our 1999 Annual Meeting proxy
statement, our new Plan includes a "Three-Year Independent Director Evaluation"
provision. Pursuant to this feature, a newly created committee of your Board,
composed only of independent directors, will review the Plan at least every
three years. This committee will communicate its conclusions to the full Board
after each review, including any recommendation as to whether the Plan should be
modified or the rights issued under the Plan should be redeemed.

        The Plan provides that stockholders of record on July 18, 1999 will
receive one right for each share of Applied Materials common stock. Also, each
share of Applied Materials common stock issued after that date will be issued
with one right attached. The Plan is similar to stockholder rights plans adopted
by over 2,200 publicly held companies. The Plan was not adopted in response to
any specific effort to acquire control of Applied Materials, and we are not
aware of any such effort.

        Under the Plan, if any person or group acquires 20 percent or more of
Applied Materials' outstanding common stock, other than pursuant to a tender
offer for all shares approved by the Board, each right not owned by such person
or group will entitle its holder to purchase, at an exercise price of $375,
Applied Materials common stock with a market value of twice the exercise price.
In addition, if Applied Materials is acquired through a merger or other business
combination or sells more than 50 percent of its assets, in certain instances
after the rights have been triggered, rights that have not previously been
exercised (except rights held by the person or related parties whose stock
ownership triggered the rights) will entitle the holder to purchase common
shares of the acquiring company having a market value equal to twice the
exercise price.

        Until the occurrence of these events or the commencement of a tender
offer for 20 percent or more of Applied Materials' outstanding common stock, the
rights will not be

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exercisable and no certificates for rights will be sent to stockholders. The
rights will expire on July 6, 2009 and, in certain circumstances, are subject to
amendment or redemption by the Board of Directors at $.01 per right.

        The issuance of the rights has no dilutive effect, and will not affect
reported earnings per share, will not be taxable to you or to Applied Materials
and will not change the way in which you can currently trade Applied Materials'
common stock. The issuance of the rights does not require any action on your
part at this time.

        Separately, your Board amended Applied Materials' bylaws to require that
future amendment or repeal of bylaw provisions by stockholders may be effected
only by the affirmative vote of the holders of a majority of the outstanding
shares of Applied Materials common stock. The same stockholder vote generally is
required for stockholder approval of changes to Applied Materials' certificate
of incorporation.

        On behalf of the Board of Directors, we want to thank you for your
continued support.

                                             Sincerely,

                                             James C. Morgan



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                          SUMMARY OF RIGHTS TO PURCHASE
                                 PREFERRED STOCK

               On July 7, 1999, the Board of Directors of Applied Materials,
Inc. (the "Company") declared a dividend distribution of one Right for each
outstanding share of common stock, par value $.01 per share (the "Common
Stock"), of the Company to stockholders of record at the close of business on
July 18, 1999 (the "Record Date"). Each Right entitles the registered holder to
purchase from the Company one ten-thousandth (1/10,000) of a share of Series A
Junior Participating Preferred Stock, par value $.01 per share ("Preferred
Stock"), at a price of $375 per one ten-thousandth of a share of Preferred Stock
(the "Exercise Price"), subject to adjustment. The description and terms of the
Rights are set forth in a Rights Agreement (the "Rights Agreement") between the
Company and Harris Trust and Savings Bank, as Rights Agent.

               Initially, the Rights will be evidenced by the Common Stock
certificates representing shares then outstanding and no separate Right
certificates will be distributed. The Rights will be exercisable, and
transferable apart from the shares of Common Stock, on the earlier to occur of
(i) 10 business days following a public announcement that a person or group of
affiliated or associated persons has acquired, or has obtained the right to
acquire (an "Acquiring Person"), beneficial ownership of 20% or more of the
outstanding shares of Common Stock (the "Stock Acquisition Date"), or (ii) 10
business days following the commencement of (or a public announcement of an
intention to make) a tender offer or exchange offer if, upon consummation
thereof, the person who commenced the offer would be an Acquiring Person (the
earlier of such dates being called the "Distribution Date"). The foregoing time
periods are subject to extension as set forth in the Rights Agreement. After the
occurrence of an event set forth in clause (ii) above, Rights will become
exercisable for fractions of shares of Preferred Stock at the Exercise Price per
one ten-thousandth of a share of Preferred Stock. After the occurrence of an
event set forth in clause (i) above, the Rights will become exercisable as set
forth below.

               After the Record Date and until the Distribution Date (or earlier
redemption or expiration of the Rights), new Common Stock certificates issued
upon transfer or new issuance of the Common Stock will contain a notation
incorporating the Rights Agreement by reference. Until the Distribution Date (or
earlier redemption or expiration of the Rights), the surrender for transfer of
any certificates for Common Stock outstanding as of the Record Date will also
constitute the transfer of the Rights associated with the Common Stock
represented by such certificate. As soon as practicable following the
Distribution Date, separate certificates evidencing the Rights ("Right
Certificates") will be mailed to each holder of record of the Common Stock as of
the close of business on the Distribution Date and, thereafter, such separate
Right Certificates alone will evidence the Rights.

               The Rights are not exercisable until the Distribution Date and
will expire at the close of business on July 6, 2009, unless earlier redeemed by
the Company as described below.

               As soon as practicable after the Distribution Date, Right
Certificates will be mailed to holders of record of the Common Stock as of the
close of business on the Distribution Date and, thereafter, the separate Right
Certificates alone will represent the Rights. Except as



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otherwise determined by the Board of Directors, only shares of Common Stock
issued prior to the Distribution Date will be issued with Rights.

               In the event that any person or group becomes the beneficial
owner of 20% or more of the then outstanding shares of Common Stock (other than
as a result of a tender or exchange offer for all shares of the Common Stock at
a price determined by a majority of the directors who are not representatives,
nominees, affiliates or associates of an Acquiring Person, after receiving
advice from one or more nationally recognized investment banking firms selected
by such directors, to be fair and adequate to the stockholders, and otherwise in
the best interests of the Company and its stockholders (a "Permitted Offer")),
the Rights Agreement provides that proper provision shall be made so that each
holder of a Right will thereafter have the right to receive, for a 90-day period
(the "Exercise Period"), upon exercise, Common Stock (or, under certain
circumstances, cash, preferred stock or other securities of the Company) having
a market value equal to two times the exercise price paid (i.e., at a 50%
discount). Following the occurrence of this event, any Rights that are, or
(under certain circumstances specified in the Rights Agreement) were,
beneficially owned by any Acquiring Person shall immediately become null and
void. However, Rights generally are not exercisable following the occurrence of
such an event until such time as the Rights are no longer redeemable by the
Company as set forth below. Further, Rights generally are exercisable only after
the effectiveness of a registration statement for the Common Stock under the
Securities Act of 1933.

               In the event that, at any time after any person or group becomes
the beneficial owner of 20% or more of the then outstanding shares of Common
Stock (other than as a result of a Permitted Offer), (i) the Company engages in
a merger or other business combination transaction in which the Company is not
the surviving corporation (other than following a Permitted Offer), (ii) the
Company engages in a merger or other business combination transaction with
another person in which the Company is the surviving corporation, but in which
its Common Stock is changed or exchanged (other than following a Permitted
Offer), or (iii) 50% or more of the Company's assets or earning power (on a
consolidated basis) is sold or transferred, the Rights Agreement provides that
proper provision shall be made so that each holder of a Right (except Rights
which previously have been voided as set forth above) shall thereafter have the
right to receive, upon the exercise thereof at the then current exercise price
of the Right, common stock of the acquiring company having a market value equal
to two times the exercise price paid (i.e., at a 50% discount). The events
described in this paragraph are defined as "Triggering Events."

               The Exercise Price payable, and the number of shares of Preferred
Stock or other securities or property issuable, upon exercise of the Rights are
subject to adjustment from time to time to prevent dilution (i) in the event of
a stock dividend on, or a subdivision, combination or reclassification of, the
Preferred Stock, (ii) upon the grant to holders of the Preferred Stock of
certain rights or warrants to subscribe for Preferred Stock or convertible
securities at less than the current market price of the Preferred Stock, or
(iii) upon the distribution to holders of the Preferred Stock of evidences of
indebtedness or assets (excluding regular quarterly cash dividends) or of
subscription rights or warrants (other than those referred to above). Provision
is made for similar anti-dilution adjustments with respect to the Common Stock.

               With certain exceptions, no adjustment in the Exercise Price will
be required until



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cumulative adjustments require an adjustment of at least 1% in such Exercise
Price. No fractional shares of Preferred Stock will be issued (except fractions
which are integral multiples of one ten-thousandth of a share of Preferred
Stock) and, in lieu thereof, an adjustment in cash will be made based on the
market price of the Preferred Stock on the last trading date prior to the date
of exercise.

               At any time after the date of the Rights Agreement until 10
business days (or such later date as the Board of Directors of the Company may
determine) following the Stock Acquisition Date, the Company may redeem the
Rights in whole, but not in part, at a price of $.01 per Right (the "Redemption
Price"), payable in cash, Common Stock or other consideration deemed appropriate
by the Board of Directors. Thereafter, the Company's right of redemption may be
reinstated if the Exercise Period has expired, no Triggering Event has occurred
and an Acquiring Person reduces his beneficial ownership to 5% or less of the
outstanding shares of Common Stock in a transaction or series of transactions
not involving the Company and there are no other Acquiring Persons. Immediately
upon the action of the Board of Directors of the Company ordering redemption of
the Rights, the Rights will terminate and the only right of the holders of
Rights will be to receive the Redemption Price.

               The Rights Agreement includes a "TIDE" (Three-year Independent
Director Evaluation) provision. Under the TIDE provision, the Board of
Directors' Stockholder Rights Plan Committee composed of independent directors
will review the Rights Plan periodically (at least every three years). This
committee will communicate its conclusions to the full Board of Directors after
each review, including any recommendation as to whether the Rights Plan should
be modified or the Rights should be redeemed.

               Until a Right is exercised, the holder thereof, as such, will
have no rights as a stockholder of the Company, including, without limitation,
the right to vote or to receive dividends. While the distribution of the Rights
will not be taxable to the stockholders or the Company, the stockholders may,
depending upon the circumstances, recognize taxable income in the event that the
Rights become exercisable for Preferred Stock (or other consideration) of the
Company or for common stock of the acquiring company as set forth above.

               Other than those provisions relating to the principal economic
terms of the Rights, any of the provisions of the Rights Agreement may be
amended by the Board of Directors of the Company prior to the Distribution Date.
After the Distribution Date, the provisions of the Rights Agreement may be
amended by the Board of Directors in order to cure any ambiguity, to make
changes which do not adversely affect the interests of holders of Rights
(excluding the interests of any Acquiring Person), or to shorten or lengthen any
time period under the Rights Agreement; provided, however, that no amendment to
adjust the time period governing redemption shall be made at such time as the
Rights are not redeemable.

               A copy of the Rights Agreement has been filed with the Securities
and Exchange Commission as an Exhibit to a Registration Statement on Form 8-A. A
copy of the Rights Agreement is available free of charge from the Company. This
summary description of the Rights does not purport to be complete and is
qualified in its entirety by reference to the Rights Agreement, which is
incorporated herein by reference.



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                         DESCRIPTION OF PREFERRED STOCK

               Applied Materials, Inc. Series A Junior Participating Preferred
Stock (the "Preferred Stock") purchasable upon exercise of the Rights will be
nonredeemable and subordinate to other series of the Company's preferred stock.
Each Right shall entitle its holder to purchase one ten-thousandth (1/10,000) of
a share of Preferred Stock.

               Each share of Preferred Stock will have a minimum preferential
quarterly dividend rate of $1.00 per share but will be entitled to an aggregate
dividend of 10,000 times the dividend declared on the Company's Common Stock.

               In the event of liquidation, the holders of the Preferred Stock
will receive a preferred liquidation payment of $1.00 per share but will be
entitled to receive an aggregate liquidation payment equal to 10,000 times the
payment made per share of Common Stock.

               Each share of Preferred Stock will have 10,000 votes, voting
together with the Company's Common Stock.

               In the event of any merger, consolidation or other transaction in
which shares of Common Stock are exchanged, each share of Preferred Stock will
be entitled to receive 10,000 times the amount received per share of Common
Stock.

               The rights of the Preferred Stock as to dividends, liquidation
and voting, and in the event of mergers and consolidations, are protected by
customary antidilution provisions.

               Because of the nature of the Preferred Stock's dividend,
liquidation and voting rights, the value of the one ten-thousandth interest in a
share of Preferred Stock purchasable upon the exercise of each Right should
approximate the value of one share of Applied Materials, Inc. Common Stock.



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