Page 11 of this report from the American Institute of Physics shows that condensed matter physics is by far the most common PhD dissertation topic in 2007 and 2008. Can anyone here explain why this would be so? Additionally, what are they studying. and what is application with this subject? On a related note, why are atomic and molecular physics so uncommon as a PhD dissertation topic? Personally, I think that atomic and molecular physics should be more popular, since atomic physics is closely associated with chemistry, making it more broadly applicable. Is this the case?
Condensed matter is a pretty large field in physics. Just as an example it includes the whole area of semiconductor physics, so any electronic device. From a more theoretical view it there are still a lot of open questions that are at the same time hard to solve and can have a wide area of applications. High temperature superconductivity is one of these examples. So that might explain the relatively large number.
I would not over-interpret this statistic too much, as there is a large overlap between the different fields. At pretty much every 'specialized' conference you will see that the boundaries are very soft. Depending on who you ask condensed matter, applied physics, materials science, surface physics and statistical physics all belong to a similar area of research.
And from an application viewpoint pretty much every area of physics is used somewhere. Quite a few people are trying to predict the stock market with thermodynamical models, plasma physics can be used to kill bacteria on your skin instead of antibiotics, and without relativity the GPS in your smartphone would not work. So I would not conclude that there are too few in a certain area, as there is no real criteria how estimate what 'too few' really means. Over a long time period interesting areas will attract more students (and funding) while other areas are not as attractive anymore. This is not static though, a major breakthrough can shift things around quite a bit. As an example before the high-Tc superconductors in 1986 that area was more or less declining and not got much attention and students at all.
Remarkably everyone has so far commented on the theory of condensed matter -- but the article specifies that only 32% of PhDs awarded were theoretical! (Unfortunately that's overall, so there is no indication of the breakdown for condensed matter. It probably doesn't deviate too strongly from the overall number though, I imagine.)
As much as I personally love CMT, I think the answer is more pragmatic than my interests... Condensed matter experiment groups tend to be quite large, because compared to the LHC, condensed matter experiments are small, and so it's reasonable to have a large faculty (and an army of students) working on a diverse set of scientifically exciting but also potentially practical physics. CME is thus well funded by military bodies, and government agencies (at least in the U.S). Many students come into grad school without having chosen a subfield. They often fall into a group that can promise a paid research position so they don't have to teach the entire length of their program.
Additionally, perhaps this is important: many of the experiment students that I know personally (the bulk of students in my department) did their undergraduate work at schools with large CME groups and got their start with some basic lab-work as undergrads -- sometimes because of a lab-work requirement for graduation. Getting them hooked young is key. ;)
Basically, condensed matter was big in 2007-8 because it's been big for a long time! It has the most money, and while a handful of students go into physics because they read "The Elegant Universe," it takes a long time to train a theorist of any stripe. You can start doing CME as a wide-eyed undergrad, fall in love, and pick up what you need along the way.
Condensed matter theory now encompasses quite a bit more than the traditional quantum liquids and solid state theory. In Cambridge the TCM group also does complexity stuff, quite a bit of biophysics and just outright biology; there are also people who work on foundations, but it's not really new. In addition, even in the "old" world there are new things: cold atoms are now making it possible to do some very nifty things and all those experiments need interpretation. Quantum optics is a growing field, and related is generic strong light-matter interactions (polariton physics).
I think it's telling that the only theoretical group in the physics department in Cambridge is TCM. High energy theory is very much blue-sky, no contact with experiment, and done in the maths department. Astrophysical theory is done in the astronomy department, and functions pretty much independently. As a rule, TCM does any theory which pertains to an actual experiment that someone is doing/has done. It's not fundamental, but mostly organisational.
Personally, I think this is simply a sign that we have done enough reductionist thinking to account for the majority of what the rest of science relies on, and now we have to reconstruct. Condensed matter honed these tools on solid state and quantum systems, but they have wider applicability. The name of the game is "simple approximations which are good enough", not exactitude.
From my view the reason is the main driving force of academic research: the potential to publish. From personal experience I can say that CMP results are so stretchable and fuzzy, that there is a lot of potential to do publishable research in high level journals without anyone being able to proof you wrong. I was shocked to learn that there are well-known experts who read the same publications but religiously believe in completely opposite conclusions. It's because most measurements in CMP are very indirect and open to interpretation (most of the time none can be draw but due to publish-or-perish people interpret nonetheless).
Did AIP count all PhDs done in industry? If not, that might skew the results. Quite likely most other physical areas produce more real world applications.