SANTA CLARA, Calif. -- In an about-face, Applied Materials Inc. here today announced it has agreed to acquire full ownership of a Japanese joint venture in flat-panel display manufacturing systems. The company said it will buy Komatsu Ltd.'s 50% interest in Applied Komatsu Technology Inc., which was formed as a 50-50 joint venture in 1993.
Last year, Applied Materials said it would discontinue the joint-venture operations, which had been losing money. In Applied's fiscal 1998 fourth quarter, the company recorded a $58 million loss related to operating losses and charges for closing down Applied Komatsu Technology. However, Applied Materials said it has reversed the decision and will not only keep the unit open, but take full ownership.
"Significant improvements in overall business conditions and an increase in demand for FPD manufacturing equipment in Taiwan and Korea present new opportunities for Applied Materials and contributed to our decision to purchase Komatsu's interest," said Dan Maydan, president of Applied Materials. "These changes in the FPD business, combined with the increased need for enhanced flexibility and responsiveness to market changes, were also factors in our decision."
Applied Materials said its decision to keep the flat-panel display operation open will not change its net income or total earnings as previously reported. Applied Komatsu will be reclassified as a continuing operation, the company said.
The purchase of Komatsu's share in the venture is expected to be completed by the end of the current fiscal quarter, which ends Oct. 31.Once the transaction is finished, the flat-panel display equipment business will be called AKT and operate as an Applied Materials company. The unit will continue to focus on chemical vapor deposition (CVD) tools for the the flat-panel display market. Applied said the operation will be based primarily in the U.S.
Applied Materials did not disclose financial details or a purchase price, but it said the acquisition is not expected to have a material effect on its balance sheet or ongoing net income for the current fiscal year, which ends Oct. 31.