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rgrutza600
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WOW!
rgrutza600   9/24/2013 9:55:02 AM
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I just never imagined this having followed the industry for over 20 years now.  Amazing.  Wonder if it will be approved.

rick merritt
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Re: WOW!
rick merritt   9/24/2013 1:43:10 PM
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A bold move to lead the consolidation, but I agree, will it be approved? And who is left in a viable third, fourth, fifth place?

gutiea1
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Another consequence of Moore's Law de-facto demise
gutiea1   9/24/2013 10:02:58 AM
Clearly, this is a move to cut costs, reduce redundancies and inefficiencies.  It is a good news for the shareholders and the industry and not so good for the employees; I imagine sales offices will be reduced, marketing trimmed and even R&D will be reorganized.  Another hint from a rapidy maturing industry with an unclear path for the future.

elctrnx_lyf
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Re: Another consequence of Moore's Law de-factor demise
elctrnx_lyf   9/24/2013 10:34:25 AM
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The consolidation could be a good news for the industry if the synergies these two companies could actually help to innovate with products.

AZskibum
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Re: Another consequence of Moore's Law de-factor demise
AZskibum   9/24/2013 10:54:22 AM
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It strikes me as an excellent move, and probably a necessary one. Either company alone would've faced much greater challenges leading the charge toward the limits of Moore's Law.

junko.yoshida
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Re: Another consequence of Moore's Law de-factor demise
junko.yoshida   9/24/2013 12:08:35 PM
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Forgive me for my lack of knowledge, but what complementary products/technologies each company (Applied and Tokyo Electron) will bring to the table, I wonder...

m00nshine
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Re: Another consequence of Moore's Law de-factor demise
m00nshine   9/24/2013 12:25:34 PM
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TEL primary products are litho tracks, diffusion furnaces, and etch tools and also have a variety of wet cleans and CVD. They are the market leader in litho tracks. ASML doesn't really have a litho track product or cleans products but they basically have all the others excluding litho scanner.

junko.yoshida
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Re: Another consequence of Moore's Law de-factor demise
junko.yoshida   9/24/2013 12:37:21 PM
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@m00nshiine, thanks for your quick repsonse! That's good info. So, presumably, with the newly acquired litho products from TEL, Applied will have an edge over AMSL...

Phononscattering
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Re: Another consequence of Moore's Law de-factor demise
Phononscattering   9/24/2013 1:20:34 PM
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m00nshiine post was easy to misunderstand. The new company will not have a competing product to ASML scanners, however they will have TEL tracks which are a required add on. ASMLs only competitor is Nikon, although that is debatable considering the dominant position of ASML lately...

 

 

m00nshine
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Re: Another consequence of Moore's Law de-factor demise
m00nshine   9/24/2013 1:28:11 PM
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Thank you for clarify. My point is after merger with TEL and earlier purchase of Varian, AMAT (edit, thx @resistron) can provide all of major semi production equipment sectors except scanner. Thin film, diffusion, etch, implant, clean, metal, CMP, and half of litho. Litho Scanner is hard enough to keep alive...ASML required to purchase Cymer and needed cash from Intel, TSMC, and Samsung to keep developing new technologies.

junko.yoshida
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Re: Another consequence of Moore's Law de-factor demise
junko.yoshida   9/24/2013 5:15:05 PM
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Ahhh, I get it. Thanks for educating me.

daleste
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Re: Another consequence of Moore's Law de-factor demise
daleste   9/24/2013 9:23:59 PM
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I expect this will be approved even though it will make a dominate player for the industry.  While at the same time, they block a couple airlines that would still have very close competitors.  That's called the Injustice department.

resistion
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Re: Another consequence of Moore's Law de-factor demise
resistion   9/24/2013 7:23:43 PM
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M00nshine, you mean AMAT instead of ASML?

mohov0
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Re: Another consequence of Moore's Law de-factor demise
mohov0   9/24/2013 12:26:52 PM
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I totally agree. For these two giants to merge on an equal basis says tons about cooperative moves for the sake of keeping the momentum going in the chip and display industries.

krisi
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ultimate consolidation?
krisi   9/24/2013 5:12:38 PM
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It looks that as teh foundry market will consolidate in hands of few players the same will happen in equipment market...are we going to see 3-4 vendors at the end of the day?

geekmaster
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Incorporate in Netherlands?
geekmaster   9/24/2013 9:04:19 PM
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Why do they plan to incorporate in the Netherlands (basically next to ASML)?

Ogemaniac
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Re: Incorporate in Netherlands?
Ogemaniac   9/25/2013 3:43:14 AM
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Peter Clarke
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So what will be the new name?
Peter Clarke   9/25/2013 6:27:50 AM
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So what will be the new name for the merged company?

"Applied Electron" is the obvious front runner.

But is kind of boring?

Let us have your nominations for the name for the merger of Applied Materials and Tokyo Electron!

I'll get you started. If you flip the order of the names round and then initialize you have the justification for "Team." Too corny? Yeah probably.  

 

geekmaster
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Re: Incorporate in Netherlands?
geekmaster   9/25/2013 10:12:48 PM
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To incorporate in the Netherlands because of tax rates does still not make much sense to us.  Yes, it is less than US (40%) vs 25%. But if tax rates are the reason why not Ireland with 12.5% or Liechtenstein with 12.5%? Bulgaria is even lower than that.  Is there another strategic consideration?

Peter Clarke
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Re: Incorporate in Netherlands?
Peter Clarke   9/26/2013 5:24:37 AM
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Yes there is something about the Netherlands.

STMicroelectronics is headquartered in Geneva but has been incorporated in the Netherands for many years.

When ST-Ericsson was created, it too was headquartered in Geneva but incorporated in the Netherlands.

So there is something about the Netherlands for multinationals but I don't know exactly what it is. Probably something similar to Delaware in the US.

 

wilber_xbox
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Re: Incorporate in Netherlands?
wilber_xbox   9/26/2013 8:14:39 AM
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I agree, Netherlands is not really a tax heaven for companies but maybe the less bureaucracy and transparent system can be a reason. Another could be the more incencentives for high-tech companies.

KB3001
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Re: Incorporate in Netherlands?
KB3001   9/26/2013 9:05:13 AM
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They might have a tax deal with Luxembourg (Benelux countries have some special arrangements between them) which allows companies to enjoy the political benefits of being headquartered in the Netherlands (a big EU country) while benefiting from Luxembourg's extremely low tax system. I am just speculating :-) but I am nearly sure it's to do with taxes. It does not have to be about the headline corporate tax rate, Governments can offer financial sweeteners in many many other ways....

EUV Guy
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Merger considerations
EUV Guy   9/24/2013 9:42:40 PM
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Wow, big move!  For those wondering: AMAT has PVD, plating, CMP, implant, inspection/measurement, mask tools, solar and display business which TEL does not have.  TEL has diffusion furnaces, wet processing batch and single wafer tools, some assembly/packaging equipment that AMAT does not have.  There is overlap in CVD film deposition, dry etch (conductor and dielectric) and tracks.  Everyone quickly forgets Sokudo is a DNS-AMAT JV.  The merger is quite complementary, since most areas of overlap have one dominating over the other (conducter etch is mostly AMAT/LAM, dielectric etch is mostly TEL/LAM, tracks are mostly TEL).  From a customer perspective I would be quite concerned about the decreased competition. Any anti-trust experts out there who can weigh in on how the regulators would approach this?

rick merritt
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Re: Merger considerations
rick merritt   9/24/2013 9:52:42 PM
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Good analysis EYV Guy, and a great question: Who has any insights into regulatory thinking here?

AnySilicon
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who said consolidation?
AnySilicon   9/25/2013 3:09:39 AM
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Consolidation will only accelerate. We see it in IP market, EDA market and even in Silicon foundries. If GloFo for example megre with UMC, this will put TSMC in a different position, and change the market totally!

junko.yoshida
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'Merger of equals'
junko.yoshida   9/25/2013 8:47:58 AM
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When I was reading FT this morning, I came across a pointed question FT's LEX column raised on Applied Materials/Tokyo Electron deal. 

In the press release, both companies insisted that this is a "merger of equals."

FT, however, points out:

Appled with a $20 billion market cap is no equals of Tokyo Electron, which has less than half the equity value. 


It is an interesting question, isn't it? What do you think?

Peter Clarke
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Re: 'Merger of equals'
Peter Clarke   9/25/2013 10:09:57 AM
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2 to 1 in terms of equity value reflects how the holding in the new company will be divided and $20 billlion plus $9 billion reflects the estimated value of the combined entity. And Dickerson as CEO.

That's the money talking.

But dual headquarters, dual listing, and five directors each and a new name. That's the merger of "equals."

 

 

junko.yoshida
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Re: 'Merger of equals'
junko.yoshida   9/26/2013 11:39:21 AM
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Yeah, I get that, Peter. But "Merger of equals" in that sense -- dual headquarters, new name, etc. -- seems to be a tactic to soothing both companies' ego, more than anything else, and it may turn out to be the most efficient way to do a merger.

LarryMartell
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CD-SEM tool
LarryMartell   9/25/2013 11:47:47 AM
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AMAT also has an amazing new CD-SEM data mining tool, Prizm:

http://www.extremetech.com/extreme/155588-applied-materials-designs-tools-to-leverage-big-data-and-build-better-chips

 

 

any1
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CEO
this was unexpected
any1   9/25/2013 1:04:59 PM
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I must say I am surprised by this merger.   Consolidation in the semiconductor equipment  industry is expected, but not this pairing.  I think it is a bad sign for the industry as a whole.  As this new company will dominate the equipment industry now. 

wilber_xbox
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Re: this was unexpected
wilber_xbox   9/26/2013 8:16:42 AM
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any1, this will create more monopoly in the industry. I do not think that high development cost can really be a just reason as companies can collaborate on RnD. There are so many companies in semiconductor manufacturing that are working on similar model.

KB3001
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Re: this was unexpected
KB3001   9/26/2013 9:09:05 AM
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Not good for consumers, yes, but I believe that the article is right, saoring costs for new nodes makes consolidation an attractive proposition. It's the job of the regulators to stop this merger if they think it will harm consumers.

rick merritt
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Author
Excerpt from Canaccord Genuity analyst Josh Baribeau
rick merritt   9/25/2013 6:10:00 PM
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Here's an excerpt from a report by Canaccord Genuity analyst Josh Baribeau on the proposed merger:

"We see little initial disruption from the newly combined entity. We are not adjusting our ratings, targets or estimates as a result of the merger.

The most likely negative impact would be to MKS Instruments whose #1 and another top-5 customer have just combined with a stated goal of extracting costs from all layers of the supply chain. The impact to pricing and MKS' possible offsets, however, remains uncertain at this stage.

There may be a slight positive impact for Ultratech as Applied possibly gets distracted away from its smaller annealing business, and/or its customers look to diversify away from the newly merged entity in smaller or non-critical applications.

We see no overly positive or negative impact to Nanometrics.

We expect further consolidation in the equipment space, probably among the smaller suppliers as they struggle to 'go large,' but we now realize that almost any transaction size is possible."

rick merritt
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EUV
rick merritt   9/26/2013 9:42:20 AM
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Will the merged company supply litho systems including EUV, or is that sole sourced from ASML these days?

Peter Clarke
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Re: EUV
Peter Clarke   9/26/2013 10:09:18 AM
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Neither Applied nor Tokyo Electron provide lithography systems.

Nikon is just about the only alternative to AMSL and ASML is just about a monopoly (backed by Intel, Samsung, TSMC) for EUV lithography. 

I don't see Applied Electron getting acquiring Nikon to get into Litho 

wilber_xbox
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Manager
Re: EUV
wilber_xbox   9/27/2013 1:05:13 AM
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I do not think Anyone other than ASML will provide the EUV system for the time being. There was some news about Nikon developing 6.5nm EUV systems but looking at the progress on 13.5nm EUV system from ASML i do not think many companies will even think about starting their own RnD in this.

resistion
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Re: litho impact
resistion   9/27/2013 2:16:17 AM
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Tokyo Electron is involved in advanced lithography through its track and resist development.

DbaiG
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Synergies
DbaiG   9/30/2013 9:25:49 AM
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This will create synergies between two and it will also reduce administrative costs. Applied Materials had experienced fall in revenues in 2012 and so may explain why they wanted to merge. It had total assets of $12.1 billion then. Other semi-conductor firms may also be looking to merge now to compete with them since it will be difficult to do so on their own.

 

DbaiG

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