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.
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.
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...
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.
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.
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?
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....
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?
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!
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.
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.
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.
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.
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."
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.
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.
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