Summary
The $4.9 billion acquisition of Varian Semiconductor by Applied Materials is proving to be a disaster.
Lam Research’s acquisition of Novellus is enabling the company to enter new and rising markets.
Lam Research’s pending merger with KLA-Tencor will alter the purchasing strategy of semiconductor manufacturers.
There have been two acquisitions in the semiconductor equipment space in the past few years that are impacting company revenues and shares. While this is not uncommon, this article will point out that these decisions will continue to dominate the entire corporate strategy of the companies involved.
These are:
Applied Materials (NASDAQ:AMAT) – Varian Semiconductor (NASDAQ:VSEA)
Lam Research (NASDAQ:LRCX) – Novellus (NASDAQ:NVLS)
The article presents statistics showing what we can learn in the aftermath of the LRCX and AMAT acquisitions, and what to expect from the upcoming LRCX – KLA-Tencor (NASDAQ:KLAC) merger that will affect AMAT and LRCX market shares.
Applied Materials – Varian Semiconductor
Applied Materials shipped the world’s first fully automated Ion Implanter — the Precision Implant 9000 — to a major European customer in early 1986. During the second quarter of fiscal 2007, the company exited the business. With the acquisition of Varian Semiconductor Associates (VSEA) in November 2011, Applied began to design, market, manufacture and service ion implantation systems again.
While the obvious rational for the acquisition of VSEA was to fill the gap in the Implant sector that AMAT exited four years earlier, the real motivation was because of VSEA’s tool for AMAT’s solar arsenal of equipment. Solar was hot and semiconductors not so hot in 2011, and that remains the scenario today.
AMAT’s ill-fated amorphous silicon solar cells strategy using converted AKT (for displays) deposition equipment was replaced by the company purchasing HCT Shaping Systems for $475 million in June 2007, a supplier of wire saws and from Baccini, based in Italy, a screen printer business, for $330 million shortly thereafter.