Consolidation in the semiconductor industry continues and is being complemented by consolidation in the semiconductor equipment industry as well. Yesterday, Lam Research reported its intention to combine with KLA-Tencor. Lam said the combination would help its customers by reducing variability and accelerating yield in furtherance of extending Moore’s Law.
The move mirrors consolidation among semiconductor makers, who constitute the prospective customers of Lam Research and KLA-Tencor.
“The pairing of Lam Research and KLA-Tencor brings industry leadership in process and process control together, accelerating our capability to address our customers’ most difficult challenges as they scale to meet the market demands of lower power, higher performance, and smaller form factors,” said Martin Anstice, Lam’s president and chief executive officer, in a press release. “Lam Research and KLA-Tencor’s shared commitment to collaboration and building strong customer trust, along with our respective track records of innovation, product leadership, and operational excellence, position us as a combined company to deliver the higher levels of technology differentiation and speed to solutions that are critical to our customers’ long-term success.”
“I strongly believe that this transaction represents a great outcome for all of KLA-Tencor’s key stakeholders,” added Rick Wallace, president and chief executive officer of KLA-Tencor. “The combined company will be uniquely positioned to work collaboratively with our customers to help them meet the challenges of FinFET, multi-patterning, and 3D NAND development. Given the complementary nature of the two companies’ product offerings and technologies as well as the lack of product overlap, the combination will create an industry leader with greater opportunities for our respective employees for professional development and growth. Lastly, this transaction will benefit our stockholders who will receive compelling upfront value, in addition to the opportunity to own a meaningful stake in an industry leader and participate in the upside potential created by the combination.”
The companies say their combination will result in a semiconductor capital equipment company offering a “strengthened platform for continued outperformance, combining Lam’s best-in-class capabilities in deposition, etch, and clean with KLA- Tencor’s leadership in inspection and metrology.”
The combined company will use the name Lam Research Corp. and continue to trade on the Nasdaq Global Select Market under the symbol LRCX. Anstice will lead the combined company.
The Wall Street Journal reports that the combined company would become the number 2 supplier of chip production tools after Applied Materials, which earlier this year terminated a proposal to merge with Tokyo Electron Ltd. (TEL).
In related news, the Journal reports that disk-drive maker Western Digital is intending to buy memory-chip maker SanDisk—a move that could help it contend with the decline of rotating disks and the rise of flash.
The Journal charts the biggest deals this year: Avago/Broadcom for $36.6 billion, Western Digital/SanDisk for $19 billion, Intel/Altera for $16.7 billion, NXP/Freescale for $11.8 billion, and Lam Research/KLA-Tencor for $10.6 billion.
The Journal quotes Dan Hutcheson, of VLSI Research as saying, “The best way to show growth is to buy someone else.” Hutcheson expects the chip-manufacturing equipment total market will decline 2% to $48.8 billion in 2015.
