Semiconductor equipment industry Lam Research and KLA - Tencor merger broken, the competent authority ruled that, any one of the two companies are merged, is unfair to the market.

Authority of the United States has already rejected Lam Research and KLA - Tencor proposed $10.6 billion merger, which revealed a message that means chip manufacturer in terms of optimization of the next generation process, have to rely on cooperation between equipment suppliers; Ruling is expected and the case will be cooling in the field of semiconductor equipment acquisition boom, while entering the mature stage of the overall IC industry is still big blow the whole and the wind.

Lam, merger with KLA is nearly a year ago (reference) is put forward, the goal is to set up with wafer manufacturing and process measurement equipment of the unique ability of the new company; Lam, deposition and etching equipment has many competitors, KLA is the market leader of semiconductor process measurement equipment, and the competent authority ruled that, any one of the two companies are merged, is unfair to the market.

"KLA - Tencor in several semiconductor part quantity and test (metrology and inspection) market leadership, let Lam Research has the potential to timely KLA - Tencor by key equipment and related services, other competitors;" The us department of justice for the ruling on the case statement said: "the process measurement technology for the successful development of semiconductor manufacturing equipment and process technology, more and more important role."

Authority of the United States with China, South Korea, Japan and other places of authority to investigate cooperation, Lam/KLA merger is in the semiconductor equipment industry should be material (chipmaking gear) and Tokyo power kechuang (Tokyo Electron) after the merger proposal is put forward, which finally is broken due to not approved by the competent authority (reference).

Industry consultancy Semiconductor Advisors market watchers Robert Maire in a newsletter, points out that Lam/KLA merger resolution, is a warning to other potential merger case ─ ─ is not only the customers of the parallel or vertical overlap problem, even zero overlap product that will be approved: "because of recent two merger proposals failed finally, in the field of Semiconductor devices is unlikely to someone trying to promote large-scale merger."

And the resolution of the us department of justice means chipmaking gear will be for the foreseeable future maintain semiconductor equipment market leading position.

Lam/KLA's response

In the U.S. justice department announced on the Lam/KLA merger after the verdict, the two companies said on a conference call, respectively, industry power will continue to make them grow; Market analysts pointed out that the KLA's future is very promising, in the process control market has more than 50% market share, and is expected to continue to grow. But analysts also speculation, Lam will seek in the neighboring areas longer-term growth potential of the market.

Lam, originally estimated, and the combination of the KLA will lead to $600 million a year in integrated product business opportunities; Lam, chief executive Martin Anstice said on a conference call "we desire as far as possible through the cooperation to expand our horizons, but everything is impossible." KLA executive Rick Wallace is in another conference call, said: "we feel very depressed, the combination of process and process control can accelerate the innovation of the industry."

The long term, Wallace expected revenue of KLA can grow 5 to 7% a year, higher than 2 ~ 4% of the overall semiconductor industry growth; He was not expected the company will have other buyer, because of other semiconductor equipment providers, only two have launched such a large deal of money, and don't like a Lam, the two companies and they overlap on the process control products.

ASML for June announced a $3.1 billion deal to buy Taiwan han micronas electron beam testing equipment suppliers (Hermes) case (reference), is an understatement, said the deal will help ASML launched an ultraviolet light (extreme ultraviolet lithography and EUV) equipment, but the KLA optical detection system is 100 ~ 1000 times faster than the electron beam.

Semiconductor Advisors Maire says mergers broken, KLA in the next few years there are more than Lam, the quiet time, because the former facing competitive pressure is smaller than Lam, a lot of; And he points out, the case ruling result: "make Applied only in process equipment and testing/measurement equipment at the same time have a strong position in the field of semiconductor equipment suppliers, but still lag behind in the field of semiconductor process control equipment KLA many."

Based on KLA said in a telephone conference according to statistics, at present in the semiconductor process control equipment market, ranks third in chipmaking gear, and the distance from the first vendor KLA with Hitachi (Hitachi) there is a distance.

Lam and KLA said, semiconductor capital equipment market outlook; Because of preparing to production 10 nanometers and 7 metric cheng wafer generation industry need to double or triple graphics (patterning) scheme, memory manufacturer is developing density higher 3 d NAND flash memory chips and memory such as a new generation of 3 d XPoint, etc.

And for the two companies will face the problem is the need to adjust its strategy for the team, in cooperation with a wider range of competitors. Maire said that after the merger put forward clearly has a lot of personnel changes of the plan, and merger broken, it seems that the two companies another reforming personnel will again.