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Commentary: Applied's ASMI bid reads Intel

Posted: 11 Jun 2008 ?? ?Print Version ?Bookmark and Share

Keywords:ASMI bid Applied? ALD PE-CVD units? tools 450mm?

Why did Applied Materials Inc. make an unsolicited bid to acquire a chunk of ASM International NV?

ASMI said last week it has received an unsolicited offer of between $400 million and $500 million from Applied for its atomic-layer deposition (ALD) and plasma-enhanced chemical vapor deposition (PE-CVD) units. The offer does not include ASMI's back-end unit or some front-end tool efforts.

ASMI may resist, but its shareholders see a bonanza in the Applied bid. ASMI is a weakened vendor, as various shareholders have attempted to break-up the company's front- and back-end units into two parts. Its front-end equipment unit has been losing money, while the back-end operation seems to be in good shape.

The real reason for the bid is clear: Applied wants to gain greater access ASMI's largest customer: Intel Corp. For years, ASMI has been Intel's main low-k dielectrics equipment vendor.

Intel is also using ASML's equipment on a bigger front: high-k. Like low-k, Intel's main equipment vendor for high-k is ASMI, industry sources said. Intel may also be pushingand fundingASMI to develop 450mm tools.

High-k is one of the prizes. Applied has recently launched equipment for high-k, but the company has reportedly gained little or no traction in the emerging arena. What's more, Applied needs a boost. Its tool business on the semiconductor front is sliding amid an IC lull in the market.

Perhaps Intel has already given its blessing to an Applied-ASMI deal. Intel can't afford a weak tool vendor in its fab, especially as it ramps up its 45nm and beyond processes.

This reminds some of another Dutch deal. Many years ago, SVG was Intel's main lithography vendor, but the U.S. tool vendor fell on hard times and experienced delays with its 193nm tool.

Dutch-based ASML Holding NV ended up buying SVG with hopes of cracking the Intel account. It didn't work that way. ASML has some business at Intel, but Nikon Corp. has been the lithography vendor of choice at Intel. Looking back, that has not hurt ASML.

If Applied buys part of ASMI, could the same thing happen to Applied? Possibily. For Intel, it's ''my way or the highway" for its tool vendors. In other words, Intel has a great deal of control over its tool vendors.

Applied isn't used to getting pushed around, but maybe a big customer in high-k is worth the trouble. And Applied, which has resisted 450mm, could change its tune in the arenajust to get in the door at Intel and gain access to plentiful funding.

- Mark LaPedus
EE Times





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