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Applied acquires Varian, makes ion implanter comeback

Posted: 09 May 2011 ?? ?Print Version ?Bookmark and Share

Keywords:Applied-Varian agreement? ion implanter? wafer fabrication equipment? ion implantation equipment?

''We are incrementally more positive on AMAT as we believe its acquisition of VSEA makes strategic sense. In solar, we believe Applied will be able to accelerate VSEA's Solion penetration with new solar customers. In semi, we believe the addition of VSEA will expand its servable market into ion implantation, which should continue to outgrow the industry. We believe this deal signals that that the market is undervaluing the semi equipment group, and we expect more strategic M&A deals will occur in the coming year,'' said Edwin Mok, an analyst with Needham & Co. LLC, in a recent report. .

''We believe VSEA's high-efficiency solar cell offering is strategically most important to AMAT. VSEA is the emerging leader in the area of high-efficiency solar cell technology. We believe AMAT wants to own this critical technology, as the market is moving away from selective emitters. Furthermore, VSEA's Solion tool complements AMAT's Bacinni product. By leveraging its customer base, AMAT should be able to accelerate Solion's market penetration,'' Mok said.

''In semi, ion implant is complementary to other AMAT offerings. AMAT will be able to not only integrate ion implant with other tools in the FEOL process flow, but the emerging materials modification implant processes could also be used to address challenges in areas such as etch and CMP. However, AMAT recently announced a plasma doping product that is positioned to compete against VSEA's PLAD, which currently has a 100 percent market share. We believe this could raise some eyebrows and cause some delays in the regulatory review,'' Mok said.

Meanwhile, Varian recently reported its results. Varian's ''March revenue of $330 million was above guidance and beat consensus of $321 million. EPS of $1.07 slightly beat consensus of $1.06 on strong OM of 28.9 percent, despite higher OPEX,'' he said in a recent report.

''F3Q11 (June) revenue guidance of $323-$333 million is essentially flat Q/Q, and well above peers' outlook of down 5-15 percent Q/Q. Varian confirmed some order push-out, but stated that June Q revenue could have been significantly higher without the push-out. Additionally, Varian stated that it has not seen an increase in competitive pricing action that was highlighted by Axcelis. Clearly, guidance suggests strong adoption of Varian's new high current implant tool and continued progress in Japan,'' Mok said.

''Solar continues to make progress. Varian expects to ship at least 5 more tools in the coming quarter, including a repeat order from a second customer (beyond Suniva). Varian remains confident that revenue will surpass prior targets of $25-30 million in CY11 and $100 million by CY12,'' he added.

- Mark LaPedus
??EE Times

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