Proposed Merger between Applied Materials Inc. and Tokyo Electron Limited

Notifying Parties:

Applied Materials Inc. and Tokyo Electron Limited

Notifying Date:

20 January 2014

Summary of transaction:

PART 5
INFORMATION FOR THE CCS PUBLIC REGISTER
(TO BE COMPLETED BY THE APPLICANT(S))

Please provide a comprehensive, non-confidential summary of the merger including at least the following information:

  (i)           the names of the merger parties;

·         Applied Materials, Inc. (“AMAT”); and

·         Tokyo Electron Limited (“TEL”),

(collectively, the “Parties”).

 (ii)          a description of the transaction;

This is a joint notification made by AMAT and TEL, in relation to the merger of AMAT and TEL in an all-stock transaction (“Merger”).

(iii)          a description of the business activities of the merger parties worldwide and in Singapore;

AMAT is involved in the production and supply of equipment, services, and software for the manufacture of semiconductor, flat panel display, and photovoltaic products.

AMAT has a main office and operations centre in Singapore, which provides assistance with sales, marketing, technical support, general administration, and other related services for AMAT’s business units, in addition to a product development centre, which is a manufacturing, and research and development facility.

TEL is involved in the supply of a wide range of wafer fabrication equipment (“WFE”) used to manufacture semiconductors. TEL also provides service and support to global semiconductor device manufacturers. TEL also has a flat panel display and photovoltaic production equipment business, and electronic computer components and computer networks businesses.

TEL provides assistance with sales, marketing, technical support, general administration and engineering support to customers, and sells and markets post-warranty service and related services in Singapore.

 (iv)          a description of the overlapping goods or services, including brand names;

The Parties overlap worldwide in the provision of the following types of products: (i) Sputtering for bump processing; (ii) ECD, or “plating” (including Through-Silicon Via (“TSV”)); (iii) ECD for bump processing; (iv) Silicon etch (including TSV); (v) Dielectric etch (including bump); (vi) Clean tools; and (vii) Plasma Nitridation.

The Parties overlap in Singapore in the provision of Dielectric etch (including bump) products. 

 (v)          the applicant’s views on:

a.             definition of the relevant market(s);

b.            the way in which competition functions in this market;

c.             barriers to entry and countervailing buyer power; and

d.            the competitive effects of the merger (non-coordinated, coordinated and/or vertical effects, as relevant).

The Parties submit that the relevant product markets are (i) Sputtering for bump processing; (ii) ECD or “plating” (including TSV); (iii) ECD for bump processing; (iv) Silicon etch (including TSV); (v) Dielectric etch (including bump); (vi) Clean tools; and (vii) Plasma Nitridation, and that the relevant geographic market is worldwide in scope.

The Merger will not result in a substantial lessening of competition in view of factors, including the following:

Non-coordinated effects

(a)           the limited product overlaps between the Parties, and limited competition between the Parties for such limited product overlaps;

(b)           the multitude of existing and potential WFE suppliers who will be able to provide substitutable WFE products to customers and maintain strong competition for WFE products post-Merger;

(c)           large customers who are able to drive and sponsor new innovation;

(d)           the rapid technological change in the market for WFE that could result in rapidly evolving market shares;

(e)           the low barriers to entry, in particular, the transition from a 300 mm wafer to a 450 mm wafer represents a potential greenfield entry and expansion opportunity to suppliers across segments; and

(f)            the strong countervailing buyer power that would continue to exist post-Merger; and

Coordinated effects

(g)           the multitude of competing WFE suppliers globally who can provide similar products to semiconductor manufacturers, and who will thereby be able to disrupt any coordinated behaviour; and

(h)           the strong countervailing buyer power of large semiconductor manufacturers, who will be able to disrupt any coordinated behavior.

Decision:

The proposed merger, if carried into effect, will not infringe the section 54 prohibition.

Decision Date:

23 September 2014
Click here for the decision.