Applied Materials, the largest chipmaking-equipment supplier, has agreed a deal to buy Tokyo Electron for $9.39 billion in stock in the largest deal for a Japanese company from outside the country in six years.
Gary Dickerson, who was promoted to chief executive officer of Applied Materials this month, will be CEO of the combined manufacturer, the companies said in a statement.
Applied Materials shareholders will own 68% of the new entity.
Dickerson is moving to consolidate the industry across continents amid slowing demand for equipment used to prepare silicon during the early stages of chip fabrication.
Applied Materials in August forecast revenue that missed analysts’ estimates for the second straight quarter amid a record slump in the personal-computer market and muted semiconductor demand.
The consolidation among chip-equipment makers mirrors the increasing concentration within their customer base.
Intel, Taiwan Semiconductor Manufacturing and Samsung Electronics now buy the majority of the production machines deployed by the industry, making the earnings of their suppliers more volatile.
Netherlands-based ASML Holding, Europe’s biggest chipmaking-tools supplier, completed its purchase of San Diego-based Cymer in May to expand in extreme ultraviolet lithography technology.
Tokyo Electron, the second biggest maker of chip-production machines, reported a 3 billion yen ($30 million) loss for the three months ended June 30.
The companies make machines that prepare silicon wafers for imprinting with the circuits that turn them into processors capable of crunching numbers, showing video and connecting to mobile networks, among other tasks.
Spending on semiconductor equipment is projected to decline 8.5% to $34.6 billion this year, hurt by shrinking investment by semiconductor manufacturers, according to Gartner Inc.
Spending by the top-five chipmakers will make up more than 65% of total 2013 spending, the research firm said.
The combined company forecast cost savings of $250m in the first year after completion. The company also plans to buy back $3 billion in stock in the first 12 months after the deal closes.
