Date: 07/10/2016

Merger of Lam Research and KLA-Tencor cancelled

The merger of semiconductor equipment companies Lam Research and KLA-Tencor is cancelled. The reason quoted by Lam in its release is: “After careful review of recent antitrust agency feedback and evaluation of their options, both companies have decided that it is not in the best interest of their respective stakeholders to continue pursuing the merger. In accordance with terms set forth in the merger agreement, no termination fees will be payable by either company”.

"We believe that this proposed combination would have resulted in compelling benefits for our customers, employees and stockholders, as well as accelerate innovation in the broader Semi Conductor industry, so we are disappointed with the outcome. However, together with our customers, we have affirmed the value of closer cooperation between process and process control for new enabling solutions, for that reason, we plan to explore collaboration opportunities with KLA-Tencor around programs identified as beneficial to our customers," said Martin Anstice, president and chief executive officer.

Anstice continued: "Lam's growth trajectory as a standalone company remains firmly in place. We are more committed than ever to moving forward with the company's mission of creating and delivering increased value to all stakeholders. The need for leading-edge wafer processing capability, particularly those enabling the key technology inflections, continues to become even more critical to our customers as they seek to deliver more powerful and capable Semi Conductor products that make possible the disruptive innovations of our future. We look forward to updating our vision and strategy for delivering continued industry out performance and profitable growth at our Analyst Day event in November."

In year 2015, merger of leading semiconductor equipment makers Applied Materials and Tokyo Electron was also did not materialize due to regulatory issues.

Although a huge amount of consolidation is happening among semiconductor chip vendors irrespective of their geographic locations and sizes where regulatory body approvals are not much of a issue, Where as in the case of Semiconductor manufacturing equipment market, it's not the same. The market demand pattern is also quite different between semiconductor chip and semiconductor equipment areas.

Is it that the regulators do not want semiconductor equipment industry to gain a kind of monopoly over the Semiconductor equipment market?