KKR’s Kokusai Electric brought for $2.2bn by Applied Materials
World's top chipmaking machine supplier moves to cement lead with Japanese deal
Applied Materials, the world’s largest provider of chipmaking machinery, will purchase Kokusai Electric, a more prominent Japanese peer, Nikkei has discovered.
According to people acquainted with the agreements, the U.S. firm will buy the former Hitachi group affiliate from the American private equity group KKR by the middle of the year.
Later on Monday, Applied Materials announced the agreement, stating it would purchase all Kokusai Electric’s remaining shares for $2.2 billion.
The acquisition will expand the product lineup of Applied Materials into developing more advanced chips for applications including 5G networks and artificial intelligence at a moment when the semiconductor industry is racing.
As a provider, getting various machinery types allows the development of current systems and know-how simpler.
Regulators are anticipated to experience an in-depth review of the deal. In 2013, U.S. officials expressed issues about a scheduled partnership between Applied Materials and Tokyo Electron, Japan’s largest semiconductor machinery provider, and subsequently the U.S. firm revoked its suggestion.
While the volume distinction between Applied Materials and Kokusai Electric leaves this less probable this moment, a sector official said Chinese authorities might withhold permission for the purchase during the continuing trade war between the U.S. and China.
The critical portion of its Made in China 2025 project, Beijing has built up the country’s semiconductor sector. Worries that important technologies may leak to China seem to have agreed to purchase Kokusai Electric from Applied Materials.
The business value of the U.S. company is anticipated to increase from 18% after the purchase to more than 20%, depending on information from study company Gartner.
Kokusai Electric has power in film deposition machinery, a method for incorporating thin film pieces to create circuits on silicon wafers.
The business was initially component of Hitachi Kokusai Electric, a telecommunications machinery manufacturer, a Hitachi subsidiary purchased by KKR in 2017. The department of semiconductor machinery was turned off into Kokusai Electric the previous year.
In the latest downturn in the semiconductor industry, KKR had trouble identifying a customer for Kokusai Electric. Japanese participants expressed concern but were discouraged by a possibly elevated buy cost and contest officials ‘ possibility of evaluation.
The demand for semiconductor pre-processing machinery is anticipated to reinforce after this year, reaching about $58.4 billion in 2020, according to SEMI, a worldwide sector group.