Semiconductor Deal: Dutch ASML To Buy US Company Cymer For $2.6 Billion

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(Image: Flavio Takemoto)
(Image: Flavio Takemoto)

BUSINESS

  • ASML and Cymer to develop EUV technology, satisfy consumer demand for microchips
  • PC demand drops to 349 million units in 2012, marking first decrease since 2001
  • Demand for memory chips to be weak during start of 2013, while demand for logic chips to grow

ASML Holding NV, Europe’s largest semiconductor equipment supplier, has agreed to purchase San Diego, CA, based Cymer Inc. for around $2.6 billion to accelerate the develop of extreme ultraviolet (EUV) semiconductor lithography technology used in the creation of microchips.

EUV technology is used to increase the capacity and speed of microchips, while lowering costs and making them more energy efficient. The chips are used in smartphones and tablet computers.

Cymer manufactures lithography light sources used to make advanced semiconductor devices, and ASML manufactures lithography systems used by the semiconductor industry.

Both companies aim to bring new technologies to the market and improve value for their customers. ASML’s customers include Samsung, Intel Corp. and Taiwan Semiconductor Manufacturing Co. Earlier this year, all three companies purchased a stake in ASML to help it fund the development of EUV technology.

The cash and stock deal is expected to close during the first half of 2013, and is subject to closing conditions. In addition, it must be approved by Cymer’s shareholders, and both American and European regulators.

Once approved, the deal will be the largest in AMSL history.

Personal Computer Market Drops

According to market research firm IHS iSuppli, the personal computer market will fall to nearly 349 million units in 2012, the first decrease since 2001.

Demand for memory chips is forecast to be weak during the first two quarters of 2013, while demand for logic chips is expected to grow.

ASML CEO Eric Meurice says: “As we enter 2013, we recognize our customers’ uncertainty regarding the underlying semiconductor demand for the tablet and smartphone segments, as well as for the PC business.”

Meanwhile, ASML CFO Peter Wennink says in a video on the company’s website that EUV technology is vital to the future of the industry, adding the technology is in demand.

Slow demand for PCs has caused ASML competitor Applied Materials to cut 1,300 jobs. In July, the company was forced to industry wide factory equipment sales projections by $2 billion.

Key Statistics - Global Semiconductor Equipment Industry (source: MarketLine)

  • In 2011, the world semiconductor equipment market generated revenue totaling nearly $42 billion. For the period spanning 2007-2011, this represents a compound annual rate of change (CARC) of -0.6%.
  • In 2011, the market's most lucrative segment was wafer processing, and revenue totaled over $33 billion. This is equivalent to slightly more than 79% of the overall market value.
  • For the five-year period 2011-2016, the market’s performance is predicted to accelerate. A compound annual growth rate (CAGR) of 5% is anticipated. By the end of 2016, the market is expected to be valued at more than $53 billion.

By Melina Druga for
Melina Druga is an American writer and editor. She is the author of Enterprising Women: Practical Advice for First Time Entrepreneurs.

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