James Dennin, Kapitall: Two of the largest semiconductor supplier companies are merging, and it's a pretty big deal.
- The deal combines the largest chip-making equipment manufacturer with a huge overseas rivals.
- It looks like a sign of the rapid consolidation going on throughout the semiconductor industry.
- Companies in this industry are facing increasing scarcity when it comes to finding buyers for the machines they produce.
[Read more from Kapitall: Stocks to Watch as iPhone Sales Soar]
The merger will expand the global reach of both companies, and allow them to combine their assets. That's very important as inventory is getting more difficult to sell. Applied Materials reported income lower than analyst's estimates over two consecutive quarters this year, in part due to lagging PC sales, but also thanks to a competitive market.
- But the main problem is that there are now only three companies buying a majority of the parts used in semiconductors.
- Intel (INTC), Taiwan Semiconductor (TSM), and Samsung (OTC:SSNLF) are the big names.
- With the first and third largest companies that supply chip-making equipment now merging, only one other major competitor, ASML Holding (ASML) remains.
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