Worldwide highlights

04/01/1997

Worldwide highlights

International alliance for 1-Gbit DRAM development. Hitachi Ltd., Mitsubishi Electric, and Texas Instruments will begin joint work to develop 1-Gbit DRAM chips. The three companies will share an estimated 100 billion yen (about $814 million) in development and patent costs, and hope to bring the memory chips to the commercial prototype stage by 1999. This is the first time the three companies have worked together on a DRAM development project. The tri-company effort will help defray costs of developing the next-generation technology.

Report sees DRAM oversupply continuing through 1997. While the world DRAM market is rebounding from last year`s overcapacity, supply and demand will not balance in 1997, according to Dataquest`s report "DRAM Supply and Demand Quarterly Statistics: First Quarter 1997 Outlook." Dataquest predicts that DRAM oversupply will likely run at 7% per quarter during most of 1997. This represents a marginal improvement over the greater than 10% oversupply experienced in the first half of 1996.

KLA acquisition of Tencor to be complete April 30

In a move that will create a metrology and process monitoring company with annual revenues of over $1 billion, KLA Instruments, San Jose, CA, will acquire Tencor Instruments, Milpitas, CA, in a one-for-one stock swap deal worth about $1.3 billion at current share prices. The initial waiting period under the pre-merger notification requirement of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 expired without a second request for information from the Federal Trade Commission. The merger now remains subject to final Securities and Exchange Commission clearance and stockholder approval, and KLA and Tencor will hold shareholders` meetings on April 30 for a vote on the merger.

Following the merger`s closing, KLA chairman and CEO Ken Levy will serve as chairman of the new company, which will be known as KLA-Tencor. Jon Tompkins, Tencor chairman, president, and CEO, will be CEO. No decision has yet been made on how Tencor operations will be integrated into the KLA organization. A Tencor spokeswoman noted, "One real benefit [of the merger] is the ability to take some overlapping engineering projects and reassign those engineering resources to other projects that neither company was able to address. The combined company will be able to meet the SIA Roadmap." The only major product line overlap between the two firms is in wafer inspection systems.

Bob Boehlke, KLA chief financial officer and VP for administration, declined to speculate on whether work force reductions might take place, but did indicate that facilities costs and selling, general, and administrative areas may offer opportunities for cost-cutting once the deal closes.

KLA`s planned acquisition of Tencor represents a good deal at the $1.3 billion price, despite being three times Tencor`s annual revenues, says Dr. Tia-Min Pang, VP at Smith Barney`s research division in San Francisco. "KLA is also trading at about three times price to sales. KLA had a 22% margin before taxes last year, while Tencor had 26%. All the operational issues are pretty close, and assuming the deal goes through, it will be minimally dilutive to earnings in calendar 1997 - about $0.05-$0.10/share."

SEMI`s Bill Reed dead of apparent heart attack at 72. William H. Reed, who for 13 years served as president of Semiconductor Equipment and Materials International, died of an apparent heart attack on the morning of Wednesday, March 5. He was 72. According to a SEMI spokesman, Reed had been in good health, and was working out at a health club just prior to his death. Reed stepped down as SEMI president last year, but retained a seat on the group`s board of directors. Prior to joining SEMI as an employee, he was director of sales and marketing for Monsanto Electronic Materials Co., where he worked for 15 years. Reed leaves a wife, three daughters, and several grandchildren.

SIA`s new worldwide chip billings. The Semiconductor Industry Association`s new worldwide billing total replaces the organization`s North American book-to-bill ratio, which was discontinued this past December. SIA reported worldwide chip billings of $10.99 billion in December 1996. This total represented a decline of just under 1% from November`s $11.09 billion, and a drop of 16.6% from December 1995 levels of $13.17 billion (see table). Total worldwide billings for 1996 were $131.97 billion, 8.6% less than 1995`s record total of $144.40 billion. The US and Japan saw the worst year-to-year declines, with Europe seeing the least.