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Applied Materials to Acquire K...Applied Materials, a Santa Clara-based chip gear maker, will take over Kokusai Electric from KKR &Co Inc, Reuters reported. The announcement was made public on Monday.
The $2.2billion acquisition will help Applied Materials to focus on producing more memory chips used in 5G phones, AI-enabled devices, and data centers.
According to reports by Nikkei Asian, once the acquisition process is completed, Kokusai Electric will operate as an individual business unit within Applied Material’s semiconductor products. The report also suggested that Applied Materials will complete the transaction by cash and loan.
Considering the size of the industry, the deal is significant for Applied Materials because they are the primary suppliers of equipment used by the chip makers to turn silicon into processors for PCs. Intel, Samsung Electronics Co. Ltd., and Taiwan Semiconductor Manufacturing Co. are the customers of Applied Materials.
Coming to Kokusai Electric, they make machines that are used to produce semiconductors. Intel, Samsung and TSM and others fall under the company’s customers list.
The acquisition comes against the backdrop of excess supply in the memory chip market due to a recent plunge in the sales of smartphones across the world.
In terms of approval, the American company believes that the deal doesn’t need any approval from the US government authorities. But, the deal can be hampered by the deadlock between America and China as Chinese authorities may interfere on the matter.
If the acquisition is successful, it will boost the growth of both companies.