UMS Holdings

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(25-09-2013, 07:05 AM)Drizzt Wrote: “When we looked at Tokyo Electron’s supply chain, in the past and currently, it’s very high quality suppliers and we looked at the Applied supply chain, very diverse base of suppliers. So, we think combining the two of those got a lot of opportunities in time, cost and quality.” The merged company also would have more leeway in terms of pricing, Sanganeria added. Johnson of Gartner said the new entity would have “tremendous leverage.”

This can be a positive or negative risk.

AMAT engages UMS due to their ability to deliver and cost, so if Endura remains the more competitive product, and if its cheaper to be done in Singapore, then i believe it should be ok.

If in Japan they have a cost competitive one or that the product from Tokyo Electron is better, very much possibilitity of a shift to japan.

Just my thoughts.

http://gigaom.com/2013/09/24/why-applied...b-company/

Also read this: "According to the companies, direct product overlap is minimal. In the broader tool categories that both companies address, such as etch, management stated that Tokyo Electron is primarily focused on the dielectric sub-segment, and Applied generally addresses the conductor etch category."

Yeah thats the question. Tokyo Electron doesnt have operations in Singapore i think. If the JPY continues to depreciate, do we still have competitiveness?
AMAT surge 9.1% yesterday. gosh
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(25-09-2013, 07:05 AM)Drizzt Wrote: “When we looked at Tokyo Electron’s supply chain, in the past and currently, it’s very high quality suppliers and we looked at the Applied supply chain, very diverse base of suppliers. So, we think combining the two of those got a lot of opportunities in time, cost and quality.” The merged company also would have more leeway in terms of pricing, Sanganeria added. Johnson of Gartner said the new entity would have “tremendous leverage.”

This can be a positive or negative risk.

AMAT engages UMS due to their ability to deliver and cost, so if Endura remains the more competitive product, and if its cheaper to be done in Singapore, then i believe it should be ok.

If in Japan they have a cost competitive one or that the product from Tokyo Electron is better, very much possibilitity of a shift to japan.

Just my thoughts.

http://gigaom.com/2013/09/24/why-applied...b-company/

Your quote and link are different articles. Found the source of your quote (pg5/7 of slide show),

http://www.marketwatch.com/story/5-reaso...picks=true

Further, you missed out the first part, which'd have given it more weight as it's coming from Applied CFO.

Quote:Benefits of a combined supply chain

A merged company means a more efficient supply chain. Robert Halliday, Applied’s chief financial officer, noted this on the call with analysts, saying, “When we looked at Tokyo Electron’s supply chain, in the past and currently, it’s very high quality suppliers and we looked at the Applied supply chain, very diverse base of suppliers. So, we think combining the two of those got a lot of opportunities in time, cost and quality.”

Still, if Tokyo Electron had been running at a loss, "cost" may be a more important factor of consideration than "very high quality".



l0nEr Wrote:Also read this: "According to the companies, direct product overlap is minimal. In the broader tool categories that both companies address, such as etch, management stated that Tokyo Electron is primarily focused on the dielectric sub-segment, and Applied generally addresses the conductor etch category."

Yeah thats the question. Tokyo Electron doesnt have operations in Singapore i think. If the JPY continues to depreciate, do we still have competitiveness?

How about UMS Penang plant for cost competitiveness?

BTW, Tokyo Electron do have an office in Singapore, but more for Sales & Support. They also have other biz like Electronic Components, perhaps more for this segment.

Tokyo Electron Singapore Pte. Limited
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
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- It seems like a very good fit if one look at figure 5 on page 11 of the following report – a very good report. It appears that AMAT and TEL are not competing with each other in many of the market segments.
- TEL’s strength/market share has been in “photo resist processing”, “dielectric etching” and “LP CVD”.
- The report did make an analysis on impacts of depreciating yen on competitiveness of TEL.
- Penang is definitely more price competitive than Japan IMO.
- One player less in the market - becoming more “oligopolistic”
- Positive for AMAT
- Positive for UMS ? – may be – if AMAT outsource more work to UMS
- Negative for UMS ? – I don’t see any it at this point in time.

http://www.berenberg.de/fileadmin/user_u...nology.pdf

(vested)
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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market seems afraid, down 2%. Oops.
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Isn't there a 5 year deal signed between AMAT and UMS last year ? I don't think this will cause an abrupt change to UMS revenue in the next couple of years. It is too early to say whether the merger will be positive or negative for UMS in the long run. In short, it really boils down to - is Endura superior to what Tokyo Electron manufactures ? If yes, we could see UMS gg to Japan to support the manufacture of Endura there. If not, we could see UMS losing a huge source of income. If TE doesn't deal with anything related to Endura, then this is pretty neutral to UMS - which I think is the most likely outcome. It will be exciting if we acquire companies to serve TE interest in SEA in the coming years.

http://www.tel.com/news/2012/0711_001.htm [TE PVD system but for LED]

(Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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Few of their products overlap - consistent with Figure 5 (page 11) of Berenberg's research report. If regulators approve the deal, AMAT would benefit the most in the "next big wave" which is very likely to happen, IMO.
________________________________________________________________________________________________________________________________________________
Applied Materials in all-stock deal for Tokyo Electron

By Reiji Murai and Supantha Mukherjee
Wed Sep 25, 2013 3:10am EDT

(Reuters) - Applied Materials Inc agreed to buy rival Tokyo Electron Ltd in an all-stock deal worth more than $10 billion, combining the No.1 and No.3 makers of chip-making gear as demand for their products slows and it gets tougher to turn a profit.

The deal, which analysts expect to hold up under scrutiny from antitrust regulators, aims to create a new company with a shared leadership team that is 68 percent owned by Applied Materials shareholders, the companies said on Tuesday.

The value of the deal is worth $10.16 billion, based on Tokyo Electron's issued shares, Applied Materials' latest stock price, and the agreed upon stock ratio, making it the second-largest acquisition by a foreign buyer in Japan, according to Thomson Reuters data.

Applied Materials shares finished 9 percent higher on the Nasdaq on Tuesday at $17.45. Tokyo Electron's shares surged 13.2 percent on Wednesday to 5,490 yen.

Applied, Tokyo Electron and Dutch chip equipment maker ASML Holding NV are the three largest players in an industry that has consolidated as the rising cost of developing cutting-edge chips and slowing semiconductor demand forced alliances and acquisitions.

The combined market value of Applied and Tokyo Electron at the time of the announcement was around $29 billion.

Most U.S. chipmakers have sold off or mothballed capacity and outsourced manufacturing to Asian foundries such as Taiwan Semiconductor Manufacturing Co Ltd, further eroding Applied's customer base.

The American company's net income has fallen steadily over the past two years and it posted losses in two quarters during that period. Tokyo Electron reported a 23 percent drop in quarterly sales in July.

ASML bought U.S.-based Cymer last year for about $2.5 billion, while Lam Research Corp bought smaller rival Novellus Systems Inc for $3.3 billion.

"When you look at the buyers of semiconductor equipment; when you look at the people who are really making very advanced chips these days, it's a very small number," Mike Splinter, Applied Materials' executive chairman, told Reuters. "Technology changes are getting more difficult and complex."

Despite their global reach and scale, few of their products overlap, analysts said.

RBC analyst Mahesh Sanganeria said both companies sell etching equipment, used to carve circuits onto silicon, but Applied Materials is a relatively small player in that market compared with rival Lam Research.

"There isn't that much overlap at the product level. I think it will be looked at closely, but I think it will go through," Sanganeria added.

Close competitors of the new company would include Lam Research, KLA-Tencor Corp and Hitachi Ltd subsidiaries Hitachi High-Technologies Corp and Hitachi Kokusai Electric Inc.

"We've looked at this in a lot of detail and we think the overlaps are very, very small," Splinter said.

Citigroup paid $12.56 billion in two tranches for Japanese bank Nikko Cordial in 2007, which remains the largest ever foreign acquisition in the country, Thomson Reuters data shows.

NEXT BIG WAVE

Should the acquisition win the OK of regulators, the combined company might be able to ride the next big wave of capital investment from chipmakers.

Intel Corp, Samsung Electronics Co Ltd and TSMC are planning a new generation of mega-factories - a major shift that will require tens of billions of dollars. Within a decade, there could be just a handful of plants around the world producing the most cutting-edge microchips.

"Applied Materials is going to be the biggest beneficiary from this deal, given that they're going to be a large company and I think their customer exposure also improves following this deal," Stifel Nicolaus & Co analyst Patrick Ho said.
The deal is the biggest ever for Applied Materials, whose last big acquisition was Varian Semiconductor Equipment Associates for $4.9 billion in 2011. The companies expect the deal to close in the middle to the second half of next year.

For every existing share, Tokyo Electron shareholders will receive 3.25 shares of the as-yet unnamed new company and Applied Materials shareholders will receive 1 share.

Applied Materials CEO Gary Dickerson will be chief executive of the new company and Tokyo Electron Chief Executive Tetsuro Higashi will become chairman. The companies will maintain dual listings on Nasdaq and the Tokyo Stock Exchange.

Dickerson told analysts he would move to Japan to lead a company whose board will comprise 11 directors - five appointed by each company and another they both agree upon.

The companies said they expected to achieve $250 million of savings by the end of the first fiscal year of operation. The new company will also buy back $3 billion of its shares within 12 months of the combination, they said.

Goldman, Sachs and Co acted as Applied Materials' financial adviser, while Tokyo Electron was advised by Mitsubishi UFJ Morgan Stanley Securities Co.

Jones Day and Nishimura & Asahi represented Tokyo Electron. Weil, Gotshal & Manges LLP, Mori Hamada & Matsumoto, and De Brauw Blackstone Westbroek advised Applied Materials.

"They have the highest profit margins, they have the best balance sheets, they make money through thick and thin," said David Rubenstein, senior analyst at Advanced Research Japan. "So they are not desperate, but they are hungry for earnings growth and this is one way they can do it."

(Additional reporting by Nathan Layne and Maki Shiraki in Tokyo; Elzio Barreto, Denny Thomas and Michael Flaherty in Hong Kong; Chandni Doulatramani in Bangalore; and Noel Randewich in San Francisco; Editing by Edmund Klamann, David Holmes, Pravin Char, Ted Kerr, Andre Grenon and Chris Gallagher)

http://www.reuters.com/article/2013/09/2...CB20130925

(Vested)
Research, research and research - Please do your own due diligence (DYODD) before you invest - Any reliance on my analysis is SOLELY at your own risk.
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Based on what I know, TEL engages or used to engage Hermes-Epitek as one of their key contractors. That is why TEL Singapore's office is located at Hermes-Epitek Centre. TEL Singapore
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UMS Holdings’ (52 cents, unchanged) key customer
Applied Materials have bought Tokyo Electron for
US$9.39bln. Gary Dickerson the CEO of Applied
Materials will be CEO of the combined entity and Applied
Materials’ shareholders will own 68% of the combined
entity. According to Gartner, the semiconductor
equipment industry which both Applied Materials and
Tokyo Electron serves is expected to decline 9% this year
to US$34.6bln, hence both companies are trying to
mitigate the downturn by combining their business to reap
economies of scale and capitalize on synergies as both
companies serve similar customers. The deal should
benefit UMS Holdings as they are the key supplier for
Applied Materials’ Endora Systems. The deal would
increase the addressable market for them.

http://www.remisiers.org/cms_images/rese...925_LT.pdf [Report]

I guess this is possible if TEL clients are willing to use AMAT products ?

(Vested)
Disclaimer: Please feel free to correct any error in my post. I am not liable for anything. Do your own research and analysis. I do NOT give buy or sell calls and stock tips. Buy and sell at your risk. I am not a qualified financial adviser so I do not give any advice. The postings reflects my own personal thoughts which may or may not be accurate.
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(25-09-2013, 09:58 PM)Nick Wrote: I guess this is possible if TEL clients are willing to use AMAT products ?

UMS is basically a Precision Engineering co. I suppose it's also possible for TEL to use their services for their own product line-up? For eg., for cost reduction reasons, assuming there's significant cost savings to be had.

Anyway, it's still early days yet. Anything is possible but we'll only start to see some visibility, likely, earliest only in 2015.

In the meantime, it'd be more interesting to see if UMS is able to develop more biz at AMAT for another product or to buy over another co (perhaps yet another of CEO + sis-in-law's one... my guess) with new competence, as mentioned in a recent Edge article..... Big Grin



(25-09-2013, 07:12 PM)HitandRun Wrote: Based on what I know, TEL engages or used to engage Hermes-Epitek as one of their key contractors. That is why TEL Singapore's office is located at Hermes-Epitek Centre. TEL Singapore

Announcement on Establishment of a New Subsidiary in Singapore

1. Objective of establishment
The merger is designed to strengthen sales in the Singapore and Southeast Asia region following the establishment of a local subsidiary in Singapore.


Not sure what they meant by "merger". Either bad English or there were prior Rep Office or Subsidiary previously before this new setup last year.
Luck & Fortune Favours those who are Prepared & Decisive when Opportunity Knocks
------------ 知己知彼 ,百战不殆 ;不知彼 ,不知己 ,每战必殆 ------------
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KopiKat San

I used to work in the semiconductor industry X number of years ago.

At that point in time, TEL is rarely, if ever, a competitor of AMAT. AMAT's bigger competitors would be KLA-Tencor or Lam Research. Therefore, anyone working in the industry will know that such a combination (if merged successfully) between AMAT and TEL is highly complementary.

However, this does not mean that it will be positive for UMS. TEL has its own ecosystem and supporters such as Hermes-Epitek. Whether UMS can dislodge or replace TEL's ecosystem, or it gets displaced, only time will tell.....
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