Demand From Chipmakers Bring A New Hope For Applied Materials, Inc. (NASDAQ:AMAT)

The antitrust issues destroyed Applied Materials, Inc. (NASDAQ:AMAT)‘s hope when it placed a bid for Tokyo Electron Ltd., but the situation seems to be getting back on track. As per the reports, the increased demand from chipmakers has brought a new ray of hope for Applied Materials after a few setbacks lately.

Analyst predict major swings in the market… will it affect AMAT?

What Analysts Have To Say:

It’s not something Applied Materials would have hoped once, but after 18 months of struggle, it’s not solidly positioned to put the entire focus on its core business. It will not have to be worried about the distraction of a merger, as well as integration cost. On the other hand, Tokyo Electron faces increased development and research cost. There are high chances that it may end up losing market share to Applied Materials.

Why Merger Possibilities Faded Away:

Applied Materials based in Santa Clara, California and Tokyo Electron based in Japan had initiated talks for what would have been a second to none merger deal for both the companies. But things didn’t turn out favorably. The U.S. Justice Department had some issues concerning this merger, for which, both the companies tried their best to resolve the differences. Even after putting tons of efforts, things didn’t turn out right, which forced them to take a backseat and forget about any such deal.

The possibilities of the merger transactions elevated in September 2013 when a slowdown in semiconductor demand and the increasing cost of developing cutting-edge chips forced the companies to build alliances. However, the situation has changed now. The capital spending on chip-equipments that was down 11.6% in 2013 had elevated to 16.4% in the previous year. According to market research firm Gartner, the spending is expected to incline by 5.6% in 2015.

Experts hope that Applied Materials, Inc. (NASDAQ:AMAT) will be able to deliver up to investors’ expectations in the coming months.



Erica is a graduate of New York University's school of Journalism. She joined US Markets Daily as a general assignment reporter in January of 2008.