Question

How are Lam and Novellus similar and how are they different? In what way will their similarities and differences help or hurt the long-term success of the merger?

Answer 1

Lam & Novellus:

The similarity is that both the companies are engaged in the business of semi conductor equipment. Both are among the world’s largest manufacturers of semi conductors’ equipment. They deal in complementary products with lam’s leadership in etech & single wafer clean equipment while Novellus dealing in thin film deposition & surface preparation technologies. Hence the combined company can have the following benefits:

• Advanced benefits from owning adjacent technologies.
• Optimizing collective development of next generation tools.
• Developing complementary customer relationships.

The merger can be a success in the long run because of acquisition of novellus by lam makes lams an even larger player in the semi conductor equipment business. It is estimated that Novellus can boost lam’s research revenue by over 48% after the merger is completed.. Furthermore merger of lam with Novellus can help lam in getting inlet as its customer & now it can sell its own equipment to inlet using novel’s sales people.

This consolidation has led the top 5 players in the semi conductor industry to rule the market. Though Tokyo electron made a counter offer to Novellus, that won’t make any sense as lam/ Novellus merger. Hence lam & Novellus together can be a stronger company with wider presence in the semi conductor market.