Date
22 January 2017
Chip equipment makers like ASML are consolidating to acquire the scale needed to cope with rising costs. Photo: Bloomberg
Chip equipment makers like ASML are consolidating to acquire the scale needed to cope with rising costs. Photo: Bloomberg

ASML to buy Taiwan’s Hermes Microvision for US$3.1 bln

ASML Holding NV, one of the biggest producers of chipmaking equipment, agreed to buy Taiwan-based Hermes Microvision Inc. for about NT$100 billion (US$3.1 billion) to add technology for creating smaller and more advanced semiconductors, Bloomberg reports.

ASML, based in Veldhoven, Netherlands, is paying NT$1,410 per share in cash, or 31 percent more than Hermes Microvision’s average price in the past 30 days, the companies said in a statement on Thursday.

Chip equipment makers are consolidating to acquire the scale needed to cope with the increasing cost of the fundamental technology that goes into semiconductors.

That also puts them in a better position to negotiate with the few companies that can still afford to build leading-edge production facilities.

Just three customers, Intel Corp., Samsung Electronics Co. and Taiwan Semiconductor Manufacturing Co., account for the majority of spending, Bloomberg said.

The Dutch manufacturer is the industry leader in lithography machines that etch the lines into materials deposited on silicon disks, which create the tiny circuits that enable chips to process complex computations.

For most of the past decade, ASML has been touting extreme ultraviolet lithography systems, which can produce smaller chips while increasing capacity and speed.

Hermes Microvision’s equipment checks that steps in the manufacturing have been properly completed.

Unlike some more recent deals in semiconductor production equipment, which focused on cost synergies, the acquisition of Hermes Microvision is about technology, Morgan Stanley analysts said in a note to clients.

ASML is financing its purchase with cash, about 1.5 billion euros (US$1.7 billion) of debt and 500 million euros of ASML stock that will be bought by Hermes Microvision’s main shareholder and the Taiwanese company’s executives, the report said.

Part of the proceeds will be reinvested in Hermes Microvision, and ASML said the deal will immediately add to its per-share earnings.

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