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The KLA-Tencor–Lam Research Merger: Basics of KLA-Tencor

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KLA-Tencor—a major semiconductor equipment manufacturer

KLA-Tencor (KLAC) makes process control and yield management products for the semiconductor industry and nanotechnology industry. The primary applications for its products include LEDs, data storage, and materials research.

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KLA-Tencor’s products

KLA-Tencor’s portfolio of defect inspection and metrology products helps integrated circuit manufacturers manage their yield. These products and offerings help semiconductor manufacturers accelerate their development and production ramp cycles. This helps achieve higher semiconductor yields and ultimately improves profitability.

KLA-Tencor’s products and services are used by bare wafer, integrated circuit, lithography reticle, and disk manufacturers. Applications for KLAC’s technology include defect monitoring, defect inspection, packaging inspection, metrology, surface topography and composition measurements, wafer shape and stress metrology, computational lithography, and overall yield management.

According to KLA-Tencor, its defect inspection products and services are applicable for the following applications: chip manufacturing, wafer manufacturing, reticle manufacturing, LED and compound semiconductor manufacturing, data storage media/head manufacturing, microelectromechanical systems (“MEMS”) manufacturing, and general purpose/lab applications.

KLAC’s products are complementary with Lam Research’s (LRCX) products and are the driver for the KLA-Tencor–Lam Research merger. Cloud computing, mobility, and the Internet of Things (IoT) are creating demand for integrated semiconductor companies that can offer a broad menu of products and services.

In 2015, KLA-Tencor had three customers that accounted for more than 10% of revenues: Intel (INTC), Samsung, and Taiwan Semiconductor.

Merger arbitrage resources

Other important merger spreads include the deal between Baker Hughes (BHI) and Halliburton (HAL) and the merger between Freescale Semiconductor (FSL) and NXP Semiconductors (NXPI). For a primer on risk arbitrage investing, read “Merger Arbitrage Must-Knows: A Key Guide for Investors.”

Investors who are interested in trading in the tech sector can look at the S&P SPDR Tech ETF (XLK).

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