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



Lam Research—a major semiconductor equipment manufacturer

Lam Research’s Form 10-K describes the company’s business as follows: “We are a global supplier of innovative wafer fabrication equipment and services to the semiconductor industry. We design, manufacture, market, refurbish, and service semiconductor processing systems that are used in the fabrication of integrated circuits (“ICs”). Our market-leading products are designed to help our customers build smaller, faster, more powerful, and more power-efficient devices that are used in a variety of electronic products, including cell phones, tablets, computers, storage devices, and networking equipment.”

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Lam Research’s products

Lam Research’s (LRCX) customers include manufacturers of semiconductor memory and integrated devices, which are used in memory and logic devices. The company’s portfolio of products will mesh well with KLA-Tencor’s (KLAC) quality control and yield management products.

Lam Research’s main products include:

Thin Film Deposition: Primarily Metal Films, Dielectric Films, and Film Treatment processes

Plasma Etch: Conductor Etch, Dielectric Etch, and TSV Etch

Single-Wafer Clean: Wafer Cleaning, Bevel Cleaning

Last year, Lam Research had three customers that each accounted for more than 10% of revenues: Micron Technology, Samsung, and Taiwan Semiconductor. KLA-Tencor also serves Samsung and Taiwan Semiconductor, and improving service to big customers is a major driver for the KLA-Tencor–Lam Research merger.

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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