Applied Materials & Tokyo Electron merger (comments and background)

(c) 2013 Eurotechnology Japan KK www.eurotechnology.com Japan’s electronics manufacturers (23rd edition) September 26, 2013
JAPAN’S ELECTRONICS MANUFACTURERS
“MONO ZUKURI”
23nd Edition, September 26, 2013
by Gerhard Fasol, PhD, Eurotechnology Japan KK
http://www.eurotechnology.com/
fasol@eurotechnology.com
Section summarizing the Applied Materials + Tokyo Electron merger. Download full report here:
Latest revision: http://www.eurotechnology.com/store/j_electrical/
1

AGENDA - LIST OF CONTENTS
7
•Executive summary
•“mono zukuri” (= making things) as a philosophy and business model
•Branding
•“Galapagos effect”, Japan-Focus vs. globalization, and business model issues
•Keiretsu industrial family bonds
•Japan’s 8 major consumer electronics manufacturers
•Industry sector overview, ﬁnancial analysis and trends
•Company overview and analysis
•Hitachi
•Panasonic
•SONY
•Mitsubishi Electric
•Sharp
•Toshiba
•Fujitsu
•NEC
•Japan’s 7 major electronic component makers
•Industry sector overview, ﬁnancial analysis and trends
•Company overviews and analysis
•Murata
•Kyocera
•TDK
•Alps Electronics
•Nidec
•Nitto Denko
•Rohm
•Other companies covered in this report
•Nintendo
•Canon, RICOH
•Oki
•Citizen
•Summary

TOKYO ELECTRON ANDTHE MERGER WITH
APPLIED MATERIALS
200

TOKYO ELECTRON
201

Tokyo Electron Limited
TEL
founded as “Tokyo Electron Laboratories” (TEL)
Founded
Founder
Headquarters
Stock Exchange
Consolidated sales
Number of employees
Major share holders
Major business areas
April 6, 1951 as 桜洋行株式会社 (Sakura yoko ?)
Nov 11, 1963,Tokyo Broadcasting Systems (TBS) invests
Tokyo
TokyoTSE 8035 (Tokyo Electron DeviceTSE 2760)
YEN 497 Billion (US$ 5.0 Billion) (March 31, 2013)
10,068 consolidated (March 31, 2010)
TBS Holdings (4.83%), Chase Manhattan Bank (2.76%), JP Morgan
(1.82%)
semiconductor production equipment, electronic components

TOKYO ELECTRON: REVENUES AND INCOME
203
•BothTokyo Electron’s annual revenues and annual income show strong year-on-year ﬂuctuations due
to the cyclic nature of the semiconductor industry
•Clearly visible is the very strong drop in revenues in 2008 due to the Lehman crisis
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
100
200
300
400
500
600
700
800
900
1000
annualrevenueYENBillion
US$ 1 Bill.
US$ 2 Bill.
US$ 3 Bill.
US$ 4 Bill.
US$ 5 Bill.
US$ 6 Bill.
US$ 7 Bill.
US$ 8 Bill.
Annual revenues of TokyoElectron
c2013EurotechnologyJapanKK
www.eurotechnology.com
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
100
50
0
50
100
150
200
annualoperatingandnetincomeYENBillion
US$ 0.5 Bill.
0
US$ 0.5 Bill.
US$ 1.0 Bill.
US$ 1.5 Bill.
TokyoElectron
mean operating income
mean net income

TOKYO ELECTRON: MARGINS
204
•Tokyo Electron shows mean annual operating margins of 7.8% and mean net margins of 4.0%
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
20
10
0
10
20
30
annualoperatingmargin
TokyoElectron
mean operating margin 7.8
mean net margin 4.0

APPLIED MATERIALS
205

APPLIED MATERIALS:
REVENUES AND INCOME
206
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
2
4
6
8
10
12
14
16
18
20
annualrevenueUS$Billion
Annual revenues of AMAT
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
1
0
1
2
3
4
5
annualoperatingandnetincomeUS$Billion
0
AMAT
mean net income

APPLIED MATERIALS: MARGINS
207
•Tokyo Electron shows mean annual operating margins of 10.2% and mean net margins of 7.0%
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
20
10
0
10
20
30
AMAT
mean net margin 7.0

ACQUISITION OFTOKYO
ELECTRON BY APPLIED
MATERIALS
208

MAJOR FACTS FORTHE MERGER:
TOKYO ELECTRON - APPLIED MATERIALS
209
•new merged company will be created with new name:
•with combined market capitalization of US$ 31 billion
•dual headquarters inTokyo and Santa Clara
•incorporated inThe Netherlands
•Chairman =Tetsuro Higashi (Tokyo Electron)
•CEO = Gary Dickerson (Applied Materials)
•CFO = Bob Halliday (Applied Materials)
•ownership:
•68% Applied Materials shareholders
•32%Tokyo Electron shareholders

COMPARING APPLIED MATERIALS AND
TOKYO ELECTRON
210
Applied Materials Tokyo Electron
Revenues (sales)
R&D spending
Employees
Patents
Market capitalization
ratio of combined market
capitalization (=US$ 31.5 billion)
Ownership of merged company
US$ 7.2 billion US$ 5.4 billion
US$ 1.3 billion (18% of sales) US$ 0.8 billion (14.8% of sales)
15,000 10,068
10,500 16,000
US$ 21.46 billion
YEN 991.554 billion
(US$ 10.07 billion)
68.06% 31.93%
68% 32%

REVENUES
211
•Applied Materials revenues are on the order of 20% higher than revenues ofTokyo Electron
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
100
200
300
400
500
600
700
800
900
1000
annualrevenueYENBillion
US$ 1 Bill.
US$ 2 Bill.
US$ 3 Bill.
US$ 4 Bill.
US$ 5 Bill.
US$ 6 Bill.
US$ 7 Bill.
US$ 8 Bill.
Annual revenues of TokyoElectron
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
0
2
4
6
8
10
12
14
16
18
20
annualrevenueUS$Billion
Annual revenues of AMAT

INCOME
212
•Mean operating and net income of Applied Materials are approximately twice as high as ofTokyo
Electron
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
100
50
0
50
100
150
200
annualoperatingandnetincomeYENBillion
US$ 0.5 Bill.
0
US$ 0.5 Bill.
US$ 1.0 Bill.
US$ 1.5 Bill.
TokyoElectron
mean net income
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
1
0
1
2
3
4
5
annualoperatingandnetincomeUS$Billion
0
AMAT
mean net income

MARGINS
213
•Applied Materials margins are substantially higher thanTokyo Electron Margins
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
20
10
0
10
20
30
TokyoElectron
mean net margin 4.0
1998 2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020
30
20
10
0
10
20
30
AMAT
mean net margin 7.0

CONTACT AND MORE INFORMATION
225
Contact
•Gerhard Fasol PhD
•Eurotechnology Japan KK,Tokyo, Japan
•http://www.eurotechnology.com/
•Mobile +81-90-8594-6291
•fasol@eurotechnology.com
•gfasol@gmail.com
More information:
•reports:http://www.eurotechnology.com/store/
•twitter: http://twitter.com/gfasol/
•website: http://www.eurotechnology.com/
•personal site: http://fasol.com

Applied Materials & Tokyo Electron merger (comments and background)

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Applied Materials & Tokyo Electron merger (comments and background)