Thursday, September 1, 2016

Applied Materials Or Lam Research: Which Is The Better Stock?

As Published by Yahoo Financial: The semiconductor equipment segment has seen quite a bit of consolidation such that today there are just a handful of companies worth looking at. But this has led to some really big players such that further consolidation may be difficult due to anti-trust hurdles.

Earlier, Applied Material’s AMAT proposed acquisition of Tokyo Electron fell through on anti-competitive concerns and now there is a possibility that similar issues in China, Japan and Korea will work against the Lam Research LRCX-KLA-Tencor KLAC merger.Here is a brief analysis of the two market leaders in the backdrop of shrinking process nodes, 3D NAND production ramp up and an emerging Chinese semiconductor sector.

Applied Materials remains the market leader in wafer level manufacturing equipment according to Gartner with a 19.1% share. The company has been the market leader for as far back as I can remember and it continues to take share (growing 1.3% in a market that shrank 1.0% in 2015). But Lam Research has seen more remarkable growth of 24.7% in 2015 to end the year with a 14.3% share of the market. Lam has grown through acquisitions, most notably that of Novellus Systems in Jun 2012.

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