Applied Materials to acquire Japan's Kokusai for $2.2 billion


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Applied Materials to acquire Japan's Kokusai for $2.2 billion

On Monday, the 1st of July 2019, Applied Materials Inc., the US chip gear maker, headquartered in Santa Clara, California, had agreed to purchase its Japanese counterpart Kokusai Electric for about $2.2 billion from KKR & Co.

Inc. in order to revamp its memory chip business, as the company had long been betting on growing demands of memory chips used in 5G phones, Artificial intelligence-powered devices and data centers. As a matter of fact, the buyout deal of Applied Materials surprised many, as it came amid a market backdrop where memory chip markets were gridlocked due to a decline in demands from smartphone makers, which eventually weighed on sales of semiconductors and curbed prices.

Apart from that, Applied Materials had relived its investors on Monday’s (July 1st) statement saying the acquisition deal for the Kokusai would not require a US Justice Department approval, which three years earlier, had forced the chipmaker to shatter a $10 billion takeover deal for Japanese Tokyo Electron Ltd.

Nonetheless, the acquisition would still unlikely to avert criticisms of Chinese authorities given the extent of acrimony between the Beijing and Washington in context of an eleven-month-long trade war, which last year had scrapped Qualcomm Inc.’s $44 billion buyout deal for NXP Semiconductors.