October 23, 2017 / 4:15 PM / 2 years ago

Lam Research CFO says done with major M&A

(Reuters) - Last year’s failed $10 billion bid for KLA-Tencor Corp (KLAC.O) likely marks the end of efforts at any major acquisitions by Lam Research Corp (LRCX.O) and other booming producers of equipment for chipmakers, Lam’s chief financial officer has told Reuters.

Speaking by phone from California, Doug Bettinger also said the producer of industrial equipment for chipmakers - whose market value has doubled to $33 billion in the past year - would likely top the $1 billion it spent on research last year in fiscal 2018.

He said the window for big mergers or acquisitions in his hi-tech manufacturing sector seemed to have closed after Applied Materials Inc (AMAT.O) own $10 billion bid for Tokyo Electron Ltd (8035.T) was blocked by regulators in 2015.

He said, however, that he was not opposed to one or two smaller deals, pointing to Lam’s purchase of 3D circuit modeling firm Coventor in August as an example.

“I think large scale M&A is perhaps behind us,” Bettinger said.

“It doesn’t mean that there might not be a tuck in or two left out there, but ... the last two really big deals that the industry tried to do, didn’t clear the regulatory process.”

Lam, whose products are used to make chips for mobile phones, PCs and wearable devices, walked away from buying KLA-Tencor in October after opposition from the U.S. Justice Department on antitrust grounds.

Lam has raised its investment in research and development by nearly 60 percent in the last four years as it adjusts to changing technology trends and stiffer competition in a sector where a handful of firms are now valued at between $30 billion and $76 billion by market capitalization.

“Five years ago, we saw the evolutions in the industry that are happening today and pretty dramatically increased our R&D spending,” Bettinger said.

“R&D for us is north of a billion (in 2018).”

Lam, which reported over $8 billion in revenue for fiscal 2017, includes Micron Technology Inc (MU.O), Samsung Electronics Co Ltd (005930.KS) and SK Hynix Inc (000660.KS) as major customers.

Reporting by Aishwarya Venugopal in Bengaluru; editing by Patrick Graham

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