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Intel Supplier Seeks Tie-Ups as AMAT Deal Stokes Competition

Dainippon Screen Manufacturing Co., a chipmaking equipment supplier to Intel Corp. and Samsung Electronics Co., is seeking alliances, including capital tie-ups, to defend its market share as competition intensifies.

The maker of semiconductor wafer cleaners needs to boost its competitiveness after Applied Materials Inc.’s acquisition of Tokyo Electron Ltd., Eiji Kakiuchi, Dainippon’s incoming president, said in an interview. Three of Dainippon’s four biggest customers are also Applied Materials’ largest.

“It’s likely that we will see more deals coming in the industry,” Kakiuchi said in Kyoto, Japan. The Applied Materials acquisition of Tokyo Electron “had a huge impact,” he said.

Applied Materials has three times more sales and more than 20 times Dainippon’s market value. The Santa Clara, California-based chip equipment maker agreed in September to pay $9.39 billion in stock for rival Tokyo Electron as a record slump in demand for personal computers prompted consolidation to cut costs.

The 10 percent slump in global PC shipments last year was the worst ever, researcher Gartner Inc. said in January.

Dainippon had net losses in three of the past five years, including a 13.5 billion yen ($132 million) loss in the year ended in March.

The shares rose 0.4 percent to 482 yen at the close of trading in Tokyo, in line with the 0.4 percent advance in Japan’s benchmark Nikkei 225 Stock Average. Dainippon has dropped 19 percent this year, compared with an 11 percent decline for the Nikkei 225.

Profit Forecast

Kakiuchi, set to become president April 1, takes over as the company rebounds from last year’s loss as orders from chipmakers in Taiwan recover, he said.

Net income will probably be 6.1 billion yen this fiscal year, according to the company’s forecast. The company raised its projection in February from 5.1 billion yen, after increasing it in November from 4 billion, as demand for mobile devices drove expansion in the industry.

Dainippon said last year it planned to cut costs by buying more materials from overseas markets including China. The company has also said it will reduce its number of suppliers.

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