Although a 10-or-so percent CAGR isn’t anything to dismiss, it is substantially less than what was the norm. Looking forward, Freeman says, growth appears to be even lower.
There’s some dispute about what the number’s been since then, but most estimates put it in the 8 to 12 percent range. Freeman and other analysts note that the semiconductor industry had a 15+ percent compound annual growth rate (CAGR) before 1995. Consequently, there’s a need to merge.Īnd there’s another reason: slower growth. Companies have to be large enough to support the cost of developing and delivering new products to a few worldwide semiconductor players, Freeman says. Principal Analyst Dean Freeman, who predicts that a winnowing-out will happen because of soaring research and development expenses. That’s a view shared by Gartner Dataquest (Stamford, Conn. Still, it’s clear that the companies’ management expects industry consolidation-and fairly soon.
“Today, there are still a lot of suppliers.” “In the subsystem area, which we are operating in, there is no such thing,” says Pandraud. Ironically, the “rule of three” that prompted the merger isn’t part of the new market where the combined Entegris-Mykrolis-Extraction will live. “When you have three major suppliers of a dedicated tool, there is not much room for a fourth or a fifth one already,” says Pandraud, alluding to an ongoing consolidation of semiconductor tool vendors. Any company in the no-man’s land of in-between quickly moves up, down, or out. The top three vendors command most of the market, Pandraud explains, while others cling to a few percent of the remaining total. and Extraction Systems (Franklin, Mass.) an invoking of “the rule of three.” When a market matures, the ultimate corporate survivors become either large players or confined to a niche. (calls his company’s merger with Entegris, Inc. Jean-Marc Pandraud, president and chief operating officer at Mykrolis Corp. BILLERICA, MA-Slow growth in the semiconductor industry, combined with rising research and development costs, may make the recent Mykrolis Corp./Entegris Inc./Extraction Systems merger more the norm than the exception for contamination-control companies.