Continuing consolidation in the electronic materials business, Entegris has struck a deal to acquire CMC Materials in a transaction valued at about $6.5 billion.
CMC, which until last year was known as Cabot Microelectronics, is the world’s leading producer of chemical mechanical planarization (CMP) slurries, used to smooth the surfaces of circuit-laden silicon wafers between semiconductor chip fabrication steps. It has annual sales of about $1.2 billion.
Entegris has annual sales of about $2.1 billion of both equipment and chemicals used in chip production. In announcing the deal, Entegris CEO Bertrand Loy said the combination will create “the industry’s most comprehensive and innovative end-to-end electronic materials offering.”
Mike Corbett, a managing partner at the electronic materials consulting firm Linx Consulting, says the purchase will make Entegris a top-5 player, by sales, in materials and gases for wafer fabrication, along with Linde, Air Liquide, DuPont, and Merck KGaA.
Moreover, Corbett says, Entegris’ materials portfolio will be both diverse and positioned at the advanced end of the technology spectrum, where semiconductor industry customers are innovating. “They will be invited into more technical development programs,” he says.
In a presentation to stock analysts, Loy provided an example of how the two companies will fit together. Entegris produces organometallic precursor chemicals that are deposited onto chip surfaces via chemical vapor deposition or atomic layer deposition, creating ultra-thin films. CMC supplies the slurries and polishing pads needed to smooth those films to be ultra-flat. Entegris comes back in the process with slurry containers and filtration devices as well as post-CMP cleaning chemicals, filters, and brushes.
Overall, Corbett estimates, Entegris will be the second-largest supplier of CMP consumables after DuPont, the leading pad supplier, and will have a 25% share of the global market.
Both CMC and Entegris have been aggressive acquirers of electronic materials businesses in recent years. In 2018, CMC purchased KMG Chemicals for $1.6 billion, taking it into the business of high-purity chemicals for cleaning wafers between fabrication steps.
The following year, Entegris battled Merck KGaA to acquire the electronic materials maker Versum. Merck won out, buying Versum for about $6 billion. Entegris went on to buy a number of smaller businesses, including Digital Specialty Chemicals, MPD Chemicals, and, recently, BASF’s electronic chemicals unit.