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Electronic Materials

Cabot Micro to acquire KMG in electronic chemicals deal

Merger will combine planarization and high-purity chemical portfolios

by Michael McCoy
August 15, 2018 | A version of this story appeared in Volume 96, Issue 33


A photo of an Intel semiconductor fab.
Credit: Intel
The semiconductor maker Intel is a customer of both Cabot Micro and KMG.

In a deal that will combine two major producers of materials for the electronics industry, Cabot Microelectronics has agreed to acquire KMG Chemicals for cash and stock worth about $1.6 billion.

With annual sales of about $570 million, Cabot Micro produces largely silica-based chemical-mechanical planarization slurries used to smooth circuitry-containing silicon wafers during the semiconductor manufacturing process. The firm calls itself the world’s leading producer of CMP slurries and the number two maker of the polymer pads they are applied with.

KMG is a supplier of high-purity cleaning chemicals used between chip-making steps. It has annual sales of about $460 million and says Intel is its largest customer. Linx Consulting ranks KMG as the world’s number two producer of bulk wet chemicals for the semiconductor industry.

In a presentation to analysts, Cabot Micro CEO David Li said the combined company’s $1 billion in annual sales will put it in the same size league as competitors such as Entegris, Platform Specialty Products, and Versum Materials.

Cabot Micro’s CMP slurries and KMG’s cleaning chemicals have little overlap because they are used during different stages of the chip-making process, notes Mike Corbett, a managing director at Linx. Still, Cabot Micro will be unique in offering these two critical areas of chemistry under one roof, he says.

Cabot Micro has a well-recognized quality culture that it will be able to bring to KMG, Corbett points out. In addition, he says, Cabot Micro can help KMG increase its sales in China. Today, KMG records the majority of its sales in the more mature U.S. market.


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