Applied Materials

Applied Materials, Inc. supplies deposition, etch, and inspection equipment to fabs. TSMC, Samsung, Intel, and Micron are the customers. A missing tool delays a fab by months.

The equipment market is specialized. For some steps one or two vendors are qualified. Qualifying a second tool is expensive, so incumbency lasts. That is lock-in by process recipe, not by a consumer contract.

Applied pursued Tokyo Electron in a deal that was abandoned in 2015 after competition concerns. It later dropped a Kokusai Electric deal. Those abandoned combinations are the boundary: enforcers will not casually let the main tool makers fold together.

Service, parts, and recipe support are an aftermarket. A fab that cannot get parts except from the tool maker is in a classic aftermarket monopoly for that installed base.

Step-specific tool monopolies inside the fab.

Abandoned Tokyo Electron and Kokusai deals mark the merger limit.

Installed-base service is an aftermarket.

Export controls decide which customers can even buy the tool, which reallocates capacity.

Chip buyers never see the tool. They see delays and prices when a fab cannot add a process step.

A smaller chip designer depends on foundries, which depend on these tools. The bottleneck is two steps upstream.