Applied Materials lifts its Besi stake to 20%, below the full-bid threshold

The additional 11 percentage points represent about EUR 27.3 million of Besi's nine-month profit. Applied seeks no board seat and has no intention of going beyond about 20%.

Applied Materials agreed on Monday to raise its stake in BE Semiconductor Industries, known as Besi, from 9 percent to about 20 percent. Besi shares closed on Tuesday at EUR 163.05, up 11.4 percent on Monday's close of EUR 146.35, according to Euronext.

The 11 new points carry about EUR 27.3 million of look-through profit on Besi's nine month income. A twenty percent stake does not give Applied control. It stays below the Dutch threshold for a mandatory full bid, while a takeover would face Chinese regulatory review.

Take Besi's nine month net income of EUR 247.8 million. As a look-through share of that profit, the old 9 percent equals EUR 22.3 million and 20 percent equals EUR 49.6 million. On the third quarter alone, 20 percent is EUR 21.4 million.

The stake comes with limits

Applied already works with Besi, the Dutch hybrid bonding tool maker, and the stake ties their finances together. Applied signed an accelerated share purchase agreement on 26 October, according to its Form 8-K.

Combined with its existing holding, Applied would own about 20 percent of Besi's outstanding shares. Delivery depends on the expiry of the Hart-Scott-Rodino antitrust waiting period.

The April 2025 purchase of 9 percent went through market transactions and needed no regulatory approval.

Applied sets its own limits. Its 26 October release says it "currently has no intention to increase its investment in Besi beyond approximately 20 percent" and does not intend to seek board representation. Applied calls the investment long term, and Besi's statement repeats that Applied has no plans to buy more shares.

Why a full takeover faces obstacles

Dutch law allows more than Applied says it wants. A company that acquires more than 30 percent of a Dutch listed rival must launch a full bid. China makes that line hard to approach.

China accounted for about 30 percent of Applied's 2025 revenue, and Besi has a plant in Leshan. In 2021 Applied dropped its planned purchase of Japan's Kokusai Electric after China's regulator did not approve it in time.

Degroof Petercam analyst Michael Roeg wrote in a note quoted by Reuters:

"We believe AMAT would love to buy Besi, but we also believe the Chinese regulator would likely block such a deal."

Applied agreed to buy after Besi's share price had more than halved. The shares had fallen more than half from their 52 week high of EUR 328.40 on Euronext. That was before Tuesday's 11 percent rebound, in a broader chip selloff.

A SemiAnalysis report added to concerns. It said ASML appeared to be developing a rival hybrid bonding tool. Besi's Blickman answered, "We do not view ASML as a hybrid bonding competitor."

Orders and profit at Besi

Besi's own results show what Applied is buying. Third quarter orders were EUR 342.6 million, up 96.1 percent on a year earlier. That beat the Visible Alpha consensus of EUR 298 million.

Revenue was EUR 283.4 million, up 113.6 percent. The book to bill ratio, orders divided by revenue, was 1.21, so Besi is booking faster than it ships.

Over nine months orders reached EUR 905.2 million, up 108.3 percent, against revenue of EUR 718.1 million. That is a book to bill of 1.26, so orders ran ahead of shipments over the nine months.

Besi's third quarter release says hybrid bonding orders this year have more than doubled against fiscal 2025. Cumulative unit demand exceeds 215 systems. Third quarter gross margin was 65.2 percent.

Net income was EUR 107.2 million, up 323.7 percent on a year earlier, which is a net margin of 37.8 percent. Net cash was EUR 246.6 million at 30 September.

Nine month net income was EUR 247.8 million, up 179.1 percent. Blickman welcomed the stake as "further confirmation of Besi's hybrid bonding and wafer level assembly strategy."

The fourth-quarter revenue forecast is flat and below analyst expectations. Revenue should land within 5 percent either way of EUR 283.4 million, or about EUR 269 million to EUR 298 million. LSEG analysts had expected EUR 291.5 million.

Gross margin is guided at 63 to 65 percent. Operating expenses rise 5 to 10 percent from EUR 55.1 million, mainly on higher strategic consulting costs, in Besi's words.

Besi's release says certain customers request delivery dates for third quarter orders in line with first half 2027 production capacity plans. Blickman said the flat outlook "has nothing to do with any delays" and "It's not a customer push out."

ING's Marc Hesselink said stronger orders, hybrid bonding momentum, the ASML clarification and the buyback "more than offset the softer guidance, particularly given the timing-related nature of the shortfall."

The 20 percent stake could be seen as a first step towards control. That reading faces several obstacles: Applied's stated cap and lack of a board seat, the 30 percent offer rule, and Chinese review, which has already ended one Applied deal.

The stake is better understood as securing the partnership while keeping future options open. A bid that cannot clear Beijing is worth less than a stake that keeps the supplier close.

The partnership is already broad. Applied's release dates the collaboration to 2020. On 1 October the two companies widened it, with Besi becoming an innovation partner at Applied's EPIC Center.

Prabu Raja runs Applied's Semiconductor Products Group. He tied the stake to hybrid bonding and next generation interconnect for "energy-efficient AI compute performance." The collaboration areas include thermo compression bonding and die on wafer, die on die and die on panel integration.

For chipmakers, the stake makes the Applied and Besi hybrid bonding system a joint roadmap. Applied brings front-end manufacturing expertise and Besi brings die placement, interconnect and assembly, according to Besi.

Buybacks and the next update

For Besi shareholders, Applied's 20 percent is a buyer that has said it will not go to a bid. Besi finished a EUR 60 million buyback on 26 October.

A EUR 100 million programme starts on 27 October and runs to October 2027. Besi's third quarter release says the programme aims at general capital reduction and at offsetting dilution from employee stock plans.

Applied reports its fiscal fourth quarter results on 12 November. That is the first scheduled date on which management can place the stake in its packaging plans.