Applied Materials raises Besi stake to 20%, with no plans for a board seat

Besi shares fell 11% in the two sessions before the deal. Applied's stake gives it access to hybrid bonding; it does not intend to seek a board seat.

Applied Materials is lifting its Besi stake to about 20%. At Monday's close that holding is worth about 2.4 billion euros.

The stake gives Applied access to hybrid bonding through a capped strategic holding, without control. The supplier says its hybrid bonding orders have more than doubled this year. Hybrid bonding attaches chips to a wafer or to each other.

Besi's own buyback shows how far the price has fallen. The company paid an average of 210.67 euros a share to buy back stock in the third quarter. That is 44% above Monday's close of 146.35 euros, and the close is 55% below the 52 week high of 328.40.

Applied is increasing an existing investment. Its Exhibit 99.1 to its Form 8-K says it is raising an investment first made in April 2025. The 8-K itself puts the combined holding after the purchase at about 20%.

The two companies have worked together since 2020. Besi recently joined Applied's EPIC Center as an Innovation Partner.

The 2.4 billion euro figure is the value of the whole holding at Monday's price. Besi's market value was 11.876 billion euros at the close, and 20% of that is 2.375 billion. It includes the April 2025 shares, so the cash still to be spent is lower.

Orders and profitability

The investment gives Applied exposure to Besi's growing order book. Third quarter orders in its results of 22 October were 342.6 million euros. That is up 96% from a year earlier and 17% from the second quarter.

Besi credits hybrid bonding, datacenter and AI related mainstream computing for the rise. Chief executive Blickman says hybrid bonding orders have more than doubled so far this year against fiscal 2025.

Customer adoption is widening. Hybrid bonding now has 23 customers and cumulative demand above 215 systems. Orders came from logic, co packaged optics and memory customers, and one leading memory customer ordered both hybrid bonding and thermo compression tools.

Besi has booked 271 million euros more orders than it has shipped in four quarters. Orders were 1,155.6 million euros against 884.6 million of revenue.

Orders have beaten revenue for five quarters running, and the third quarter book to bill ratio was 1.21. That is a delivery queue Besi can ship into 2027.

Besi is also profitable. Third quarter net income was 107.2 million euros on a 65.2% gross margin, 323.7% more than a year earlier. Net cash stood at 246.6 million euros at 30 September.

The order figures suggest that growth can continue. Orders for the first nine months were 905.2 million euros, up 108.3% on the same period of 2025. Besi's chief executive says the favorable order momentum should continue into the fourth quarter.

China exposure and the entry price

Applied now shares Besi's exposure to China, which placed 137.5 million euros of third quarter orders, 40% of the total, and made up 34% of revenue.

The entry price has fallen in a week. Besi closed at 162.45 euros on 21 October and 145.10 on 23 October, down 10.7% around its results, before Applied announced anything. Its 52 week range runs from 120.15 to 328.40 euros.

The multiple fell with it. At Monday's close Besi is valued at 27.7 times its annualised third quarter net income of 429 million euros. At the 21 October close that multiple was about 30.7.

The stake and buyback terms

Applied is buying through an accelerated share purchase agreement. Delivery waits on the waiting period under the US Hart-Scott-Rodino Act, the American premerger review.

Applied says it currently has no intention of going above about 20% and does not intend to seek board representation. Besi's 60 million euro buyback was due to finish on 26 October.

A new 100 million euro program starts on 27 October, with authority to repurchase up to 10% of Besi's shares. At the end of September Besi held 0.5% in treasury. Any shares it cancels would lift Applied's percentage mechanically.

The collaboration and delivery schedule

For a chipmaker or packager buying bonders, the alliance puts Besi's hybrid bonding and TC Next tools into Applied's EPIC Center. The commercial aim is to develop processes using Applied's wafer tools.

The collaboration covers three dimensional chip scaling, logic and memory integration, and thermo compression bonding. Applied's release also lists die on wafer, die on die and die on panel integration platforms.

Prabu Raja, president of Applied's Semiconductor Products Group, said hybrid bonding is becoming increasingly critical to energy efficient AI compute. He said the same of next generation interconnect architectures.

Besi does not see ASML as a rival. Blickman specifically rules out competition in hybrid bonding and says the two companies are working together on die stress programs.

Near term revenue will be flat, and Besi calls that a timing issue. It guided fourth quarter revenue flat on the third quarter's 283.4 million euros, plus or minus 5%. Some customers want delivery dates in line with first half 2027 production plans.

Blickman says order momentum "should continue in Q4-26" as the multi year AI capacity build-out progresses.

Applied reports fiscal fourth quarter results on 12 November. Besi reports fourth quarter and full year 2026 on 25 February 2027. Revenue inside the 269 million to 298 million euro range guided on 22 October would show the surplus is shipping. Orders above revenue again would show demand is still building.