TOKYO (Reuters) - Applied Materials Inc (NASDAQ:AMAT) and Tokyo Electron Ltd said on Monday they have given up plans to merge in a deal that would have been worth more than $10 billion (6.59 billion pounds), citing problems in getting approval from U.S. antitrust regulators.
U.S.-based Applied Materials had agreed in September 2013 to buy Tokyo Electron in an all-stock deal combining the world's No.1 and No.3 makers of chip-making gear as demand for their products slows and turning a profit becomes tougher.
The two companies said the decision came after the U.S. Department of Justice told them their proposals for a combined business were not good enough to replace the competition lost from a merger.
"Based on the DoJ's position, Applied Materials and Tokyo Electron have determined that there is no realistic prospect for the completion of the merger," the U.S. company said in a statement.
No termination fee would be payable by either party, Applied Materials said.
Applied Materials, Tokyo Electron and Dutch maker ASML Holding (AMS:ASML) NV are the three largest players in an industry that has consolidated as the rising cost of developing cutting-edge chips and slowing semiconductor demand forced alliances and acquisitions.
Most U.S. chipmakers have sold off or mothballed capacity and outsourced manufacturing to Asian foundries such as Taiwan Semiconductor Manufacturing Co, further eroding Applied Material's customer base.