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SANTA CLARA, Calif. — Applied Materials, Inc. (NASDAQ: AMAT) announced that it has entered into a settlement agreement (the “Agreement”) with Samsung Electronics Co., Ltd. (“Samsung”).
The Agreement resolves potential civil claims and removes the risk of civil litigation between the parties relating to the alleged acquisition, misappropriation and misuse of Samsung confidential semiconductor information in Korea. It also establishes a broad framework of incentives to Samsung for the future relationship between the two companies.
“We are pleased that we have reached this agreement with one of our largest and most important customers,” said Mike Splinter, chairman and chief executive officer. “I am confident that this agreement will extend the mutually-beneficial and long-term relationship between our two companies.”
Under the Agreement, which is generally effective for a three-year period starting November 1, 2010, Applied will provide volume-based rebates on purchases of semiconductor products by Samsung and its affiliated companies. Applied also will provide volume-based incentives related to Samsung’s use of Applied systems (i) for production of semiconductor devices in applications for which Samsung has not previously used Applied systems, and (ii) for joint development activities.
In addition, the agreement includes volume-based credits for certain upgrades, engineering services and spare parts. The financial impact of the above rebates and incentives on Applied’s consolidated results of operations and financial position will depend on the volume of purchases by Samsung after the effective date of the Agreement.
In fiscal 2009, Samsung accounted for approximately 10% of Applied’s consolidated net sales. Applied currently expects that operating margins for its Silicon Systems Group will be consistent with its previously-released segment financial model, with downside risk of no more than one percentage point below the low end of the range. A copy of the model is available on Applied’s website at www.appliedmaterials.com or by clicking the following link http://www.appliedmaterials.com/sites/default/files/SSG_Model_2010.pdf.
The settlement terms of the Agreement pertain to potential civil claims between the parties and are separate from and do not affect criminal proceedings against individual defendants, including the current proceedings pending against employees of several companies (including certain current and former Applied Materials Korea employees) in the Seoul Eastern District Court of the Republic of Korea. Neither Applied nor any of its subsidiaries is a defendant in these proceedings.
Thanks Laurie for the post. RFID technology will be a perfect feedback path between retailers and customers and this will also help store owners in improving inventory accuracy. I head some of the credit card companies (American Express, MasterCard, Visa) issuing RFID enabled credit cards this will encourage the customers to go for shopping by saving their billing time.
The RFID technology has been broadly used in Europe and Asia but pretty much limited to certain applications. Would we see common use in stores anytime soon? The cost still restricts its adoption across the board plus we don't need additional security similar to that built in credit card with a RFID chip on it.
Interesting stuff. From the business perspective, I definitely see how valuable the technology is. The lack of end-to-end visibility is a common complaint among supply chain companies so this kind of data is a huge step in the right direction. The inventory management possibilities are endless. I'd like to see how this develops.
As a consumer, I hate the idea that someone or something is gathering data on me. I guess the problem is, targeted marketing and advertising just adds to the overall advertising noise, rather than making advertising in general more meaningful.
The perfect application of targeted advertising would be like a scene in the movie “Minority Report.” As Tom Cruise walks through a corridor, all the ads that appear–holographically–address his character directly. If gathering data on me means not dealing with cars I'll never drive; clothes I'll never wear; beverages I'll never drink; and stores I'll never shop in, then I guess I'd say “bring it on!”
The local libraries are starting to install RFID technology to keep track of books at the shelves and at the checkout. While this is improving productivity, it is also cutting costs. Then the question remains, what happens to the jobs of America when we become more and more technologically sound?
Hello hwong. You bring up a good point. The workers will need to educate themselves to take on new responsibilities. The old jobs will have been replaced with high tech equipment that someone will need to know how to operate and maintain.
Oh Barbara, you would be the perfect consumer for the use of behavioral targeting, an online technology that relies on ad tags and cookies in browser windows to target advertisements to consumers based on likes and dislikes. The advertising industry often uses the movie “Minority Report” to describe behaviorally targeted ads.
The industry also insists consumers would see less ads because behaviorally targeting the ads would give consumers the right amount of information without the ad networks having to serve up an enormous amount of ads to get consumers to convert, which means to complete the purchase or download the document.
Oh Barbara, you would be the perfect consumer for the use of behavioral targeting, an online technology that relies on ad tags and cookies in browser windows to target advertisements to consumers based on likes and dislikes. The advertising industry often uses the movie “Minority Report” to describe behaviorally targeted ads.
The industry also insists consumers would see less ads because behaviorally targeting the ads would give consumers the right amount of information without the ad networks having to serve up an enormous amount of ads to get consumers to convert, which means to complete the purchase or download the document.
You're welcome Kumar1863
Putting privacy concerns aside for now, there are several other reasons why RFID adoption has progressed slower than expected, especially in the US.
The main reason is the cost of tags, which can vary depending on a number of factors, including whether the tag is simply embedded on a label or encased in a material such as plastic, passive tag or active tag, and the amount of memory required on the tag, to name a few. The more commonly used and basic passive RFID tag (96 Bit EPC inlay) embedded on a label that is used in retail and in the supply chain can typically cost 7 to 15 cents, and of course can range depending of volume. The costs can increase above 15 cents for low and high frequency tags. This does not include the costs involved for companies to provide RFID tags on products within the supply chain whether they are manually applied or systematically applied. So for instance, companies that manufacture and/or distribute high-end electronics retailers or pharmaceuticals, the costs of the tags are easily absorbed, but for companies selling, let’s say toothpaste or pencils, the costs can dramatically affect profit margins. So, if you are at a store that sells a variety of products, both expensive and inexpensive products, at this point it would not be feasible to expect that all the items sold in the store would have RFID tags and would require multiple processes in how to handle these products.
Another main reason for slower than expected adoption is the overall readability of the lower cost passive RFID tags. For example, plastic and paper products read well, while liquid and metal products do not. This lack of “universal” readability is problematic , especially for companies looking to put a more automated RFID process within their supply chain.
In order to have a wider adoption rate for RFID use, tags will need to be more read easily across a wide variety of product mixes and the costs need to be under 1 cent per tag. I do expect however that we will eventually get there. The positives of using RFID technology greatly outweigh any negatives.
Thank you Dave for your insight. You make several good points about the cost of tags and readability. But I've been hearing that same song for more than six, maybe seven, years. I can point to countless articles in the early 2000s where I wrote those very word … 1 cent tag, problems with readability, (blah, blah, blah). What's the solution? How do companies manage deployment while keeping costs low?
Hi Laurie, RFID, if implemented properly within the supply chain can yield tremendous long term savings, along with significant increased speeds of processing goods and tracking accuracies. Although there is an upfront cost, companies need to understand that the benefits of using RFID internally within their operations and not just for compliance purposes will prove beneficial and provide overall cost savings in the long run, even if the ROI takes a little longer. With more companies that utilize RFID tags, the cheaper the tags will become. RFID had a lot of momentum and buzz several years ago and has fizzled out a bit over the past 2 years, but it will eventually become what barcoding is today.