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Applied Materials hires new CEO

The semiconductor equipment maker brings in Intel veteran Michael Splinter as chief executive amid tough times in the market.

Applied Materials, the world's biggest maker of chip-manufacturing equipment, has hired Intel veteran Michael Splinter to become its new CEO.

On Wednesday, Splinter became CEO and president of the company. He will also join the board. James Morgan, who has been Applied's CEO for 27 years, will remain as chairman of the board. Dan Maydan, who has been serving as Applied's president, will now become president emeritus.

The change in management, which takes effect immediately, comes amid tough times for the semiconductor equipment market. Large chipmakers such as Intel and Taiwan Semiconductor Manufacturing have cut back capital spending budgets. Several companies, including National Semiconductor, are increasingly outsourcing.

For equipment makers, these two trends mean fewer potential customers are buying less equipment. More semiconductor companies are outsourcing manufacturing, in part, because of the expensive and complex nature of semiconductor equipment. A fabrication facility can cost $3 billion or more to erect, and most of the budget goes toward equipment for etching circuit lines, polishing wafers or depositing chemical layers.

"The big challenge is how to get Applied Materials back to growth, and to grow in a market that is pretty difficult at this point in time," Splinter said in a conference call. During the go-go years of the late 1990s, Applied hired acts such as Bob Dylan and Stevie Wonder to perform at corporate events.

Also on the call, Morgan said the shift in management is occurring to better adapt to the changes in the industry. From his position at Intel, Splinter has a good understanding of the manufacturing challenges facing Applied's customers, Morgan said.

Although it has weathered the economic downturn better than some of its competitors, Applied has had to engage in several rounds of layoffs. In March, the company said it planned to cut 2,000 employees, or 14 percent of its staff. The company has also periodically ratcheted down sales.

Splinter has worked at Intel for about 20 years in a variety of departments. Most recently, he served as executive vice president in charge of the sales and marketing department. At one point, he was a long-shot candidate for successor of Intel CEO Craig Barrett.

Intel said Jason Chun Shen Chen will replace Splinter. Chen, who has been with Intel since 1991, had been a vice president in Intel's sales and marketing unit, where he was the general manager of the Asia-Pacific region.