After nearly four years and $23 million of investments in startup technology companies, the venture capital partnership of Applied Materials Inc. (Nasdaq: AMAT) has been terminated. The investment team has not been provided with a rationale for the shutdown, although it has been aware of the likely disbandment for several months.
A source within the group says that the partners are hoping to spin out as an independent firm via a management buyout, so long as it can find LPs interested in the early-stage semiconductor space. Other possibilities are a sale to a financial or secondary buyer. In either case, the team hopes to continue to managing the portfolio and to honor existing commitments. In an SEC filing, Applied Materials said it would cap contributions at $25 million total, which leaves just $2 million of wiggle room.
Speculation is that the parent company’s decision is related to new leadership. The ventures group was founded under the leadership of James Morgan, who led Applied Materials for 25 years until transitioning to a chairmanship role, which he currently holds. During a depression of the company’s share price in 2003, Michael Splinter, formerly executive vice president at Intel, joined Applied as its president.