This case aims to explain the development of the merger between Tokyo Electron and Applied Materials, two major players in the semiconductor Equipment Industry. Both companies’ chose this merger in order to strengthen their positions, since their customers are consolidating, and develop new products in a highly volatile industry. We analyze the merger from its beginning to its abortion when the US department of Justice refused the deal, invoking antitrust concerns, though some expected taxation issues played a role in this. Tokyo Electron suffered the most from this failed merger and the situation is critic as the competitors are consolidating while Tokyo Electron has no possibility to consolidate with big players. In this difficult position, the company must look for a new strategy that will enable it to overcome its internal difficult while consolidating its position in the industry.