Santa Clara, Calif.-based Applied Materials is expected to pay $63 a share for Varian, the person said. The price represents a 55 percent premium to Varian’s closing price of $40.55 a share on Tuesday on the Nasdaq stock exchange, giving it a market value of just over $3 billion.

The transaction is one of the largest recent deals between companies that make equipment used in the manufacture of integrated circuits for electronic devices such as flat-screen TVs and solar panels.

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As I noted yesterday, CEO Michael Splinter said on the call that he expects the chip industry to spend $18 to $20 billion on capital equipment in 2010, up from $12 million to $13 million this year; at the mid-point, that would be an increase of 52 percent, which while off a nightmarish bottom, is still nice growth.

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Applied Materials (AMAT) could be next.

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The revenue forecast implies $1.24 billion to $1.36 billion, well above the Street consensus at $1.07 billion, although down from $2.04 billion a year ago.

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Analysts seem to agree that there has been a pick up in demand for semiconductor manufacturing equipment from the foundry sector. But the company’s solar business is struggling.

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Last week, the company pre-announced results for its fiscal first quarter ended Jan. 25, estimating revenue for the quarter of $1.33 billion, with a loss of 9-11 cents a share. At the time, the company also said that it planned to continue to cut costs, including shutdowns as appropriate.

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More ominously, the company said it’s planning further cost-reduction efforts, “including shutdowns and additional restructuring activities, as appropriate for the unprecedented business conditions.” While not entirely unexpected, such “activities”–presumably layoffs–would be an ugly blow to a workforce steeling itself for the up to 1800 job cuts Applied already plans to make in 2009.

[Image credit: Flickr/aturkus]

Stupefying.

The year-end total for tech sector job losses in 2008 is expected to reach 180,000, according to Challenger, Gray & Christmas. That’s the largest annual job loss for the sector since 2003, when tech firms sacked some 228,325 employees.

Not at all hard to believe given the news these days. Job cuts through Oct. 31 total 140,422, according to Challenger’s calculations.

That is 31 percent more than the 107,295 cuts announced in all of 2007.

Looks like the tech sector is shooting for a full percentage point increase in unemployment this year.

“In addition to Sun Microsystems’ announcement, Applied Materials and National Semiconductor have announced job cuts in November,” says John Challenger, chief executive officer of Challenger, Gray and Christmas. “By the end of the year, we may also see cuts from Cisco Systems, Qualcomm and Nokia, all of whom are reporting falling sales amid the weakening economy.”

Wonderful. Something to look forward to…sigh….

Challenger’s release in full, after the jump.

Tech Sector Cuts To Reach Highest Level Since 2005
MORE THAN 140,000 TECHNOLOGY CUTS SO FAR

CHICAGO – After a quiet first half of the year, job cuts in the technology sector surged in the third quarter and are on track to reach the highest year-end total since 2003. The latest evidence that the economic downturn has reached the tech sector came this morning with the report that Sun Microsystems will be eliminating 5,000 to 6,000 jobs in a broad restructuring.

Through October 31, job cuts by firms in the telecommunications, electronics and computer industries total 140,422, according to global outplacement consultancy Challenger, Gray & Christmas, Inc., which tracks job-cut announcements daily. That is 31 percent more than the 107,295 tech-sector job cuts announced in all of 2007.

Nearly two-thirds of these job cuts (89,433) have occurred since July. The 69,654 tech-sector job cuts announced in the third quarter were 37 percent more than the 50,989 job cuts announced by technology firms in the entire first half of 2008. The third-quarter total was, in fact, the largest quarterly figure since the fourth quarter of 2003, when technology cuts numbered 82,328.

Computer, electronics and telecommunications firms have already announced 19,779 cuts since the beginning of the fourth quarter. Job cuts in the technology sector are now averaging 22,358 per month in the second half of year, up from a monthly average of 8,498 in the first half. At the current
pace, the year-end total could reach 180,000, which would be the largest annual total since 2003, when technology firms announced 228,325 job cuts.

“In addition to Sun Microsystems’ announcement, Applied Materials and National Semiconductor have announced job cuts in November. By the end of the year, we may also see cuts from Cisco Systems, Qualcomm and Nokia, all of whom are reporting falling sales amid the weakening economy,” said John A. Challenger, chief executive officer of Challenger, Gray & Christmas.

“The tech sector is simply the latest victim in this downturn that began last year with the collapse of the housing market, and quickly spread to the financial markets. Since then, the impact has rippled throughout the economy and job cuts have surged in several industries, including retail, transportation, media, entertainment and leisure, automotive and even health care. Businesses and consumers have slashed their spending and no industry is immune,” he added.

[Image credit: Someecards]

The last time the unemployment rate was this high was in July 2004, following the dotcom bust. Seems even the high-tech world is becoming more fiscally cautious as the economy crumbles around us. We’ve seen layoffs at Yahoo (YHOO), Motorola (MOT), Applied Materials (AMAT), Hewlett-Packard (HPQ), Sun (JAVA), Nortel (NT) … even Google (GOOG), which announced the first major cuts in its 10-year history.

What was it Mark Twain once said? “By the Law of Periodical Repetition, everything which has happened once must happen again and again and again–and not capriciously, but at regular periods, and each thing in its own period, not another’s, and each obeying its own law.”

Arcuri reports in a research note that he sees AMAT’s Q3 semi equipment orders tracking down 5 to 10 percent in sequentially off a Q2 that was at the low end of guidance due to push-outs from Hynix that now also include Samsung and Taiwan Semiconductor (TSM).

Arcuri writes that there have been “big changes at Samsung,” where the company has “significantly downsized” second-half orders, with its Line16 now planned as “a stripped down copper fab” with re-used tools rather than a “full-blown production fab.”

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One clear message from the Applied Materials’ (AMAT) earnings call yesterday is that there has been a dramatic reduction in capital investment in the DRAM and NAND memory chip sectors.

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