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Byline: Olaf de Senerpont Domis
Nearly 1,600 chip-equipment companies showed off their technology this past summer at Semicon West. And in a hyper-cyclical business notorious for its executives' go-it-alone mindsets, the industry's annual confab displayed, above all else, a population that should be culled. Sanjeev Chitre, principal and founder of U-Group LLC, a small team of chip-equipment industry veterans, is quietly trying to do just that, rolling up struggling chip-equipment startups with plans to sell them off to larger, publicly listed semiconductor capital equipment players. His 2-year-old firm has received equity investment commitments ranging from $15 million to $50 million from several public companies (which Chitre declines to name) that are interested in the strategy alongside San Francisco's Golden Gate Capital, the only disclosed investor in U-Group.
"We are all about reducing risk for these companies by consolidating a space for them," Chitre says. If the rollup succeeds, the financial partner company either sees a return on its investment or acquires the melded group of small companies outright, he says.
Whether U-Group's strategy will work (more on that in a moment), it's fairly clear that global …