Applied said each share of Consilium, based in MountainView, California, will be exchanged for between 0.182 and 0.165 of a share of Applied Material's common stock. The actual ratio will be based upon Applied's average closing stock price prior to a shareholder vote on the merger.

The acquisition, which is expected to be accounted for as a pooling of interests, is expected to close by the end of calendar year 1998 or in early 1999, subject to regulatory and Consilium stockholder approval.

Applied Materials said that Consilium has become a major force in providing semiconductor and electronics makers ways to optimize the use of their manufacturing plants and facilities.

By offering Consilium's software and consultingservices, along with its wide range of semiconductor equipment, Applied said it can offer customers a total solution and help customers improve their manufacturing effectiveness and productivity.

Min Pang, an SG Cowen & Co analyst, said that as chipmakers gradually transition to 300 millimetre manufacturing process technology, they will be using more software from companies like Consilium to run their factories.