The chemical reaction at the Ni/InP (110) and Ni/GaAs (110) interfaces produced by sequential deposition of thin Ni overlayers onto cleaved semiconductor surfaces has been investigated with valence band (VB) and core level photoemission and Auger spectroscopies using synchrotron radiation as the excitation source. By monitoring changes in the VB, P 2p, In 4d, Ga 3d, As 3d, and Ni 3p photoemission spectra and the lineshape of the P LVV Auger transition during the initial stage of Schottky barrier formation, we found that for both interfaces the first few Å of Ni react strongly with the surface resulting in the formation of a nickel phosphide or nickel arsenide. At the same time, segregation of metallic In or Ga is observed.