2001 Ad

Electronic News, April 30, 2001 by Jeff Chappell

But companies benefiting from technology buys

MUNICH, GERMANY -- The industry may be in the grips of what could prove to be one of the worst cyclical downturns in its history, but for many smaller equipment and materials suppliers dealing in advanced technology, life is good.

It's common wisdom that during a downturn, industry focus shifts away from getting product out the fab door to R&D and ramping new technology. Perhaps that's why, despite tight travel budgets, rumors of exhibitors pulling out and a very slow first day, attendance at Semiconductor Equipment and Materials International's (SEMI) Semicon Europa trade show was up this year over last year's show. Registered visitors at the show numbered a little over 13,000, nearly 2,400 more than attendance in 2000.

Last Tuesday, the first day of the show, was visibly slow for a Semicon exposition. But attendance and booth traffic seemed to pick up Wednesday and Thursday, many exhibitors said, and the show floor was noticeably busier. Some exhibitors even experienced more booth traffic than last year's Europa.

"Wednesday was the busiest day of the last two years combined," noted Paul Sagues, president of motion-control company Berkeley Process Control.

Companies poised to take advantage of technology buys are doing just that, particularly in 300mm-wafer technology. A general consensus among toolmakers large and small is that the 300mm ramp continues more or less on schedule despite the downturn, and that's helping many smaller companies weather the slowdown. Companies involved in ancillary 300mm technologies that chipmakers also want to implement in their ramp to the larger wafer size, such as fab automation, wafer handling and connectivity software, are enjoying the ride as well despite overall market conditions.

Other advanced technology companies at Europa had positive news to report. Genus Inc., for example, a Sunnyvale, Calif.-based film-deposition company that almost didn't survive the previous downturn, had new sales to report in the first quarter, despite a rough fourth quarter. The show so far has seen considerable interest in the company's (nasdaq: GGNS) atomic-layer-deposition technology.

"Just at this show we've found several new applications," said Thomas Seidel, Genus' chief technology officer.

Companies providing tools to the optoelectronics industry in particular report very strong orders and continued growth. Despite the contraction in the overall telecom market, optoelectronic applications, such as fiber optic networks, remain a strong market, tool suppliers said.

Silicon-on-insulator (SOI) technology is another technology whose time seems to have arrived. SOI wafer suppliers reported at the show that sales continue to rise dramatically as demand increases. Meanwhile, Munich-based toolmaker Karl Suss chose Europa to publicly announce its entry into the SOI arena with the CL200, a cleaner and SOI substrate bonder that cleans, dries, aligns and bonds in a single chamber.

Extended Down Cycle?

Make no mistake, in spite of these positive aspects, the current down cycle is dramatically severe. Many companies, including many enjoying strong 300mm-tool sales, report that new 200mm-tool sales have dropped off completely, and backlogs are getting hammered by cancellations and push-outs.

Even though initial evidence exists that chip inventories are beginning to drop, it may be some time, perhaps not even until late 2002 or early 2003, before the equipment industry returns to positive, double-digit growth. That's the conclusion of Elizabeth Schumann, director of industry research and statistics for SEMI, who delivered an equipment and materials market briefing during the show.

"Even when the (chip) demand problem corrects itself late in the year, we will still have a supply problem," Schumann said of the demand for capital equipment.

Part of the problem is that, while the semiconductor industry cycles, the corresponding equipment industry cycles tend to be more extreme. While growth rates in chip sales quadrupled in 2000, equipment sales growth rates grew more than five times faster than they did the previous year.