Concept Systems sees big sales rise; forms Europe unit

Electronic News, April 4, 1994 by Walter Andrews

FREMONT, CALIF.-- Concept Systems Design, Inc., the maker of Gemini epitaxial silicon reactors, projects revenues will jump 75 percent this year, and last week formed a European subsidiary, Concept Systems Ltd., to bring its sales and service closer to its growing European customer base.

Andrew R. Goode was named the managing director of the new Bowdon, England-based subsidiary, Concept Systems said. Mr. Goode was formerly managing director of Baycarbon Ltd., which had represented Concept Systems in England. Thomas W. Spindler, formerly a field service engineer with Lam GmbH, also has been named European field service manager for the new subsidiary, Concept Systems said.

Jim Mezey, presidetn of Concept, said the company projects sale of about $7 million for the 1994 fiscal year ending June 30, compared with $4 million for the previous year. Concept is forecasting sales of $10 million to $12 million for the next fiscal 1995 year, Mr. Mezey said.

Formed in 1989, privately-held Concept has been profitable for the last three years, he said, with earnings this year estimated between $1.5 million and $2 million. "This will be our best year," he said. About 35 to 40 percent of the company's sales are in Europe with a similar percentage in the United States. Sales to the rest of the world, primarily Japan and Korean, make up the rest, he said. Right now, the Asian market is "relatively flat," he said.

Mr. Mezey estimated Concept currently has about 10 percent of the epitaxial silicon equipment market, which he estimated at $80 million to $100 million annually. About 75 percent to 80 percent of this is attributed to the chemical vapor deposition process used in the company's Gemini reactors. Epitaxial wafers account for about 10 percent of the total semiconductor wafer market, he said.

Some Japanese and Korean semiconductor makers have designed out epitaxial wafers from their products because of the higher cost, Mr. Mezey said. Concept is currently developing a new Gemini 4 reactor, which will significantly increase capacity and reduce per wafer costs, he added.

"We think we can make a significant improvement in cost," Mr. Mezey said. Asked when the Gemini 4 would be introduced, Mr. Mezey said: "It's too early to say right now." Expitaxial wafer costs currently range from $10 to $50, he said.

"The focus is to make (the Gemini 4) more energy-efficient and more cost-effective overall, both of those driving the cost of epi downward," he said. Asked how far the cost could be driven down, the Concept president said: "You could probably reduce the cost of the epi another 40 to 50 percent off of where it is today. Most of that is going to be energy efficiency."

The latest Gemini 3 reactor is priced at $1 million to $1.2 million, Mr. Mezey said, while the Gemini 4 is priced around $900,000. Concept also sells a Gemini modification kit for $500,000, which will double the capacity of a Gemini 1 reactor to that of a Gemini 2 for 60 percent of the cost of a Gemini 2. There are currently 60 Gemini 1 reactors in operation today, about 200 of the Gemini 2s and 40 of the Gemini 3s. About 75 percent to 80 percent of Concept's sales are in new systems, Mr. Mezey said.

Concept acquired the Gemini line from Lam Research two years ago after two years of on-again, off-again talks (EN, Sept. 7, 1992). Lam had bought the line in 1988 from its developer, Gemini Research. Concept and Lam began talking after Lam set plans to phase out the Gemini reactor line (EN, July 23, 1990).

Because of the changes in ownership, Mr. Mezey said there had initially been some sales resistance from customers worried about service and support. With the market now realizing that the company and the Gemini line are here to stay, Concept is overcoming this resistance, he said. The company hopes to make its first sales in Korean later this year to replace Gemini reactors purchased from prior owners, he said.

Mr. Mezey likened the Gemini reactors to the Energizer Bunny: "Not only does it keep going and going, it also presents advantages that...have yet to be matched by alternative technologies:" ion implantation and molecular-beam epitaxy.

He said Gemini reactors are the only deposition system capable of addressing the whole epi spectrum, from the less than 5-micron thin-film layers to the in-situ multi-layer thick films used in insulated gate bipolar transistor (IGBT) power ICs.

"Today, Gemini users are as diverse as manufacturers of logic ICs and silicon wafer suppliers, whose customers demand ready-to-run wafers for their high-volume microprocessors, memory chips and power devices," Mr. Mezey said.

"It is a mature and proven cost-effective technology that people really feel comfortable with as an installed base with field upgradeable performance. And, that's one of the areas we're doing quite a bit of business in right now--just upgrading the performance of the systems," Mr. Mezey said. He said about 75 percent to 80 percent of sales were in new systems.

"One of the main things it has going for it is the fact that it can run a broad spectrum of epi products from day to day. It doesn't require a lot of downtime for requalification. You pretty much dial it in and it's off and running," the Concept executive said.