Gear firms unite under pressure at 'first of kind' SEMI event

Electronic News, Feb 3, 1997 by Carol Haber

Analysts representing major financial institutions responded. David Wu of The Chicago Corp. said: "Unless they're big, the equipment companies aren't going to be around long term. About $1 billion is big. $500 million is the bare minimum. Companies in the $50 million range should find marriage partners very soon." Consolidation will continue in the sector, he said. "There won't be 500 companies selling to 50 semiconductor companies like today; there'll be 200 selling to 20. It's too big a game." Equipment companies definitely have their own dynamics apart from the larger semiconductor device companies and should be evaluated in a different light, suggested Gunnar Miller of PaineWebber. "Investors need to understand that these companies are in transition and are beginning to address markets such as flat panel, thin film heads. They are also becoming less equipment makers and driving more of the process."

Sanford C. Bernstein & Co.'s Vadim Zlotnikov said: "Equipment companies are trying for a higher profile, especially in face of the coming transitions to 300mm and copper."

Meanwhile, at Danbury, Conn.-based ATMI, CEO Gene Banucci was pleased to be part of a smaller conference.

Mr. Banucci said ATMI's SDS product line is growing "so rapidly that you can fully anticipate our making capacity moves in the very near future." He added that as a smaller company and one that is complicated to boot "it is difficult to get investor attention, they gravitate to large cap stocks with a simpler story. They have a lot of institutional investors, we don't. It is important in the long term to minimize the cost of capital. Wall Street doesn't have to invest now. Just pay attention to us," he said.