Everybody has to stop watching this stock tick by tick. Many of us are down but lets face facts, news drives stocks up or down. CYMER has a pretty lame policy as far as press releases go. Therefore its going to take blow out earnings again or some large buying. If analysts start upgrading the smart buyers have already got in and its probably now time to get out. We need News. I have added this article to give us some pep it may have been read b4 but this baby can make an eskimo buy ice cubes.
Sep 02, 1997
Highlights On SI, Cymer: Keeping Moore's Law legal
Sal Habash, is an active participant at the Cymer (CYMI) thread here on SI. Sal provides a magnificent commentary on Cymer (CYMI 90 7/8). Below is his write up.
"Dr. Gordon Moore, co-founder of Intel, wrote "Moore's Law," which has defined the computing era since it was first articulated in 1965: "The average power and complexity of the silicon chip will double every 18 months with proportionate decreases in cost." Over the last 32 years, Moore's Law has been nothing short of prophetic, much to the shock of skeptics who argued that the rapid development of technology would have to slow. But how long will this continue? When will Moore's Law cease to rule technology? The single most important determinant of this question comes from the semiconductor capital equipment industry--the "chip-making equipment makers." The easiest way to ensure more powerful chips is to make them smaller, Smaller, smaller, smaller..
Most commonly today, semiconductor chip manufacturing is done on the 0.35-micron photolithography process (which etches lines of about 1/200 the width of a human hair on a piece of silicon). Light from mercury-arc lamps is shined through camera-like tools, known as steppers and scanners, which shrinks and projects circuit images onto photosensitized silicon wafers. When all layers are imprinted, such wafers are cut into small segments, bonded and packaged into integrated circuits or "chips."
Improvements in photolithography technology are the key for driving the miniaturization of silicon chips, and the best way to etch finer lines is to use [focusable] light of smaller wavelengths. As a rule of thumb, the resolution of a stepper approximates the wavelength of light used. For more than 30 years, mercury-arc lamps, which produce light with the wavelength of about 350 nanometers, provided the necessary light for steppers and scanners to image their patterns as small as 0.35-microns. But their relatively long wavelength does not meet the required resolution, depth of focus, and critical dimension control for next-generation (<0.35-micron) semiconductor designs. Mercury-arc lamp technology has reached its physical limits. It's time to move on..
Without Cymer's micro-fine laser light technology, Moore's Law is doomed
"Excimer" lasers are recognized throughout the semiconductor industry as the light source replacement for mercury arc lamps, and this is where Cymer (NASDAQ: CYMI; $90 7/8) comes in. Cymer's excimer laser light is generated by mixing krypton and fluorine gases inside a two and a half foot-long chamber. A 12,000 volt charge is repeatedly burst into the chamber, forcing krypton and fluorine (KrF) atoms to combine into an unstable molecule known as an excited dimer, or "excimer" (note the company name, Cymer). During the electrical discharge, pulsed deep-ultraviolet (DUV) light of less than 250 nanometers is released, purified, and directed out one end to its stepper/scanner mate. Though invisible, this light has just the right characteristics (aside from the extremely narrow wavelength, it must be able to be focused with a lens) to image the microscopic circuit patterns never before possible.
Chipmakers must now rely on excimer lasers as the illumination source for production of semiconductors with critical geometries below 0.35-micron. The Semiconductor Industry Association's Technology Roadmap forecasts that leading-edge 0.25-micron devices will be produced in volume by 1998 and 0.18-micron devices will ramp in production by 2001. Everyone in the semiconductor industry--from makers of microprocessors to integrated circuits to memory chips--has just begun to ramp up to 0.25-micron technology for their products; thus, they need 0.25-micron capacity in their chip fabrication plants. To illustrate: On September 8, semiconductor kingpin Intel will announce their "Tillamook" chip--their first processor designed to be exclusively manufactured on the 0.25-micron level. All this makes the excimer lasers imperative to the production of the next several generations of semiconductor chips. Without Cymer's micro-fine laser light technology, Moore's Law is doomed.
Initially, Cymer was having trouble carrying the weight of Moore's Law
Cymer effectively owns the transition to chip geometries of 0.25-micron and below, with about 90% of the DUV excimer laser market. The only competition, Komatsu and Lambda Physik, are at least a full generation behind Cymer's current KrF laser technology, and even further behind in next-generation argon fluoride (ArF) lasers for sub-0.18-micron technology. Cymer has full support of the industry--stepper and scanner makers being amongst the most significant. The five DUV stepper/scanner manufactures of the world, ASM Lithography, Canon, Nikon, Silicon Valley Group, and Integrated Solutions, all recognize Cymer as the excimer light source of choice (as well, ASML, Nikon, and Canon each own an equity stake in Cymer). In turn, this DUV lithography equipment is sold to the end users--the likes of Intel, IBM, Motorola, AMD, Texas Instruments, Micron Technology, Samsung, NEC, Toshiba, Fujitsu, etc, etc. Cymer's massive technology lead (including 16 patents and many more pending) and strong customer relationships described above create an extremely high barrier to entry of competition. The excimer laser market is Cymer's to lose!
Initially, Cymer was having trouble carrying the weight of Moore's Law and the semiconductor industry on their shoulders; they couldn't begin to meet the world's demand for their lasers. But management has taken action. Manufacturing capacity has ramped up sharply--as fast as Cymer can hire qualified engineers, that is. Cymer has also outsourced some manufacturing to Seiko (which holds a 2% equity stake in Cymer). In short, Cymer is alleviating its status as the industry bottleneck and should have the capacity to ship about 1,000 (cost around $428,000 each) laser units in 1998. To quantify their growth: Cymer shipped 34 laser systems in 1995; 145 units in 1996; and in just the first half of 1997, 201 laser systems.
I believe that Cymer has the potential to be amongst the best stock investments for the next several years
One advantage of being capacity-constrained, however, is that it gives us good future-earnings visibility. Book-to-bill is enormous at a reading of 1.68 (for every $100 worth of product Cymer ships, they receive orders for $168). Cymer's 12-month deliverable backlog stood at $122 million as of June 30, 1997, which equates to roughly 300 laser systems already on order for delivery by June 1998. According to First Call, the consensus earnings per share (EPS) estimate for Cymer's 1998 fiscal year is $2.30, which the analysts themselves have dubbed "quite conservative." In Wall Street jargon, "quite conservative" actually means ridiculously conservative.
But what happens if there is another downturn in the wildly-cyclical semiconductor industry? Fortunately for Cymer, it should be business as usual. When times get tough for the chip makers--when competition, commoditization , and oversupply wreak havoc- the way to survive is to separate yourself from the competition with better technology and especially lower prices. This is done by investing in advanced capital equipment which facilitates the manufacture of smaller chips (dramatically lowering manufacturing costs, because you can etch more chips on a single wafer) which are also more powerful. Moore's Law, always in effect! Ultimately, it will be a Cymer excimer laser which will fulfill the need. The future truth of Moore's Law, the future of technology, it all belongs to Cymer.
[My personal opinions, rant, and babble]: I believe that Cymer has the potential to be amongst the best stock investments for the next several years. Perhaps one day in the future, people will be looking back and saying how they coulda/woulda/shoulda bought Cymer back in 1997-1998; the same kind of retrospect that we now hear in reference to legendary stocks such as Dell Computer, Cisco Systems, Ascend Communications, Microsoft, and Intel. Of course, in this schizophrenically volatile and nervous market, short-term forecasts are impossible to make. I view Cymer as a tremendous investment, a long term investment.
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