Robert and all.
Here is the full report from Merrill Lynch on the Laser Industry:
(Sorry if there are some errors in it. I didn't have time to edit)
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Laser Battle Heats Up
Komatsu Gaining Share in Domestic Japanese Market
Merrill Lynch Japanese semiconductor equipment analyst, Richard Kaye, recently visited the two Japanese laser manufactures Komatsu (6301) and Ushio (6925, USHJF, C-2-1-7, Y1,530) and came away with the following comments:
"Komatsu (6301) seems to be gaining market share against Cymer. In Japan, Komatsu's unit share has grown 66% YoY in IQ FY3/99. Komatsu's FY3/00 shipment forecast is: 1H 30%, 2H 70% (20% export, i.e. to Nikon/Canon overseas). Customers: Toshiba (6502) uses Komatsu as its first vendor, and recently bought the 2kHz laser, for 204nm scan (in a Nikon stepper). Komatsu has shipped three units to Taiwan (no damage in the quake), one to Samsung, and expects to make its first shipment to ASML next summer. Komatsu claims much of its installed base is being used in scanners."
ML Analysis: We have been saying for some time that Komatsu has made in-roads into the Japanese domestic laser market. Every laser company we talk to has slightly different market share estimates but there is no doubt that Komatsu has become a serious player in Japan. The important news to watch, however, is Komatsu's ability to gain market share outside of Japan. CYMI controls well over 90% of the non-Japanese laser market and has started many demand pull programs that will make this market difficult to penetrate. Therefore, Komatsu's first three overseas shipments could turn into a significant event if the company receives follow up orders
Third Tier Laser Producers Eyeing Future Markets
Ushio Remains In The Background...
Further comments from Richard Kaye:
"Argon flouride (ArF) is the likely battleground with Ushio (6925). Komatsu expects ArF to be only 15% of light-source market even in CY02, because maintenance costs are 3x those of KrF (krypton flouride), component costs 1.5x KrF. If true, this should augur ill for Ushio's imminent debut in the ArF market."
... As Does Lambda Physik
Merrill Lynch London semiconductor analyst Andrew Griffin visited Lambda Physik and had the following comments:
"Lambda Physik, the German based subsidiary of Coherent Inc, is also entering the DUV laser market - it has a unit installed with an ASML machine at Micron, and is having its ArF unit assessed by Sematech. We expect this company to hit the market with the transition to 193nm."
ML analysis: Komatsu's planned shipment of a laser system to ASML suggests that Lambda Physik's development effort at ASML is not going well. ASML has limited bandwidth to work with laser vendors. Thefact that it has decided to work with a third laser supplier means that it is hedging its bets in developing a second source. Cymer remains the dominate supplier at ASML with >95% share at the ASML account.
DUV Laser Pricing Environment Still Good
Even though Komatsu has emerged as Cymer's first competitor with any significant momentum in the market place, the pricing environment has remained strong. We expect the pricing strength in Japan to remain as demand continues to grow and only two viable suppliers exist. Furthermore, it appears this two-supplier market will continue for the next few years as Ushio and Lambda wait for the 193nm market to develop.
If, however, Komatsu successfully enters the non-Japanese markets the competitive environment could quickly degrade to a ruthless battle for market share. Cymer doesn't currently engage in price driven selling but when you dominate the market you don't have to.
Bottom Line: CYMI remains "The" Name in DUV Lasers
Despite quite a bit of noise coming from Komatsu's market share gains in Japan, we believe Cymer will maintain virtually all of its non-Japanese market share and will not be truly vulnerable until the industry transitions to 193nm or 157nm technology. Even when the industry makes this transition CYMI is clearly in the driver's seat due to the experience it has gained from producing so many more lasers than all of its competitors combined, not to mention the company's existing relationship with all of the important customers.
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