KLA-Tencor, Rudolph headed on a collision course
Mark LaPedus
09/05/2003 12:25 PM EST
URL: siliconstrategies.com
MINNEAPOLIS, Minn. -- KLA-Tencor Corp. and Rudolph Technologies Inc. remain in a rock solid position in their respective IC inspection and metrology markets, although the two companies are heading on a collision course, according to new reports released by U.S. Bancorp Piper Jaffray today (Sept. 5, 2003).
KLA-Tencor--the leader in the wafer and reticle inspection markets--is reportedly looking to expand its wings and enter into Rudolph's core business: metal metrology, according to the reports from the research firm.
As previously reported in Silicon Strategies, KLA-Tencor is reportedly readying the ESX (Electron Stimulated X-Rays) tool, which will perform both film thickness and chemical analysis for copper-enabled devices--based on an X-ray beam technology. The ESX is expected to be introduced later this year ( see July 11 story ).
As a result, competition is slowly evolving between KLA-Tencor and Rudolph, said analyst Steve O'Rourke, who watches the chip-equipment markets for Piper Jaffray, based in Minneapolis. "The biggest perceived threat (for Rudolph) is KLA-Tencor's new opaque film metrology tool," said O'Rourke in the report.
"We believe KLA's e-beam-based, X-ray technology will likely present a threat at the 65-nm node, and will take some market share through this upturn," O'Rourke said.
Rudolph--and KLA-Tencor--face other challenges in the marketplace, although both companies appear to be well-positioned and showing steady gains amid the current downturn in the chip-equipment business.
KLA-Tencor sees upturn
For example, KLA-Tencor is expected to exceed its order guidance of 5 percent sequential growth for the third quarter of 2003, and will also meet its revenue and earnings targets of $315 million and $0.16, respectively, in the period, O'Rourke said. "We believe CQ3 orders will be driven by Samsung, SMIC, Sony, and Toshiba, with TSMC in CQ4," he added.
At the same time, O'Rourke believes that KLA-Tencor has the "best business model" in the chip-equipment market. "KLA-Tencor is most leveraged to increased demand for process control equipment with advanced technology adoption," he said in the report. "With narrowing process windows, the demand for advanced process control equipment increases, leading to upwards of 50 percent more per-fab spending with each technology node transition. We note that KLA plays to virtually all secular trends, helping to mitigate slowing cyclical growth."
KLA-Tencor, however, also faces growing competition from the likes of Applied Materials Inc. and a slew of other players. "KLA's significant threat is Applied Materials," according to the report.
"We believe Applied has gained share in optical wafer inspection, and with enormous resources, could pose a longer-term threat to KLA," according to the report. "Applied would have an advantage with integrated and in-situ process control; however, we view these sub-segments as slowly evolving niche markets, and should provide limited near-term leverage to Applied's push in the process control market."
Peddle to the metal
Like KLA-Tencor, Rudolph sees a huge opportunity the metal film and copper metrology markets. "We expect the ramp for 130-nm copper manufacturing to accelerate in '04, and that the metal film metrology market will exceed $250 million over the next 30 months, with the majority at 300-mm," according to the report.
"We believe Rudolph's total available market could approach $600 million at the next peak (in 2005), and that the company should gain share in macro defect inspection, and at least maintain its position in transparent thin film metrology," it said.
Clearly, Rudolph has been at the right place at the right time. The company is the "metal metrology process tool of record" (PTOR) at the world's top 10 chip makers, and reportedly, has a lock on Intel Corp.'s 90-nm business, according to the report.
It faces some challenges as well. "We believe the biggest risk to Rudolph is its ability to compete effectively with much larger competitors on a limited R&D budget," according to the report.
"We anticipate (Rudolph's) revenue to remain largely flat through the remainder of the year, with orders up sequentially in CQ3," it said "We believe near term sustaining and incremental orders will come from Inotera, Samsung, Sony, and Toshiba, with TSMC in CQ4." |
