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To: Cary Salsberg who wrote (823)	8/22/1997 8:37:00 AM
From: Sam Citron	of 2946

Cary, <<I don't understand the significance of the "pilot plant" and the choice of the ASMLF system. My most cynical take is that this is a marketing ploy and the ASMLF tool is best suited for the "mickey mouse" wafer processing that will occur in a demo plant.>> AMAT is much too smart for that. I believe that AMAT's decision to install ASMLF system in its pilot plant was quite rational and has nothing to do with the "mickey mouse" aspect of demo plant processing. Tool integration is a critical issue going forward as automation proceeds and efficiency concerns predominate. I believe the ASMLF selection is entirely rational. Here's why: (1) ASMLF has perhaps 3 times the stepper market share compared to SVGI and the gap is widening. Last year's global stepper market share figures [Dataquest]: Nikon 47% Canon 27% ASMLF 19% That leaves SVGI and UTEK sharing only 9% (2) ASMLF is aggressively taking market share from the Japanese as they expand capacity. Reportedly they are targeting 33%, although the time frame is unclear. ASMLF doesn't seem to have as severe capacity constraint that SVGI seems to have (possibly a result of good relationship with lens supplier Carl Zeiss, who promises 80 new lenses this year). Why should AMAT demonstrate a system in its pilot that is reportedly as hard to buy as the Micrascan? (3) Analysts think ASMLF could capture 1/3 of the deep UV market this year. (4) ASMLF's product has a "workhorse" reputation and supposedly gets 20% greater throughput. These factors suggest to me that ASMLF is no tulip, even though current PSR now approaches 10. I agree that SVGI "looks very cheap" but unless it can figure out a way to ease its capacity constraints, I think it may well remain that way. SC

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