Cary,
From ILC 10K:
PRODUCTS - MERCURY XENON SHORT ARC LAMPS ("STEPPER LAMPS")
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In fiscal 1995, the Company began commercial shipment of a new product, the
mercury xenon short arc lamp ("stepper lamp"), which is used to expose patterns
during the fabrication of semiconductor wafers. ILC is currently shipping a
complete line of 1,000 and 2,000 watt stepper lamps. Each lamp, fully utilized,
lasts for approximately 1-2 months. Accordingly, the Company expects that the
product will generate a high repeat business.
The market for stepper lamps is currently dominated by a Japanese
competitor of the Company. ILC has invested heavily in ensuring the quality of
its stepper lamps since end users perceive substantial risk in switching
suppliers. In addition, ILC's stepper lamp does not require the end user to
modify any of its maintenance procedures. The Company has worked extensively
over the last four years with major U.S. end users of stepper equipment to
qualify its stepper lamps at the major semi-conductor fabrication facilities.
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PRODUCTS - MERCURY XENON SHORT ARC LAMPS ("STEPPER LAMPS") (CONTINUED)
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During fiscal 1995, ILC established itself as the only qualified United
States supplier of short arc stepper lamps used in semiconductor chip
manufacturing equipment, a market that has been dominated by foreign
manufacturers. In 1996, ILC's lamps were qualified by a number of key customers
including IBM, Intel, Integrated Solutions, Inc. (ISI), and others. The failure
of the Company's stepper lamp to achieve or sustain market acceptance would have
a material adverse effect on the Company's results of operations.
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