NO WAY!!! The reticle manufacturers are a pure play in this arena since PLAB just makes reticles for the tech industry (FPD, IC, TFH, etal. types). DPMI used to be part of the Dupont Corp until it was spun off not long ago. I am sorry you did not pick up on this before. We did not do a good job conveying this then.
As time markches on in technology, DPMI, PLAB and MASK are the purest of plays for reticles. New design, Re-designs, replacements, design fixes, ramped production and new technologies always require new reticle tooling. It's almost like saying that it does matter how long you are able to keep a car operational before you need to buy a new one, or what model year it is, or what type of performance vehicle it is, because every week you have to take it to the gas station and put gasoline in the car.
Of the 3 companies mentioned above, DPMI and PLAB represent, far and away the vast majority of the reticles produced outside of Japan. you could say they are Avis and Hertz (you can debate who is which), while MASK (Align Rite) is National or Budget Rent a Car. MASK is getting bigger and better but PLAB and DPMI bury them in the major markets.
On a final note, WFR is also a good play since it is the substrate producer for the industry.
The problem with reticles(masks) and wafers are that expansions come on in step function increments and not incrementally. So, when expansions occur and the industry dips, they both get caught with a great deal of underutilized capacity, especially if you expand and the industry falters. This is what happened to WFR on the last downturn. Extra capacity is a double hit because the depreciation and operating expenses really hit the bottom line when the facilities do not run at capacity and the extra capacity is used as a lever against them by their customers to get price concessions for these commodities.
However, when the converse is true, tight capacity and more demand, these guys get even and pillage the village. Truly a feast-famine or supply-demand economics classic situation.
With the upcoming conversion to 300mm, WFR is stage real well for a monumental comeback. The stock is now trading 25% below its original IPO price, roughly, and 33% of its all time high. Its time will come. I do not know exactly but it will be a nice payoff when it does (1-4 years at worst).
andrew |
