All: Reliable sources advise me that consideration is being given to having a conference call re the ISI acquisition when the deal closes. Let's hope that this occurs. I think it is important for the company to explain its strategy and the terms of the deal to the investment community once the deal closes.
Reliable sources also advise me of the following. Ultratech signed the definitive agreement to acquire the assets of ISI for cash. The acquisition is expected to close within 30 days. ISI's engineering organization will remain headquartered in Massachusetts. ISI has 21 sales & support offices worldwide that will be integrated into Ultratech's existing infrastructure along with the administrative and financial organizations.
This acquisition will allow UTEK to offer a complete range of lithography solutions to the disk drive industry. There is rapidly changing technology for the read heads in hard disk drives. Trendfocus has estimated that by the year 2002, that 30-40% advanced read head layers will require .25 microns and below feature sizes. Ultratech has over 80% market share in read head lithography equipment (since all feature sizes are over .6 microns today). ISI has i-line and deep UV 4X reduction steppers that complement Ultratech's 1x product portfolio by extending it toward 0.13 microns. Below, 0.13 microns, UTEK will use the UltraBeam e-beam technology to continue to drive head market dominance.
The disk drive read head manufacturing process is very photomask-intensive as each head manufacturer has many different head designs. Lot sizes are comprised of only 2-10 substrates per run. The shift from MR and GMR heads is adding many layers to devices, driving up the number of masks needed. ISI 's 4X technology allows head manufactures to use 5" x 5" photomasks that are roughly half the cost of 6" x 6" photomasks required for use by the competitors (i.e. Nikon ...5X read head steppers). In addition, the development of the optics and resolution of the ISI steppers are industry leading. One of Ultratech's main interests in ISI is for the disk drive market.
After the acquisition, UTEK will be the only company with a full extension roadmap with lithography technology solutions to cost effectively meet the requirements of the disk drive industry. [G-line (no one else has offers g-line steppers), i-line, Deep UV, E-beam.]
Some background. ISI, a spinoff from General Signal, originally focused on servicing existing GCA steppers after GCA was shut down by General Signal. ISI found demand for GCA R&D tools due to the advanced capabilities of these systems that resulted from the Sematech development program in the late 1980's and early 1990's that funded over $100 million into GCA. ISI developed niche R&D and metrology applications for the technology. Ultratech intends to continue selling tools for 193nm (DUV) metrology to test photoresist and device features for .18 microns and below. This will enable manufactures to pre-test photoresist and ensure it is corrected for insertion into the lines. These cost of these tools are in the range of $3 million -$3.5 million.
The acquisition of ISI will also provide some opportunities for Ultratech in the semiconductor side by selling these tools.
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