This company i think is undervalued
Introduction
Triant technologies is a company which produces equipment/process monitoring software
primarily for the semiconductor industry. The software system is called Modelware.
They are based in vancouver and trade on VSE under TNT but a NASDAQ bulletin board
listing is imminent as TNTTF.
Current Situation
Triant are part of SEMATECHS process control initiative, it has signed three major marketing agreements recently with Metron, Innotech and in the last two weeks Fastech.
Metron is a major semiconductor sales and service organisation focused on Europe /SE Asia. They will give Triant access to every semiconductor factory in these areas.
Innotech is there Japanese equivalent and they will provide the same.
But the best signing I think is is Fastech (www,fastech.com), who are a company which produces Semiconductor Factory host control software. Their system is the best of its type on the market and includes a process/equipment monitoring system. The fact that they want the Triant system underlines how good it is. Fastech are a worlwide organisation., they will provide triant with a sales pitch at the factory control level, to complement the equipment sales approach that Metron and Innotech will give.
A senior director of Applied Materials has recently joined the board. Also on board is james fletcher who has over twenty years experience in corporate and venture capital finance.
Explanation of System
I think its important to explain the environment that the software operates in, so here goes
The semiconductor industry has a variety of processing tools which are used to produce semiconductor wafers. The wafers go through hundreds of process steps before they become the finished product. Each process step usually has one particular type of processing tool to perform that step. Because of the volumes involved usually a number of tools are required to perform a particular step. This results in huge factorys containing hundreds of machines costing millions of dollars each. The cost of a new semiconductor plant is now well over 1 billion dollars.
If a particular tool develops a problem it can be very hard to spot during production, often only
coming to light when wafers have been completed. This causes huge losses in the industry with individual problems costing millions of dollars.
These problems are usually caused by some small equipment fault which has caused the processing
conditions for the wafers to change slightly
Many semiconductor factorys have their procesing equipment linked up to a central computer
which monitors data from the equipment and attempts to spot deviations in processing conditions before
too much product has been affected.
This approach has had limited success.
Triants system sits in the data output of these processing tools and monitors the equipment at the same time as the host system, as well as having data fed directly into it from other sensors on the equipment.
The modelware software is much more powerful than any host monitoring software i am aware of.
Basically the system monitors a good process run and this becomes the model against which future processing runs are judged. It can stop processing as soon as any deviation becomes apparent.
Competition
The data output from each semiconductor processing tool is unique. I'm sure some company could
produce competitive software, but to characterize it for the hundreds of different procesing tools
which are used would take time and the support of a major semiconductor manufacturer. I see no incentive for a manufacturer to go through this costly and time consuming process when the triant system already exists. Triant has completed some installations for Motorola, LSI logitech. I think they have such a lead that others will be discouraged from entering and they will corner a previously untapped niche.
Market size
There are over 120 semiconductor factorys in california alone. With each semiconductor factory having hundreds of pieces of equipment. Triant put the market at around $200 million I think the software is retailing at around $20,000 per system but i believe their are various licensing aggreements.
20,000 * 50 wafer fabrication plants * 200 process tools = $200 million
Future Markets
The lifetime of semiconductor equipment is incredibly short (usually only a few years)considering the cost of the equipment. With the constantly improving processes, new types of equipment are required, each one will require a new version of modelware ( as they are individually characterised). So as well as an installed base of equipment to sell too, a steady stream of new equipment is more or less assured. The semiconductor industry has just begun the transition to next generation 300mm wafers.
Additionally the communication control protocol that the Semiconductor industry uses is beginning to permeate into other areas. For example Candescent a thin CRT silicon valley start up company are using the same communication technology to control there manufacturing equipment. This I believe is a market
which Triant can tap in the future.
Share price
Price is down to ~ 20c from $1, inversely the company has in my opinion improved its prospects considerably, with the sales agreements now in place and the addition of strong management.
Semiconductor Market
The profits of Semiconductor companys have fallen recently due to DRAM prices, and Asian problems , however I think the companys are still prepared to pay for software which will improve their yield.
They are still producing, the only problem is they are currently not getting the huge profits they have enjoyed in the last couple of years. The last thing they want to do is to have to scrap product they spent months manufacturing because of a process problem in the final stages of manufacture.
The semiconductor industry is renowned for its up and down cycles, but so far after every down cycle their has been an up cycle.
Stock Monitoring
Because its a VSE stock with low market cap its hard to get data on it, but you can use www.wallstreetcity.com using tnttf symbol. They have excellent charting facilities, MACD, stochastics etc and its free. But my opinion is that technical analysis on a stock at this price level and volume is of limited use, i'm preferring to analyse it at the moment on a fundamental basis.
Triants website is www.triant.com. The companys financials are posted there.Theres also an SI thread
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