MSDW part 3
-In 1997, the deep-ultraviolet photolithography market was 283 units. Based on demand weakness over the past few quarters, our new 1998 DUV photolithography market forecast is 325 units, down from 430 previously. Our new estimate assumes the DUV system market grows 15% in unit terms with capital spending down 30-35%. In dollar terms, DUV market growth should exceed 20% with a richer mix of systems.
-Based on our 1998 photolithography system market estimate of 325 units, our new 1998 laser market estimate is 371 units, down from 450 previously. We assume Komatsu and Lambda Physik together shipped about 30 lasers into photolithography system vendors for evaluation, testing, and beta sites (30 may be too high). Therefore, we assume Cymer represents 92% of the market. However, 100% of volume chip production on deep-UV photolithography systems worldwide is done with Cymer lasers. In fact, if it were not for Cymer, there would be no reliable 0.25-micron laser-based DUV chip production.
-Our new DUV photolithography system market estimate for 1999 is 375, down from 450 previously, and our new 1999 laser market estimate is 395, down fro 531 previously. Our 1999 laser to photolithography system ratio is 1.05 following our estimate of 1.14 in 1998. Our initial 300 unit estimate for Cymer in 1999 assumes a 76% share of the market, but upside is likely because our research indicates neither Lamda Physik nor Komatsu has been qualified for volume production has been qualified for volume production by any chipmakers.
-As the current excess laser inventory situation likely vaporizes in mid-1999 and longer-lead time scanner demand becomes dominant, we expect laser to lithography system manufacturing lead times to expand again. Therefore, our initial 2000 laser market forecast is 600 units, which represents a 1.14 ratio to our 2000 DUV photolithography system market estimate of 525 systems. Similar to our 1999 estimate for Cymer relative to the market, our initial 2000 forecast for Cymer assumes a 78% market share.
Shareholder Lawsuit
-Cymer announced on September 4 that it is the target of a shareholder lawsuit charging that the company's management issued intentionally false or misleading statements to the public between April 24th and September 26th, 1997. Similar to the spate of shareholder lawsuits that characterized the semiconductor and semiconductor capital equipment industries after the 1993-1995 cycle, we believe Cymer can prevail if this case ever goes to court. However, if reasonable terms can be achieved to get the hassle out of the picture in order to keep management focused on the business, Cymer would probably consider biting the bullet and settle the case as many other technology companies have. Either way, we do not expect this issue to lead to a material fundamental or financial problem for the company.
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