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Politics : Formerly About Applied Materials -- Ignore unavailable to you. Want to Upgrade?

To: Proud_Infidel who wrote (30919)	6/9/1999 6:15:00 PM
From: Henry Eichorszt	Read Replies (1) \| Respond to of 70976

Intel, Motorola moving to larger semiconductor wafers (New throughout; adds analyst, executive comments) By Duncan Martell PALO ALTO, Calif., June 9 (Reuters) - Intel Corp. on Wednesday made the long-awaited move to using larger silicon wafers in producing its computer chips, allowing it to cut costs by about 30 percent per semiconductor. The world's largest chipmaker (Nasdaq:INTC - news) will begin using the dinner-plate-sized wafers in high volume in early 2002 using next-generation copper technology. Currently, the industry uses wafers that are roughly the diameter of a salad plate, or about 8 inches (200 millimeters) across. Moving to the larger wafers is a massive undertaking for the industry, requiring millions of dollars of research and development by chip-equipment makers such as Applied Materials Inc. and others. But the much-anticipated move had been put on the back burner because of the Asian economic crisis, which erupted in July 1997 when Thailand devalued its currency. Now, though, Intel said that the newer, multimillion dollar equipment is ready and it expects to start ordering the machines during the next several months. By moving to the larger wafers, the 31-year-old chipmaker, which had 1998 revenues of $26.3 billion, gets more chips per wafer and that cuts its costs. This would result in lower prices for chips sold to computer makers and other high-tech firms. ''While your wafer costs do go up with the larger wafers, you get significantly more (chips) per wafer, so the economics are pretty positive,'' said analyst Mark Edelstone at Morgan Stanley Dean Witter in San Francisco. Analysts also expect that Intel's move will jump-start a migration to the newer technology. Already, chip- and cell-phone-maker Motorola Inc. (NYSE:MOT - news) is underway with its move to the 12-inch-diameter (300 millimeter) wafers. Taiwan Semiconductor Manufacturing Co. said in late May that it would have a 12-inch wafer plant on line in 2000. ''Everybody has to do this, but it's a question of when do you have to cough up the money,'' said analyst Daniel Niles at BancBoston Robertson Stephens in San Francisco. The news helped Intel and chip-equipment stocks rally. Intel stock climbed $1.31 to $53 on the Nasdaq, while Applied (Nasdaq:AMAT - news) added $1.50 to $63.31, Lam Research Corp. (Nasdaq:LRCX - news) rose $2.13 to $34 and KLA-Tencor Corp. (Nasdaq:KLAC - news) advanced $3.56 $53. On May 18, when Applied -- the largest maker of chip-making equipment -- reported second-quarter earnings, it said it would pare spending on 300-millimeter technology until customers expressed an interest in the new machines. That time appears to have come. ''It's been obvious for some time that 300-millimeter will be a good cost reduction for our products,'' said Michael Splinter, head of Intel's technology and manufacturing group. ''The question has been when will the equipment be ready.'' The larger wafer represents more than a doubling of the surface of the current wafer, allowing for 2.4 times more die, or chip, per wafer. It expects to begin volume production using the larger wafers about a year after it begins chip production using 0.13 micron technology on the now-standard wafers. ''This will certainly help revenues at the chip-equipment companies,'' said Sue Billat, an analyst at BancBoston Robertson Stephens. ''The timing is good.'' ------------------------------------------------------------------------ More Quotes and News: •Applied Materials Inc (Nasdaq:AMAT - news)•Intel Corp (Nasdaq:INTC - news)•KLA Tencor Corp (Nasdaq:KLAC - news)•Lam Research Corp (Nasdaq: LRCX - news)•Motorola Inc (NYSE:MOT - news) Related News Categories: US Market News ------------------------------------------------------------------------ Help ------------------------------------------------------------------------ Copyright © 1999 Reuters Limited. All rights reserved. Republication or redistribution of Reuters content is expressly prohibited without the prior written consent of Reuters. Reuters shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon. See our Important Disclaimers and Legal Information. Questions or Comments?