** KLAC Interview **
Note the two year forecast. Hmmmmmmmm.........
CNBC- SQUAWK BOX
INTERVIEW WITH KLA-TENCOR CEO KEN SCHROEDER
JULY 12, 1999
SUMMARY: Schroeder comments on the semiconductor
industry and his goals for the company as the new CEO.
Mark: With things looking up for the industry, there's a lot to
discuss. We'll find out what's hot for the sector in today's
CEO call, with the new CEO of KLA-Tencor, the world's
largest maker of tools that identify imperfections on
computer chips during manufacturing. Good morning, to Ken
Schroeder joins us. He assumed the role of CEO just last
month. We can't blame anything on him yet. Good morning,
sir.
Good morning, Mark.
Mark: Thank you for being with us. You are the new man on
the block in just a month, what is the game plan, what are
you thinking about where you're taking this company?
I'm pleased with the first few weeks, the stock's been up
about ten points since I've been appointed CEO, so I'm
happy with that, but I think really concentrating on two
things, that is earnings and growth. And over the long-term,
growth, I think we've got a great couple years ahead of us
and we should do well in terms of increasing earnings.
Mark: How are you going to grow the company? You are in
the arena with Applied Materials which virtually is an end to
end supplier now.
Applied is the leader in process equipment, but KLA-Tencor
is really the leader in yield management and process control
equipment. Of that market segment, it is about a $2 billion
segment, KLA-Tencor has about 50% of that segment, and
there about 30 other companies that split the other 50%. So
the first thing is to continue to grow in that segment, and
then secondly, we are going to be entering some other
markets that we think are attractive to our company also.
Gregg Hymowitz: To that point, production yields now close
to 90%, how do you motivate and persuade the fabs to use
more of your processes, given where the production yields
already are?
They are 90% on old technology but as you know, the
industry keeps changing technologies. If you take a look at
copper, for example, the yields on copper are maybe in the
10 to 30% range worldwide today. And with copper being a
major technology change in the future, companies are going
to need KLA-Tencor equipment and software and
methodology to get the copper yields up.
Mark: I am going to need to change my equipment?
Of course. What you have now is a new fabs being built, and
expanded but you have to go to a new equipment set, one
for a larger wafer size, 300 millimeter, and copper requires
new equipment and new yield management also.
Mark: If I have a fab and look at this going on, frankly, I don't
know how this is going to sort out, but I don't want to buy a
bunch of new equipment for copper and have to turn around
and ditch it all when 300 millimeter comes along or
vice-versa. Are you experiencing any gridlock, as people
uncertain of timing put off purchases until they figure out
exactly what they need when?
I think all of the customers need to watch their capital
dollars closely, but the customers know that economics will
be with 300 millimeter and with copper. When they buy a
copper tool, they will buy a 300 millimeter tool and when
they buy KLA-Tencor, it also will be 300 millimeter
compatible, if they are buying it for copper.
Gregg Hymowitz: You've seen a pick up in Asia, I
understand, but what are you seeing in Europe?
Europe has been strong also, and there are a number of
European companies like Seimans and ST that are very
strong but American companies that have facilities there.
The equipment industry, if you look forward to Year 2000,
we're looking at about a 25% growth in building backlogs to
be able to achieve the numbers in the year 2000.
Mark: I want to go back and pick up a thread we left
dangling. You said with regard to the company growing
going forward, there are other areas you can see the
company getting into but you didn't specify which. Which
areas might you get into?
In the present businesses, we'll be getting into more
software, also in terms of process module solutions, we call
selling a copper solution as a whole package in terms of
bringing a total solution to the customer base. Other
segments outside of our business but have the same
advantages, use our core competencies, are things like data
storage and wafer manufacturing, those areas we will be
growing in also.
Mark: The testing and quality and yield control of same,
right?
That's right, the process control and yield management,
using the core competencies we have as a company.
Mark: Thank you. Best of luck to you. Appreciate it.
Appreciate it.
Mark: Ken Schroeder, CEO of KLA-Tencor. |
