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To: Ian@SI who wrote (2183)	7/21/1999 9:40:00 PM
From: Katherine Derbyshire	Read Replies (1) \| Respond to of 2946

>>All the same, SVGI didn't develop the tool in a vacuum. It was 2 of their development partners that walked away. "Keep the money, keep the machine we paid for (with R&D advances), we'll go elsewhere, thank you very much. " << How about, "It's been great working with you, but we find that our needs have changed. The tool no longer fits our short term plans, but we will certainly give it another look when we do decide to migrate to 193 nm exposure systems." The important point (which IR completely failed to explain) is that SVG lost the business to 248 nm, not to someone else's 193 nm tool. They weren't wrong so much as early. Just like the people who spent roughly $4 billion industry wide on 300 mm tool development in the last few years. As I said, it happens all the time. Katherine

To: Ian@SI who wrote (2183)	7/21/1999 9:56:00 PM
From: FJB	Respond to of 2946

Ian, Good point. They had already poured several $M apiece into the development(sunk costs). To not want to ante up the last few $M is disturbing. Here is a recent excerpt about SVGL's ability to fund litho R&D. If Intel is the only company willing to fund their R&D, then there will be problems later, unless they get big revenues in the near future. Company chairman der Torossian acknowledged that SVGL — with about $300 million in annual lithography revenue — is too small to fund the development of several lithography platforms at once. Not only must the company continue to improve its 248-nm deep-ultraviolet scanners now coming into wide use, it must also invest in its troubled 193-nm ArF scanner and start up a 157-nm F2 program. eet.com Bob