Gerald & Intel Investors - Intel May Choose Novellus AND Applied Materials for Copper PVD (Physical Vapor Deposition) equipment.
Sounds like Intel is getting close to making major purchase orders for copper development and/or small pilot line production.
And, Intel seems to want to use some LEVERAGE on AMAT to keep Intel's expenditures in line - and a LID on costs !
Paul
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08/03 3:17P (DJ)
Intel Expected To Select Novellus For Chip-Making Upgrade
Story 1040 (AMAT, IBM, IBM.A, INTC-D, INTC, NVLS, I/CPM, I/CPR, I/SEM...) By Christopher Grimes, Staff Reporter NEW YORK -(Dow Jones)-
Semiconductor giant Intel Corp. is primed to select Novellus Systems Inc. as a supplier of gear to build chips with ultrafast copper circuit connectors, a technology thought to be crucial in future generations of semiconductors, Merrill Lynch & Co. analyst Mark FitzGerald said Tuesday.
FitzGerald said Intel (INTC) should make the selection soon. Novellus (NVLS), which manufactures equipment used to make semiconductors, could end up splitting the contract with the industry leader, Applied Materials Inc. (AMAT). "We think that the odds are better than 50-50 that Novellus will win this bake-off, or at least split the business," FitzGerald said. Santa Clara, Calif.-based Intel is the world's largest chip maker, purchasing about 10% of all chip-making equipment. San Jose, Calif.-based Novellus has had a difficult time penetrating the Intel account, FitzGerald said. As PC prices fall, pressuring the price of its microprocessors, Intel is increasingly focused on costs. It wants to have two equipment suppliers - Applied and Novellus - to make prices for the gear more competitive, the analyst said.
The gear in question is called PVD, or physical vapor deposition. These systems are used to deposit the metal lines used in the chip. Right now, circuits and their connectors are made out of aluminum, which doesn't conduct electricity as well as copper. The copper technology was pioneered by International Business Machines Corp. (IBM).
Applied's PVD product carries a profit margin of 65%, well above the company's average margin of 48%, FitzGerald said. "Intel knows there's a lot of room to bring prices down in this marketplace and they want to have two vendors to make it more competitive," he said. "Intel is focusing on costs like never before." FitzGerald said the PVD tool market could total $1.2 billion in 1999.
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