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Technology Stocks : Mattson Technology -- Ignore unavailable to you. Want to Upgrade?

To: Ian@SI who wrote (2203)	11/22/1999 7:08:00 PM
From: Philip W. Dunton, Jr	Read Replies (1) \| Respond to of 3661

Ian, Put on your rose colored blinders. The following is the semiconductor equipment excerpt from the CTSL annual State of the Technology Nation. <<This week's conference call by AMAT summarized the message we heard at the AEA--business is super. Last year we said it appeared that the equipment industry would see stronger sales by the middle of 1999. After one big buy in late 1998 from a Korean company, Samsung, the Taiwan foundries came in with huge orders for both capacity expansion and technology advances (shrinking line widths to 0.18 micron). U.S. logic manufacturers scrambled to get in line and then the Japanese finally started ordering this summer. Early this year, you could get a stepper delivered in 30 days, no problem. The lead time today is 15 months, if you beg. Our major positive call on the equipment industry last year was well rewarded with spectacular moves out of Applied Materials, KLA-Tencor, Lam Research, Credence Systems and Cymer. Cymer makes lasers for the aforementioned steppers--classic "front end" equipment. Credence makes testers to check out completed chips-- classic "back end" equipment. When both companies are doing well, as they are now, we know the whole industry is in gear. Even little Mattson, with great technology but only a $265 million market cap, has tripled this year. Mattson made an excellent presentation at the AEA and the stock rose almost $4 to a 12 month high yesterday. But there's more to come. The major buys now are for capacity expansion or to get down to 0.18 micron. That will continue through 2000 and 2001. By mid-2000, manufacturers will start deploying copper interconnect technology, replacing aluminum circuit lines with copper. Copper has to be processed in a totally separate facility using specially designed (and more expensive) equipment. In the move to 0.18 micron, chip makers can carry forward about 70% of the equipment they used for 0.35 or 0.25 production. The copper production lines have to be all brand new. That will carry the industry through 2001 into 2002. But we're not done yet. Intel and Taiwan Semiconductor (the biggest independent foundry) have committed to move from 8" to 12" wafers in 2001. That means installing a 12" R & D line in the second half of 2000 to get the bugs out of the process. Chips are 56% cheaper to make on 12" wafers than on 8" wafers, so the many competitors of these two leading companies also have to make the switch. Forget about carrying forward 70% of the old equipment; everything has to be new. That carriers the industry through 2002 into 2003. As we've said before, this is the first time we've had visibility on a four year upcycle in the semiconductor equipment industry.>>