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Technology Stocks : Applied Materials No-Politics Thread (AMAT) -- Ignore unavailable to you. Want to Upgrade?

To: robert b furman who wrote (3528)	10/8/2002 9:14:58 PM
From: Proud_Infidel	Respond to of 25522

ITC keynoter optimistic on recovery By Nicolas Mokhoff EE Times (10/08/02 03:25 p.m. EST) BALTIMORE — Alex d'Arbeloff has weathered more than a few downturns in the 40-plus years since he founded test equipment maker Teradyne Inc., and he's confident the electronics industry is on its way to a healthy recovery, he said in his keynote address Tuesday (Oct. 8) at the International Test Conference (ITC) here. D'Arbeloff, the current chairman of MIT Corp., painted two possible scenarios for the test equipment industry and by extension the semiconductor industry. One involves normal cyclical growth of a technology-based industry, and the second involves a more mature cycle that reflects the possible commoditization of the test industry. "This second scenario says that basically there is a fundamental switch in the test industry — from one that relies on technology innovation where products are bought based on performance, to one where commodity products are bought on lowest price," he said. D'Arbeloff backed the first scenario and said he is dead set against an industrywide open architecture infrastructure that would allow various modules to be mixed and matched in any test vendor's standardized rack. "That approach won't work in the ATE industry, where the value that is offered to test equipment users is the system integration done by ATE vendors, which otherwise users would have to pay," he said. "In the end they would end up paying ten times as much for doing the integration themselves, or for having an outside service bureau do it for them." During his tenure as Teradyne's leader, d'Arbeloff said a semiconductor vendor would spend from 1 percent to 3 percent of its revenue for equipment to test its chips. "That's what the test companies relied upon to lead them to the next test technology innovation to keep up with testing ever more sophisticated chips," he said. An industry that exhibited a "commodity fever" would not allow that to happen and "test innovations would simply die," he said. Hidden costs D'Arbeloff warned against the seductiveness of an open architecture that would purportedly relieve semiconductor vendors from increasing test costs. "That argument has been made for the last 40 years but it hides one important aspect — the system integration costs that the user gets with his test equipment," d'Arbeloff said. "With an open architecture the system integration costs are absorbed by the user, the semiconductor vendor." The wisdom of d'Arbeloff's choice of a conservative scenario for a standard cyclical semiconductor rebound remains to be seen. Many test companies are tightening their belts and forming partnerships to reduce costs and share development expenses. Some even decided to forgo this year's ITC, the test equipment industry's largest trade show. Among the larger players not in attendance here were d'Arbeloff's former company, Teradyne, as well as Credence Corp.