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

To: C_Johnson who wrote (7692)	10/23/2003 11:55:28 AM
From: rhering	Read Replies (3) \| Respond to of 25522

RE: Upgradeability is key Carl, You are right, upgrade is a key term in my note. I know of one company that pushed P5000's well beyond what anybody thought was practical. It does happen. I also think that in times of financial constraints the used equipment market tends to heat up. Going forward with 300MM most equipment firms have done a better job of standardizing components at a more modular level so future upgradeability should also be easier. One side of the equation is what is technically possible with a piece of equipment, another is what is the ongoing cost of ownership of the old or upgraded tool, compared to a new tool. In that cost of ownership are variables that can mean very different things to different chip manufacturers (.ie throughput, footprint, consumables, software standards etc...) Given this, as you say, there will be niche markets for old equipment for certain manufacturers and applications. But at this point I think the percentage of 300MM systems being sold is increasing rapidly. It is definitely above 50% and maybe 60-70%. (I thought I heard 70% on the KLA call yesterday). The 200MM systems still are pumping out product but I expect the amount of R&D being put into them has fallen off quite a bit. I’ve never seen a stacked bar chart of chip revenue by technology over time but historically speaking my guess is that after 5 years from its peak technology buy a technology node would be down to less than 25% of the total. As the complexity of moving to the next node increases it's virtually certain that time between nodes will lengthen, so looking forward the downward slope will decrease somewhat. As a chip equipment investor I would hope that increased tool R&D investment will be covered in the pricing of the tool, and additionally offset by the number of tools needed to handle increased chip complexity. Over the near term I expect the transition to 300MM will accelerate the retirement of older technology systems. It will be interesting to see in three years time what percentage of chip revenue is 200MM & lower vs 300MM. Regards, Roger

To: C_Johnson who wrote (7692)	10/23/2003 1:37:15 PM
From: Cary Salsberg	Read Replies (3) \| Respond to of 25522

Hi Carl, I have a subject that has not been discussed much in what I have read. 248 nanometer DUV lithography tools were extended from the 0.25 micron line widths all the way down to 0.10 micron linewidths. This was the first time that tools were extended to line widths smaller than the tool's wavelengths and the extension process went on and on. I would guess that this process improved the chipmaker's ROI on litho tools and slowed the sales growth and reduced the profitability of the litho tool makers. Now, the move is to 193 nanometer, 157 nanometer, and EUV (or possible other methods) for 90, 65, and 45 nanometer linewidths (.09, .065, .045 microns). Each of the DUV tools starts at linewidths considerably smaller than their wavelengths, so they can not be used for as many nodes as 248 was. 193 immersion is being considered to extend 193 to the 45 nanometer node. I believe that the industry is entering a "payback" period where the stability and ROI gains made by 248 nanometer tools, as they borrowed from the future, is replaced by more instability and lower ROI levels for the chip makers, and higer revenue and profits for the litho tool vendors. 193 will be used for 90 and 65, and either 193 immersion, 157, or EUV will be used for 45, with 157 immersion or EUV for 32, and EUV for 22. 193 at 90 and 65 pushes the limits of line widths smaller than wavelengths, while 193 immersion, 157, and EUV are new, untested technologies. There are only 3 litho vendors. 2, Nikon and Canon, are not primarily litho vendors and have other larger, very successful businesses. It seems to me that the industry is depending on 3 companies to successfully develop 3 new tools, using 3 new and different technologies, in a relatively short time frame. The industry is divided on what they say they will use and they feel very comfortable in changing their minds downstream. I think that chickens come home to roost when chip makers need to take delivery of these new tools and ramp up production. I expect that these conditions will lead toa relative "golden age" of profitability for the 3 litho tool vendors, if, indeed, there are 3 left. I am certain about 1, ASML, and I expect it to be the "golden boy" of the semi-equips. I would appreciate any comments that bring my "forest" closer to the "trees." TIA