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To: Investor2 who wrote (711)	12/8/1997 5:19:00 PM
From: Andrew Vance	Respond to of 1305

This concept is not new. The "mini-fab" is just an extension of the "Applications Lab" many equipment manufacturers have had in use for quite awhile. I will use UTEK and a Resist Vendor as examples. UTEK built steppers but had resist application, develop, and cleaning equipment in their Apps Lab for years in order to process customer demo wafers. Some of the PhotoResist Vendors had labs with Resist application, develop and cleaning equipment along with steppers, etchers, and some deposition or diffusion equipment to allow complete in house testing and development of new generations of products. To take this one step further companies like Eaton and AMAT that have a wide range of equipment used in the industry often put together these mini-fabs (actually I want to call them pilot lines) to demonstrate "processes" to the point of actually creating functional wafers. SEMATECH in Austin is a consortium of companies that got together and put together one of the largest pilot lines where existing and new generations of equipment from the equipment sector were put through their paces and all the bugs were worked out as they created process modules for the member companies. What is being talked about is just another word for a pilot line. many big IC manufacturers have pilot lines where they shake out new processes before they go into full scale production. Some of them call them R&D lines or R&D facilities. This is not to detract from the comments made in the post you linked me to. The mini-fab is useless to an INTC or MU which needs high volume production capabilities for the types of products they manufacture. The mini-fab is definitely adequate for the low volume ASIC providers, fast turn prototype houses or even fabless Design houses that want real fast turn around on new designs. Gate Arrays usually met this demand and then well converted into cell based silicon. IF you had a one chip product like a GigaPet (heaven forbid), you might be inclined to have your own mini fab but it really is a very expensive proposition give the cheap foundry wafer costs. I see no real future to the mini-fab unless it is the apporach used by Fabless semiconductor design companies to meet initial customer prototype or limited production demands prior to off loading it to a foundry. I know what $80 million would buy you these days and it is a very unrealistic production capability and is more of a functional R&D capability for limited customer requests. The money quoted does not have adequate back up equipment nor does it have a competitive cycle time associated with it. It is also very cost inefficient, again relegating it to high margin prototype business. I really do not want to ruffle the author's feathers on this but it seems to me that the Eaton story is consistent with what has been done in the past. For a broad based provider of equipment, what better way to sell your product line than to produce or develop products utilizing as much of your product offering as possible. This approach is consistent with a comment made by me in the past. Pretty soon you will be calling up a company like AMAT (equipment) and Fluor Daniels (Design and Construction) and say "Hey, both of you get together and deliver me a fab that manufactures X,XXX wafers a week at 0.x0u capability, complete with process modules for the following design requirements. Call me when you have the quote and then call me when the facility is complete and ready to be turned on". And believe me, AMAT could go into the IC manufacturing business if they want to. They have enough equipment and $$$$ to put a heck of a fab together. Their Applications Engineering Department have worked on so many novel processes with their end customers, they must have a cornucopia of process talent and expertise in house. they would only need a device to build and order that equipment that they do not already provide to the industry. Again, just a response to you request. A opinion just like the link you provided. Have a good night. Andrew