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To: Tech Master who wrote (12311)	2/24/1998 10:48:00 AM
From: Andrew Vance	Read Replies (2) \| Respond to of 17305

AV -- IMPORTANT INFO and STORY The following story is significant since it merges numerous things together: Grant Willson is an ICON in Microlithography. He has co-authored a book that is used and has been used as the foremost training/tutorial reference book for training many of my fellow lithographers, I have previously spoken about an up and coming company (ISI) relative to its SEMATECH involvement and the BellLabs SCALPEL process, DUV has been validated for numerous process technologies now which ends some of the previous worries and discussions that it was a short lived light source this breakthrough could expedite the overall feature size design technology by 5-7 years (further compressing the cycles), keep Moore's Law on track, definitely establishes CYMI as a key provider of enabling technology. DPMI and PLAB become critical suppliers to this enabling technology. ASLMF will not be left in the dust, nor will the other stepper manufacturers. Ladies and Gentlemen, you are looking at a WHEN and not an IF this technology takes off. You have the players and only yourselves to blame by not being properly positioned in these stocks when you feel the timing is correct. Only that you see below is further validation and data supporting my comments in lithography over the past year or so. Long term, these are quality places to be. I have been adding to my position continually for the FUTURE. Somewhere buried among this short list is a company that will parallel INTC, MSFT, or DELL in price performance over the next few years. BTW-Consider this a SPAM since it will be copied to 5 SI Threads. I am doing it for the community and our communal pocketbook. Also consider it real time analysis of stuff that has not yet sunk into the minds of those movers and shakers within the financial community. They still need to decipher this stuff into meaningful non technical and financial terms. You all have a leg up now. Other comments are always welcomed and doing further Due Diligence and research is always important prior to making an investment. I can only bring information to your attention and it is up to you to make the final decision. UNIVERSITY OF TEXAS TEAM ACHIVES 0.08 MICRON BRAKTHROUGH Feb 24 1998 Semiconductor Production Technology Business High Tech Editors AUSTIN, Texas-(BW)--Feb. 24, 1998 DuPont Photomasks Supplies Required Phase Shift Photomask A University of Texas graduate student research team led by Dr. Grant Willson has successfully completed a SEMATECH funded project to print 0.08 micron features on a semiconductor wafer using a 193 nm wavelength stepper. Currently, the most advanced commercial semiconductor designs are manufactured using 0.25 micron process technology, and the Semiconductor Industry Association's recently revised roadmap based on the collaborative work of 300 scientists from industry, government and universities does not call for 0.08 micron feature sizes until the year 2009. The University of Texas breakthrough is especially impressive since it was achieved with a 193 nm Deep Ultraviolet (DUV) stepper while many industry experts believed it would be necessary to develop new post-optical technology to produce feature sizes at or below 0.10 micron, One micron is the equivalent of Approximately 1/25,000 of an inch. Each feature resolved at 0.08 micron is approximately 320 atoms wide. The 0.08 micron features were generated using an etched quartz phase shift photomask produced by DuPont Photomasks, Inc. (NASDAQ: DPMI), more commonly referred to as DPI, in their Round Rock, Texas production facility- Photomasks are high purity quartz plates that contain precision images of the features that are patterned onto semiconductor wafers with lithography steppers to build integrated circuits. The task of building photomasks to enable semiconductor production becomes progressively more difficult as feature sizes shrink, and special techniques such as phase shifting must be incorporated in photomasks to provide the required degree of precise focus. Phase shift photomasks function by allowing a small percentage of the light through the photomask while simultaneously altering the phase of the light transmitted allowing for improved depth of focus and higher factors of resolution. Another essential component in the semiconductor manufacturing process is the photoresist, a chemical substance that interacts with the light source to pattern the image at the required feature sizes onto the semiconductor wafer. The photoresist employed by the University of Texas team, an amorphous polyolefin, took three years to develop. The polymers had to be specifically designed to work with the 193 nm wavelength DUV light source used by the ISI 10X stepper to pattern the features, polymers widely used today by semiconductor producers are formulated for use in processes utilizing 365 nm i-line or 248 nm DUV light sources and are opaque when exposed to 193 nm light sources. Dr. Grant Willson. professor of chemistry and chemical engineering at the University of Texas, led the research team that successfully generated the 0.08 micron features. "I didn't believe it could be done at first," said Dr. Willson, "It really works better than my wildest imaginings, and it appears that 'the process latitude is there to generate smaller features yet." "This is a remarkable achievement for the University of Texas research team, and DuPont Photomasks is pleased to have assisted in their work," said Gil Shelden, DuPont Photomasks' director of engineering. "This is further proof of the enabling power of photomasks in the semiconductor manufacturing process. As the industry's leading producer, DuPont Photomasks is focused on creating the photomask technology that will keep the industry moving forward." The project was funded by SEMATECH, a non-profit research consortium of 10 semiconductor manufacturers, and the 0.08 micron features were generated at SEMATECH's Austin facilities. Kyle Patterson, a University of Texas graduate student on the research team, will.. Andrew

To: Tech Master who wrote (12311)	2/24/1998 11:04:00 AM
From: Andrew Vance	Respond to of 17305

AV--A MOTLEY response for today indirectly related to APM. Since I have shied away from the DD sector and Motley seems to agree, is that good or bad?<GGG> Andrew The Daily Trouble (Archive) Feb 24, 1998 Read-Rite Corp. (Nasdaq:RDRT - news) Phone: 408-262-6700 Website: readrite.com Price (2/23/98): $13 7/8 HOW DID IT FIND TROUBLE? Reading, writing, and arithmetic may go together, but the numbers just have not been adding up for computer disk drive head supplier Read-Rite. General chaos in the disk drive industry following turmoil in Asia has led to price-cutting and a rapid technology transition by key Read-Rite customer Western Digital (NYSE:WDC - news) . As special charges have stacked up, this head maker has found itself on the chopping block. The shares started drifting down from the August high of $30 as investors worried that excess inventories at industry bellwether Seagate (NYSE:SEG - news) meant component suppliers would start feeling price pressures. The October market meltdown sank the stock below $20, where it's pretty much stayed. On November 7, Read-Rite echoed sentiments expressed by Western Digital, saying that it would accelerate its transition to higher performance magnetoresistive (MR) head technology while cutting its production of inductive thin film heads for the 1.3 gigabyte market. This combo meant the firm would miss revenue and earnings estimates for the December quarter and be forced to take a $30 million charge on its inductive technology. Then Singapore Technologies announced that its Micropolis subsidiary, one of Read-Rite's minor customers, was being liquidated. Read-Rite was forced to reserve $15 million to account for receivables, inventories, and other Micropolis-related exposures. On January 5, Read-Rite announced that shipments for the last two weeks of December were even weaker than expected, resulting in first quarter sales of $261 million. That was only slightly above year-ago levels and well below fourth quarter revenues of $318 million. Plus, the transition to MR was forcing additional charges. Actual results reported January 21 showed an after-tax charge of $91.8 million and operating earnings of just $0.02 a share. BUSINESS DESCRIPTION Read-Rite is the world's largest independent supplier of magnetic recording heads. These heads hover just a microinch above a computer's hard disk drive platter, reading and writing data. The company designs and manufactures heads as head gimbal assemblies (HGAs), which include a magnetic recording head attached to a suspension arm and a wire/tubing assembly. Most HGAs are sold as headstack assemblies (HSAs), a combo of several HGAs (2 to 8) with other third-party components. Although its products are used mainly in 3.5" disk drives (98% of sales), the company believes it supplies a broader range of drive products (52 in 1997) than any other independent supplier. On the other hand, its 107 million HGAs sold last year went to just six customers, with Western Digital, Quantum (Nasdaq:QNTM - news) , and Maxtor accounting for most of its revenues (51%, 18%, and 13%, respectively versus 43%, 29%, and 12% for FY96). The shift to higher performance MR head technology should be dramatic. In FY97, Read-Rite sold 24 million MR heads, increasing MR product sales to $280 million (24% of revenues) from just $34 million the year before. MR products should account for the majority of sales in FY98. Competitors include Japanese firms TDK/SAE and Yamaha and U.S. companies such as Applied Magnetics (NYSE:APM - news) and the internal head operations of drive manufacturers such as Seagate and IBM (NYSE:IBM - news) . In November, IBM announced that it was expanding its manufacturing operations to include a giant MR (GMR) program that would produce heads for next generation 3.2 to 16.8 gigabyte products. The company has manufacturing operations in California, Japan, Thailand, Malaysia, the Philippines, and Singapore, employing some 24,500 people. Insiders own about 4% of the stock. FINANCIAL FACTS Income Statement 12-month sales: $1,171.9 million 12-month income: $88 million* 12-month EPS: $1.81* Profit Margin: 7.5%* Market Cap: $729 million (*Excludes all charges: $1.9 million for debt pre-payment; $14.8 million Micropolis loss reserve; $92 million reserve for inductive head phase-out) Balance Sheet Cash: $227.5 million Current Assets: $458.5 million Current Liabilities: $211 million Long-term Debt: $417 million Ratios Price-to-earnings: 7.7 Price-to-sales: 0.62 HOW COULD YOU HAVE SEEN IT COMING? In May, Quantum formed a joint venture with its primary Japanese manufacturing partner, Matsushita Kotobuki Electronics (MKE), to make MR recording heads for its drives. This represented the latest move by Quantum to find another head source and prefigured Read-Rite getting locked out of Quantum's 2.1 gigabyte drive program. Read-Rite was thus hugely and increasingly dependent on Western Digital, a major risk for any supplier. Also, both were slower than others in the industry to transition to MR technology. Had the pricing environment held up, that might have been no problem. But Seagate's inventory troubles and the ensuing price slashing by Fujitsu, exacerbated by the Asian financial crisis, spelled trouble. As a rapid and costly shift to MR became inevitable, inventory write-offs loomed. WHERE TO FROM HERE? Sales to Quantum won't be significant during the first nine months of FY98. And analysts see substantial losses for Western Digital through at least the next two quarters. Both are major negatives for Read-Rite. Meanwhile, the firm's capital expenditures this year will run $250 to $300 million. Moreover, HSA sales have accounted for a growing portion of Read-Rite's total sales (67% last year, up from 57% in FY96). Because HSAs consist of a bunch of purchased components, they carry much lower gross margins for Read-Rite than do the plain old HGAs. Plus, tough industry pricing overall is expected to persist for several quarters. So Read-Rite is due for a lot of near-term pain. The analysts have basically written off FY98. Earnings estimates of $2.56 a share three months ago have been slashed, with the real consensus revision probably close to the worst-case projection of a loss of $0.84 per share. Analysts are looking for a recovery thereafter to $1.00 per share or more for FY99. The good news is that the market has now squarely adopted MR technology, and Read-Rite is coming along. In the first quarter (ended in December), MR heads accounted for 46% of sales. Moreover, Western Digital expects to see 80% of its products using MR technology by the June quarter (up from 20% in the December quarter). That suggests that Read-Rite's overall sales should move rapidly to MR over the next few months. Plus, Western Digital's near-term dependence on Read-Rite for supply may support gross margins for now. Read-Rite also has been qualified as a suppler by five customers for the next generation 2.8 gigabyte MR heads. Investors looking for a beaten-down play in the disk drive industry should include Read-Rite among the candidates. On the other hand, the company's even greater dependence on its current customers suggests that it may prove a laggard in a recovery.