PAinvestor -- I'll post a copy of your article to preserve it for the thread.
From the Capital Equipment pages of Electronic News: February 23, 1998
Issue
Cymer's DSM Labors May
Finally Pay Off
10 Years Of Excimer Laser R&D But What Technology
Lies Ahead?
By Dylan McGrath
San Diego--It may have taken longer than its founders had hoped, but
one San Diego company is finally reaping the benefits of years of hard
work. After 10 years of development, Cymer, Inc.--which produces
excimer laser light sources for use in deep-submicron (DSM) wafer
steppers and scanners--is finally basking in the light at the end of the
tunnel.
"From about 1986 to 1995, we were enduring a very lengthy process
development phase," said Robert Akins, Cymer president and CEO.
"We originally anticipated that excimers would be the light source of
choice for lithography, starting at about 0.5-micron dimensions. We
were very incorrect in that assumption, because I-line mercury bulbs
were extended to 0.5-micron and substantially below. The entry point
for excimers got pushed off to the 0.25-micron dimension. We've had a
long history; almost 10 years of technology development and market
developmental positioning before the real opportunity began."
But the real opportunity has certainly come knocking. Cymer's $203
million in 1997 revenue represented a 213 percent increase over the
company's $65 million in 1996 revenue. In 1995, the company had just
$19 million in revenue. In two years, its revenue, and seemingly its
importance, have grown by 10x.
In the early 1980s, Mr. Akins and fellow founder Rick Sandstrom, now
Cymer's VP of advanced research, were part of a team at work on an
excimer laser for use in the "Star Wars" strategic defense program. In
the mid-1980s, convinced that DUV would triumph over X-ray
technology for the DSM era, Messrs. Akins and Sandstrom decided to
develop and apply their laser technology in the area of microlithography.
For the next 10 years, while the company waited for the semiconductor
world to be ready for excimer light sources, Cymer further developed
the technology to make sure that it would be ready for the
semiconductor world.
The Decisive Moment
"For a technology development standpoint and a market share garnering
standpoint, we started the company at the right time," Mr. Akins said.
"It took a long time to get a robust technology. Because we were early
and could play in all the process development phases, we were able to
get very high market share while the market was still small. From a
financial standpoint, it would have been easier to start the company in
1990 or 1992 and not have as many years of no growth to contend
with. If we had waited that long, some other company would have
positioned itself as the company of choice and it would have been very
difficult for us to come in and change the dynamics of the industry."
Cymer's 5000 series of excimer lasers are used in wafer steppers and
scanners for DSM processes. Cymer's customer list begins and ends
with the world's four major stepper/scanner-producing companies:
Nikon, Canon, ASM Lithography and SVG Lithography. As
semiconductor companies increasingly shrink their chips in order to get
the most out of each wafer, DSM processes are entering their heyday.
Companies need DSM steppers and scanners, and DSM steppers and
scanners need excimer lasers.
Cymer, according to Pascal Didier, senior VP of worldwide customer
operations, commands an 88-95 percent share of the worldwide
excimer laser market. Although Komatsu Ltd. and Lambda Physik also
produce excimer lasers, Cymer isn't exactly feeling the heat. "Do we
have competition?" Mr. Didier asked. "Yes. But is it a competition in
mass production? No. I think we have a 100 percent production share."
In some ways, Cymer must cash in on its 10 years of technology
development while it can. DSM lithography's reign as the cutting-edge
champion could be approximately 10 years. Crucial industry debate is
under way about which technology will replace optical lithography as
the state of the art. Several candidates have emerged as possibilities,
but none use excimer lasers as the light source. In fact, Mr. Akins
concedes excimer lasers will not be incorporated into steppers and
scanners beyond optical lithography.
Does that mean Cymer is near its end? Mr. Akins points out that, while
optical lithography will eventually be replaced at the cutting edge, many
non-critical layers will continue to need photolithography. And
photolithography will continue to be powered by the excimer laser. Mr.
Akins even hints that a new product may be on the way from Cymer,
one that would be targeted at post-optical lithography. "We have been
very vague on the subject and will continue to be so, but we are in the
design concept phase of 13.2-nanometer EUV (extreme ultraviolet),
'soft' X-ray light source," he said. "We think there is an excellent chance
there may be a big market for that."
Of course, things haven't all been fun and games for Cymer. In
September 1997, reports began circulating about Cymer when word
surfaced that a customer had pushed out on order. Analysts and
insiders alike wondered whether a flaw in Cymer's technology had been
spotted. The rumor mills heated up. "As a new public company, we
didn't get out in front of a few events with enough guiding information,
enough facts," Mr. Akins said. "We let the marketplace speculate a little
too long and the rumors took on a life of their own. We weren't out in
front leading the market with facts, so they created some of their own."
Cymer's stock price began taking a dive around that time. Mr. Akins
said that added fire to the rumors, but explained that the stock price had
gotten ahead of the company's success. Lately, though, the stock price
has begun to rally somewhat. About midweek last week, it sat at $21, a
healthy push up from the 52-week low of less than $14.50, but still a far
cry from the 52-week high of $49.25. Although Cymer's stock has
begun to recover and to a large extent the industry's confidence in
Cymer is back, Mr. Akins doesn't quite believe the effects of the
rumors have completely worn off. "I don't know that it's all behind us,"
he said. "I think people will remember that because it was a noticeable
financial event. In a real way, I think it is behind us."
Challenge Ahead
The biggest challenge facing Cymer in 1998, according to Mr. Akins, is,
ironically, its own growth. While revenues have skyrocketed, so too has
the number of facilities, employees and plans. Mr. Akins said he knows
Cymer will have to manage its growth carefully to stay in control of the
company.
Like many companies in the industry, Cymer will feel the effects the
Asian financial crisis (AFC). In a financial statement released last month,
Mr. Akins said the AFC combined with the slide of DRAM prices has
Cymer anticipating a 10-15 percent reduction in revenues for 1Q98.
But, according to Mr. Didier, Cymer should be somewhat insulated in
respect to other companies. "Everybody has to be concerned when
Asia has a problem," he said. "But what's good about being on the high
side of technology is these things affect you less. People are still going to
have to buy DUV steppers, and DUV steppers are still going to need
excimer lasers."
With the long and sometimes stagnant climb to the top behind it--and
with the market seemingly cornered on a key technology--Cymer now
stands as a booming semiconductor equipment company that should
only get more successful in the immediate future. Recently, the company
retooled its management team, replacing laser technology experts with
veteran semiconductor equipment executives. Bordering on the height of
its glory, Cymer is a company in transition: from a pure technology
company to an all-around equipment company. |
