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To: LLCF who wrote (1500)	3/13/1998 12:16:00 AM
From: FJB	Read Replies (2) \| Respond to of 2946

RE:what about SVGI's products in the long term? Any comments? They are still fairly bright believe it or not. They have a lot of crucial technology in-house. On the other hand, since they are quickly approacing(or have past) a point where supply will outstrip demand for Micrascans, they've got to go out and create some demand. They may service their big three customers very well, now they have to step up to the other 80% of the market and say they can do the same for them. Samsung used a Micrascan to create the world's first Gb DRAM, but it looks like ASML tools will be making them in production(if the creative financing works). At 193nm, reflective optics become critical and this is their major strength. They'll keep their current accounts, because they lead at the very high-end, but there must be a large demand for this very leading-edge stuff for them to do well. Of course, probably six months before the next up-turn in the cycle, the stock will move regardless of the underlying technology and all will be right in the world. When is that exactly? Hmmmm... Bob

To: LLCF who wrote (1500)	3/17/1998 12:33:00 PM
From: David Aegis	Read Replies (1) \| Respond to of 2946

DAK <what about SVGI's products in the long term? Any comments?> I've recently toured both the Thermco and Track facilities. The production people I met with all seemed to be bright, hard-working and optimistic about the future prospects for their products. Thermco has recently been adding headcount and production space to meet anticipated demand for certain new product developments including the RVP 300 and certain new film technologies (silicon nitride, nitride gates, TEOS) on the AVP machine and the RVP 200. Other people whom I've talked to have indicated that Thermco's main shortcoming was that its machines addressed too narrow a market need in anneal/oxidation. These new products should help address this problem. Anyone care to comment?? The Track personnel were also bright, hard-working and optimistic. Track was running only about one and a half shifts, and headcount was flat to slightly down. On the positive side, they indicated that they had shipped four APS 200's to four different customers for evaluation. The machines are currently being installed at the customer sites for evaluation. The Track employees claimed the APS 200 has certain advantages over the most advanced machines from TEL, including throughput, software control, set-up/modular changeability, and chemical usage. These two divisions generated $2 per share of earnings in the last upcycle at a time when the Micrascan division was not making any contribution to profits. The recent slowdown in capacity expansion should allow some of the new products from these divisions to gain a foothold. I would be very interested to here comments from anyone in the industry or with industry contacts on the relative merits of some of Track and Thermco's new products. SVGI is increasing its R&D budget, which is one of the stated reasons for the MarQ EPS shortfall. Some of that money is going to Thermco and Track. The Wall Street analayst gang ignores these divisions, but I think they will remain viable competitors in the next upcycle. I am trying to get a visit scheduled at the Lithography operation in Connecticut. Like many on this thread, I do not understand some of the excuses for the March shortfall or the preannounced weakness in the second half of the fiscal year. Intel is still less than half way through its .25 micron shrink, and most other manufacturers are even further behind. The apparent fact that Micrascan supply is starting now to exceed demand does not jive with the push for .25 micron shrinks. Yes, the shrink trend is a negative for Track and Thermco, since their products are more susceptible to capacity buy decisions. Lithography, however, is an enabling technology for the .25 micron shrink. Therefore, like the back end test and assembly companies, I had expected SVGL to manage steadier gains while awaiting the next round of fab builds. Maybe one, some or all of SVGL's main customers are holding out to try to squeeze price concessions. If that's the case, I applaud Papken for holding the line because I think there is a light at the end of this tunnel. It will be an interesting conference call come April. --David