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Technology Stocks : Cymer (CYMI) -- Ignore unavailable to you. Want to Upgrade?

To: TI2, TechInvestorToo who wrote (16854)	4/22/1998 11:20:00 AM
From: FJB	Read Replies (1) \| Respond to of 25960

For you TI2, I'll post the whole thing! PALO ALTO (Dow Jones)--Komatsu Ltd.'s lasers appear to be making inroads into the Japanese stepper market, a technical and esoteric area of semiconductor production dominated by Cymer Inc. (CYMI). Komatsu, the Japanese machinery maker, has begun working with major stepper makers Nikon Corp. and Canon Inc., according to analysts and a published report in a Tokyo newspaper. That could create competitive challenges for U.S. laser maker Cymer, but probably not significant ones until next year. Any competitive threat depends on Komatsu's ability to build its lasers in volume, a task that can't be taken for granted with complex high-tech equipment. Steppers are used to etch circuit lines on silicon wafers. According to analysts, Nikon has begun shipping steppers with Komatsu lasers to customers for examination and testing. Canon is reviewing Komatsu lasers in house while ASM Lithography Holdings (ASMLF), a Dutch company, is waiting to take a look at the Komatsu products, industry sources said. These three companies control the vast majority of the stepper market. Cymer, which dominates the worldwide market with greater than 80% share, said it expected the competition. Since Cymer raised prices late last year, it knew it would not be the only supplier to the market, said Marie Burke, director of investor relations. Cymer, of San Diego, also recently unveiled its new generation product, the ELS-5010, which like its ELS-5000 is designed to work at 0.25 microns, the smallest circuit width semiconductor makers use in production lines. The company is preparing its Orion for release in the third quarter. Jay Deahna, an analyst at Morgan Stanley Dean Witter, said Nikon and Canon appear to be nurturing alternative laser suppliers. "They are working with (Komatsu) because they want to develop a second source," Deahna said. But the question is whether Komatsu can ship enough product this year to make an impact in the market, he said. Deahna said he expects Cymer to hold 94% of the worldwide market this year and 75% in 1999. According to a published report in the Nihon Keizai Shimbun newspaper, Komatsu is contracted to supply lasers for half the steppers shipped to domestic Japanese users this year. That would be equivalent to about 15% of the worldwide market. If Komatsu is able to ship at this level it would mean some marketshare loss for Cymer, said Risto Puhakka, an analyst at VLSI Research Ind. of San Jose. What is less clear is how Komatsu is pricing its products. Puhakka estimated Komatsu lasers are about half the list price of Cymer's new generation product. But Deahna estimates the price to be greater than the $410,000 Cymer ends up charging for the ELS-5000. The ELS-5010 sell for as much as $500,000. Komatsu, however, claims its products have a longer chamber life, meaning that they will last longer and therefore be less expensive over time. Cymer shares were up 1 3/4, or 7%, to 26 9/16. -By Mark Boslet; 650 496-1366