Hi, all:
I've been in ETEC since it was at 31, and had been considering getting out until I saw the following article in the Friday NY Times business section. Did anyone else see this? Talk amongst yourselves!
Now I'm considering not only holding on to to ETEC, but getting into CYMI at these prices as well. Or maybe still closing out ETEC and putting it all into CYMI, which seems to have the most room to grow. (I can't imagine ETEC doubling on me again, but I suppose stranger things have happened in tech stocks.)
The article is below. Most of you will no doubt already be familiar with the technical discussion, for which I apologize in advance.
Bootz
Faster PC Chips Propel Makers of Equipment
By JOHN MARKOFF
SAN FRANCISCO, April 23 - Gordon Moore, the co-founder of Intel, is well known for observing in the 1960's that the number of transistors that can be placed on a silicon chip doubles every 18 months.
The celebrated observation, while not an immutable law of physics, has proved remarkably reliable, largely because of the Herculean efforts by hundreds of companies that design and manufacture the equipment for chip makers.
More recently, Dr. Moore has advanced a corollary: to feed the expo-nential growth, chip makers will also have to spend at an exponential growth rate on new factories.
While the specter of multibillion--dollar chip plants may give pause, in the short run at least this process is fueling a crucial sector of the semi-conductor equipment industry.
Jay P. Deahna, who tracks the industry from Silicon Valley for Mor-gan Stanley Dean Witter, says 1998 will be a pivotal year. There will be a fundamental shift, he says, to equipment capable of making chips with much smaller "line widths," which refer to the dimensions of wires etched into the surface of the chips. A human hair can be 75 to 100 microns in diameter. The shift is to equipment that reduces line widths to just 0.25 micron from 0.35 micron.
For that reason, Mr. Deahna calls this the "year of the shrink" and says it is happening because chip makers are bumping up against a law of physics. The lines being etched are so thin that conventional light sources and lenses cannot make the ultrafine wires that connect the millions of transistors that make up an advanced microprocessor.
During the late 1980's, many people in the industry held out hope that once conventional light sources were exhausted, X-rays or even electron beams could be used to make finer wires. Those technologies have not borne commercial fruit.
But companies that make equip-ment capable of using light past the visible part of the spectrum -- known as deep ultraviolet -- are filling the gap. Their equipment provides the power necessary for the photolitho-graphic process needed to make the ultrafine wires. Mr. Deahna calls these companies part of the "the deep UV food chain," and this month he created an index to track them.
The Morgan Stanley Dean Witter Deep UV Photolithography Food Chain index contains the stocks of ASM Lithography, Cymer, Dupont Photomasks, Etec Systems and Photronics. With a gain of 42 percent so far this year, it would have beaten the Philadelphia Semiconductor Index by 22 percentage points. Since the beginning of 1997, the stocks in the new index have appreciated 98 percent, compared with 32 percent for the semiconductor index.
ASM Lithography, one of the best--performing stocks, with a gain of 43 percent so far this year, makes the $6 million to $8 million deep ultraviolet scanners that came onto the market in late 1996 and are at the heart of the industry. Last year, about 300 of these machines were sold worldwide by companies including ASM, Nikon and Canon. This year, as many as 500 may be sold, said G. Dan Hutcheson, president of VLSI Research, a semi-conductor market research firm in San Jose, Calif.
"This is a fundamental transition," he said. "It's not like going from Pentium to Pentium Pro, It's an entirely new architecture."
For Mr. Deahna, that suggests these companies will continue to out-perform the rest of the semiconductor industry. He said he expected the five companies in the index to have annual growth of more than 30 per-cent over the next five years, while the overall semiconductor and semi-conductor equipment industries will grow 17 percent to 18 percent.
"The chip makers don't have any choice," he said. "They have to pay the piper, and the market has recognized this."
This growth comes despite a lack of business from Intel, the world's largest semiconductor maker. Intel uses equipment made by Silicon Val-ley Group, an ASM competitor, and recently announced it was deferring significant new capital investments.
Silicon Valley Group, whose stock is down by 12 percent for the year, has already reached the 0.25-micron line width by specially tuning its existing machines that use conventional light. The company is about to add its own laser-based line of deep ultraviolet machines, which will eventually permit Intel to go to line widths of 0.18 or even finer. |
