US Advanced Lithography press conference summary. I attended today's event with about 30 others. Art Zafiropoulo, Ultratech CEO, gave a 20 minute presentation (the notes are below) and answered the few questions that were asked. We received a white paper which I'll post once I get an electronic copy. Since it was a press conference, I was expecting camera flashes and reporters with hard hitting questions, instead it was a presentation to industry people mostly from the Dept of Energy, Dept of Commerce, SEMI and semi equip manufacturers. Art's goal was to present this endeavor directly to these people as opposed to having them hear about it via rumors.
United States Advanced Lithography (USAL) will be a jointly funded company with Ultratech providing $10 million (or just under 20%) of the initial $50 million necessary to fund a prototype system. The "just under 20%" allows UTEK to account this as an equity investment as opposed to an expense. Since this was just announced, USAL still needs to raise the other $40 million which Art hopes to do this year. Its still "embryonic". He stated that UTEK has $160M and could have fully funded it, but investors wouldn't want to take the R&D losses for so long. USAL's success would be financially significant for its members including UTEK. Wall Street agrees with USAL's direction and thinks there are bigger risks in medical technology than USAL. USAL may get funding from a major investment bank. It is open to US companies only. No foreign investment allowed.
After developing the first beta system with the initial $50 million, USAL plans to go public in 2000 to raise the funds for production. Production machines will be available around 2002 and cost $15-20M each. Art stressed the importance of lithography leadership and that it also involves everything it touches like track. If the U.S. can lead lithography it will grab large marketshare in these related areas as well.
"The mission of the USAL is two fold. First, to assist in the development of EUV technology, and second, to become the primary systems integrator that provides EUV lithography systems to the global market. Although USAL is led by Ultratech, which provided the initial funding, the company is open to any leading US semiconductor manufacturers that wish to make an investment to participate. Ultimately, the goal is to include other industry leaders such as Silicon Valley Group, Applied Materials, KLA-Tencor, Lam Research and Novellus." --white paper excerpt
Art is currently acting president of USAL, but plans to hire a permanent president soon (he has his own company to run). UTEK's global organization will be used by USAL to maximize technology funding and minimize overhead expenses.
I was delighted to meet Art for the first time. He gave me all the time I needed to discuss my questions. Those good things we've heard about him are true. The investor relations rep talked with me for 15 minutes before the presentation. I was very impressed with UTEK's responsiveness to shareholders.
PRESENTATION OUTLINE
Note: words in brackets are my notes from Arts speech.
BACKGROUND
Industry & Government worked cooperatively under CRADA agreements to develop fundamental EUV lithography technology (approximately $30M investment) [Plus $30M from industry, UTEK was single largest contributor: $6M]
IC industry [led by Intel] formed EUV LLC to fund continued R&D and building of prototype EUV tool (approximately $250M investment) [USAL signed contract with EUV LLC on April 15]
Semiconductor industry has concluded that EUV is one of the leading candidates for next generation lithography--chips would be 100 times faster and store 1,000 times more information than today's [Its still not clear whether EUV or scalpal will win, but assuming that the known technical problems can be resolved, it comes down to EUV's 60 wafers/hr throughput versus scalpal's 40 wafers/hr.]
The development cost and resultant revenue stream is very large relative to any single stepper manufacturer today
National Labs can develop much of the basic technology, but stepper industry participation is needed for sound tool design and commercialization
Ultratech has formed the USAL LLC as an additional U.S manufacturer of EUV tools [the other is SVG.]
SCOPE AND OBJECTIVES
Design, engineer and manufacture Beta Tools for EUV lithography
Produce sufficient volume of steppers to satisfy domestic market demand, specifically the early needs of EUV LLC members
Attract strong member companies from U.S. semiconductor equipment manufacturers such as Applied Materials, KLA-Tencor, Lam Research, etc. [possibly photoresist companies, chip companies, and venture capitalists. None of these companies mentioned have been approached yet.]
Utilize talents/assets of member companies where possible, supplement where necessary
OVERVIEW OF DEVELOPMENT AND MANUFACTURING PHILOSOPHY
Rely on member companies to develop and manufacture subsystems when possible (e.g. stage, laser, plasma generator, optical components, coating, reticles...) [UTEK core technology is reflective optics necessary for EUV. There's no objections to licensing technology to 3rd parties]
Primary functions of USAL LLC will be system integration, test, marketing, sales & service
Benefit U.S. suppliers, IC manufacturers, defense needs and component technology development [bring marketshare back to the U.S.]
FUNDING FOR PROTOTYPE SYSTEM
Beta Tool Design, Fabrication and Test = $35M
Production Design, Modeling, Planning = $5M
Licenses and Other Expenses = $10M
TOTAL = $50M
[$50M is not the end, but the beginning of a huge investment]
<193nm LITHO TOOL MARKET FORECAST
[This is a graph based on data from Intel and SEMATECH 9/97. It shows # of EUV system and approximate revenue.]
year, systems, revenue
2000, 0, $0
2005, 180, $3B
2010, 600, $10B
PROJECTED SALES AND PROFIT (2002-2010)
Total Sales = $40B
Gross Profit = $6B
Licenses and Royalties = $2B
Net Profit = $4B
Compound Return on $250M investment = 32%
[end of presentation]
The USAL logo looks like a perforated stamp with a red, white and blue flag and "USAL" across the top. A star sits between the S and A. USAL has no web site at this time to direct you to.
[All disclaimers regarding errors and omissions apply]
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