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To: Proud_Infidel who wrote (14432)	6/15/1998 7:06:00 PM
From: Andrew Vance	Read Replies (1) \| Respond to of 17305

AV--I thought that AMAT was going to do just that last year at SEMICON WEST. I even wrote a few posts as to why it makes a great deal of sense to do that since AMAT would be in every facet of the IC manufacturing business. ISI(now owned by UTEK) was trying to shop itself for the past months to close to a year. They must have approached AMAT at one time during the past year. I am almost positive that there were discussions between AMAT and SVGI for the acquisition of SVGL. AMAT already has a coat/develop lithography equipment set as of last year and it would make perfect sense to take over the SVGL unit. It is the massive type of equipment with the name brand customers attached to it. While they may not turn out to be actual buyers down the road, IBM, MOT, INTC, and one or more other big name companies have flirted with the SVGL system. IBM has the world's largest installed base still, I believe (older versions). This would make perfect sense and in retrospect, maybe this downturn of last year was "predicted" by AMAT and they decided to wait to see how things progressed in 3rd and 4th quarter last year before moving forward. I rthink this downturn is severe enough that we may see a large number of mergers, acquisitions, takeovers, and even closures of certain companies in the equipment sector. With this said, I want to make it perfectly clear that an AMAT takeover of SVGL while it does make sense, it will require a great deal of Slaes, Marketing, and Engineering effort to "re-create and makeover" the SVGL Micrascan system to make it more attractive to the marketplace and potential customers. The Micrascan as it is today is a very long evolutionary program that goes back to Perkin Elmer erroneously buying a company called CENSOR and having to completely re-engineer that product. IBM and Perkin Elmer worked together for years to develop the first generations of Micrascans that resulted in IBM buying almost all the systems and a disasterous first pass at SEMATECH. All this leads up to the step and scan system of today but it was a tumultuos path that had many potholes along the way. Sometimes it is hard to overcome negative perception and a history of non acceptance. As can be readily seen, the same has happened to GGNS with its Tungsten and Implant equipment.( a whole different story). If AMAT wants an exposure tool in its product line, it will be taking over the #4 or #5 contender in marketshare. They may have a dramatic uphill PR battle to eat away at the market share of the top 3 providers. However, AMAT has the name in the industry, the engineering resources, and could actually overcome this and possibly bring SVGL to a higher marketshare. I use #4 or #5 because the acquisition of ISI by UTEK could actually propel UTEK into the #4 slot above SVGL if a smooth transition is made to increase the production capacity of the ISI steppers and to convince the marketplace that the ISI system is a viable product that will be supported for a number of years. ISI has a quality product but it was perceived that they could not deliver on the types of volumes the customers might order and there was a question as to whether they could remain as a viable company. I still stand behind the high probability that SVGL could be acquired by AMAT. I will not waver from that statement. However, I want to plant these two seeds as outside alternative possibilities to consider. 1. With the price of ASMLF as low as it is, they are a prime takeover candidate for AMAT. This would actually be the BEST situation sinc eit moves AMAT into the #3 spot with a great chance of displacing Nikon or Canon in a relatively short period of time. The problem here is that ASMLF is a foreighn held company and that a majority of the shares reside in the hands of a small group that can dictate policy and will ultimately determine if they want to sell out. I believe that Phillips may still be a large stockholder. 2. IF you look at mid to long range vision, you have to give the nod to UTEK. With the EUV and Ultrabeam down the road, with the mix and match of low end and high end steppers, the high throughput pad and polimide machine/process, The SCALPEL process with the ISI tooling, and the P-GILD process, UTEK provides a great deal of breadth to the exposure tool segment of the business as well as some entry into the mask tooling business and novel new IC processes. Long term this would be a better acquisition than SVGL but you have Art Z. as the dynamic individual that thinks he can do this as an independent entity. His drive and determination along with his vision will probably result in a big fight if a hostile takeover is attempted. I do not think at this juncture, he would be amiable to be taken over by the large corporate mentality again. He was the founder of Drytek whjich was taken over by Genral Signal and he helped revive UTEK from extinction by breaking it away from General Signal much like ISI (formerly GCA) was taken over by General Signal and broke off awhile later. Art has been part of the "500lb gorilla" and was not too pleased. Therefore too many problems could result from this if it is not an amiable transition. With 35% of capex being litho related, it makes sense for AMAT to be a full service player here. I do not think it is a distribution problem as much as it is a perception of technical and field service support for these systems. The factory is there to build the systems but I do not think the proce tag and size of the system as well as the support are as good as they have to be to make this a success. AMAT can accomplish this. Andrew