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

To: orkrious who wrote (20121)	11/3/1998 5:10:00 PM
From: Edward A. Fitzpatrick III	Respond to of 25960

Jay and others: 2 questions. Who stands to gain most from the move to 300mm? Second, in what timeframe will this move likely come? addendum. I think CYMI will build a base from here on out and not fluctuate as wildly as we have been used to. I'm coming up on 2 yrs anniversary with this company and I haven't considered a divorce yet, but I would like to smack around the PR department. Cheers, EAF

To: orkrious who wrote (20121)	11/5/1998 4:43:00 PM
From: FJB	Read Replies (2) \| Respond to of 25960

TOKYO — Citing a looming shortage of 0.25-micron capacity, NEC Corp. is in discussions with a number of dedicated foundries about the manufacture of NEC's most sophisticated logic devices. Among the companies in discussions are Taiwan Semiconductor Manufacturing Co. (TSMC) and United Microelectronics Corp. (UMC) in Taiwan, and Chartered Semiconductor Manufacturing Ltd. in Singapore, said Hajime Sasaki, senior executive vice president of NEC, on Thursday (Nov. 5). NEC's announcement comes as recently released figures suggest that Taiwan is increasing its spending on capital equipment and becoming a more important source of production capacity, while Japan and other regions continue to tighten their belts. Data presented by Applied Materials Inc. at this year's Semicon Taiwan98 suggests that spending on fab equipment in Taiwan may even surpass spending in Japan in 1999. That NEC, the world's second largest chip manufacturer, would entrust a portion of its system-on-a-chip production to a dedicated foundry is strong evidence that foundries no longer take a back seat to vertically integrated device manufacturers when it comes to process technology. It also signals a possible shortage of 0.25-micron capacity among chip suppliers — including those with deep-pockets — after several years of playing conservative with capital spending. Sasaki said NEC intends to outsource a portion of its 0.35-micron and 0.25-micron manufacturing, but most of the outside work will involve 0.25-micron process technology, because NEC's own 0.25-micron capacity is maxing out. "The foundries in Taiwan and Singapore have excess capacity for 0.25, but we are running very tight," Sasaki said. Misao Higuchi, NEC's manager of memory engineering, said there are signs of a possible shortage of 0.25-micron capacity needed to produce some leading-edge parts, such as Direct Rambus DRAMs. Excess capacity at foundries and pressure on NEC to reduce its own manufacturing costs make it practical for the company to tap foundries for capacity in lieu of making larger capital investments for more 0.25-micron capacity, Sasaki said. Earlier this year, the company announced that it had reduced capital spending by about $260 million and postponed equipment orders until next year for its newest 0.25-micron fab in Yamagata, Japan. "We need to meet peak demand, but it doesn't make sense to invest for peak demand," Sasaki said. Indeed, some evidence suggests that cutbacks in capital spending by large semiconductor manufacturers coupled with aggressive investments by foundries has created a situation of lopsided 0.25-micron capacity. As a result, large semiconductor companies find themselves negotiating with foundries. "Right now, 0.25-micron [foundry capacity] is underutilized," said Brian Klene, vice president of worldwide marketing for Chartered Semiconductor. "Over the last two to three years a lot of IDMs [integrated device manufacturers] have been cutting capital expenditures, but foundries have trailed the semiconductor downturn by about a year. We are having more discussions with IDMs, and I think the prolonged downturn is accelerating the acceptance of the foundry model. And in the case of system-on-chip we're talking about leading-edge process technology." Klene declined to discuss whether Chartered was in discussions with NEC. Against this backdrop, Taiwan is the only major region of the world that is holding steady on capital equipment spending, rather than cutting back. "Taiwan in the future could become the second largest investor in fab capital expenditure in the world," said David Wang, senior vice president for Applied Materials (Santa Clara, Calif.). Semiconductor Equipment and Materials International (SEMI), an industry association, estimates that fab equipment purchases in Taiwan will amount to about $4 billion this year. "That is about the same level of equipment purchases that Taiwan made in 1997," said John Schuler of SEMI. In comparison, Japan's fab equipment tab fell from almost $7 billion in 1997 to just $5 billion this year. Equipment purchases in the United States also fell from about $9 billion in 1997 to a little over $8 billion this year. South Korea fell the furthest, according to SEMI, with 1997 purchases of about $2.5 billion plummeting this year to just over $1 billion. Applied's data for next year shows that vendors in Taiwan will increase capital expenditures from $3.8 billion this year to $4.2 billion next year. In contrast, Applied said that Japan will spend $6 billion this year but only $4.9 billion in 1999. "A $700 million difference is plus or minus the loading of one 8-inch fab," said a securities analyst in Taipei, Taiwan. "Given the vagaries of the world economy now, it could go either way. Taiwan could very well surpass Japan next year." SEMI also presented data that shows purchases from Taiwan growing as a percentage of the world's $4.5 billion lithography equipment market, from 13.4 percent in 1997 to 16.5 percent this year. Meanwhile, Japan's share of the equipment segment fell from 22.9 percent in 1997 to 19.5 percent this year. "Taiwan's investment in first generation DUV lithography equipment is significant," said Schuler. "Likewise, Taiwan's increased purchase of inspection/measurement equipment allows them to effectively move towards the successful production of smaller line width ICs. In contrast, the Japanese are cutting back on the necessary investment in DUV equipment. When an industry upturn comes, this trend could significantly help the Taiwanese and hinder the Japanese." eet.com