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Technology Stocks : Lam Research (LRCX, NASDAQ): To the Insiders -- Ignore unavailable to you. Want to Upgrade?

To: Duker who wrote (2662)	3/21/1999 8:40:00 PM
From: Duker	Respond to of 5867

Japanese Chip Makers Turn To Taiwanese Firms for Help By DERMOT DOHERTY Dow Jones Newswires TAIPEI -- Their coffers drained by the effects of the Asian financial crisis, growing numbers of Japanese semiconductor companies are forging closer ties with local chip makers through technology-licensing agreements, industry experts said. "Increasing the number of strategic alliances just makes sense," said Nowell Chernick, manager of Taiwan equities at Jardine Fleming. "It's difficult for integrated-device manufacturers to justify building a new [chip-manufacturing plant] given the costs involved." Such new plants can cost "just under a billion U.S. dollars," he said Already this year, three Japanese semiconductor companies have signed technology licensing agreements with leading Taiwanese chip makers. In January, Fujitsu Ltd. signed an agreement with Acer Semiconductor Manufacturing Inc., providing the Taiwanese company with 0.22-0.20 micron dynamic random access memory, or DRAM, technology. In return, the subsidiary of Taiwan's largest personal-computer maker, Acer Inc., will supply Fujitsu with memory chips. And just last week, Winbond Electronics Corp. signed a similar deal with Toshiba Corp., further cementing a strategic partnership originally formed in 1995. Under the licensing deal, Winbond will license 0.175-micron and 0.15-micron manufacturing technology from Toshiba. In early February, Toshiba had announced that by March 2002 outsourcing will account for some 40% of its semiconductor supply, compared with the 10% expected this fiscal year. Meanwhile, United Microelectronics Corp., Taiwan's second-biggest chip maker, recently signed a deal with Kawasaki Steel Corp. that involved the transfer of 0.25-micron embedded DRAM technology, as well as leading-edge 0.18-micron manufacturing technology. And investors in Taiwan's stock markets are betting that the growing outsourcing trend will yield attractive profits further down the road. United Microelectronics' stock has climbed some 45% since the beginning of the year, while Winbond's has gained around 23% in the period. At the heart of this growing synergy between Taiwanese and Japanese chip makers, analysts said, is the latter's leading-edge technology and Taiwanese chip makers' expertise in cost-efficient manufacturing. Providing Taiwanese semiconductors with the technical know-how and contracting chip-making out to them guarantees Japanese companies a steady supply of chips, analysts said, while avoiding the necessity of forking out large sums to build their own plants, known as fabs, or expand existing facilities. "You're signing a strategic alliance to ensure a steady flow of chips," explained Mr. Chernick. And for many Japanese companies, the cost of designing and making their own chips is simply too great a financial burden, analysts said. "Japanese companies in consumer electronics are losing tremendous amounts of money designing and making these chips on their own," said one dealer at a foreign brokerage in Taipei, requesting anonymity. "They don't want to spend so much capital ... they don't have it." As a result, production capacity at some Japanese semiconductor companies trails that at many Taiwanese chip makers, analysts said. "Fabs at some of the leading [integrated device manufacturers] were globally competitive five years ago," said Mr. Chernick. "But they're lagging behind in technology investments." Besides, the volatility of the global market for DRAM chips has made many Japanese chip makers wary of allocating large chunks of their capital expenditure to making memory chips, analysts noted. Chip makers took a pounding in 1998 as DRAM prices plunged amid a global supply glut. And even though prices have picked up in recent months, concerns remain about the sustainability of these prices, analysts said. By contracting out to Taiwanese chip makers, Japanese semiconductor companies are less exposed to the volatility of the global DRAM segment, and can respond more nimbly to fluctuating supply and demand, they pointed out.

To: Duker who wrote (2662)	3/21/1999 9:27:00 PM
From: Jong Hyun Yoo	Read Replies (1) \| Respond to of 5867

DuKer: The question you raised regarding the tradeoff between photoresist selectivity versus Oxide etch rate is a very complicated one. HOwever, If I can give you a very simplified answer, I would say that for a process condition that gives you a high etch rate, you are likely to have a poor selectivity of PR while if you have a good PR selectivity, you etch rate might suffer. That's why oxide etching is a very technically challenging area. Both Lam's 9100PTX and AMAT's IPS system have the same problem as far as I know. AMAT's IPS system is a greatly improved version of its HDP Oxide etcher in terms of hardware reliability and configuration. However, I get the impression that it is having a bit of problem with the process performance. 9100PTX is not without the problem either. It has improved the hardware performance significantly. However, it seems like it still has some areas of improvement with process repeatability. As for Tel, it has won many orders from Samsung, Hyundai, Intel, ect... because of its hardware reliability and process repeatability. Lam has lost good market share to Tel in the oxide etch area in the past years. However, encouraging news is that Tel seems to be having problems with smaller geometry features. As chipmakers accelerates its transition to smaller feature size (0.13 micron by year's end), Lam will have a plenty of opportunities to recapture the lost market share.