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On March 10, VLSI Research Inc started a new e-mailing to its market leader subscribers to address the increasing need for instantaneous analysis of events. I write the letter on an on-going basis and send it every day or two. My purpose is to focus on the strategic angle and always try to cover new ground. It is meant for senior executives. So it is brief, brash, to the point and as such, avoids things that have been hashed over so many times that everybody knows it. It often starts with things I've been hearing and seeing out there and then gives my viewpoints on them. On other occasions, I will cover strategy in general, as a business leadership course might do. This executive advisory gives a paper summary of what has been sent so far. The paper summary will be issued as needed. The topics are random, but I think you'll find them interesting. – G. Dan Hutcheson
3/10/98 From the front lines:
300MM: I keep hearing resistance building to putting up new 200MM fabs with 300MM looming out there in the future. Virtually every chip maker I talk to says 300MM won't come until the 0.13 micron generation. The most advanced expect to be there by 2000.
Nikon reported that its DUV business is coming in much lower that expected. They are getting cancellations in both Korea and Japan as the Asian Financial Crisis grows.
Korea is asking for 365 day terms on equipment orders. Funding, not demand is the big issue. Most of their capacity is still 0.5/0.35 micron. They need to move to 0.18 to stay competitive. Expect creative funding (for Korea anyway) such as leasing to suddenly become popular in Korea. There is lots of leasing money available in the US.
KLA-Tencor said that CMP has become the big driver of the defect inspection business. With everyone trying to shrink, KLA-Tencor's business should be able to circumvent the slowdown.
Packaging: the sub-$1000 PC is shifting packaging demand back from BGA's to TQFP’s. BGA's are still too expensive, as subcontractors are seeing tremendous pricing pressure -- down at the 0.6-0.7 cents per lead level for garden variety TQFP's.
The assembly equipment manufacturers have become very aggressive in discounting. ESEC is reportedly the most aggressive. The Japanese wire bonder companies have also very aggressive as they try to keep employment up. ASM Pacific has been able to hold prices up as their prices are generally much lower than the other companies.
Cognex reported the following market share numbers in machine vision:
Cognex 61%
AISI 17%
ICOS 14%
Other 8%
They identified the market size as $230M for OEMs, $160M for factory floor automation, and >$1B is unserved market potential.
Their most rapidly growing area is factory floor implementations. It now represents 32% of their business and covers everything from computer chips to potato chips.
And on that note: . . . a letter to the editor of The Times of London said,
Dear Sir,
I am firmly opposed to the spread of microchips either to the home or to the office; we have more than enough of them foisted upon us in public places. They are a disgusting Americanism, and can only result in the farmers being forced to grow smaller potatoes, which in turn will cause massive unemployment in the already severely depressed agricultural industry.
