JMAR’s in motion to grab a corner of the microchips bag

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July 28, 2003 — If what they say about tool companies being necessary precursors to a successful nanotech industry, then JMAR Technologies Inc. is in the right spot.

The San Diego-based company makes X-ray lithography steppers, which are motion control systems, for the microelectronics industry. JMAR’s motion control equipment can position wafers with precision, then the company’s collimated plasma lithography CPL system goes to work.

Collimating is the process of gathering scattered point source X-rays into bundles that can create a uniform field that goes through a mask that casts a shadow pattern on the wafer, like stenciling a T-shirt. The CPL system’s X-rays produce MEMS components with deep and fine features — qualities also needed by new, smaller semiconductor chips.

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“An X-ray beam penetrates the resist, creating a chemical reaction where the nanosize holes will be. Those contact holes enable contacts between layers of semiconductor chips, making it economical to shrink semiconductor chips down to the nano level,” said Ron Walrod, chief executive.

Marketing problems JMAR faces include the semiconductor industry’s perception that X-ray lithography was rejected a decade ago as too expensive and the company’s first choice of material to work with, gallium arsenide, was ahead of the market. But now the market is catching up.

Christopher Moore, director of research for New York-based Bristol Investment Group, says JMAR has a three-stage approach to attacking the chip market. The first step is to attack the smaller piece of the market, he said, so the company is focused on gallium arsenide for high-speed communications.

“Their technology lends itself extremely well to this market,” he said. “The ultimate goal is to get into the silicon market.” For that, he said, the company may need to find a strategic alliance with some of the bigger players, like Nikon, Canon or ASM Holdings.

Marketing is a minor problem compared to the organizational challenges JMAR has faced recently. “I parachuted in here eight months ago and started off by developing a business plan starting from the ground up,” said Walrod, a 60-year-old MIT graduate, serial entrepreneur and former coast guard officer.

“Tangential efforts will be jettisoned. We cannot afford to be defocused. We’ve had to make some really hard decisions on what to do. Hardest of all is trimming back staff. The criteria we use have to do with which members of the team contribute to the most promising aspects of the company’s initiatives. That focuses very quickly on CPL.”

After deciding to sell two noncore subsidiaries, the company is relying on defense contracts for most of its income. In early June, the Department of Defense released $2.6 million to JMAR from the main $34.5 million contract agreement to develop CPL and advanced X-ray proximity masks for making semiconductor chips.

Those developments encouraged analysts for Taglich Brothers, a brokerage firm in New York covering small cap companies. Although Taglich’s research department on May 6 lowered its rating for the company due to the company’s lower-than-expected earnings in the first quarter of 2003, the analyst had high hopes for the company in the second half of the year due to the restructuring.

The May 6 report also noted a risk of being delisted from Nasdaq, but JMAR nimbly avoided that problem when it received approval on May 8 to transfer its listing to the Nasdaq SmallCap Market, which has lower equity requirements and a longer grace period for maintaining a minimum bid price.


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Company file: JMAR Technologies Inc.
(last updated July 28, 2003)

Company
JMAR Technologies Inc.

Ticker symbol
Nasdaq-SCM: JMAR

Headquarters
5800 Armada Drive
Carlsbad, Calif., 92008
In addition to a research-focused headquarters in Carlsbad, JMAR maintains a systems branch (design & manufacturing) in Vermont and a microelectronics center in Sacramento, Calif.

Industry
Manufacturing systems and process technologies

Employees
120

Revenues
$18.4 million (2002). During this time the systems, research and microelectronics divisions, respectively, accounted for 41 percent, 38 percent and 21 percent of revenues.

Small tech-related products and services
JMAR develops, manufactures and markets X-ray lithography steppers for the semiconductor industry. JMAR’s collimated plasma lithography (CPL) technology can be used for the fabrication of high-speed gallium arsenide semiconductors.

Management

  • Ron Walrod: president, chief executive officer and director
  • Dan Fleming: senior vice president and chief operating officer
  • John Ricardi: vice president of business development

    Selected strategic partners and customers
    The U.S. government is JMAR’s main client, representing more than two-thirds of company sales. JMAR has expressed interest in developing alliances within the silicon market.

    Investment history
    Most of JMAR’s research into CPL technology was funded by a multimillion-dollar U.S. Army grant (JMAR has received $70 million in Department of Defense grants in the last five years).

    Barriers to market
    JMAR is functioning with a new CEO using a reworked business plan, and has had to eliminate tangential business efforts and cut staff. On a broader scale, the company faces the perception by some that X-ray lithography is an abandoned technology, as well as waiting for the market to “catch up” with regard to gallium arsenide usage.

    Goals
    Get a share of the future $1 billion next generation lithography source market.

    What keeps them up at night
    “I don’t really stay up at night worrying, because you don’t worry about things when you are being proactive, and have clear issues to deal with. The commercialization of CPL is such an intriguing challenge that I’m amazed I get paid to do what I do,” said CEO Ron Walrod.

    Selected competitors

  • ASML Holding NV
  • Heidelberg Instruments
  • Intelligent Micro Patterning LLC
  • NanoInk Inc.
  • Ultratech Inc.
  • Relevant patents
    Method and apparatus for laser ablation of a target material
    Solid-state laser system for ultraviolet microlithography

    Recent articles
    JMAR names new chief executive
    JMAR contracts with MIT nano director

    Contact

  • URL: www.jmar.com
  • Phone: 760-602-3292
  • Fax: 760-602-3299
  • — Research by Gretchen McNeely

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