by James Montgomery, News Editor
Applied says the beamline implant business won’t return enough profits to justify future R&D investments, but the decision may also be just as much about the dynamics of a fiercely competitive market segment — and possibly another implant card up the company’s sleeve.
Faced with what it claims is a business that would generate unacceptable returns on significant future R&D investments, Applied Materials Inc. says it will cease development of beamline implant products, and close its Applied Implant Technologies group in Horsham, UK. Support including new and refurbished tools will be phased into Applied’s global services arm. About 270 employees, located primarily in Horsham, will be affected by the closure, which is expected to be completed by year’s end at a rough cost of $90-$130 million.
Essentially, Applied didn’t see much of a profitable return to justify the R&D investments for a technology for which there “hasn’t been a major structural change…for a long time,” and in the end it was a “pretty easy decision” to cease future investment, according to Tom St. Dennis, Applied’s SVP and GM of etch, cleans, frontend, and implant products business groups, in an interview with WaferNEWS. “The technology was probably in many ways on that trajectory for some time,” and that’s been reflected in how customers are dictating their pricing, and thus the overall profitability of the tools, he said.
Trying to somehow monetize the technology via M&A or a JV was also deemed unfeasible — integration and product portfolio management is long and expensive, he pointed out, and “you quickly get to billions of dollars of investment, but what’s the likely return on that?” he asked. “It’s better to put your money in T-bills.”
Applied will continue to invest in other development work going on for implant technologies outside of beamline, St. Dennis noted, without elaborating on what those products are or when/where they might be brought to market. But it’s likely that, based on known technology development, those efforts likely target plasma-doping tools, which are based on IP from Silicon Genesis per a 1999 agreement (and originally developed and tested at UC-Berkeley).
“I was surprised” by Applied’s announcement, noted Risto Puhakka, president of VLSI Research, telling WaferNEWS that he believes Applied’s beamline tools have achieved “a reasonably strong position with key accounts.” The company’s exit from high-current implant, he surmised, is probably as much about the rise of a key competitor as it is an investment decision. In 2004 Applied led the high-implant market with $225 million in revenues, followed by Varian Semi. Equip. Assoc. with just $130 million, according to VLSI’s data. But in 2005 Varian surged to the top spot with ~$230 million, while Applied fell to second place ($200M), with Sumitomo Eaton Nova and Axcelis Technologies trailing behind. Data from Gartner Dataquest (see table below) suggests a similar marketplace shuffle.
Numbers for 2006 aren’t in yet, but Puhakka expects Varian to have continued to gain share at the expense of other suppliers, particularly as more chipmakers push into leading-edge process technology.
“Varian with their single-wafer technology was able to create a pretty sizeable technological differentiation advantage, especially going to 90nm and 65nm,” Puhakka told WaferNEWS, pointing to the need for high angles and precise controls. “It’s hard to say that ‘this tool is better than that tool,’ but Varian has been gaining share steadily.”
With Applied bowing out of future high-implant tool development, that leaves three suppliers battling for bragging rights, and essentially only two alternatives depending on where customers are located, Puhakka said. In Japan, the choice is between Varian and mainly domestic supplier Sumitomo Eaton Nova; and everywhere else it’s a race between Varian and Axcelis. — J.M.