AMS: Life under the PE umbrella, and the secret progress of finFETs

by James Montgomery, News Editor, Solid State Technology

Days before Semicon West, WaferNEWS caught up with Christopher Moore, president/CEO of Advanced Metrology Systems (AMS), nee Philips AMS, to chat about how life is different nine months after taking the private equity route.

The first thing he pointed out is the need to understand the difference between private equity (PE) and venture capital (VC) investments, and why the former was the right play for AMS. While VCs primarily seek out investments with a clear goal of a quick and bountiful return, “private equity’s long-term goal is to grow the business, and they have the patience to let us do that,” recognizing that in the semiconductor industry development-to-production timelines can be two years or more. Former parent Philips also showed patience with the business, he added, but it was always clear (and uneasily so among customers) that AMS wasn’t in the European firm’s long-term core plans.

Moore also indicated that the increasing presence of private equity circling the semiconductor industry looking for deals has changed many companies’ outlooks about their potential exit strategies, particularly in the crowded metrology space. “Before I got into this business, I would have said we’re going to be sold to a bigger player, or go IPO,” he told WaferNEWS, “but now I’m beginning to believe more and more that the exit strategy in this type of business is another private equity round.” Even the sector’s biggest players, which in the past have proven to be consolidators vs. consolidatees, might not be immune to PE interest — “anybody would be much smaller than the deal done with Chrysler, if someone seriously wanted to take a run at them,” Moore pointed out (referring to this May’s $7.4 billion deal for Daimler-Benz selling an 80% stake in the US automaker to Cerberus Capital Management). “If there’s a good opportunity, then there’s private equity willing to do it, whether it’s in semiconductors or something else.”

In addition to a change in exit strategy, Moore also has had a change-of-heart about the well-accepted belief in building “critical mass” to compete in an industry segment. “I subscribed to that for a long time,” he said, noting that in any commodity market critical mass is perhaps the most important strategy to compete. But semiconductor equipment, and particularly metrology, he pointed out, is a specialists’ arena, with application-specific systems and tools geared to do certain things, so critical mass is less important than leveraging specific knowledge. “If you can find a market, not $200 million but maybe $30-$50 million market, that’s a good business if you can string some of them together […] and support tools for those specific applications with specific knowledge.”

AMS’ business is chugging along, expected to repeat the 50% business growth enjoyed last year, even though Moore said he didn’t expect the market’s softness to extend into 2Q07 (>50% of AMS’ business is in DRAM, which has been pummeled so far this year). As a buffer the company now has 10%-15% of its business in power devices, up from zero in 2006. Explaining the differences required to do business in those fields, Moore explained that DRAM lends itself well to consortia efforts, where there’s a universal approach among partners early in the process, although there will be some tweaks and nuances to transfer technologies to the fab levels. Power, though, is largely a collection of individual companies, and much more of a mix of capacity investments vs. technology buys, he noted.

Looking ahead to SEMICON West, Moore is particularly interested in learning what people are thinking about 3D structures, and of course the metrology for chipmakers that are using the third dimension “to actually build things instead of just putting layers on.” He also revealed that there’s been a lot of “serious, pilot-process work” going on behind the scenes in finFETs, and many may not realize just how far this technology has come — he indicated AMS is working two customers (from different industry consortia) who expect to have the capability to put finFETs in production next year, suggesting the 45nm node. “Given what we’ve seen, it’s not ‘yeah we’ll do it at 45nm,’ not a fait accompli,” he told WaferNEWS, “but it certainly looks like it’s doable.” — J.M.


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