SAN JOSE, Calif. -- The sleeping giant woke up in the fab tool business, but will its rivals take notice or respond with a yawn?
Answer: The competition should begin to take notice--and get nervous. Seeking to regain momentum in the fab equipment market, Applied Materials Inc. (Santa Clara, Calif.) has thrown down the gauntlet in the arena. Following a major acquisition, the company has now rolled out separate tools in two critical areas: chemical mechanical polishing (CMP) and rapid thermal processing (RTP).
Applied's new RTP technology is a next-generation, laser-based millisecond anneal system. It has shipped one of the first tools to Taiwan Semiconductor Manufacturing Co. Ltd. (TSMC). In response, rival Ultratech Inc. is also readying a competitive RTP system.
Meanwhile, Applied's second new tool, dubbed the Reflexion GT, is a dual-wafer CMP system, said to lower the cost-of-ownership in fabs. With the new machines, Applied, the world's largest fab tool vendor, is seeking to protect its large installed bases in CMP and RTP. The company is the world's largest supplier of CMP and RTP systems.
Several rivals have recently rolled out new CMP and RTP tools, which threaten Applied's installed base. The company's new RTP tool would compete against systems from Dainippon Screen Manufacturing Co. Ltd. (DNS), Mattson Technology Inc. and Ultratech. In CMP, Applied primarily competes against Ebara Corp. and others.
It also appears Applied is trying to regain momentum in the fab tool sector. For some time, the company appeared to be putting more emphasis in its solar business, by acquiring companies or rolling out new systems. In comparison, Applied appeared to have fewer announcements in its bread-and-butter fab and flat-panel tool segments.
Some believed Applied was taking its eye off the ball in the segment. Others believe that Applied's product pipeline had dried up. Still others insisted that Applied has many products in the works, but has not made them public.
In any case, there is a sense of urgency for Applied. Ebara is giving Applied a run for its money in CMP. In RTP, Applied is late to the market with its next-generation tools. And it has lost momentum in etch, mask inspection and metrology, analysts said. Some believe it has made little or no progress with its high-k tools. Applied also sells tools for CVP, PVD and other markets.
For this and other reasons, Applied's fab equipment business recently fell off a cliff amid the downturn. This in turn contributed to the sudden and recent resignation of Tom St. Dennis, who was in charge of Applied's fab tool unit, dubbed the Silicon Systems Group.
Following that announcement, Applied appears to have become more aggressive in its fab tool segment. Simply put, the sleeping giant woke up from its deep sleep. As reported, Applied and Semitool Inc. last month announced a definitive agreement for Applied to acquire the outstanding shares of Semitool for $11 per share in an all-cash tender offer.
With the move, Applied re-entered the electrochemical deposition (ECD) market. Semitool sells ECD systems, surface preparation tools and wafer transport container cleaning units.
''We argue that while Semitool does offer Applied incremental share of the ECP market for front-end equipment considering Semitool's recent success at memory makers such as Micron, Hynix, and Samsung, we believe a primary motivation for the acquisition is Applied Materials' desire to offer a full suite of products servicing the emerging high growth through silicon via (TSV) market,'' said C.J. Muse, an analyst at Barclays Capital.
''We think this acquisition is a strategically smart one and places Applied in the pole position to potentially dominate this emerging market,'' he said. ''It doesn't change our view that Applied's silicon business will undergrow (wafer fab equipment) in the coming cycle, but we do view this acquisition positively.''