In February, Schlumberger Ltd., the French-based parent company of Schlumberger Semiconductor, announced it was attempting to sell the ATE business in order to focus more attention on its core activities in oil field services, smart cards, and other sectors.

The decision to sell the test systems business also came in the middle of the current downturn. The slump has been particularly difficult for ATE suppliers, which fell into the recession during the second half of 2000. In the first quarter of 2001, Schlumberger's ATE sales dropped 31% compared to the same period last year, according to the company.

But still, Schlumberger was the world's second largest ATE supplier for logic test in 2000, only behind Teradyne Inc. of Boston, according to VLSI Research Inc. of San Jose. Teradyne had about 45% market share in the logic test last year, while Schlumberger held a still respectable 15% of the sales, based on a new ranking released this week by VLSI Research. In total, the logic test market was a $920.6 million business in 2000, said the San Jose-based research firm.

More importantly, however, Schlumberger is one of the key ATE suppliers to Intel. In fact, Intel awarded Schlumberger a major contract to develop and ship a new line of low-cost testers, according to sources. Intel plans to use these testers as part of its new strategy to cut the overall cost of testing chips (see today's story ).

A spokeswoman from Schlumberger Semiconductor in San Jose declined to comment on the status of the ATE operation.

But the fact that the ATE unit is still on the block should be a major concern for Intel, according to analyst Ron Leckie of Infrastructure Inc. "I don't know if Intel is worried about Schlumberger's ATE business being up for sale, but I would be concerned if I were them," Leckie said. "Typically, the sale of a business unit creates uncertainty, staff turnover and a lack of focus," said the Saratoga, Calif.-based analyst.

So far, however, there are no known buyers for Schlumberger's test business. "Apparently, the top ATE firms have all looked at the ATE unit, and despite the potential to get the Intel business, none seem to be interested," Leckie said.

"Schlumberger has lost market share over the last up-cycle and has lost quite a few of the top staff," he said. "Rumor has it that the asking price is too high. This lack of action tells me that the ATE competitors feel that Schlumberger's ATE unit is becoming less of a competitive threat," he added.

At present, the Schlumberger Semiconductor Solutions has several business units, which could be sold in pieces or as a whole.

"Out of the five business units, there are only two that I hear are getting significant interest--the e-beam probe/focused-ion-beam and the automated thermal handling system units," he said. "These units have very successful products," Leckie added.