Market got you down, fella? Think there's no light at the end of the tunnel? Tired of listening to the prophets of gloom and doom? Then take a tip from ESEC, the Cham, Switzerland-based provider of die attach and wire bonding systems. First, some background: This March, ESEC reported an operating profit for its abbreviated (10 months) fiscal year of about $97.5 million (Swiss Francs converted to USD). The short fiscal year is a result of ESEC's acquisition by Unaxis last July. ESEC recorded (short) calendar year 2000 sales of about $332.4 million with full year revenues of $404.5 million. Recessionary Hedge So what, you say. Everybody did well last year! That's mostly true, but ESEC's been working on a hedge for this incredibly lousy (and hopefully short) recession. It's a silver lining for their IC assembly equipment business-the opto-electronics (O-E) market for networks.
Your humble editor recently met with Kent Connell, ESEC USA's VP/GM, based in Phoenix, André Nipkow, Switzerland-based VP for the company's Micron Business Unit (MBU), and Domenico Truncellito, ESEC's formidable senior marcom giant, at a Chinese restaurant in Los Altos, Calif. Between bites of mu-shu pork, broccoli beef and lemon chicken, the trio presented a hopeful, but restrained, immediate future for ESEC's bread-and-butter gear: Die attach and wire bonding equipment for ICs. But the big excitement for ESEC, they noted, is likely to be in selling equipment to package O-E, MEMS (micro-electro-mechanical systems) and MOEMS (micro-optical-electro-mechanical systems). Right now, the competitors are few, and small, consisting mainly of Palomar Technologies, Vista, Calif. (formerly a division of Hughes) and the MRSI Group in North Billerica, Mass. Japanese equipment maker Toray also produces machines with the ability to handle O-E apps, while Karl Suss has developed equipment for low-volume O-E work, primarily in the lab. Most of the revenue to date for ESEC's MBU has been to supply the flip-chip market, according to André. Figures compiled by ESEC show the company's traditional IC assembly equipment beginning a bookings decline in August 2000. At the same time, MBU equipment sales began to increase. "The MBU business, in addition to the established flip-chip market, is now focusing on other new applications, particularly those in the opto-electronics sector," André remarked. "Opto-electronics is a market lagging something like 25 years behind the semiconductor area. At the moment, however, it's growing very fast-at much higher average rates then the semiconductor market." O-E represents a 2-3x steeper growth rate than semiconductors, in fact, he said. What's pushing this growth? The answer is Internet applications, such as network backbones. The assembly of O-E components has been very labor intensive up to this point, according to ESEC. "Companies like Lucent are trying to get away from the highly manual labor involved, André noted.
A Profitable Emerging Market Typically in the past, however, they have employed equipment built in-house. Now, they're looking to outside equipment suppliers-offering what ESEC believes is a profitable emerging market. How emergent? There are essentially no standards yet-much like the IC assembly area of two decades ago. The big O-E users are Corning, JDS, Lucent and Nortel. According to figures supplied by ESEC, optical communications components represented a $4.9 billion market in 2000. By 2004, this will be a $23.7 billion industry. Technically, we're talking about high-speed data transmission. Traditionally, long-haul data transmission has been handled via copper cables. These cables, however, are severely capacity-constrained. Switching to optical fiber allows much greater transmission capacity (broadband). The O-E components are the interface between the electrical signals coming in from, for example, a computer. The signals are transformed into optical signals by the O-E devices partly packaged with (the company hopes) ESEC's Micron equipment. The key to these devices is a laser diode, which produces the light triggered by the electronics. The light is multiplexed and fed into the fiber optic cable. The pump laser is an example of a rapidly growing O-E device. The parts are optical amplifiers, typically made from GaAs and designed to amplify the signal as it attenuates along the fiber. These pump lasers are mounted on an optical sub-assembly, and along with other O-E devices, it is packaged and ready for use. We, like ESEC, plan to keep a sharp eye on this market in the future. The Directory This issue features our annual review of the IC packaging foundry business. Although we'd venture that it's the most detailed profile of the chip assembly business appearing in any trade publication, we know that we've left a number of assemblers out. They're not included because they failed to answer our repeated attempts to get them to return our survey! Hey, we'll try to do better next year! (And we hope the holdouts will, too.)
|
Copyright © 2001