September - October 1999
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Will ESEC and Kulicke & Soffa Industries Tie the Knot?- By Ron Iscoff
First Chrysler acquired the weaker American Motors Corp., thereby obtaining a stock of flashy but obsolescent bumpers, grills and tail fins for such flagship automobiles as the AMC (Nash) Rambler and AMC Eagle.
The result: A small and tightly controlled industry became suddenly smaller, more tightly controlled and less subject to market forces.
Then Switzerland-based ESEC merged with Pennsylvania-based Kulicke & Soffa Industries, which left an IC assembly equipment industry composed mainly of two Japanese giants-Kaijo and Shinkawa-and the merger partners. Does ESEC have a better idea? Does K&S bring good things to life? Wait a minute! I'm getting ahead of my story.The Interview
Our July/August issue carried an interview with Karl Nicklaus, ESEC founder, who recently stepped down as CEO. In May, on his final U.S. press tour as CEO, Karl told me that there were no plans for ESEC to acquire another company in the near future.
I did not ask him if he would allow ESEC to be acquired by K&S. At the time, I never considered that question to be a reasonable one. The very idea would have seemed like heresy.
Where is this all leading? In case you missed it, ESEC and K&S recently announced that they will "collaborate" on integrating the K&S 8020 ball bonder platform into the ESEC Autoline (see "Industry News" in this issue).
Does this portend a merger or acquisition? Should we look for a company named KESEC Industries? Isn't this the equivalent of your daughter marrying out of her species? Or, just perhaps, this collaboration is a smart, timely economic move.
After speaking to several industry experts, the tantalizing prospect of an ESEC/K&S marriage seems not only plausible but perhaps even sensible. Both companies-K&S, the leader in wire bonders, and ESEC, number one in die attach-have been drenched in red ink and in canceled and lost orders since the industry nose-dived more than a year ago.
Earlier this year, K&S announced that it was pulling wire bonder manufacturing from Willow Grove, Pa., in favor of Singapore. Again, a reasonable if not entirely welcome move for the U.S. economy.
K&S, according to one expert, appears more interested in such things as flip chip (as seen in its partnership with Delco in Flip Chip Technologies Inc., Phoenix).
Consider, also, that K&S recently bought the XLAM substrate technology from the remainder of MCM-provider MicroModule Systems, Cupertino, Calif., which closed its doors this year and installed Jack Balani, industry stalwart, as president.
If you find the ESEC/K&S merger possibility intriguing, image how intrigued competitors Kaijo and Shinkawa must be. When I sampled industry observers about the recent announcement, one exec at an IC packaging foundry told me that he's tried to get ESEC and K&S to integrate their systems for years.
Another veteran observer insists that K&S gets more out of the partnership than ESEC, since the Swiss have been trying to buildup their wire bonder sales for years to keep pace with growth in their die-attach equipment.
I suspect the immediate and final answer to the merger question will be "no." However, as fuel for a column, it presents an opportunity too good to pass up.Post-SEMICON Thoughts
After writing this pre-SEMICON part of my column, I joined C. Scott Kulicke and much of his executive staff for a press lunch. Scott admitted that, over the years, he has considered acquiring ESEC but felt the differing personalities at the two companies would not be a match.
During the show we met Dr. Felix Bagdasarjanz, making his first SEMICON West appearance as ESEC's CEO, replacing Karl Nicklaus. No word about ESEC's acquiring from the good doctor, either.The Return of Alphatec
If you thought that Alphatec was defunct, think again.
Bob Mollerstuen, Alphatec's former president, was at SEMICON West, dispelling rumors of the Thai company's demise.
If you've been away for the past several years, here's a capsule version of the Alphatec rags to riches, riches to rags story. Within a span of three or four years after its founding, the Alphatec Group grew meteorically from a startup to (so the company said) the second- or third- largest provider of IC assembly services. Alphatec, indeed, was said to be stalking the boots of mighty Amkor.
The company was flying high. It achieved a listing on the Bangkok Stock Exchange. Alphatec also announced that it would open a near-billion-dollar fab in Bangkok in partnership with Texas Instruments. The company also acquired the former Indy Electronics plant in Manteca, Calif., at the time Manteca's largest employer, with nearly 700 workers.
Suddenly, some financial "irregularities" surfaced, plans for the Bangkok fab were quashed by TI, and Alphatec's reputation and customer base collapsed like a house of cards."Restructured"
Bob, now executive director and special advisor to the company, said Alphatec has been restructured. It's now 99 percent owned by its creditors and 0.01 percent by present shareholders. Willem de Vries is now CEO, and longtime Alphatec executive Tom Reynolds is president of ATS Services Co., San Jose, its sales and marketing arm.
IC assembly is now handled out of Cha Cherng Sao, Thailand, and Shanghai, China. Services include wafer probe through drop shipping, with plastic and hermetic capability. Contact Thomas Dietmeier, director of North American sales and marketing, at dietmeier@, agrp.alphatec.com.ASAT Gets New Investors
On the second day of SEMICON West, San Jose, the floor was abuzz with rumors of financial machinations concerning ASAT and its parent, QPL Holdings Ltd., Hong Kong. The real story with details didn't surface until after the show was over.
The truth is more positive than much of the speculation that was going around at SEMICON. Chase Asia Investment Partners, with other investors, has bought a 50 percent stake in ASAT from debt-encumbered QPL to the tune of HK$2,180 million, which will raise about $200 million for ASAT. The transaction should be completed before September 30. Chase said that while it will place members on the ASAT board, it will not be involved in the company's day-to-day management.The Return of Victor Batinovich
Victor Batinovich, founder of IPAC, San Jose, and several other IC assemblers, including Swire, also made several appearances at SEMICON West in San Jose. Batinovich was bending ears about his new company, Advanced Interconnect Solutions (AIS), formed with a Japanese partner, to help semiconductor makers exploit wafer- level packaging.
He told us that AIS, now in its early startup phase, will locate in the Silicon Valley area. "Myself and my partner spent the last couple of years developing not only the materials and the process, but also the equipment." The company has been self-funded to this point. Additional funding will come from licensing and from private investors, he reported.
Victor said the company's objective will be to license its proprietary wafer-level technology. "This is a natural extension of wafer fab. For those people that don't have their own manufacturing facilities, we'll set up a small manufacturing support line."
We last ran into Victor at Surface Mount International in 1997, where he mentioned that he was starting a new company. "It has taken us longer that expected because we couldn't find the right type of equipment, so we had to develop it ourselves."
Lex Kosowsky, an expert on plating metalization, is also involved with AIS, Victor said. Kosowsky is the former president of Dynacraft Industries, the Malaysian leadframe maker.
To contact Victor or his associate Martin Paul, former IPAC vice president of sales and marketing, e-mail email@example.com.A Salute
And now for something completely different: Don Elam, industry veteran and friend of two decades, just retired-although healthy and appearing still too young to leave the action. For the past two years, Don has been senior vice president for marketing at Pantronix Corp., Fremont, Calif.
I first met Don when he was a marketing executive for Stanford Microsystems Inc., Manila, a company which folded years ago.
In the early '80s, however, SMI was the contract chip assembly king-the biggest fish in the pond, while Anam was barely a minnow.
Don's truly a gentleman and we'll miss him. Can he stay away from the excitement? Will he surface again, perhaps to handle the marketing for the merger of ESEC and K&S? Please e-mail your guesses to me at firstname.lastname@example.org.
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