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Novellus' Hill: IC market set for four-year growth cycle

Posted: 27 Apr 2010 ?? ?Print Version ?Bookmark and Share

Keywords:lithography? NAND flash? fab tool? semiconductor industry?

What about the equipment business?
I think we're projecting that it could be up as high as 80 percent. The first half of the year is largely driven by foundries. In the third quarter, we expect foundries to slow up and be back up in the fourth quarter. Now, we see memory coming into play. We expect NAND flash to come into play towards the second half of the year. Logic is pretty steady demand.

Still, the downturn took a toll on the equipment business, right?
Somehow, we managed to survive. Even during our darkest days, we had positive cash flow all last year. We were happy about that. There were a lot of equipment companies that were not so lucky. There's a lot of equipment makers in an up market that are not making any money. So you've got to question how they are going to make it.

Despite the signs, the worldwide economy seems shaky at best. We're seeing a possible bubble in China. And nations like Greece are in trouble. Local governments in the U.S. are struggling and cutting employees.
I think those things are results of what has already transpired. Governments are slow to react. They are laying off when everything is starting to go up. The phenomena is that for every job lost in the United States, jobs are gaining in Asia. I think we tend to be provincial and we figure that the United States and developed nations have always driven the economy. I think we're asleep. I don't think we've realized that China has emerged and so has India. We are grossly underestimating how quickly China and India are developing.

Has Moore's Law run out of gas? And what are the implications for chip scaling for equipment makers?
I think the leading-edge is starting to run against the wall. But technology that is three or four generations old is still expanding. Technologically, we can do anything. The question is economics. The problem we are all up against is the amount of R&D that you have to spend in order to get this incremental performance is only going to be of value to one or two players. It's a question of how long you can keep the industry moving along and contributing R&D dollars to advance technology. We as an equipment company have to be more and more careful on where we spend our R&D dollars.

One of the issues in scaling is lithography. We are pushing lithography to finer geometries. And the cost is soaring.
Litho is always a problem. It's extremely expensive. Even with those prices, they don't make that much money. Pretty skimpy margins for the R&D they put in.

Your rival, Applied Materials, recently acquired Semitool. Does that worry you in the electrochemical deposition (ECD) market? After all, Novellus' stronghold is in ECD.
Hill: It's much ado about nothing. I am not worried about it. From a technology standpoint, we offer a substantial benefit.

Did you ever want to buy Semitool?
Not for a moment.

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