Nigel Wheeler, Trikon Technologies President, CEO

Nigel Wheeler (Source: Trikon Technologies)

Nigel Wheeler joined ET Equipments Ltd., a division of Electrotech, as general manager in 1980. He was promoted to the board in 1986 as operations director and became CEO in 1993. When Electrotech was acquired by PMT, he assumed the role of COO and board director, and the company changed its name to Trikon Technologies. In 1998, Wheeler became president and CEO. He has been invited by the government in Wales to join the Welsh Industrial Development Advisory Board, and he is also a member of the Institute of Directors. Trikon Technologies (Newport, UK) supplies semiconductor processing equipment for silicon, compound device and optoelectronics markets in the CVD, PVD and plasma etching arenas.

SI: Irrespective of the downturn, this hasn't been a bad year for Trikon. You ended your second fiscal quarter with record shipments. Can you tell us more about this and what else may be coming?

Wheeler: In recent years Trikon has done extremely well. We reported 11 quarters of sequential revenue growth. We've had a good 2Q, and previous year. One of the reasons for this is that we entered this year with a very healthy order book. Unlike many other companies, we didn't get too many cancellations. Clearly, what we're seeing with the rest of the industry is decline in some segments, particularly opto and telecom. However, we're fairly diverse in that we operate in advanced silicon, where we do dielectric deposition of low-k materials, which is a technology buy. We actually have a customer in production with it. We've also had a very good track record in compound semiconductors, where we are regarded as market leaders for front-end equipment. We also have a good bread-and-butter business in silicon, which is also seeing a downturn now. Nevertheless, we are still in good shape and profitable.

SI: Based on this, what are your short- and long-term plans and strategies?

Wheeler: Short term, we're trying to at least meet last year's revenue plan, and possibly exceed it. Given the market that we're in, that's no mean achievement. When the market returns, we want to see significant organic growth. To give you a feel for that, in 2000 we grew shipments by 122%, which is not widely reported, although in terms of growth it's right up there with the major companies. We've demonstrated that we know how to grow the business in a sustained and controlled way.

SI: What is your secret?

Wheeler: (Grinning) We work within a frame of consistency that we put down over a period of time — the whole company is ISO9000 accredited. We planned new premises in 1996-97, so we're positioned for growth. We also have a 30-year history of innovation. We find new solutions to industry problems in all sorts of areas, and that provides us our growth platform. So initially we're planning to grow through organic growth but, frankly, there are so many new and emerging areas, that we keep a watchful eye on what's going on. And if along the way we see a sensible acquisition, we'll consider it. Strategically, though, we're trying to grow organically.

SI: What do you view as your possible next growth area, and how are you planning for it?

Wheeler: In terms of technology, our next growth areas lie in low-k dielectric deposition. Right now, we have an advantage over any company in the industry — and you can match us up with the biggest and best-known names — in that we can show advanced dielectric low-k materials that'll occupy three technology nodes: 0.15, 0.13, 0.10, and even down to 0.07 µm. We've been able to demonstrate a credible roadmap to our customers, which is actually ahead of the ITRS to the extent that we've been able to penetrate LSI Logic, who are buying production equipment from us. We signed two of the top 10 players for our low-k technology in the 3Q of last year. We are currently working with another three of the top 10 with our advanced low-k product for damascene applications. This is a growth area for us for two reasons. One is that, right now, if you have differentiating technology you have a good chance to pick up technology wins, and that's currently what we're trying to do. But we're also able to demonstrate to some of these big customers that we've established a basis for growth. So we have the premises, the infrastructure and operations in place, to be able to execute on that strategy.

SI: So you view the dielectric arena as an important growth area?

Wheeler: Certainly. But equally well, we've been able to apply silicon manufacturing capabilities to the compound and optical areas. So we've won considerable business in the area of compound semiconductors — including indium phosphide — and we're getting considerable interest in the emerging technology of planar optical waveguides. People look at us and realize we have the technology, and we have also demonstrated to customers around the world that we can put production equipment in and support it well. Early this year, Infineon presented us with their Supplier of the Year Award.

SI: Is growth getting more difficult to do?

Wheeler: Yes. Clearly you need a reason to buy, and technology at present is the sweet spot because, as everybody is reporting, there isn't much capacity buying going on, whether it is in silicon or compound semiconductor. However, because of our history, which goes back over the last three decades, we've always been able to identify industry challenges and come up with solutions. As a publicly owned company, we can exploit these opportunities commercially, better than we ever could as a private company. Yes, it is more difficult to grow, given that some of our competitors are many times our size and do not give us much maneuvering room. But we're able to show — through technology — that we cannot only coexist with them, but grow as well.

SI: What are you planning to do differently from your competition?

Wheeler: One of the things that we do excellently — and our competitors would agree with this — is customer support, which is second to none. So first, we're winning business on the basis of technology by putting in a reliable piece of equipment, and then we support it extremely well. We adopt the attitude that, with capital equipment, if you build up a relationship with the customer and support the product well, you may not do particularly well financially on that initial sale, but you'll win the subsequent repeat business. If you look after them, your customers will come back. Many of our customers have significant installed bases of equipment — Infineon and Philips are two good examples here in Europe — and there are others in the U.S., such as TriQuint. Our customer support relationships are such that it is difficult for the big guys to get us out once we've gained a foothold. For a company our size, getting in is difficult, but once we do, we remain.

SI: What should users expect from you over the next two years?

Wheeler: We'll continue innovating new solutions to technology hurdles that they face. We have a very focused engineering group looking at reliability and, as I mentioned, we take customer support very seriously. So our customers should continue to expect us to improve and provide solutions in all those areas.

SI: You mentioned customer support several times. With companies no longer having a wide technical pool to draw from — concentrating instead on what they consider to be their core competencies — they expect to get supplementary expertise from their suppliers. How do you view this trend?

Wheeler: True, people today no longer just buy equipment — they expect you to also work with them in solving technical challenges. We're well-placed to do that because, with the exception of the world's biggest equipment supplier, for many years we've been the only front-end vendor able to offer the core interconnect technologies — plasma etch, plasma CVD and PVD. This has enabled us to set up an integration team with experience on those three technologies, surpassing that of some of the bigger companies. For instance, if someone buys a low-k machine for CVD deposition from one of the major U.S. firms, when he comes to integrate that film he will face difficulties in terms of metallization, etc. We're able to say, "Here is our low-k product offering and, by the way, these are the problems that you'll face on integration and this is how to solve some of them." When you can demonstrate that things are feasible, you can work very closely with the customer to help him carry out that integration. For example, we worked very closely with LSI to help them achieve production levels with low-k films.

SI: Are you comfortable with the level of communication between you and your customers?

Wheeler: (Sighing) At day's end, you can never get close enough to your customers to satisfy you completely. And they have their own reasons for that. In high technology, they certainly want to protect their IP. So on many occasions, while you get closer to your customer to understand the challenges that he will face, he not always exchanges information with you because he wants to protect his competitive position. There's always an amount of — let's call it reservation — between vendor and customer. As long as we recognize that and do not compromise one another's integrity, I think you have a framework for healthy future business.

SI: Is there anything that your are planning to change — short or long term — at Trikon?

Wheeler: Probably the biggest single area is strengthening our management team. As one grows, one needs people with different skills. In the early phase you require more entrepreneurial management abilities to get you to $100M, which we've passed. The need now is to prepare the management team to take us to higher levels. We've already begun. We recruited a new CFO who started with us last January for our next phase of growth, to ensure the company is adequately capitalized as we progress.

SI: How do you view the trend toward the fabless model?

Wheeler: Potentially, it might put considerable discretionary purchasing power in the hands of the fabs. I believe it's going to be interesting to see what happens now, after the most recent downturn, because there are many wireless and communication companies that have been very hard-hit. It'll be worth noting whether they move toward that model in the future. I suspect some of them will. For us, as vendors, we have to recognize that our efforts, therefore, have to go into establishing relationships with some of the foundries. And this is something we're pursuing both in the areas of silicon and compound semiconductors — we won't be left behind.

SI: What is your opinion of the feeding frenzy of consolidations that has been taking place?

Wheeler: There is a theory that states you must grow to a certain size. You then must ask yourself why do you have to do it. I believe that it's to get sufficient profitability from the business to enable an investment in R&D — which is one argument. But then, there are many mergers and acquisitions that don't succeed. You must be very cognizant about why you are doing it. Size for size's sake is not necessarily a good thing and can actually derail a company. However, the consolidation trend will continue.

SI: Would you consider it for Trikon?

Wheeler: Over the years, we've been approached several times. If the right partner came along we'd consider it. We don't necessarily believe consolidation is the only way to go. What we have to continue to do is innovate. That's the key to prosperity and survival.

SI: We're going through one of our industry's worst downturns, and hoping that it'll end soon. Any ideas on how we might mitigate or perhaps prevent these cycles?

Wheeler: I wish I knew the answer to that! We get these huge periods of growth (and 2000 for us was unprecedented) and then, like someone flipping a switch, we fall into a downturn. This is of deep concern for businesses such as ours. We must protect the things that are valuable to us, such as our engineers. We want to provide them with good, steady employment. Constantly, as these cycles come and go, you run the risk that people conclude that their livelihoods are potentially threatened by them if the profit motive (which most definitely exists in a public company) must be maintained. I don't believe there's an answer.

SI: Which industry trends should we pay more attention to?

Wheeler: Designers work toward smaller and faster devices, and I don't believe that this trend will end any time soon. We'll continue moving toward larger wafers and new materials — copper and low-k are an example. Things are bound to get interesting at the 0.10 and 0.07 µm technology nodes. I believe new techniques will be introduced to deposit the copper interconnect, quite different from what we are using today.

SI: If you could, what would you change in our industry?

Wheeler: (Smiling) These feast-and-famine situations we go through.

SI: How will Trikon look in five years?

Wheeler: We'll be a significantly different company — we'll be widely recognized in the industry because of the growth we expect to achieve with our technology and the management team we're putting in place. I would like to think that by then, whenever anyone is making an equipment decision, we are one of the companies that immediately comes to mind.

SI: Any advice for your peers?

Wheeler: Hire the best people that you can and encourage them to innovate — take good care of them. That is this business's lifeblood. If you have good technology and good marketing, you can position yourself well both for good and bad times.