Mary Puma, Axcelis Technologies President and CEO

Mary Puma has been president and CEO of Axcelis Technologies (Beverly, Mass.) since January. She served as president and COO from May 2000 until January of this year, and as vice president from February 1999 through May 2000. In 1998, she became general manager and vice president of the company's Implant Systems Division. In May 1996, Puma joined Eaton Corp., Axcelis' former parent company, as general manager of the Commercial Controls Division. Prior to that she spent 15 years in various marketing and general management positions at General Electric Co. Puma has a bachelor's degree in economics from Tufts University, and a master's degree in management from MIT Sloan School of Management. Axcelis manufactures ion implantation and RTP platforms, as well as cleaning and curing systems.

SI: Tell us a little about your promotion from president and COO to president and CEO.

Puma: Brian Bachman was brought into the business in July of 2000 to take the company public and get us well-established as an independent organization. He was chartered with setting up a team able to take the business to the next level, which, of course, he did. We launched in July 2000 and have already been through six quarters of strong performance, even though the industry has been down. We have a great team now — it's a mixture of semiconductor industry experience, technical depth, and business process focus. At that point, Brian decided that he had accomplished his mission and was ready to move on.

SI: You mentioned the state of the industry. Obviously, Axcelis faces the same problems as everyone else in the industry: You've had layoffs, and your 4Q02FY sales results are down 74% from the same period in 2001. How do things stand now, and what are your expectations for the next 12 months?

Mary Puma (Source: Axcelis Tech

SI: You're not new to the company, but you're certainly new to the position of CEO. What are your short- and long-term plans and strategies?

Puma: Brian (Bachman) hired me into Eaton 51/2 years ago, so we worked together for a long time, and I've been in this business now for four years. Brian and I have been very aligned in terms of business strategy as well as how to run things. So, out of the box, you shouldn't see any significant changes either from a strategic or operational perspective. We intend to continue with our strategy, which is to maintain our leadership in ion implantation and grow the complementary businesses that we've built around that core.

SI: So there is nothing that you are planning to change in the company, say, within the next 18 months or so?

Puma: (Laughing) Eighteen months in this industry is a very long time! Obviously, a strategic plan is a living document. Based on what I see today, nothing will change, but you never know what'll happen in terms of the industry consolidating, and with customers, peers and competitors. No one really knows where he's going to be in 18 months — hopefully, we'll be executing along our path. Based on the industry's fluidity, however, how we get there might change.

SI: What do you see as your next growth areas and how are you planning for them?

Puma: We have 39% market share in ion implantation and have two product areas we're keying up for growth over the next five years or so. One is dry strip, where we've had 14% market share in 2000, and have done very well on 300 mm wins. So as the market for 300 mm grows, we think that we're well-positioned to gain some share there. Also, it's become an enabling technology with the shift to low-k materials in the BEOL, so there's growth there as well.

The other area for significant growth potential is RTP, where right now we're a very small player but have a new breakthrough hot-wall technology vs. the lamp-based technology. We can offer our customers greater than a 30% cost-of-ownership advantage. We've demoed it, and four of our customers have already designed it in and we've shipped it to six fabs around the world. We believe that this tool will provide explosive growth for us in the future.

SI: What is your thinking about acquiring technology through consolidations — is it a good idea, or does it sometimes make the process difficult to digest?

Puma: Integration is never easy. Success is, to a great extent, a function of execution and how well the company has thought things through in its integration process plan. Most companies that are going to be successful must do both. They need the organic growth that comes through R&D investment, and they need to supplement that with business development opportunities whether these are joint development programs, partnerships or acquisitions. There are a number of models that have proven to be very successful in the industry.

SI: Strictly from innovation's point of view, do you view the many consolidations we've had recently as a good thing?

Puma: Whether they're good or bad is a moot point, because I believe that they're inevitable. As industries mature (and as an industry we've been around for 30-plus years), it's going to happen. It's a function of who ends up pairing with whom.

SI: What do you plan to do differently from your competitors?

Puma: I think we've been doing a good job competing. We're market leaders in implantation, and endeavor to stay ahead through technology excellence — this is our philosophy. I tell our employees that technology is the ticket to the game, but it no longer is the only thing that's going to make you win.

We have three strategies: technology leadership plus operational excellence plus customer partnerships. These strategies are executed by our people, so our corporate culture is also very important. We work to drive efficiency and effectiveness into everything we do. This has allowed us to free up cash from operations and feed it back into technology. We've been able to increase our R&D as a percentage of sales because of this. In 1995, our R&D effort was about 5% of sales. In 2000 it was about 10% of sales and, last year, mostly as a function of our revenues being down, it was over 20%. In reality, last year we had a hard increase of investment in R&D dollars of 10%. We're trying to balance all this. On the customer partnerships area, we focus heavily on how to best support our customers locally. We've been organizing around our customers to do global customer management.

SI: R&D is not an inexpensive undertaking, plus you have to produce and develop equipment that must meet increasingly stringent requirements, which your customers want at a lower cost. Is the time coming when companies such as Axcelis will have to ask customers to share some of these expenses?

Puma: (Smiling) I'd love to say yes! However, in truth, I don't see a major shift from the model. We get benefits from developing products for our customers. When we put a beta tool in, it is great for us but it is a great expense to our customers. This is why it generally is so difficult to get them to accept new tools. Even with a free demo tool there is considerable time, effort and wafers spent in getting it up and running, and qualifying it for their processes. So when they do that for you, while they're not actually paying out money, they're spending quite a bit. They already work with us in the development of the technology.

SI: In your opinion, are there any industry trends that we ought to be paying more attention to?

Puma: The level of consolidations is something that we need to watch out for. Certainly, Moore's Law — can we carry it on and still remain on the roadmap? I believe in the idea that, while the technology is really critical, the differentiator comes from other things. Sometimes people lose sight of this because we're obviously still very much technically oriented. We need to acquire a broader business perspective about the definition of success, beyond being too narrowly focused on technology.

SI: We're not yet out of the downturn, and there's already talk about the next one happening sometime during 2005. Is there anything we can do to blunt the impact of these cycles?

Puma: I really don't know, and I suspect that those who say they do are not being very truthful. For years, I've attended meetings of the Industry Executive Forum, which is sponsored by International SEMATECH and major industry suppliers. We seem to talk about it at every meeting, and are unable to come up with any viable solutions. I have found from meetings with industry leaders — both customers and suppliers — that no one has a solution.

Part of the problem is that our customers don't have any better visibility than we do as OEMs. In the last week of 2000 we had a conference call to ensure everything had shipped. Fourth-quarter 2000 was our record quarter. One of our largest customers had sent an e-mail stating he intended to push everything out during the first quarter. This was one of our first big signs that things were beginning to slow down. However, two weeks before, that same customer had called us to push us to accelerate shipments. Clearly, they had no idea about what was coming at them. It hit them very quickly, then us, and then our suppliers. So something has to improve at the top of the food chain — what exactly, I cannot tell.

SI: What don't you like about our industry?

Puma: Besides its cyclicality? I was with GE for 15 years and moved around to many different businesses in many different industries. Even when I joined Eaton I was in a different industry. This industry isn't any different from any other, it just happens to be a little more mature. But the business issues are all the same. There's nothing better or worse about what we're doing today — we're just where we are in the cycle.

SI: You mentioned integration. Are you satisfied with the level of communication between you and your customers?

Puma: We have a good dialog. We read the literature and talk to analysts, then spend time with customers to try to understand where they're going from a roadmap as well as a demand perspective. They just don't have the answers, as I already mentioned. It would help some if there were a better way to model capacity to better align people, and have a better and faster flow of information from their customers to them and from them to us about what is happening. I doubt, however, that this would change things too significantly.

SI: Any advice for your peers?

Puma: The industry must move from a strict technology focus to a broader business focus. Technology is critical, but once you know you can meet the roadmap you must know how to run the business. We don't spend enough time on this. Many important companies are still run by the engineers and scientists who founded them, and their comfort zone is in technology, not business. A broader view is needed — the business model must be made to work.