Franz Richter, SUSS MicroTec President and CEO

Franz Richter is president and CEO of SUSS MicroTec (Garching, Germany). He received degrees in mechanical engineering and in applied technology and physics from the University of Munich and the Technical University of Darmstadt, Germany, respectively. He also has a Ph.D. from the Technical University of Aachen, Germany. After holding several R&D positions at Vaillant, Carl Zeiss, and the Fraunhofer Institute for Laser Technology, Richter joined SUSS as R&D manager in 1990, and was appointed CEO of the SUSS Group in 1998. SUSS MicroTec (formerly Karl Suss) supplies equipment and process technology for packaging, microelectronics and MEMS, and test systems.

SI: We've gone through a very difficult period in our industry, and we're still feeling the effects. How have you coped with it and what's the European perspective?

Richter : Our annual figures show, surprisingly, in view of the general state of the semiconductor equipment industry, that we've grown an additional 30%, after an 85% growth the year before. We've gone from 162M Euros in 2000 to 214M Euros in 2001. The reason, of course, is that we aren't really selling into the mainstream semiconductor business. We serve certain niches — packaging and compound semiconductors — so we're not that much in the mainstream. These emerging markets are growing very quick and robustly, and there's growth even during a downturn. Of course, in 2001, we started off with a significant order backlog — as did many others. However, since midyear we've also seen a downturn in orders, and the weak market conditions have continued into this year. We see an upswing coming, but the timing is unclear.

SI: In view of all this, how do you see the order situation?

Franz Richter (Source: SUSS MicroTec)

SI: Is there anything that you are planning to change in the company?

Richter: We've already gone through a number of changes. Right now, we're consolidating. I expect we'll continue as we have over the last two years, following a trend leading us from single machines to more systems — in packaging, for example. For years we've offered proximity lithography systems. A couple of years ago we began adding the steps before and after lithography — spin coating and development. Now we offer a set of three platforms. We've done well with this and with the recent announcement of our new 300 mm lithography cluster, which integrates a mask aligner module linked to a spin-coating system. It's been successful because users can track each single wafer through the whole process, instead of by cassette, from one machine to the second to the third. This a trend we'll also continue with compound semiconductor systems.

SI: What do you see as your next big growth areas and how are you planning for them? Will you increase your presence in Asia?

Richter: In 2001 we were doing considerable business in Asia — not including Japan, which we consider as a separate region. During 2000 we grew considerably in Asia — not only percentage-wise but also in absolute figures. This was principally because of the advanced packaging, wafer bumping as a step for flip-chip bonding, that mainly takes place in foundries in Asia — Taiwan, Singapore and Korea. They've all gone through the technology transfer and implemented pilot lines. We expect volume to kick in with the next upswing. In the U.S., we experienced a significant 9/11 impact. We didn't book any net orders — zero — for the whole second half of that year. Historically, 40% of our orders come from there, so for us the worst downturn in orders came from North America. The industry isn't going to change, and I believe that there's a considerable demand building up in North America. I expect that things will pick up by year's end.

SI: You mentioned your presence in Asia. Can you tell us more about this?

Richter: We've had a service center in Shanghai for about 15 years. Some years back, we sold several machines in Shanghai, and things began developing quickly about two years ago so we opened an office in Shanghai for China, and in Hsinchu for Taiwan. These markets — packaging and compound semiconductors — are growing strongly, and today we have 22 people in Hsinchu and 10 people in Shanghai. This is all service and spare parts. At present we do not have any manufacturing activities, but we're looking into it, especially in China.

SI: Times are difficult, and these aren't easy activities you're carrying out. Does it seem to you that growth is getting more difficult to accomplish?

Richter: There's no doubt about it, particularly as you get larger. Historically, since 1993, we've had a 30% CAGR (compound annual growth rate). As the company has become larger, 30% in absolute numbers each year requires much more effort to attain. Conversely, it's all been organic growth; we haven't acquired any companies to add revenues. We wish to continue on this track. While it'll make it more difficult to grow, we're increasingly going into production. We expect packaging to provide new opportunities.

SI: So you're planning to grow your technology in-house and not by acquisition.

Richter: Correct, which isn't to say we wouldn't consider an acquisition if it fits with our guidelines.

SI: Which are?

Richter: Innovation or a strategic element. We acquired a precision photomask company, Image Technology, in Palo Alto, Calif., last year, because for our kind of lithography — full field as opposed to steppers, which do a partial field using a smaller mask — masks must be larger than wafers. To ease our customers' concerns about where to get this type of mask, we bought Image Technology and now offer 14 × 14 in. masks. This is what I mean by the strategic element.

SI: Not much competition here.

Richter: (Laughing) We all have these dreams of high margins and no competition. There's always competition and, if there isn't, this doesn't last long. This is why we're moving away from just offering a product to offering a solution for a process, and delivering more than just a machine. We partner with different companies through the Semiconductor Equipment Consortium for Advanced Packaging (SECAP) to deliver total solutions. This is necessary because our customers are no longer interested in just buying equipment. They have production problems and want solutions.

SI: So you provide expertise as well as platforms.

Richter: Exactly. Within SECAP we have a research institute: academics from the Fraunhofer Institute in Berlin who are worldwide recognized experts in packaging. Our equipment line is installed at Fraunhofer, and customers can come with wafers and go through the whole process prior to spending any money or purchasing any equipment.

SI: So experts from academia qualify your processes.

Richter: That is so. After the equipment is purchased and installed, customers can return to the Institute to get input for process improvement — all the necessary tweaking and tuning. If something doesn't work, they have a stable of Ph.D.s to help them. We're working on similar arrangements with institutes in Taiwan. We've set up a network of experts, which makes customers more confident and relaxed. We came up with this idea because things like lithography are front-end processes, but application and packaging are at the back end, and many customers were concerned over these processes. Now they have the support they need. We can help with the interfaces between the different platforms and can guarantee a certain yield.

SI: What are your thoughts on the buyouts we've been seeing in the industry?

Richter: Clearly, each and every crisis tends to end in some sort of a consolidation. When there's a downturn, companies die at its end, not at its beginning. Even if the upswing takes place, there are still cash problems. On our side, we're always looking. We just did a capital increase in January, got about 33M Euros from the market specifically for this purpose: to be able to do small acquisitions of companies that fit into our model and our requirements.

SI: Because it's often the smaller companies that come up with the new technology, do acquisitions stifle innovation?

Richter: Possibly. In our situation, for example, we aren't looking to the acquisition of revenues, but of innovations as strategic elements of our plan. In general, that's what large companies do — buy smaller companies that have great technology and aren't able to survive on their own.

SI: Is there anything we can do to reduce the industry's up and downs?

Richter: A couple of years ago, when the downturn was just beginning, I participated in a SEMICON West panel. We were discussing, prior to 9/11, how the year might develop. We noted that the equipment industry's long-term growth over years has averaged about 17%. In 2000 there was an 80-85% growth, so there were two possibilities: a downturn, or an adjustment of the long-term average growth, which is unlikely. And we've had the worse downturn ever. However, remember that the year before, we had the highest increase ever. I've heard major companies talking about controlling the cycle better — still, over the years we don't seem to be any closer to it than before. The severity of this last cycle may also be part of the price we must pay for globalization.

SI: How's that?

Richter: It wasn't that long ago that industry cycles trended different in the U.S., Europe and Asia. Today, it's no different for Intel or Infineon in America than it is in Europe or Asia. World markets are beginning to march in lock step. We must get used to the fact that, if something happens in America, it'll have instantaneous effects in Japan and Europe.

SI: If that's the case, will the implementation of the European Union cause these events to have more effect in Europe?

Richter: Certainly, although we aren't as closely knitted as the United States — there's no United States of Europe yet — but we're headed there. If you look at Europe solely as an economy, then we have three large countries: us, the U.S., and the Asian-Pacific Rim. So there aren't going to be too many differences in the industry's development in these regions.

SI: What will SUSS MicroTec look like in five years?

Richter : We'll be at 500M Euros plus. We're achieving critical mass and are evolving from an R&D equipment provider to a production partner. This will continue with packaging, compound semiconductors and MEMS, our principal three growth areas.