Stephen Schwartz, Asyst Technologies President and CEO

Stephen Schwartz was named president and CEO of Asyst Technologies in August 2002. He joined the company in January 2001 as senior vice president and was promoted to executive vice president in October of that year. Prior to joining Asyst, Schwartz spent 14 years at Applied Materials. He received his BSEE, MSEE, and Ph.D. in electrical engineering from Purdue University. He also holds an MBA from the University of Chicago Graduate School of Business.

SI: The industry is undergoing what is probably the worst downturn in its history. You've had layoffs and announced net sales of $57M for the fiscal fourth quarter, which ended in March, vs. $75.6M for the prior quarter. Like everyone else, you have orders from customers, but they are delaying execution. How do you see the outlook for the rest of 2003?

Schwartz: We're on a course that will enable us to be very successful as a company. Long- and short-term events don't change the strategy in place nor the path we're on. We are in an industry that provides tremendous opportunities being, as we are, in the automation space. The move to 300 mm on the fabs' part is increasing our prospects even more. The amount of revenue opportunity per fab more than doubles going from a 200 to a 300 mm fab. So from a focus and strategy standpoint, we're most definitely staying the course. That being said, like everyone else, we do need the industry to pick up before we see appreciable improvements; however, we're bullish. Without a doubt, 300 mm is here. It's no longer an "if" thing — it's a 10-year program that we've been on — and without question, there's traction. There are still considerable opportunities in the 200 mm area. The timing of all this, of course, will be as it becomes more affordable. This means that there will be much quicker turn-ons and, unfortunately, quicker turn-offs in terms of 200 mm. We're positioned very well in both. For the industry at present, there's still a great degree of caution. We think that the second half of the year will be stronger than the first, but we also have to be cautious.

SI: Have you had to implement additional strategies in response to the downturn?

Stephen Schwartz (Source: Asyst Technologies)

SI: Will there be anything left in the United States?

Schwartz: We don't have anything here. We'll do a little bit of pilot development locally. We still do manufacturing in Asyst Japan, but it, too, will be outsourced.

SI: Will you implement any other measures — cost-control or otherwise?

Schwartz: We're running pretty lean, like everyone in the industry. We've been through some pretty significant reductions in force, not just from the manufacturing side, but also across some of the products. We've consolidated or sold some of the companies we've acquired over the past few years to gain efficiencies and focus on our core business of automation. Presently, we're taking a serious look at our cost structure to lower the break-even even further.

SI: Have any of your procedures and processes changed or become more efficient as a result of the downturn?

Schwartz: So far, over the downturn, we've focused on market-share gains around our core business. We've looked at how we do automation inside the fab. Over the last couple of years, we've focused business units and general managers on market-share gains in 300 mm. There are some things that we don't want to do. We don't want to be in a heavily commoditized business — we cannot sustain the necessary R&D to bring more gain to fabs if we're in a commoditized business. So we continue to move toward significantly higher levels of integrated automation. Some eight months ago, we acquired 51% of a joint venture, Asyst-Shinko, which is the automated materials handling business from Shinko of Japan. They're by far the market-share leader in 300 mm, and we're adapting all our core capabilities, along with Asyst-Shinko's, and working to define our capabilities of total automation in the fab, rather than being component suppliers for the equipment.

SI: Have you been able to maintain your R&D efforts during the downturn?

Schwartz: We've tried our best to do so. We've had to cut dramatically in many places, but we have been able to sustain R&D, since that is where our company's future lies. We recently announced with Mattson Technologies a beta agreement to take a very novel concept for a tool front end to the front end of some of the Mattson tools. This is a step toward the way we'll provide a different kind of capability at the fab level of automation, when we take the automated material handling system and the tool front end and make them into an integrated automation system.

SI: How have your customers changed since the downturn?

Schwartz: They're more focused on cost, efficiency and productivity. Technology used to drive much in the industry, but now everything seems to orbit around efficiency and cost structures in the fab. It goes beyond getting better prices from suppliers. They expect you to bring more capability to productivity, to efficiency, to the sources of waste that might exist in the fab. There is a huge emphasis across the industry in terms of improvement in the performance of the fab's $2B or $3B investment.

SI: Does this mean your customers expect you to provide them with more expertise than you did before?

Schwartz: Definitely, and it is driven by the scarcity of their resources. When they can outsource a capability, technology or expertise to someone who can deliver responsibly, they do so. This provides us with a great opportunity, as people who do automation, which is still a fairly new capability for many of our customers. Also, with all the consolidation and joint ventures going on, the relationships we have with our customers are particularly important. If you watch what's going on in Japan with the formation of Renesas Technologies and Elpida Memory, and with UMC and their relationship with various partners, it becomes clear that customers with whom we've had relationships over the years change as they consolidate and merge, almost as if they were new customers, which complicates how any supplier deals with them.

SI: What have you had to implement to accommodate the way your customers now do business?

Schwartz: They are pretty demanding about additional support and resources. We must focus more, from an account standpoint, on how to serve fewer customers involved in 300 mm. As we change the company, we continue to have significant regional resources in Asia, China, Taiwan and South Korea, but we must provide resources dedicated to these 300 mm accounts.

SI: Sounds like your presence at the customer will increase.

Schwartz: Certainly, they are looking to us to perform more of the automation implementation and support. We're driving ourselves to be in the center of this trend.

SI: If anything positive has resulted from the downturn, it is that it has shown us our weaknesses. Is there anything you plan to change when times improve?

Schwartz: We are making changes now to deal with any cyclical part of the business. One of the things that moved us to outsource as much as we have is that, when another downturn comes, we want to at least break even as a company. The actions we're taking now are aimed at that, and to ensure that we perform differently when we head into the next downcycle. We plan to stay lean and focused.

SI: Is growth becoming more difficult?

Schwartz: It always feels that way when you're in a downturn. We're still pretty bullish on the growth opportunities that exist, particularly in the automation space. The things that customers require us to do provide greater growth opportunities than those available in other parts of the semiconductor equipment space.

SI: How do you differ from your competitors?

Schwartz: One of the things we're doing differently from what our competitors provide — our robotic tool systems at the front end, for instance — is moving to integrated front ends, which our Japanese competitors haven't done successfully. We have the interoperability capability required, as well as the expertise to ensure all systems work together in the fab. We're different in that our competitors are in sectors of factory automation, whereas we are across its entire spectrum.

SI: What should your end users expect from you in two years?

Schwartz: They'll have performance guarantees at the fab level for automation — very different from what they can get today from anyone, and which they need for their operations. This will be similar to what they get today from process equipment suppliers.

SI: Are there any industry trends that we should be looking at?

Schwartz: Surely the industry's significant move to China. This is on everybody's mind — what the implications of this shift are. We have considerable infrastructure in China, with more coming in, and we're balancing it against the continuing needs of customers and the support capabilities we have in Japan, Taiwan and even North America.

SI: We're still stuck in one of the industry's worst downturns, and pundits are already discussing the next one. Is there anything that can be done to minimize these cycles?

Schwartz: Diversify to mitigate. With Asyst-Shinko, we've gone into flat-panel displays. This will at least mitigate the effect of these extreme cycles.

SI: What should we be preparing for in two years?

Schwartz: As semiconductors become even more pervasive, these drivers will continue to support our industry's +10% annual growth. By then, we should be in the middle of an upturn. The number of competitors will come down due to attrition and consolidations.

SI: Do you see Moore's Law running out of steam any time soon?

Schwartz: Everything points to at least another 10 years. I think what happens then will be determined more by economics than technology.

SI: Are there any industry problems you'd like to see go away?

Schwartz: Market forces cause most of the industry's problems, the move to less expensive regions, changes from an outsourcing standpoint. These are difficult to control because we move enormous human and capital resources around, trying to satisfy the markets. Not much can be changed here.

SI: What will Asyst look like in five years?

Schwartz: We'll be a much more significant part of the fab's operation. By then, fabs will be $5B organizations, and the technical capability around the automation's productivity and the productivity of the capital investment will fall, to a greater extent, upon us as we acquire responsibility for the material in the fab. This is different from a single process tool, different from a single technology — the movement of the material in the fab and optimizing the efficiency of that will be the major opportunities for use of the capital, and we'll be in the middle of that.

SI: Any advice for the industry?

Schwartz: Let the automation companies take up the automation responsibility. There is a lot of inefficiency built into the fab because there are things being done by each company individually. For example, the tool's integration into the automation system in the fab is typically done by each OEM. I'd encourage them to outsource that knowledge and capability — there are huge gains in the industry supply chain to be made if that happens.