Preco Inc. President and CEO Mark R. Peterson
-- Semiconductor International, 8/1/2000
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| Mark R. Peterson, president of SCP Global Technologies, president and CEO of Preco. (Source: SCP) |
SI: You recently held your 7th International Symposium, and this was the first year Semiconductor International was the sponsoring publication. Tell us about the event.
Peterson: We started it for many reasons. One is to continue to help the industry's advancement. We wanted to bring together some of the world's leading technologists to identify and attack precompetitive work and breakthroughs in technology. Second, we believe it's important to partner with these leading technologists to better understand the problems they're facing and to develop the technology and enabling equipment to deal with them. As the conference has grown, we've had excellent worldwide participation from leading device manufacturers, other equipment suppliers and subsuppliers.
SI: It is not the usual sort of event.Peterson: No, we've structured the conference to be educational but also controversial in a constructive way. To me, the worst waste of time is a technical presentation where there's nothing new, and you realize you can get as much information by just reading the paper. We've tried to set up an environment for discussion because it is in spirited, red-faced exchanges that you're exposed to the most valuable arguments, counterpoints and information.
SI: The event has experienced considerable growth. Won't this eventually end this give-and-take, become a victim of its own success?Peterson: We have ongoing discussions on how to cope with our success — how to keep the discussions' intensity and spirit so people don't begin worrying about being politically correct in the middle of a debate. We've broken it into different sessions and working groups — to keep the smaller, interactive environment that enables this kind of discussion. We had 322 registered attendees, and I would not want it to go over 350. We feel that a more intimate environment is a more productive environment.
SI: What are your plans for SCP?Peterson: Prior to 1996, we were heavily focused on North American customers, and consequently didn't put too much effort into international growth. That was a mistake, and we were a little late in getting into the international market. As a result, our market share drifted downward. In the middle 1990s we were as low as number eight among the top 10 automated wet station manufacturers worldwide.
In 1996, we changed the name of the company from Santa Clara Plastics to SCP Global Technologies and started a big international push both in Europe and Asia. Since then, we have moved to number two in overall marketshare, and we hope to keep that trend going. ( Smiling ) We now have one spot left, and that's what we're shooting for.
SI: So the push was for greater international presence?
Peterson: Originally for bolstering our North American and European presence. We have retained our top market share position in North America and Europe for the past two years, and now we are working to get a stronger presence in Asia.
SI: Where in Asia?Peterson: Last year, we opened SCP Global Technologies Asia, in Singapore, as our Asian center of operations. Right now we have a sales, service and training organization. We're planning to establish an applications lab this year. We're also planning to add manufacturing capabilities. Prior to this, we'd been dealing through representatives with direct sales from the U.S. We've been successful in Singapore and Japan, and shipped the first automated wet station by a non-Japanese supplier into Japan. We're also beginning to get repeat orders. We already have equipment on mainland China.
SI: What about Taiwan?Peterson: Taiwan is our next focus. We've been successful in Asia, not as quickly as we wanted, but we're rated the second best supplier at the start-up in Singapore. We also received a fab manager award in China for our start-up, even though it is our first in mainland China. We are eager to apply this experience to our efforts in Taiwan.
SI: Other than a larger presence in Asia, is there anything else you are planning to change in the company?Peterson: Very much so. Technology development has always played a major part in our industry. We see two major thrusts taking place now - one, the continuation of past technical challenges, keeping up with the ITRS Roadmap, dealing with the various technical challenges that come up the pipe as a result of continuing to shrink devices into smaller geometries; and two, making equipment — and fabs — more productive.
We have programs aimed at not only continuing the basics of making tools, producing more wafers with lower costs and smaller footprints, but more importantly making them an integrated part of a better designed production line. I've heard colleagues, such as Brad Mattson, talk about how productivity will differentiate equipment in the future. If you look at their approaches and product offerings, it's clear they're making this a major part of their thrust. We're doing likewise — whether you look at the tools' information system design, to interfaces, to equipment size, it's all aimed at making our customers more productive.
On the technology side, we have a 58,000 ft2 R&D facility, with a 4,500 ft2 applications lab under construction. It has not only the metrology equipment we had in place but considerable new gear that allows us to look at surface preparation issues down to 0.09 and 0.06 µm particle sizes, as well as different film capabilities. We're raising the bar on technology capability and making the equipment more productive as part of an integrated production line.
SI: What are your next growth areas?
Peterson: Besides continuing to capture market share in Asia, the other area we're looking at is acquisition opportunities to consolidate the marketplace and add technology.
SI: Which technologies are you looking to acquire?Peterson: Primarily, enabling technologies that will continue to advance the state of the art in surface preparation. Secondarily, we're looking at complementary technologies for our products, which will allow us to continue integrating production processes. For example, if there is a tool that is used often either upstream or downstream of ours, and we can acquire a technology that would obsolete it and allow us to integrate that process into our tool, even if it took a radical redesign, we'd be very interested in it. Because it's clear to us that customers are interested in buying more integrated processes, fewer tools and more complete solutions from companies.
SI: Is growth getting more difficult?Peterson: No, I don't believe so. At least in our segment the bigger are getting bigger and the smaller are getting smaller. If you look at how many suppliers you need in our industry niche to get to 70% to 80% of the worldwide market, that number is dwindling continuously. This means our competition is easier to understand and monitor. Through worldwide standards, it is getting harder for companies to come up with really radically different solutions, so it's simpler to predict what's going to be successful and what won't. In the end, it comes to pure technical horsepower in terms of who can bring the best solution to the market.
SI: What are you doing that is different from your competitors?Peterson: Traditionally, we've always tried to keep our products extremely simple. For example, in the early 1990s, we were facing the dilemma in automated wet stations whether to go to a cassetteless approach, or do as some of our competitors — Dai Nippon and Tokyo Electron — advertised, and go to a reduced-cassette approach. After doing the engineering analysis, we were convinced that the simpler solution, which was more robust, easier to manufacture, and had lower cost and lower scrap rates, was the reduced-cassette. We stuck to our guns on that because it was simpler. A good segment of the market went cassetteless, only to turn around and come back a few years after. We never poured the R&D into developing a cassetteless tool because we thought it was technically challenging and of little advantage in the marketplace.
SI: So no bells and whistles?Peterson: There's bells and whistles and good engineering. Sometimes, customers ask why we don't have this or that feature, such as moving curtains between the tanks, or why don't we have more complex fluid nozzles in the tanks. It is simply because we understand the issues at a far more basic level. We don't have to use complex solutions to deal with what can be handled just through good solid engineering. This makes the tools smaller and easier to manufacture and service.
SI: Still, you have to innovate.Peterson: Absolutely, and we are! We're making our tools more information-productive. We're bringing software to our new platforms that is Internet-ready, e-diagnostic- and e-business ready. Our tools not only integrate well into an existing manufacturing system as it is being used in the marketplace, but are ready for the e-diagnostics customers are starting to warm up to.
SI: So you have Internet-ready platforms ready to go?Peterson: We've had them for about four years. We provided this service to one customer — but only periodically. This allowed us to actually monitor the tools directly from their factory. There are more and more customers now who are interested in seeing how we can do that for them long-term, and we're happy to show them we have been ready to do it for quite a while.
SI: What should SCP customers expect to see in a couple of years?Peterson: Certainly a continued offering of our basic product line tools. Also, a continuation of the conservative approach for those who stay with the older technology. We're demonstrating tools that embrace the latest technology in surface preparation and use simpler, reduced chemistries. Over the next two to three years there will be breakthroughs in advanced surface preparation that use completely new chemistries, which may not use water at all as a base solution.
SI: With copper and 300 mm coming in, what are some hurdles in your area?Peterson: There are several, and while some may sound trivial, they are the difficult ones we face. In the 300 mm wafer surface preparation area, because we are one of the few areas to at least have a current solution being based on batch wafer processing — front-end automation required to deal with the FOUP storage — batch wafer transfer continues to remain a problem. This is mainly because customers have different preferences about how the automation should be set up. Dealing with the differences you get in an international market is frustrating and has forced us to develop different solutions for those customers' demands, without any volume at this point. It has doubled and tripled the amount of engineering required for something that really is not adding anything to the wafer, just moving it around.
SI: Sounds like a lack of standards.Peterson: Correct. We must move beyond where we are today toward standards on wafer transfer and automation — truly international standards, because there is really very little opportunity to add value or differentiate in the automation area that is non-critical to wafer processing; all there is now is opportunities to screw up.
SI: Surely you see opportunities as well?Peterson: Unquestionably. On the wafer-processing side, I see great opportunities for us as an industry. Traditionally wet processing and surface preparation have been resistant to change, and we continue to build and sell tools that use more DI water and chemistry than has been required for a long time. I find this frustrating because in some ways it gives surface preparation a bad name. With 300 mm I believe people will get concerned about the amount of DI water the fab requires, and earnestly begin evaluating strategies for rinsing, dilute chemistries, alternative chemistries and simplified cleaning sequences. All these are doable, but just not accepted by the industry due to risk aversion. We're well positioned through our research and some pioneering customers we've worked with who have been aggressive about adopting those cleaner standards to bring those solutions to market.
SI: Are your customers as open as you'd like them to be about their requirements and plans?Peterson: Yes. They want us to make them successful. The trick is to get to the people who really run the fab and get to know their business at least as well as they do. Most understand there are some areas — the chemistries, for example — where we have good expertise. About the only difficulty we have after collecting all this information is bringing it back to the decision-makers and convincing them about what they need to do differently to be successful.
SI: The industry's fortunes seem to follow a sawtooth wave. What do you think we should do to ameliorate these cycles?Peterson: What is particularly frustrating about our industry is that it tends to be remarkably shortsighted. I don't know if it's due to the stock market, inexperienced young people, or if it's just due to being risk-adverse. The industry tends to make some really shortsighted decisions and therefore anticipates the future very poorly. People are spending far too much time looking for major inflection points under every rock. Any trend that pops up becomes an inflection point, and everybody runs off with very different strategies. We look for radical changes where maybe there aren't any.
If you look long-term at what the industry has done, it has been on a fairly predictable path. It's when you examine it quarter by quarter or even year by year that it becomes obvious it tends to consistently overadjust above or below the line. It comes down to people trying to grab market share, to be the first to do cutbacks so they can survive the down times better than anyone else by minimizing expense run rates. If everybody took a more cautious and long-term approach, fab expansion and silicon consumption would proceed in a much smoother way.
SI: How would you solve this condition?
Peterson: Unfortunately, the only solution seems to be to try to alter the paranoia and the fear existing between people's ears, and I haven't the faintest idea of how to do that. A number of our customers don't believe in forecasting any more. They no longer focus on forecasting, and grow more reactive insofar as equipment purchases and production are concerned. To me, making an industry and a supply chain more reactive is analogous to increasing the bandwidth on an op amp. If you want to dampen an electronic system like that you must add something to slow frequency response.
As we've moved away from forecasting and increased the system's responsiveness, we're worsening the oscillation frequency. I don't know that this will get any better. Statistically, the industry's oscillations are getting worse, more dynamic and more frequent. I do not see anything going on that might reverse that trend. Businesses like ours just have to learn how to survive and thrive in this kind of environment.
SI: Surviving and living aren't exactly the same.
Peterson: You're absolutely right. The unfortunate result is that in this environment, the wear and tear is worse on human beings. This is a reason why people tend to be highly compensated in this industry — because it's rough on them, burns them out. It makes it difficult for them to keep up, and eventually they become obsolete.
SI: Is this one of the reasons why the industry is so shorthanded?Peterson: A major reason. During the 1998 downturn, we had layoffs like everybody else. When we talked to our people in the exit interviews and asked where they were going, a majority told us they were leaving the industry and never coming back — they wanted something more stable. Now that there is an upturn, we find there really are not that many people who want to come back, regardless of incentives and stock options.
SI: What would you like to see changed in the industry?Peterson: I would like to see large chip manufacturers and system manufacturers pour some of the resources they are currently spending on technology into the supply management theories and systems that could stabilize this industry. We cannot continue to survive as an industry by hiring and training and then laying off people. There is a lot of lost value in this supply chain, just due to this oscillation.
On the standards side, I think the work SEMI and other organizations are doing to promote unified worldwide standards is great; we need more of it. The more we unify safety and other standards around the world the more we can eliminate some of the informal international barriers that still exist in the marketplace. The more manufacturers have to do to meet different standards, the more cost we drive into the industry for no added value.
SI: Do you think some of the industry roadmaps are too conservative?
Peterson: I believe they represent the average of the industry, not the leading-edge portion. This is a mistake. The ITRS should represent the leading edge of technology — not necessarily the bleeding edge, but certainly not the average. In that respect, yes, I do think the roadmaps tend to be conservative. People are working in the red areas before what is scheduled — but they are the technology leaders.
SI: What do you think we, as an industry, should be preparing for, in terms of the next three years or so?Peterson: We're going to be viewed as having more of an environmental impact, and we should prepare for it. There are some issues that need addressing, whether it be water consumption or chemistry use, to reduce these impacts. People are focusing on us as an industry, and we need to be ahead of that wave with real improvements. We also need to let the world know how clean an industry we really are. I think it is phenomenal, but if we cannot answer the questions, the media are going to jump all over us.
We need to be more aware of the beginning of down cycles, so we do not start working on those 30 fabs we're not going to need, in that way avoiding a longer, deeper downturn. The earlier we can start throttling back the better — and it all leads back to better forecasting. This would also enable us to prepare our people for downturns and become better employers.
There is also a remarkable lack of focus on technology advance at present. For the most part, everyone is trying to get copper and 300 mm implemented to get a competitive advantage. I don't see much effort going into plowing back resources to advance the technology — right now, everyone is focused on capacity. Over the past year, all I've heard is more fabs, capacity, give me tools, accelerate the delivery. We must not lose focus on the technology advance; we must continue it even through the downturn, so we can keep the industry at the pace it is on. •
— Alexander E. Braun
