Gary Alexander, SEC/N President
-- Semiconductor International, 3/1/2001
 Gary Alexander (Source: SEC/N)Gary Alexander (Source: SEC/N) |  |
Gary Alexander is founder and president of the Surplus Equipment Consortium/Network (SEC/N) Inc. (Paradise Valley, Ariz.). In 1974, Alexander joined Motorola's semiconductor operations in Phoenix as product distribution manager for the photomask organization. He later became a business and capital-planning manager for Motorola's international manufacturing operations. With the decentralization of Motorola's international manufacturing facilities in 1991, Alexander moved to the sector sourcing organization, with specific emphasis on semiconductor used equipment. His responsibilities for used equipment included representing Motorola on the SEMATECH Surplus Equipment Council (SSEC). In March 1998, Alexander retired from Motorola and founded SEC/N, the trade association for the semiconductor industry's used-equipment segment. Alexander holds a bachelor of science degree in industrial management from Miami University (Oxford, Ohio).
SI: How did SEC/N come to be organized?
Alexander: The idea grew out of the SSEC, a council founded in the late 1980s by SEMATECH member companies involved in buying and selling used equipment. Over the years, the council learned that there was a significant advantage in having a network and being able to dialog with reputable companies when it came to buying and selling used equipment. You did not have to go through a middleman, but more importantly was the fact that we stood behind the equipment and took care of it, making it very advantageous to buy from a member company. We also found out that we really didn't have the horsepower (we had our own jobs and so forth) to do the same things for the industry at large, even though we knew it was something necessary — there had to be a reliable third party when it came to dealing with used equipment in our industry.
SI: So the transition came when the council realized it couldn't devote the necessary staff and resources to this?Alexander: Yes, although the SSEC is still very active. We were realistic enough to realize that, first of all, since not everybody is a member of SEMATECH, the council couldn't speak for the industry. Secondly, our limited resources did not allow us to champion this effort for the industry. We tried several approaches, such as the SSQA, SEMATECH's quality systems review, and it was definitely a positive. The companies that we worked with were pleased with the results and agreed this was a much-needed service. Of course, we knew we couldn't provide the service on a wider scale due to limited resources, and we were both frustrated and happy about what we had been able to accomplish within the SEMATECH council.
SI: What finally got you to start SEC/N?Alexander: It was suggested that I, or some other knowledgeable person, be hired by a used-equipment supplier to become the third party for the industry. However, it was quickly decided that this wouldn't work because if any one company funded it that company would be suspect because of the profit motive. We floundered a bit about how we could make it work. Then in 1998, after I became eligible for early retirement at Motorola, five companies — Applied Materials, Applied Mechanical, Comdisco Electronics Group, Group Five and Versatile Technologies — stepped forward to provide the seed money for what would become SEC/N. We announced the formation of SEC/N at SEMICON West in 1998.
SI: Did this mean you left the SSEC?Alexander: No, we continued to work closely with the SSEC, and eventually organized SEC/N around an advisory board made up of the founding members, and with the SSEC's co-chairs invited to participate on the board. In that way we would maintain contact with the organization that preceded us, although legalities did not permit SEMATECH to become a member and vice versa.
SI: What is SEC/N's charter, its intent?Alexander: The stated mission is to provide a forum and leadership that provides companies the opportunity to buy and sell quality used equipment and services in an open, informed and professional market.
SI: Is SEC/N international in scope?Alexander: Because the majority of the used semiconductor equipment at that time was bought and sold in the U.S., we decided to initially focus on the U.S. The first year, we watched closely to see whether this was something that made sense for the industry. Today, SEC/N's international activities have grown faster than anticipated. Initially, we co-exhibited with our member companies, and once we determined that what we wanted to do was viable, we met with SEMI and, as a result, they committed to help us roll out the concept worldwide by working with them at the various SEMICON shows internationally. In May 2000, SEC/N exhibited in its own booth at SEMICON Singapore. We then went on to do SEMICON Japan and Taiwan. As a result, we now have regional councils in Singapore and Japan, and expect to have one in Taiwan soon. SEC/N will be exhibiting at SEMICON shows in Korea, China and Germany during the first half of this year.
SI: How are you funded?Alexander: Completely by annual membership fees. It costs $4000 per year to become a member. This includes everything, such as the equipment referral program. However, referring used equipment is not a primary objective of SEC/N. In fact, our mission statement says nothing about selling equipment. We continue to receive requests for information about reputable equipment, but we have no intention of putting together and maintaining a list of all the equipment our member companies have to sell — that would be a monumental task.
SI: So how do you work it out?Alexander: We work it according to need, not equipment lists. It's a free service to the industry. Anybody, worldwide, interested in locating a piece of equipment can log into our Web site, where there's a page devoted to locating equipment (last year we had over 24,000 hits), and input specific information such as manufacturer, model, wafer size, country it is going to and so forth. We receive this information on a daily basis and send it to our member companies, also daily. These requests are out there for only five days — they get dropped on the fifth day — and the new requests are added as they come in. So there is no need to do the kind of maintenance and updating you would need for an equipment list — it's both self-updating and self-servicing.
SI: Say I put in a request. What happens next?Alexander: If one of our member companies can convey title — either as brokers for another company or as owners — then we tell them who the requestor is, and we let the requestor know about the company or companies offering that equipment, and then we're out of the process. It's up to the company and the interested party to negotiate over the equipment. There are no fees associated with this because we felt that our member companies were making a significant effort in supporting and funding us and deserve recognition for doing so. But more importantly, if we are the industry's trade association, we must provide an environment where the industry can come for information.
SI: How much equipment would you estimate has moved because of SEC/N's intervention?Alexander: In the last year we had over 750 requests that we shared with our member companies. Of those, there were over 450 that we were able to go back on and say, 'Here is a piece of equipment that might fill your needs.' After that point, we don't track what happens.
SI: What would you estimate is the worth of the used semiconductor-equipment market?Alexander: We're working with SEMATECH to derive a formula for establishing that metric, which we can then turn over to a third-party industry organization that tracks metrics. For the year 2000, the number that we all seem to agree with is approximately $2B. Unfortunately, no one has a more precise figure. With new equipment, it's very easy — you can ask a company like Applied Materials, for example, how much they sold. When it comes to used equipment, you enter a gray area.
SI: SEC/N has established guidelines for used equipment, which can be regarded as standards. What's the story on this?Alexander: The first of these was the Equipment Condition Index (ECI). It was absolutely the most important one to begin with because it gives the people who buy and sell a quantifiable, more objective way of explaining the equipment's condition instead of just saying I have a used 8330 for $300,000 and someone else has another one for $400,000. There was no way to differentiate. We established the ECI, which has 21 equipment categories from new never been used, to resold as junk in a box. This version of the ECI served well for the first two years or so. We're now in the process of revising the ECI to make it easier to use and more objective. We're also working to establish decontamination standards for the industry. This is somewhat more difficult, because it must be driven worldwide. We're close to publishing what we believe will be standards for the whole industry in this respect. We're also working on contractual guidelines for used equipment — if you're not familiar with what this type of contract should cover, you can be burned pretty badly.
SI: What will SEC/N look like in a couple of years?Alexander: During our first two years we did not publish anything resembling a long-range plan, because we were still trying to figure out whether this was something that the industry would accept. This last year we've been looking back at what we've done and are asking a lot of questions, particularly as we go international. This adds an entirely new third dimension to it — an additional one for whatever country you happen to be in. We've been on a learning curve the last couple of years. Now we'll begin driving a long-range plan, starting at the March SEC/N conference. Personally, I think that what we will see over the next couple of years is that more and more of the major corporations — whether equipment or chip manufacturers — will realize the value of being networked, not just for buying or selling equipment, but with competitors, brokers, all aspects of the industry, whether it is the de-installers, the decontaminators, etc. Companies are going to need well-thought-out strategies so that not only their customers understand what they are doing, but their own salespeople and purchasing organizations.
I believe SEC/N has opened the door to a more synergistic industry relationship. This is the only place I know of where all aspects of the industry come together in one organization. In SEMI, for example, the chip manufacturers are somewhat excluded because SEMI is comprised of primarily equipment and materials suppliers. In SEC/N, companies from all segments of the industry come together to address common areas of interest and promote a more professional used-equipment marketplace.SI: How does a company join SEC/N?
Alexander: To become a member there is no form to fill out. You must apply through a letter that describes who you are and what you do in the industry, why you want to join and what you're going to bring to the party. After you've signed the SEC/N Code of Ethics stating that you'll live up to it, the letter is circulated worldwide to all our members, who then have five days to challenge it. There is no vote as such, but they may say, 'Good company,' or 'I don't know them,' or 'There is some history here that you should be aware of.' Then I go back to the applying company and we discuss it, to clarify what may be an old rumor with no reality behind it, or a real problem. Assuming the situation can be reconciled and the process is completed, the applying company must still find two members of SEC/N willing to publicly sponsor it into membership. So while there is no vote as such, there must be two member companies willing to publicly state, worldwide, that they sponsor you.
SI: What happens if a member company doesn't live up to SEC/N's expectations?Alexander: If you don't live up to the Code of Ethics — in a documentable manner — then it's very simple. We notify you that your membership is being rescinded and send a worldwide communication to the other member companies, indicating that your company's membership has been suspended for a violation of the Code of Ethics. No further explanation is needed. We have never had to do this — SEC/N membership is taken very seriously.
— Alexander E. Braun
