Aaron Hand

Cymer Outlook Reflects Advanced Lithography Climate
January 31, 2008

Cymer Inc. released its quarterly and annual revenue results earlier this week. I won’t regurgitate all the numbers for you here, but let you read the release directly (hint: follow the link). But I did want to comment on what I see as a few key highlights of the release and related conference call.

Given the company’s powerhouse status in providing lightsources for such emerging technologies as immersion lithography, double patterning and extreme ultraviolet (EUV) lithography, it was interesting to hear its executives’ perspectives on the marketplace. Although analysts and other company execs are painting a pretty gloomy picture for 2008 capital spending, and the laser system outlook is really no exception, it’s interesting to see the potential growth at the leading edge — particularly in the latter half of the year.

In 2007, Cymer’s XL-platform ArF lightsources accounted for 65% of system shipments, according to CEO Bob Akins. In the fourth quarter, Cymer shipped “multiple” XLR 500i lasers (the company’s immersion system), which should be installed in the near future. Those immersion sources accounted for 4% of 4Q07 shipments. While that might seem like a small percentage, it’s actually significant enough to bring Cymer’s currency-adjusted annual average selling price (ASP) for 2007 to a record $1.25M — ~25% above the 2006 level, according to Akins.

Some concerns have been raised about demand falling for flash memory, which has been a key market driver of late. But Akins contends that things are still looking good in that market, and he continues to be “very bullish.” Although SanDisk business and profitability has fallen, for example, the company does face stiff competition in the flash marketplace.

Interesting to note is that Cymer keeps track of the actual number of pulses used on its systems, so it can track the demand for its tools that are already installed. In 2007, pulse utilization went up 20% over 2006, so the demand certainly appears to still be there. And the laser supplier still points to its memory customers as the primary contributors to pulse utilization (followed next by foundries).

With memory still calling the shots (so to speak), it shouldn’t be surprising that there’s an overall push to advanced litho technologies. In addition to the order ramp beginning this quarter for Cymer’s 500i immersion system, Akins also made note of the 600i, a high-power, 90 W laser based on the 500i ring architecture. Its raison d’être is double patterning — specifically to get more throughput from those systems that are going to cause a hit in productivity. The first shipments of the 600i are expected in mid-2008.

But also on the radar, of course, is EUV. With Cymer’s laser-produced plasma (LPP) source chosen by ASML for its high-volume manufacturing EUV tools, Cymer stands as a good bellwether to the state of that sector of the industry. However, Cymer’s vision is only as good as ASML’s vision, so Akins deferred the question of whether or not Cymer is likely to bring in any money on EUV in 2008 to the toolmakers.

But while that question remains a bit murky, it certainly would appear that the market is still looking relatively strong on the advanced front — at least by the second half of the year. And in the meantime, while prospects are looking grim for equipment sales in the first half of the year, Cymer has its consumables business to carry it through. If luck is with Cymer, the company might even make a little money this year on its TCZ joint venture with Carl Zeiss.

Posted by Aaron Hand on January 31, 2008 | Comments (0)