So I was shocked when Doug asserted in this last call that ATMI would get back to the 2X wafer start growth rate, which means it is time for some math. OK, so he didn’t say it would necessarily occur in 2011, but we’ll use these numbers for giggles. According to Semi, wafer shipments will grow 6% in 2011 vs. 2010. If ATMI were to really grow at 12%, they would need to add $44M in revenue YoY. Let’s look at the ATMI businesses that can grow at this rate, 2X this rate, or less than this rate. First, SDS. If we assume that the SDS business has strong marketshare, it will grow around the rate of the market, barring pricing pressure or lost share, but we’ll call it 6%, or a $5.3M growth. From industry sources, the Nowpack business isn’t well regarded by customers or the resist companies, and ATMI has lost share, so let’s be generous and call that flat. I have no idea about the Life Sciences business, but since it isn’t tied to wafer starts, I’ll call that flat. Since we don’t know what comprises Other, we’ll grow that at 6%, or an additional $1.3M. That means that the copper portion of the business needs to add $37.4M, or grow 22%, 3.7X wafer starts. Obviously a lot of issues come out. First, we don’t know what the mix of this Copper category is, but presumably contains the plating chemistry, cleaning chemicals, deposition materials, and maybe even other stuff. ATMI is far from the market leader in these categories, so the growth rate instantly becomes a red flag. Second, the only way to grow that much faster than the market when no new broad market technology is coming into play is to take share, and I can’t imagine ATMI’s competitors being so poor at running their business that they could be beaten to that magnitude, despite Doug’s career-bet on the intermolecular robots. After years and years of hearing how they will accelerate R&D, and presumably new product revenue, we still haven’t seen a thing. Plus, we only hear about them in the context of aiding the development of the cleaning chemicals, so the potential benefit of using these tools to accelerate R&D is limited to some subset of ATMI’s copper category.
Once again, the reality of the numbers and the hype coming from Doug don’t tie out. Just do the math.