67 WALL STREET, New York - July 10, 2012 - The Wall Street Transcript has just published its Electronic Components Report offering a timely review of the sector to serious investors and industry executives. This special feature contains expert industry commentary through in-depth interviews with public company CEOs, Equity Analysts and Money Managers. The full issue is available by calling (212) 952-7433 or via The Wall Street Transcript Online.
Topics covered: Electronics Manufacturing Supply Chain - Secular Connector Demand Growth - Automotive, Data Center and Mobile Spending - Component Price Erosion
Companies include: AVX Corp. (AVX); Arrow Electronics (ARW); RELM Wireless Corporation (RWC); T-Mobile (DTE.DE); and many more.
In the following brief excerpt from the Electronic Components Report, expert analysts discuss the outlook for the sector and for investors.
Gabi Seligsohn was appointed President and Chief Executive Officer at Nova Measuring Instruments Ltd. in August 2006. Having joined the company in 1998, he has served in several key positions in the company including Executive Vice President, Global Business Management Group, and President of Nova's U.S. subsidiary, Nova Inc. Previous to that, Mr. Seligsohn was Vice President, Strategic Business Development, at Nova Inc., where he established Nova's OEM group managing the Applied Materials and Lam Research Corporation accounts, and Global Strategic Account Manager for the company's five leading customers. Mr. Seligsohn joined Nova after serving as a Sales Manager for financial accounts at Digital Equipment Corporation. He holds an LLB from the University of Reading in England. He was voted CEO of the year for the Israeli high-tech industry by an Israeli management institute in 2010. Mr. Seligsohn also was recently ranked third in a survey covering Israel's 100 largest publicly traded companies conducted by the nation's leading financial daily newspaper among 120 financial institutions.
TWST: Let's start with a quick corporate profile of Nova Measuring Instruments. What is its core business?
Mr. Seligsohn: Nova is a player in the optical metrology sector, which is measurement equipment that is involved in monitoring the manufacturing of semiconductors. So our equipment fits in wafer-fabrication facilities called fabs that manufacture the actual semiconductors themselves. The list of customers, just by way of example, includes Samsung, Hynix, TSMC, Micron, Elpida, UMC, GLOBALFOUNDRIES and others.Our equipment is made such that it actually measures and allows feedback on process parameters while the process takes place. Today, the semiconductor-manufacturing process consists of about 1,200 discrete steps. Those steps are primarily done over four areas in the manufacturing fab, which include photolithography, etching, CVD and CMP. Our equipment performs measurements during, before and after these processing steps.Measurement is performed by shining a ray of light at the wafer itself and collecting the diffraction of that light from the wafer. By doing so, we can actually provide the customer information that is critical for meeting the process specifications, such as the materials that we are looking at, what is the different thicknesses of the materials that we're looking at, and actually, in the last few years, also provide a profile of the structures within the chips themselves - things such as the transistor, which is the core element of the chip.
TWST: Who predominantly makes up the customer base at this point, and what are some of Nova's lead products?
Mr. Seligsohn: The area of semiconductor manufacturing continues to consolidate over the years, and the reason is that these days it costs several billions of dollars to build a fab. To start a fab, usually customers try to put together a facility that would manufacture somewhere between 30,000 and 50,000 wafers per month, and the initial investment is about $4 billion to $5 billion just to build a fab and to have that kind of capacity. Thereafter, over time, they keep on adding capacity and the cost of the additional capacity would be anywhere between $50 million and $80 million per every 1,000 wafers that they are adding, capacitywise.The reason I'm telling you this before I talk about the specific customers is that the list of customers that influences the industry is very small, so small that 80% of the spending on capital equipment, which is the sector that we're in, takes place in the top seven players. So it's a very consolidated market, very concentrated as far as spending is concerned.
Our largest customers are TSMC, which is the world's leading foundry; Samsung, which is the leader in memory; Hynix, which is another key player in the memory sector; UMC, which is a big foundry; and GLOBALFOUNDRIES, which used to be AMD and was spun out into a foundry business model. Who else? I mentioned, obviously, the Micron group also in the memory sector are a significant customer of ours. So these are the key customers. And these customers that I mentioned are in the top 10 list of the top manufacturers and spenders on equipment.As far as what it is that we actually sell these customers, we have two major products that make up most of our revenues. One is called integrated metrology. This was our invention in the mid-1990s. What we had invented, and continues to be a critical part of our business, is a miniaturization of measurement equipments such that you could actually put it onto the process tool itself by bolting it onto the tool's wafer-automation system.The need to use an integrated metrology unit arises when a particular step in the process is so unstable that it suffers from variability on a wafer-by-wafer basis.
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