A Positive Move for Applied Materials

Implications: Varian and Axcelis have long controlled the beamline-based implant market so this is no surprise. Applied's market share was relatively small by comparison and primarily within in the EU.

GCIB (Gas Cluster Ion Beams) and plasma immersion technologies are still largely in R/D. This could be a potentially better fix for Applied Materials' tool platforms if they were to decide to compete in this arena.

Analysis:

Aside from AMAT, in the past 2-years we saw Axcelis lose market share to Varian for medium and high current beamline tools. Varian beat Axcelis to the market for single-wafer tools that give better accuracy and uniformity than batch systems for advanced feature sizes. This trend could change shortly with Axcelis’ current Optima-MD/HD entries.

Applied’s exit affords both Varian and Axcelis some opportunity to capture additional market share.  However, three factors could favor one over the other:

(1) Semiconductor growth – expected to be flat to low single-digit throughout 2007

(2) Management style for Varian & Axcelis and ability to react quickly to the next-generation technolgy changes.

(3) Acceptance and utilization of cluster ion-beams and how rapidly the industry moves to 45nm and 32nm and what the transistor source and drain regions look like.