Expert's Panel

A collection of timely and important topics posed to our panel of experts.

What is the cost versus benefit of participating in alliances? Give some examples.

 (ep1049)
1. Let me give some examples of ones I have seen work well. A typical alliance in this industry might be a photoresist company making an alliance with a stepper company. You don't put a lot of money into it and you generally get a lot out of it. The two of you come up with a process that you agree to cross-license or cross-patent and both of you can enhance your product.
2. What Novellus has done is really genius. They decide what process and market share they are going to go after and what it takes pre and post-process. If they don't have the technology they will go out and find someone who does—for example Speedfa—and form a consortium. If you go into the Novellus apps lab you will see Speedfam equipment and Gasonics etchers for pre-cleaners and wafer descumers, and Lam etching equipment. Those that use the Mesa-Mesc interface you'll see Lam etching modules cook literally right on the Novellus tool. So in their apps lab they can run the process for the customer and the customer says "all I need is to get this from Novellus, this from Lam, etc", and they have a solution that Novellus couldn't do by itself. It's very effective. If there is a new process Where the Speedfam CMP machine won't work, but say Ebara's might, they will do an alliance with that company. The downside is you don't have total control so you are very dependent upon each other. Second there are some customers that want one point of reference—what happens if it breaks? Who is responsible. What Novellus has done—this is public knowledge—they have defined, up front, the ground rules everyone signs up to and so far they haven't had a major problem
3. If the alliance you are talking about is the OEM where the final user is the buyer of the OEM product that contains your product, and the final user has a choice between your product and another one, then the answer to the question on cost is "more than you think and more than you expect." Your CFO is usually delighted with OEM alliances because he or she thinks that the OEM is going to go out and sell your product. If you think that is true, I have a bridge to sell you. You basically have a duel selling job in that situation—push on the OEM and pull from the end-user.
4. I think there is an overall trend toward the alliance. We've mentioned Ultratech's involvement in this new alliance called Advanced Packaging Interconnect. I saw equipment and materials people come together to do that and it was the first time the industry has done something that dramatic and has been that public about it. The advantage is that you don't have to take each component of the process and establish it. I think it is the strategic move of the future.