- Still optimistic about 2H10. Management sees broad-based strength in memory and foundries; the company plans nine tool shipments in the September quarter and says December revenues may surpass the prior peak of $299M seen three years ago. "Varian remains one of the key names where we believe risk to numbers is to the upside in the coming quarters," he writes.
- Core business, and adjacent growth. Management targets 30% operating margins for its core business and increasing total noncore markets served (materials, solar, other)
by >$1B. VSEA hopes to ship a Solion tool in 1H11 to new customers.
- Widening the gap in implant. Ongoing shrinks provide more challenges in leading-edge chipmaking: ballistic particles, gate resistance, short channel effects, leakage/damage recovery, and tighter process windows -- and things will continue to get harder. Look for Varian to grow its 75% in core implant in 2009 to 78%-79% in 2010 and possibly more, Muse says, with focus in Japan (>50% of the market) and Taiwan (85%-90%). A multisystem win by Axcelis at Samsung likely represents an unsurprising second-sourcing move rather than a shift in tooling strategies, Muse notes.
Plasma doping (PLAD) technology has found a home in DRAM, where it eliminates a litho step in dual poly gate (DPG) -- "Samsung has nearly fully adopted PLAD for DPG," Muse says -- and should top $85M of VSEA's sales in 2010, from zero in 2006. Future growth is seen coming from expanded use in DRAM (p-type counterdoping to reduce contact resistance, n-type poly gate doping) plus logic and NAND flash (floating gate doping or surface level contact resistance doping). VSEA's first recognized revenues for a logic PLAD tool should happen after April shipment, with projected $60M in revenues outside of dual poly gate DRAM.
- Implant intensity is growing. Implant steps for foundries increases 2.4×-2.6× going from 6Xnm/4Xnm to 2Xmn nodes, and each step takes longer; drive current leakage and contact resistance are key problems to overcome. Muse sees implant staying at ~4% of total wafer-fab equipment spending this year, and probably growing from there, led by enhancements/add-ons including co-implants.
- Robust IP, new products. VSEA's bread and butter is in precisely modifying a material's electrical/physical properties, so its core IP is in implant, silicon processing, and platform engineering. That spells business and growth opportunities both inside and outside the semiconductor sector: isolating electrical properties and changing crystallinity (semiconductors, strained silicon, SOI, LEDs), changing reflectivity/refractivity (solar, optics), modifying mechanical properties (e.g. MEMS), seed materials (graphene and carbon nanotubes), and pacification (solar and LED).
Looking specifically at the solar sector...the company's first production Solion tool should be shipped sometime in the next month, plus demos at multiple customers in 1Q11; and the company has "a roadmap for multiple generation tool improvements/ enhancements over the next decade," Muse writes. For c-Si solar firms, Varian can enable higher cell efficiency (19.5%, with >22% on the roadmap) and lower manufacturing cost/W, buy reducing the number of process steps and improving uniformity. Future plans include implanting boron which will enable an n-type solution (which can improve cell efficiency by 2%), and ultimately target the interdigitated backside contact cell (adding >4% improvement in cell efficiency). Muse runs down the tool shipment plans for CY10: 6-9 beta tools, three for p-type (~$9M), six for n-type ($18M), and nine for IBC ($27M). The company is targeting $25M-$30M in solar sales for 2011 (Muse thinks $40M is possible) and $100M-$300M for 2012.
Carl Icahn apparently has again raised his ownership stake in Mentor Graphics, now achingly close to the 15% threshold trigger of the company's June 24 "poison pill" amendment, which was viewed as a preemptory response to just such a move.
Like so many others in the industry, Magma Design topped estimates in its fiscal 1Q11 (July-ending) quarter and raised its outlook for the next quarter and full-year, citing improved visibility; management sees 25% growth for calendar 2010, with more activity at leading-edge nodes. DA Davidson's Tom Diffely points to management's confidence in the pipeline (FY11 order outlook is >$160M) and generally "bullish view of the EDA market." He's also tweaked up his expectations for FY12 sales (to $152.5M, 14%-17% growth) and EPS (adding a nickel to $0.38).