KLA-TENCOR Corporation (KLAC), an original equipment manufacturer (OEM) of process diagnostics and control (PDC) equipment, recently launched its first 450mm process control equipment. The Surfscan SP3 System as it is called is a tool for inspecting the wafer surface with the ability to detect surface quality after deposition and/or etching and create maps of the surface that could facilitate correction.
The drive toward 450mm wafers is increasing, with Intel Corp (INTC) putting $4 billion into ASML Holding (ASML) for the research and development of 450mm technology. The transition of larger wafer sizes is a big positive for the chip industry, since it enables significant cost reduction, thereby facilitating the move toward the mobile and emerging markets.
Surfscan SP3 450 is the upgraded version of Surfscan SP2/SP2XP. The latest version has thrice the data processing capacity and better sensitivity, as well as higher resolution.
All these qualities make it ideal for manufacturers to deliver superior quality wafers to meet the chip manufacturer’s strict guidelines. The inspection equipment can be used at the chip level, or substrate level.
To survive the cutthroat competition in the semiconductor industry, companies are scrambling to come out with sleeker and smarter devices at lower cost. Chipmakers are therefore under great pressure to provide increasingly complex devices at lower costs. This is playing into KLA’s sweet spot, because its equipment is used to increase the efficiency of the manufacturing process.
In the third quarter of 2012 and in fiscal 2011, KLAC earned 56.0% and 64.0% of revenue respectively from the defect inspection segment alone. As may be expected, the segment is more insulated from ups and downs in the market, because of the increased efficiency.
As per U.S. research firm Gartner, the semiconductor industry is expected to generate $312.0 billion in 2012. IHS iSuppli is even more optimistic, estimating total revenue of $324.6 billion this year.
KLA reported revenue of $840.5 million in the third quarter of 2012, which was up 30.8% sequentially, 0.8% year over year, better than the guided range of $770-830 million and well ahead of the consensus estimate of $802.0 million.
Currently, KLA-TENCOR Corporation has a Zacks Rank of #3, implying a short-term Hold recommendation.
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