FREE subscription
Subscribe for free to receive each issue of Semiconductor Today magazine and weekly news brief.













































15 February 2007


Tegal’s sales dip further; signs up Korean distributor

For its fiscal third-quarter 2007 (to end-December 2006), Tegal Corp of San Jose, CA, USA, which manufactures plasma etch and deposition systems, has reported revenues of $4.4m (down 14% on the prior quarter and 30% on a year ago).

“Revenues were lower this quarter because of the timing of shipments of advanced tools, a factor which continues to drive the variability in our quarterly results,” said chairman, president and CEO Thomas Mika. Shipments included an advanced etch system for high-volume manufacturing of integrated passive devices to one of the world’s largest semiconductor companies and a repeat order for a 900 series etch tool from a California-based optical networking company.

“We also had a number of other factors that affected our profitability this quarter. These included a low-margin shipment, a significant inventory write-off and unusually high service expenses, which will not reoccur,” said Mika. “In addition, we recorded $1.2m of litigation costs, which will be reduced drastically in future quarters,” he adds. In November, Tegal’s PVD subsidiary Sputtered Films Inc (SFI) agreed to terms settling its trade secrets case against Sergey Mishin, Advanced Modular Sputtering (AMS), Agilent Technologies Inc, the Avago Entities and other defendants. A final confidential settlement agreement was executed on 21 December.

Gross profits have fallen from 47% last quarter to -30%, partly due to an inventory adjustment of $1.7m (the write-off of inventory associated with the firm’s 300mm PVD product and unusually high service expenses). Operating losses have risen from $1.2m a year ago and $3.1m last quarter to $6.4m (although this would have been $2.5m without $2.7m of non-cash charges and the $1.2m of litigation expenses). Net loss has risen from $1.9m a year ago and $3.3m last quarter to $6.1m. However, cash reserves have risen from $10.5m at the end of last quarter to $29.5m.

“Now that we have been able to put behind us the costs and distraction associated with three years of litigation we are focused on new initiatives to improve our business,” Mika continues. “We are in the process of integrating the AMS deposition tool into our operations and beginning to provide field support to former AMS customers... This addition to our product portfolio will help Tegal consolidate a dominant position in the RF MEMS arena, which includes important new devices for advanced cell phone and wireless applications,” he adds. “We also continue to make progress toward introducing several new products, including our Compact platform and Nano Layer Deposition (NLD) system, which we expect to be into beta sites within the next few months.”

Current order backlog is $5m. “We believe that next quarter will be more representative of our overall trend toward an improved business model and improved profitability at both the gross margin and operating levels,” concludes Mika.

*Tegal signs distributor agreement with Korea’s Westpac

Tegal has signed an exclusive agreement, covering an initial three-year period, for Korea-based Westpac Associates to assume responsibility for Tegal’s sales and field service support operations in Korea.

Founded in 1989, Westpac is a full-service representation/distribution company specializing in front-end process, packaging and metrology equipment for semiconductor, MEMS, LCD, LED and other electronics devices. The firm provides sales, technical service for installations and warranty, distribution and related business consultation.

The agreement is “an additional step in our overall strategy to enhance our distribution and support services globally, and especially in Asia,” says Mika. Westpac was most recently the AMS representative in Korea and was previously the representative for Tegal’s PVD subsidiary Sputtered Films Inc. “There are some very good signs of renewed demand for our specialized systems in Korea,” claims Mika.

Visit Tegal :

Visit Westpac: