News Article

Headline News (Headlines News)

Terrorist aftershock reverberates through the compound semiconductor industry The horrific loss of life in the terrorist attacks in New York City, Washington DC and Pennsylvania on 11 September touched companies within the compound semiconductor industry. Employees from Raytheon and MRV Communications were among the passengers on the hijacked airplanes. The economic consequences, although they pale into insignificance alongside the growing tally of dead and missing, will also be huge (see ). As this issue goes to press the stock markets are reeling from one of their worst weeks since the Great Depression, dashing hopes that "patriotic investing" and aggressive buy-back programs might support share prices. Further details of the financial effects of the attacks are contained in our Portfolio section (p87). Many are clinging to the hope that the downturn, though steep, might be short. Alan Greenspan, chairman of the Federal Reserve Bank, in his first public appearance after the attacks, acknowledged that economic activity in the US "ground to a halt" for a week words that did little to stop the sell-off on Wall Street. But he went on to say that prior to the attacks the economy had been showing signs of picking up. And while the magnitude of this event would no doubt "have significant effects on the US economy over the short term," he also said that the economy has become "increasingly resilient to shocks," in part because of deregulation and advances in technology. In the long run, he said, the prospects remained undiminished for faster growth in productivity, which is Greenspan s favorite driver for non-inflationary growth. What lies ahead? Not surprisingly, analysts within the compound semiconductor industry have been hard-pressed to identify any silver linings to the massive cloud that is now hanging over the economy and the American psyche. Analysts at CIBC World Markets resumed their client advisory service when the markets re-opened on 17 September, despite the fact that their headquarters at One World Financial Center are near to "ground zero" and remain unusable. Amazingly, everyone at CIBC survived the attacks. In the fiber-optic sector, CIBC s chief "take-away" message is that the impact would be only modest, possibly slightly positive or slightly negative depending on the company in question. CIBC analyst Jim Jungjohann made the following specific points:
  • Despite the sudden surge in Internet usage that followed the attacks, there are few indications that bandwidth usage will reaccelerate. "Don t look for a pick-up in WDM spending until possibly the summer of 2002," he advises.
  • There may be a short-term upswing in demand for home broadband access DSL lines, cable modems, etc but this is just a temporary blip rather than a meaningful, permanent increase in demand patterns.
  • Expect to see increased spending on storage-area networks (SANs). Traditionally, only the largest of companies have been spending on SANs; Jim Jungjohann now expects it to spread much further.
  • Finisar is one of the leading component suppliers in the SAN market. According to chief financial officer Steve Workman, current demand among SAN equipment manufacturers is primarily for 2 Gbit/s components, with both VCSELs and Fabry-Perot lasers being used. The launch of 10 Gbit/s standards is expected soon. In the wireless area, CIBC analyst Dale Pfau noted how the aftermath of the terrorist attacks showed "the significance of mobile personal communications, and perhaps highlighted the weakness in some of the carrier infrastructure networks." While he did not revise his estimates for wireless handset sales (380400 million units in 2001; 440460 million units in 2002), he does believe that the recently renewed interest in mobile communications could help to move sales "closer to the higher part of the ranges". In addition, infrastructure spending may pick up sooner than expected. Pfau said that "the deferred capital spending by the wireless carriers could become painfully evident as coverage and capacity problems throughout the networks are exposed." And, looking at things as optimistically as possible, it could be argued that the introduction of 2.5G phones now looks more promising. Pfau advises that since these phones will have "always on" data communications capability, and constant access to news and updates, they could be the "killer app" that is needed to jump-start sales of the next generation of handsets. Transportation The impact of this event on aviation in the US will be profound. Even after any lingering aversion to flying wears off, travelers will have to contend with a whole host of new consequences. Among the possibilities: fewer flights, fewer airlines, more frequent interruptions of service, higher airfares and significantly longer check-in times. Shipments of goods will also be affected. Immediately after the attacks the FAA banned freight shipments from passenger planes, sending shippers scrambling for alternatives. More than three-quarters of US domestic air cargo moves on dedicated freight-only airlines, but half of all international air freight is carried as "belly cargo" on passenger planes. Within two days of the attacks the semiconductor industry began to see the impact, as shipments between US fabs and their packaging operations in Taiwan and the rest of Asia slammed to a halt. One week after the attacks the FAA lifted the outright ban, but imposed much more stringent security guidelines on all air cargo. As this issue went to press, carriers were reported to be making good progress on working their way through the accumulated freight backlog. But even after the situation has stabilized it is expected that freight will travel more slowly and that costs will rise. "Just-in-time" inventory control systems at some companies may need to be overhauled in response, especially if future sudden interruptions in service seem likely to occur. A few of the US compound semiconductor fabs reported that, one week after the attacks, they were beginning to feel the pinch as supplies of some critical materials run low. Suppliers in Europe and Asia who buy materials from the US will also be affected, and not even sea traffic is immune. "We are trying to ship our European ocean freight, which normally ship out of Port Newark or Elizabeth to Europe, via Canada," said John de Neufville of Voltaix, a New Jersey-based producer of germane and other flammable and toxic gases. "We shall see whether this attempt to solve the problem causes more than one week s delay, as presently scheduled. A longer period may cause customer problems." Defense The nature of the response to the attacks by the US and other countries is still largely unknown. It is therefore difficult to predict what the impact on the defense industry will be. Defense contracting in the compound semiconductor industry has moved to the back burner in recent years, but it should be noted that as recently as 1995, military applications and related R&D sustained the US compound semiconductor industry. Via US Department of Defense programs such as MIMIC and MAFET the US GaAs industry was a major contributor toward, and a huge beneficiary of, efforts to improve the radar and electronic warfare capabilities of the US military. It seems likely that new technology efforts will be needed for the war against terrorism. Even the most sophisticated of today s technology was not appropriate to deal with the attacks on 11 September. New ideas (laser-based biometrics, microwave-based transmission of video from the cockpits of airliners to ground control, etc) are already being circulated. However, it is yet to be seen whether increased funds will be available for their development. On a personal note In June 1963, when a divided Germany was the front line in the Cold War, US President John F Kennedy visited the Berlin Wall and famously said: "Two thousand years ago the proudest boast was civis Romanus sum. Today, in the world of freedom, the proudest boast is Ich bin ein Berliner." In the aftermath of the attacks, I received an e-mail from a reader in Berlin who expressed his sympathy and his sense of personal involvement in the event by saying that "we are all New Yorkers now". Within the pages of this magazine we have always avoided political or personal commentary, believing that such content is out of place in a trade publication. But the impact of the events we have just seen is of such a magnitude that they cannot go unremarked. It seems to this author that they were attacks against liberty, individualism, and a belief in the constructive progress of the human race. I also think that these three things are what make high-tech industries tick. Our industry may be small, but it is very cosmopolitan, with every region of the developed world making important contributions. For myself, for the reader in Berlin, and I m sure for many others, the devastation at the World Trade Center and the Pentagon has sharpened our understanding of just how interconnected we all are, personally and professionally, across the globe. Legal battle intensifies as Shuji Nakamura sues Nichia By Jon Newey The legal battles surrounding nitride-based blue LEDs took a new turn on 23 August when Shuji Nakamura filed a lawsuit in the Tokyo District Court against his former employer Nichia. Nakamura is claiming 2 billion ($17 million) in damages from Nichia for failing to properly compensate him for his work with the firm. He is also claiming rights to one-thousandth of the patent for the basic production method of blue LEDs, which was the key result of his work at Nichia. Nakamura says he is entitled to compensation under Article 35 of Japan s Patent Law which gives inventors the right to "due compensation" for their achievements from employers. So far most of the legal activity concerning nitride-based blue LEDs has been based around infringement lawsuits between the different companies that develop and manufacture such devices (see Compound Semiconductor August 2001, p21). The case will be eyed with close interest, as it is uncommon for credit for a patent to be contested between an individual and his previous employer. Insufficient compensation Nakamura s troubled relationship with Nichia has been chronicled in an autobiography (see Compound Semiconductor August 2001, p25). Nichia began commercializing blue LED technology in 1993, and Nakamura was largely responsible for the approximately 100 patents the company holds in this field. For any patent applications he filed, Nichia paid him 10 000 ($85) with another 10 000 paid upon the patent being granted. Given the now-obvious commercial value of the patents arising out of his work, Nakamura clearly feels this was not "due compensation" and more money should be paid to him. After 20 years employment, Nakamura left Nichia at the end of 1999 and headed for the University of California at Santa Barbara (UCSB), where he was recently named as the first recipient of the Cree Chair for Solid State Lighting and Displays (see page 15). Suits and countersuits Another factor prompting Nakamura s action was the lawsuit filed against him in December 2000 by Nichia. This was apparently motivated by Nichia s fear that Nakamura would disclose confidential information to UCSB and other organizations including Cree, with whom Nakamura has a consulting contract. "My frustration built up because the Nichia suit took so much time away from my teaching [at UCSB]," explains Nakamura, "and I decided to sue them in return." "Japan became an economic giant thanks to manufacturers and their engineers, but Japanese engineers are treated very poorly," continues Nakamura. "Some Japanese companies have begun paying engineers bonuses of 10 million ($85 000), but that is almost nothing compared to compensation levels in the US." Nakamura hopes that by filing this suit he might help improve the treatment of engineers in Japan. "They will benefit if I win," he says. Inventions made while working for a company are usually viewed as company property, and individuals rarely claim rights to their achievements. This pattern may well change as there are a growing number of legal disputes between companies and researchers. Nakamura s case is seen as important because of its high profile, and because the outcome could have major implications for Japanese companies and their employees. In Japan such actions are thought to be the result of the changing labor market and employment system. The job-for-life with regular promotions, bonuses and salary rises is being left behind as Japanese firms cut costs to compete in tough global markets. Employees are far more willing to move to other companies and the reduction in long-term job security means they want to be rewarded for their efforts now, not after decades of service. Veeco Instruments acquires Applied Epi By Richard Dixon Veeco Instruments has acquired Applied Epi, an MBE component and system manufacturer, in a deal worth just over $132 million (approximately 4 million Veeco shares and $30 million in cash). Last year, Applied Epi was looking to raise cash from the equity market, and filed for an IPO in September 2000. With the industry downturn creating a highly unfavorable climate for IPOs, these plans were put on hold indefinitely. Veeco, which is based in Woodbury, New York, supplies process and metrology equipment to optical communications, data storage, research and semiconductor markets (see box). The company s products include ion-beam etch and deposition equipment, and PVD and CVD systems, in addition to a comprehensive range of test, metrology and characterization tools. The acquisition of Applied Epi bolsters Veeco s portfolio with the addition of MBE deposition systems for research and production, together with related MBE equipment such as effusion cells. The company also adds key accounts in the optoelectronic and wireless sectors to Veeco s fast-growing telecommunications base, which grew in sales from $20 to $80 million in 2000. "Applied Epi is a profitable, well-managed technology leader, with a large installed base of MBE systems," said Edward Braun, Veeco s chairman, president and chief executive officer. "By adding its MBE capabilities, we will be well positioned to play a leading role in the future integration of compound semiconductor and silicon device development. This important addition to our breadth of technologies will allow us to extend our customer base for optoelectronic telecommunications and wireless growth opportunities." Applied Epi is expected to achieve $50 million in sales this year. Based in St Paul, Minnesota, the company has an installed base of over 200 pilot production and research reactors, and more than 5000 deposition cells. Applied Epi recently entered the production MBE market with its GEN200 and GEN2000 systems. The latter is a 7 6 inch system designed for high-volume manufacturing. The company has sold at least six production systems to companies such as RFMD, Picogiga, IQE and Agilent. Since the merger was announced, says Edward Braun, Applied Epi has shipped a dual reactor GEN2000 to IQE (see ). Silicon manufacturing approach "Veeco brings the worldwide sales and service support and financial resources we need to serve our expanding customer base," said Applied Epi s president and chief executive officer Dave Reamer. "This merger will also benefit us in our quest to bring a more silicon-style volume manufacturing model to the compound semiconductor market. Veeco and Applied Epi have been on the same track in this respect, and the merger with Veeco solidifies this approach." "We also foresee a range of possible configurations that leverage the cluster-tool arrangement of our MBE system," added Reamer. "For example, it would be possible to bundle Veeco s mid-level processing and metrology tools with Applied Epi s reactor, which contains the requisite ultra-high vacuum environment." As part of the deal Reamer will retain his role as the company s president and chief executive officer, while founder Paul Colombo will support Applied Epi in a technical advisory role (see ).
    CS International to return to Brussels – bigger and better than ever!


    The leading global compound semiconductor conference and exhibition will once again bring together key players from across the value chain for two-days of strategic technical sessions, dynamic talks and unrivalled networking opportunities.


    Join us face-to-face between 28th – 29th June 2022

    • View the agenda.
    • 3 for the price of 1. Register your place and gain complementary access to TWO FURTHER industry leading conferences: PIC International and SSI International.
    • Email info@csinternational.net  or call +44 (0)24 7671 8970 for more details.

    *90% of exhibition space has gone - book your booth before it’s too late!

    Register


    ×
    Search the news archive

    To close this popup you can press escape or click the close icon.
    ×
    Logo
    ×
    Register - Step 1

    You may choose to subscribe to the Compound Semiconductor Magazine, the Compound Semiconductor Newsletter, or both. You may also request additional information if required, before submitting your application.


    Please subscribe me to:

     

    You chose the industry type of "Other"

    Please enter the industry that you work in:
    Please enter the industry that you work in:
     
    Live Event