News Article

Skyworks Pushes Tegal To Another Profit

The advanced etch systems provider posts its second profitable quarter in succession and its best operating income for seven years.

Plasma etch and deposition equipment specialist Tegal recorded a net profit of $2.8 million in the quarter that ended on December 31, 2007 "“ a huge improvement on the $6.1 million loss that it had posted a year previously.

A repeat order for an advanced etch system from GaAs manufacturer Skyworks Solutions was one of the key reasons behind that swing, as Tegal registered sales of just over $10 million in the quarter.

The financial performance is further evidence of the turnaround at Tegal under CEO Tom Mika, who said that the company s latest operating income figure, $1.7 million, was its best since December 2000.

Tegal s systems are used in a range of advanced semiconductor processes outside of the mainstream silicon industry, covering MEMS as well as compound semiconductors. Mika explained that this market focus should protect the firm from the economic slow-down that looks likely to hit those in the DRAM memory sector:

"Since we are not in mainstream semiconductor markets, we are somewhat immune to industry fundamentals, which appear to be negative due to the overall memory pricing environment and other factors."

Indeed, Mika told investors that any impending slow-down could be good for Tegal. "We believe that this is an ideal time to introduce new products, as customers have the capacity for new tool evaluations," said the CEO.

One of Tegal s most promising forthcoming products is for nanolayer deposition (NLD). The company says that a potential customer should be ready to start evaluating one of its beta tools in the summer, and that it has other good prospects for future sales.

Mika indicated that Tegal would be using some of the income that it is now generating to support the development of more beta tools.

Although the diversity of the market for advanced etch systems makes it a difficult one to quantify, Mika believes that it is growing very quickly. He said that the annual addressable market for such equipment, worth around $80 million currently, should near-double to $150 million within a couple of years.

• Investors appeared impressed with Tegal s latest figures; the company s share price jumped 30% in early trading on February 6, the day after the results were released.

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