Novellus Systems Inc. develops, manufactures, sells, and services semiconductor equipment used in the fabrication of integrated circuits. It is a leading supplier of chemical vapor deposition (CVD), plasma-enhanced chemical vapor deposition (PECVD), physical vapor deposition (PVD), electrochemical deposition (ECD), ultraviolet thermal processing (UVTP), and surface preparation equipment used in the manufacturing of semiconductors.
Novellus Systems was founded in 1984 and is headquartered in San Jose, California. The company maintains engineering & manufacturing facilities in Tualatin, Oregon and San Jose, California. Also, Novellus has a component design and software development facility in Bangalore, India.
Novellus Systems, Inc. (Novellus), together with its subsidiaries, develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits, commonly called chips or semiconductors. Customers for this equipment manufacture chips for sale or for incorporation in their own products, or provide chip-manufacturing services to third parties. Novellus also develops, manufactures, sells and supports grinding, lapping and polishing equipment for a range of industrial applications. Novellus operates in two segments: the Semiconductor Group and the Industrial Applications Group.
Semiconductor Group
The Semiconductor Group is a manufacturer and supplier of thin-film deposition and surface preparation systems used in the fabrication of integrated circuits. During the year ended December 31, 2010, net sales for the Semiconductor Group operating segment constituted 95% of consolidated net sales. The Semiconductor Group’s products include equipment used in the deposition of thin dielectric (insulating) and metal (conductive) films, as well as equipment used in complementary manufacturing steps, including surface preparation (photoresist strip) and ultraviolet thermal processing (film annealing). Novellus semiconductor manufacturing products are used in a range of different process steps. Its advanced deposition systems use chemical vapor deposition (CVD), physical vapor deposition (PVD), and electrochemical deposition (ECD) processes to form transistor, capacitor, and interconnect layers in an integrated circuit. Its high-density plasma CVD (HDP-CVD) and plasma-enhanced CVD (PECVD) systems employ chemical plasma to deposit dielectric material within the gaps formed by the etching of aluminum, or as a blanket film, which can be etched with patterns for depositing conductive materials into the etched dielectric. Its CVD Tungsten systems are used to deposit conductive contacts between transistors and interconnect or between layers of metal interconnect wiring. Its PVD systems deposit conductive aluminum and copper metal layers by sputtering metal atoms from the surface of a target source. Its Electrofill ECD systems deposit copper to form the conductive wiring on integrated circuits using copper interconnects. It offers products that address the needs of manufacturers across a range of different deposition technologies - CVD, PVD and ECD.
The Company's SPEED Max addresses dielectric gap fill at 65 nano-meters. The ALTUS DirectFill tungsten nitride/tungsten deposition system is designed for advanced contact and through fill applications at 65 nanometers and below. ALTUS DirectFill simplifies the tungsten deposition process by replacing the standard multi-tool approach with a single three-module system. The ALTUS Max CVD tungsten deposition system delivers contact and through fill technology in a platform that delivers more than 120 wafers-per-hour throughput. Its VECTOR is a PECVD system for depositing dielectric films on 300 millimeters wafers. During 2010, it introduced the VECTOR 3D system for dielectrics deposition in advanced wafer-level packaging applications, such as through-silicon vias (TSVs). In January 2011, it introduced the VECTOR Extreme TEOS xT system, a variant of VECTOR Extreme designed for the high throughput deposition of thick TEOS dielectric films used in memory chips. PVD, also known as sputtering, is a process in which ions of an inert gas, such as argon, are electrically accelerated in a high vacuum toward a target of pure metal, such as tantalum or copper. Upon impact, the argon ions sputter off the target material, which is then deposited as a thin film on a silicon wafer. The INOVA NExT platform incorporates a copper resputtering technology called HCM IONX to improve copper seed conformality, eliminate dielectric damage, and extend PVD technology for seed deposition applications at 32 nano-meters. During 2010, it introduced a version of the INOVA designed for copper barrier-seed applications in TSVs. The IONFLO copper seed in the INOVA 3D enables a four times reduction in the seed thickness required in a 6 micron by 60 micron TSV.
The Company's Electrofill products are used to build the copper conductive wires in advanced integrated circuits. Electrofill uses a copper electrolytic solution to create lines and vias in a dielectric layer, which has been etched with the pattern of the circuitry, in a process called copper damascene. Its SABRE Extreme is Electrofill system that has been qualified at 45 nano-meters and has demonstrated fill at 32 nano-meters. The SABRE Extreme incorporates a range of technological innovations for manufacturing applications, including wafer entry control for thin seed layers, tunable profile control for improved uniformities, and the capability to plate materials other than copper. During 2010, it introduced a new version of SABRE called SABRE 3D, designed for wafer-level packaging applications, including TSV, redistribution layers, pillars, under-bump metallization, and bumps. Its SOLA is an ultraviolet thermal processing (UVTP) system used for the treatment of dielectric films. SOLA is designed for materials, such as nitrides and porous dielectrics. During 2010, the G3D is a version of the GxT platform designed for advanced wafer-level packaging applications, including contact clean and TSV photoresist strip. Novellus provides the market with a range of refurbished process equipment. Novellus offers a range of older products, including legacy SPEED, ALTUS, SEQUEL Express, INOVA, SABRE, GAMMA, and MOMENTUM models. In comparison to buying a used system from an aftermarket vendor, purchasing a refurbished system from Novellus offers a range of benefits for its customers, including committed performance specifications, systems and service knowledge and expertise, and comprehensive spare parts knowledge and support.
Industrial Applications Group
Novellus entered into a market segment beyond semiconductor manufacturing through various acquisitions. This segment, referred to as its industrial applications group (IAG), develops, manufactures, sells and supports grinding, lapping and polishing equipment for optimization and serves a range of industrial applications. Its customers for this segment are manufacturers in sectors, such as automotive, aircraft, and electronic products, parts and components. Other customers are in the glass and ceramics industries, as well as manufacturers of products, such as pumps, transmissions, compressors and bearings. Its industrial business also depends on niche applications. Its industrial product range includes single and double-sided grinding, lapping and polishing machines; double-sided machines, which operate in batch processing mode for flat surfaces; inner and outer diameter surface grinders for cylindrical surfaces, creep feed grinders, as well as through-feed grinders, and deburring systems that feature a continuous feed of parts to be processed.
The Company competes with Applied Materials, Inc., ASM International, Mattson Technologies, Inc. and PSK, Inc.
One of the challenges Novellus met in retaining strong financials while working with Japanese customers (who still made up 25 percent of sales) was the slow payment habits of the Japanese (120-day cycles being common) and the rising value of the yen against the dollar. To alleviate these problems, Novellus established a $7 million line of credit in yen at Sanwa Bank and Bank of America in Japan. Upon billing of Japanese customers, Novellus drew yen from its accounts and sent dollars back through intracompany payments. Then, when invoices were paid, Novellus immediately replaced the money in the accounts. In this way, yen-dollar fluctuations presented no problem to previously completed sales transactions. In other countries with comparatively slow paying habits (including Korea, Taiwan, and Singapore), Novellus utilized confirmed letters of credit, guaranteeing payment within 30 days.
Applied Materials--the company that declined to buy Novellus in its faltering early years--filed a patent infringement lawsuit against the company in 1995. The lawsuit charged patent violation associated with the use, in Novellus's Concept One and Concept Two systems, of plasma-enhanced tetraethylorthosilicate (TEOS), a silicon-containing source gas used in dielectric CVD. In the $704 million CVD market, Applied continued to be the leading company in the dielectric segment. However, Novellus demonstrated higher growth than Applied in 1994, challenging Applied's market share. The case became more complicated, with two additional patent infringement suits, related to metal CVD technology, filed in association with the initial dielectric CVD technology suit. Novellus claimed that Applied's WxZ tungsten CVD system infringed on a Novellus patent, and Applied counterclaimed that Novellus systems infringed on a separate Applied patent.
Strongly Positioned for the Future
By 1995, Novellus systems were used by all of the world's largest semiconductor device manufacturers. The company received the Texas Instruments' Supplier Excellence Award, and was named among the Ten Best Process Equipment Companies in the VLSI Research annual survey. Sales in 1995 were $373.73 million (a 66 percent increase over 1994), with net income of $82.5 million (an 83.7 percent income increase). A new product, Speed, was completed that year. Speed is a high-density plasma system with simpler, more cost-effective solutions for inter-metal dielectric films. Novellus's entire product line now consisted of dielectric solutions (Concept One, Concept One Maxus, Concept Two Sequel, Concept Two Dual Sequel, Concept Two Sequel-S), dielectric HDP solutions (Speed and Speed/Sequel), and metal solutions (Concept One-W) and Concept Two-Altus, and Concept Two-Dual Altus). To service its expanded international markets and product lines, Novellus now employed over 800 people.
Market conditions were difficult throughout 1996, with lowered bookings and higher expenses affecting net income. Stocks of manufacturers and suppliers in the $150 billion worldwide semiconductor industry took a downturn, with Novellus handling the downturn better than others. A new product--a plasma-enhanced anti-reflection layer system--was introduced at Semicon Japan. Novellus was rated the favorite large supplier of wafer processing equipment in VLSI Research's 1996 Customer Satisfaction Survey.
According to Novellus, the total available dielectric and metal CVD market is expected to grow to $2 billion by 1998. The company's name, "Novellus," is derived from the Latin word for "unique," and the company has carved a unique market niche for itself since it began in 1984, keeping labor costs low and profits high while maintaining a presence in new technological developments. While the nature of the semiconductor market leads to fast growth and easy failure, Novellus has managed to weather storms including economic recession and the weakening of Japanese business, remaining near, if not at, the top of the market.
OVERALL
Beta: 1.21
Market Cap (Mil.): $3,191.85
Shares Outstanding (Mil.): 89.31
Annual Dividend: --
Yield (%): --
FINANCIALS
NVLS.O Industry Sector
P/E (TTM): 10.48 24.75 19.91
EPS (TTM): 1,389.19 -- --
ROI: 21.34 11.03 15.90
ROE: 24.85 13.37 17.49
Statistics:
Public Company
Incorporated: 1984
Employees: 1100
Sales: $373.7 million (1995)
Stock Exchanges: NASDAQ
SICs:: 3559 Machinery, Special Industry, Not Elsewhere Classified
Name Age Since Current Position
Hill, Richard 59 2000 Chairman of the Board, Chief Executive Officer
Hertz, John 44 2010 Chief Financial Officer, Vice President
Archer, Timothy 43 2011 Chief Operating Officer, Executive Vice President - Corporate Operations
Chen, Fusen 51 2009 Executive Vice President - Semiconductor Systems Products
Gottlieb, Andrew 44 2010 Vice President, General Counsel, Secretary
Spivey, William 64 Lead Independent Director
Possley, Glen 70 1991 Independent Director
Whitaker, Delbert 67 2002 Independent Director
Nishi, Yoshio 70 2002 Independent Director
Rhoads, Ann 45 2003 Independent Director
Bonke, Neil 69 2004 Independent Director
El-Mansy, Youssef 66 2004 Independent Director
Saraswat, Krishna 63 2011 Independent Director
Address:
3970 North First Street
San Jose, California 95134
U.S.A.
Novellus Systems was founded in 1984 and is headquartered in San Jose, California. The company maintains engineering & manufacturing facilities in Tualatin, Oregon and San Jose, California. Also, Novellus has a component design and software development facility in Bangalore, India.
Novellus Systems, Inc. (Novellus), together with its subsidiaries, develops, manufactures, sells and supports equipment used in the fabrication of integrated circuits, commonly called chips or semiconductors. Customers for this equipment manufacture chips for sale or for incorporation in their own products, or provide chip-manufacturing services to third parties. Novellus also develops, manufactures, sells and supports grinding, lapping and polishing equipment for a range of industrial applications. Novellus operates in two segments: the Semiconductor Group and the Industrial Applications Group.
Semiconductor Group
The Semiconductor Group is a manufacturer and supplier of thin-film deposition and surface preparation systems used in the fabrication of integrated circuits. During the year ended December 31, 2010, net sales for the Semiconductor Group operating segment constituted 95% of consolidated net sales. The Semiconductor Group’s products include equipment used in the deposition of thin dielectric (insulating) and metal (conductive) films, as well as equipment used in complementary manufacturing steps, including surface preparation (photoresist strip) and ultraviolet thermal processing (film annealing). Novellus semiconductor manufacturing products are used in a range of different process steps. Its advanced deposition systems use chemical vapor deposition (CVD), physical vapor deposition (PVD), and electrochemical deposition (ECD) processes to form transistor, capacitor, and interconnect layers in an integrated circuit. Its high-density plasma CVD (HDP-CVD) and plasma-enhanced CVD (PECVD) systems employ chemical plasma to deposit dielectric material within the gaps formed by the etching of aluminum, or as a blanket film, which can be etched with patterns for depositing conductive materials into the etched dielectric. Its CVD Tungsten systems are used to deposit conductive contacts between transistors and interconnect or between layers of metal interconnect wiring. Its PVD systems deposit conductive aluminum and copper metal layers by sputtering metal atoms from the surface of a target source. Its Electrofill ECD systems deposit copper to form the conductive wiring on integrated circuits using copper interconnects. It offers products that address the needs of manufacturers across a range of different deposition technologies - CVD, PVD and ECD.
The Company's SPEED Max addresses dielectric gap fill at 65 nano-meters. The ALTUS DirectFill tungsten nitride/tungsten deposition system is designed for advanced contact and through fill applications at 65 nanometers and below. ALTUS DirectFill simplifies the tungsten deposition process by replacing the standard multi-tool approach with a single three-module system. The ALTUS Max CVD tungsten deposition system delivers contact and through fill technology in a platform that delivers more than 120 wafers-per-hour throughput. Its VECTOR is a PECVD system for depositing dielectric films on 300 millimeters wafers. During 2010, it introduced the VECTOR 3D system for dielectrics deposition in advanced wafer-level packaging applications, such as through-silicon vias (TSVs). In January 2011, it introduced the VECTOR Extreme TEOS xT system, a variant of VECTOR Extreme designed for the high throughput deposition of thick TEOS dielectric films used in memory chips. PVD, also known as sputtering, is a process in which ions of an inert gas, such as argon, are electrically accelerated in a high vacuum toward a target of pure metal, such as tantalum or copper. Upon impact, the argon ions sputter off the target material, which is then deposited as a thin film on a silicon wafer. The INOVA NExT platform incorporates a copper resputtering technology called HCM IONX to improve copper seed conformality, eliminate dielectric damage, and extend PVD technology for seed deposition applications at 32 nano-meters. During 2010, it introduced a version of the INOVA designed for copper barrier-seed applications in TSVs. The IONFLO copper seed in the INOVA 3D enables a four times reduction in the seed thickness required in a 6 micron by 60 micron TSV.
The Company's Electrofill products are used to build the copper conductive wires in advanced integrated circuits. Electrofill uses a copper electrolytic solution to create lines and vias in a dielectric layer, which has been etched with the pattern of the circuitry, in a process called copper damascene. Its SABRE Extreme is Electrofill system that has been qualified at 45 nano-meters and has demonstrated fill at 32 nano-meters. The SABRE Extreme incorporates a range of technological innovations for manufacturing applications, including wafer entry control for thin seed layers, tunable profile control for improved uniformities, and the capability to plate materials other than copper. During 2010, it introduced a new version of SABRE called SABRE 3D, designed for wafer-level packaging applications, including TSV, redistribution layers, pillars, under-bump metallization, and bumps. Its SOLA is an ultraviolet thermal processing (UVTP) system used for the treatment of dielectric films. SOLA is designed for materials, such as nitrides and porous dielectrics. During 2010, the G3D is a version of the GxT platform designed for advanced wafer-level packaging applications, including contact clean and TSV photoresist strip. Novellus provides the market with a range of refurbished process equipment. Novellus offers a range of older products, including legacy SPEED, ALTUS, SEQUEL Express, INOVA, SABRE, GAMMA, and MOMENTUM models. In comparison to buying a used system from an aftermarket vendor, purchasing a refurbished system from Novellus offers a range of benefits for its customers, including committed performance specifications, systems and service knowledge and expertise, and comprehensive spare parts knowledge and support.
Industrial Applications Group
Novellus entered into a market segment beyond semiconductor manufacturing through various acquisitions. This segment, referred to as its industrial applications group (IAG), develops, manufactures, sells and supports grinding, lapping and polishing equipment for optimization and serves a range of industrial applications. Its customers for this segment are manufacturers in sectors, such as automotive, aircraft, and electronic products, parts and components. Other customers are in the glass and ceramics industries, as well as manufacturers of products, such as pumps, transmissions, compressors and bearings. Its industrial business also depends on niche applications. Its industrial product range includes single and double-sided grinding, lapping and polishing machines; double-sided machines, which operate in batch processing mode for flat surfaces; inner and outer diameter surface grinders for cylindrical surfaces, creep feed grinders, as well as through-feed grinders, and deburring systems that feature a continuous feed of parts to be processed.
The Company competes with Applied Materials, Inc., ASM International, Mattson Technologies, Inc. and PSK, Inc.
One of the challenges Novellus met in retaining strong financials while working with Japanese customers (who still made up 25 percent of sales) was the slow payment habits of the Japanese (120-day cycles being common) and the rising value of the yen against the dollar. To alleviate these problems, Novellus established a $7 million line of credit in yen at Sanwa Bank and Bank of America in Japan. Upon billing of Japanese customers, Novellus drew yen from its accounts and sent dollars back through intracompany payments. Then, when invoices were paid, Novellus immediately replaced the money in the accounts. In this way, yen-dollar fluctuations presented no problem to previously completed sales transactions. In other countries with comparatively slow paying habits (including Korea, Taiwan, and Singapore), Novellus utilized confirmed letters of credit, guaranteeing payment within 30 days.
Applied Materials--the company that declined to buy Novellus in its faltering early years--filed a patent infringement lawsuit against the company in 1995. The lawsuit charged patent violation associated with the use, in Novellus's Concept One and Concept Two systems, of plasma-enhanced tetraethylorthosilicate (TEOS), a silicon-containing source gas used in dielectric CVD. In the $704 million CVD market, Applied continued to be the leading company in the dielectric segment. However, Novellus demonstrated higher growth than Applied in 1994, challenging Applied's market share. The case became more complicated, with two additional patent infringement suits, related to metal CVD technology, filed in association with the initial dielectric CVD technology suit. Novellus claimed that Applied's WxZ tungsten CVD system infringed on a Novellus patent, and Applied counterclaimed that Novellus systems infringed on a separate Applied patent.
Strongly Positioned for the Future
By 1995, Novellus systems were used by all of the world's largest semiconductor device manufacturers. The company received the Texas Instruments' Supplier Excellence Award, and was named among the Ten Best Process Equipment Companies in the VLSI Research annual survey. Sales in 1995 were $373.73 million (a 66 percent increase over 1994), with net income of $82.5 million (an 83.7 percent income increase). A new product, Speed, was completed that year. Speed is a high-density plasma system with simpler, more cost-effective solutions for inter-metal dielectric films. Novellus's entire product line now consisted of dielectric solutions (Concept One, Concept One Maxus, Concept Two Sequel, Concept Two Dual Sequel, Concept Two Sequel-S), dielectric HDP solutions (Speed and Speed/Sequel), and metal solutions (Concept One-W) and Concept Two-Altus, and Concept Two-Dual Altus). To service its expanded international markets and product lines, Novellus now employed over 800 people.
Market conditions were difficult throughout 1996, with lowered bookings and higher expenses affecting net income. Stocks of manufacturers and suppliers in the $150 billion worldwide semiconductor industry took a downturn, with Novellus handling the downturn better than others. A new product--a plasma-enhanced anti-reflection layer system--was introduced at Semicon Japan. Novellus was rated the favorite large supplier of wafer processing equipment in VLSI Research's 1996 Customer Satisfaction Survey.
According to Novellus, the total available dielectric and metal CVD market is expected to grow to $2 billion by 1998. The company's name, "Novellus," is derived from the Latin word for "unique," and the company has carved a unique market niche for itself since it began in 1984, keeping labor costs low and profits high while maintaining a presence in new technological developments. While the nature of the semiconductor market leads to fast growth and easy failure, Novellus has managed to weather storms including economic recession and the weakening of Japanese business, remaining near, if not at, the top of the market.
OVERALL
Beta: 1.21
Market Cap (Mil.): $3,191.85
Shares Outstanding (Mil.): 89.31
Annual Dividend: --
Yield (%): --
FINANCIALS
NVLS.O Industry Sector
P/E (TTM): 10.48 24.75 19.91
EPS (TTM): 1,389.19 -- --
ROI: 21.34 11.03 15.90
ROE: 24.85 13.37 17.49
Statistics:
Public Company
Incorporated: 1984
Employees: 1100
Sales: $373.7 million (1995)
Stock Exchanges: NASDAQ
SICs:: 3559 Machinery, Special Industry, Not Elsewhere Classified
Name Age Since Current Position
Hill, Richard 59 2000 Chairman of the Board, Chief Executive Officer
Hertz, John 44 2010 Chief Financial Officer, Vice President
Archer, Timothy 43 2011 Chief Operating Officer, Executive Vice President - Corporate Operations
Chen, Fusen 51 2009 Executive Vice President - Semiconductor Systems Products
Gottlieb, Andrew 44 2010 Vice President, General Counsel, Secretary
Spivey, William 64 Lead Independent Director
Possley, Glen 70 1991 Independent Director
Whitaker, Delbert 67 2002 Independent Director
Nishi, Yoshio 70 2002 Independent Director
Rhoads, Ann 45 2003 Independent Director
Bonke, Neil 69 2004 Independent Director
El-Mansy, Youssef 66 2004 Independent Director
Saraswat, Krishna 63 2011 Independent Director
Address:
3970 North First Street
San Jose, California 95134
U.S.A.