Article Excerpt:
TWST: What is Entegris?Mr. Cantor: Basically, Entegris purifies, protects and transports critical materials that are used in the manufacturing process to make all those electronic products that we love and enjoy, things like laptops and MP3 players and digital cameras and everything in between. The kinds of material that we are actually involved with can be anything from silicon wafers, or the core material from which an integrated device or chip is made from, to the various process gases and liquids that are used to create the circuits on that chip. We are also involved with materials used to made disk drives and other electronics such as flat panel TVs and displays. Fundamentally, what we do is eliminate or reduce contamination in the manufacturing process and protect those materials. Why that's important is because contamination leads to defects, which reduces yields and is probably the number one enemy of reducing the costs of all of those electronics that we like to buy. The company has actually been in the business for 40 years. Originally, it was a private company called Fluoroware and later merged with a company called EMPAK. Both of them made various polymer-based products. The companies merged and became Entegris in 1999, and went public in 2000. In August 2005, Entegris merged with a company called Mykrolis, which was based just outside of Boston, another leading supplier to the semiconductor industry. The merged company is the leading provider of what we call materials integrity management solutions primarily to the semiconductor world, but also to other high tech markets.
TWST: What's the outlook at this point? Looking at some of the higher
level cycle, demand, capacity, pricing, new entries, and consolidation,
what's going on at the higher levels that has an impact on what you see
as your markets, your customers and your own dynamics for growth?
Mr. Cantor: To start at the beginning, we look at these electronic
devices. Everybody wants the smallest possible device that does a lot of
different things and that's on anytime, anywhere. If you think about
the BlackBerry ' which is a good example of converging technologies that
enable someone to access their e-mail, calendars, phone and even
Internet access ' or the iPod, you get a sense in terms of the kinds of
technologies that are fundamentally driving the semiconductor world or
the electronics world. I think the outlook longer-term is very good.
The demand for those devices is expected to grow, and grow in virtually
every region of the world. Within this semiconductor world, there are a
number of challenges. How do you manufacture all the components that go
into those devices to achieve the highest performances possible at a low
enough cost? Here we see our customers contending with new manufacturing
processes and the use of new esoteric materials. We see them also
contending with just the physical barriers of making devices smaller, as
well as with trying to improve or increase the productivity of their
manufacturing operations. All those things really play well, longer-
term, into what Entegris does, because with each new innovation in terms
of technology to develop new devices, there is a whole range of new
contamination issues in the manufacturing environment that need to be
dealt with. To give you a sense, about six or seven years ago, we were
dealing with contamination in the form or particulates of 0.1 micron in
size, which is about a thousand times smaller than the width of a human
hair. Today, we are now dealing with particulates of about .01 micron
and even molecular level contamination that is measured in angstroms.
These are obviously very difficult things to control in the
manufacturing process, but discovering solutions for that is central to
our core business. The other thing that I think impacts us favorably is
the high cost of a fabrication facility to make semiconductors that can
now cost almost $3 billion, and the cost to design and engineer a state-
of-the-art processor that might go into your PC can be as much as $30
million for a single device, so there is a lot of pressure on the
manufacturers of semiconductors to reduce the time to yield; in other
words, these customers need to reduce the amount of time it takes them
to build a fab line and get it to peak production potential. They are
very interested in anything that can reduce defects and improve yield
and that's kind of where our focus is.
Tickers included in this excerpt: ENTG
TWST Newsletter
For more information call (212) 952 7433. The Wall Street Transcript does not endorse any of the comments made by interviewees, and does not make stock recommendations.