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TWST: We would like to begin with a brief historical sketch of FSI and a
picture of the things you are doing at the present time.
Mr. Mitchell: FSI provides capital equipment to the semiconductor
industry. Our customers are global computer chip manufacturers. The
semiconductor industry has experienced growth for four consecutive
years, driven principally by consumer spending on electronics, including
cell phones, iPods, and home entertainment products. The industry is now
in a substantial capacity expansion phase driven by continued demand for
devices and the migration to new technologies. We are a supplier of
surface conditioning equipment designed to perform approximately 100
steps required to build a semiconductor device. These may include
material etch, particle removal, cleaning and oxide growth which allows
our customers to both expand their manufacturing capacity and extend
their technology nodes. We are a well-established, globally recognized
technology supplier. FSI has two major Japanese competitors and one
major European competitor. We are the leading US-based pure play surface
conditioning company. TWST: What have been the principle drivers of the company's success over
the years?
Mr. Mitchell: After the technology bubble burst in 2001, we restructured
the entire company with the aim to expand within the surface
conditioning market. This meant selling or closing operations that did
not contribute to our mission to serve and expand within that
semiconductor technology segment. Our strategy consisted of three major
initiatives. First, we replaced our distributor and converted to a
direct distribution model throughout the world. We now have direct
offices in virtually every country that produces advanced semiconductor
devices. This allows us to get much closer to the customer and to better
align our technology development to their future technology needs.
Secondly, we had to make a substantial investment in order to expand our
portfolio of products, so that we could participate in the larger
segments of the surface conditioning market. Today the surface
conditioning market is nearly $2 billion per year. Three years ago, we
only possessed products that allowed us to participate in about 15% of
that market. Over the past two to three years, we have introduced new
products that will permit us to participate in nearly 90% of the
available market with our fourth flagship technology presently rolling
out to its first customer beta site. Therefore our growth will not be
limited to industry growth alone but rather, we have a substantial
opportunity to grow our marketshare. The third initiative has been to
focus on penetrating the top spenders in the semiconductor industry.
Nearly 80% of the industry's capital is spent by 20 companies.
Therefore, we have made a tremendous effort to align our strategies
around penetrating those top 20 accounts and have made great progress
during fiscal 2006.
Tickers included in this excerpt: FSII
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.
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