Semitool, Inc.

1978–1995

Semitool, Inc. designs, manufactures, markets, and services equipment used in the fabrication of semiconductors. Its products include batch and single-substrate spray chemical processing tools, thermal processing equipment, and wafer-carrier cleaning systems. These products provide improved yields (the number of good die per wafer) through higher uniformity of production and reduced contamination levels, and increased throughput (the number of wafers processed by a particular tool in a given period) through advanced processes that reduce cycle times. They are also used to manufacture other materials and devices, including thin film heads, compact-disc masters, flat-panel displays, hard-disk media, and ink-jet print heads. Semitool's customers in 1995 included Advanced Micro Devices, Fujitsu, GEC Plessey, IBM, Intel, Motorola, National Semiconductor, Seagate, Siemens, and SGS-Thomson.

Private Company, 1978-94

Raymon Thompson, a mechanical engineer with a background in semi-conductor equipment, purchased a machine shop in Orange County, California, in the 1970s and founded Semitool there in 1978. The company's first product was a horizontal on-axis spin rinser/dryer that removed chemicals from the surfaces of silicon wafers being imprinted with computer chips. In 1979 Thompson moved the fledgling company to his hometown of Kalispell, Montana.

Semitool introduced the company's spray-solvent and spray-acid tools in the early 1980s and its first automated tool in 1984. Thompson then founded Semitherm, a partnership with a group of former Texas Instruments engineers, to develop vertical furnace systems for "baking" silicon wafers. This company was merged with Semitool in 1994. During the 1980s Semitool introduced several generations of its spray-solvent and spray-acid tools for chemical processing and its vertical furnaces for thermal processing and began to market its products to manufacturers outside the semiconductor industry. Exporting abroad began in 1981.

In fiscal 1991 (the year ended September 30, 1991) Semitool, together with Semitherm, had net sales of $25.1 million and total assets of $15.1 million but a net loss of more than $1.1 million and a debt of $3.1 million. There were approximately 200 employees. For a 1991 survey Thompson told D&B Reports, "I have an absolutely outstanding work force, from software engineers right down to the gal who cleans the floor. I think it's largely an ethic of our area here in this part of Montana. People love living here, and they come to work with an internal peace of mind. They're ready to participate as a creative human being, not as a monkey." In 1995 Semitool employees were working weekly 4-day, 10-hour work shifts; the third weekend shift was putting in a three-day work week.

Semitool lost $303,000 on nearly $28 million of net sales in fiscal 1992 and $447,000 on net sales of $42.8 million in fiscal 1993. The company's first profitable year was fiscal 1994, in which it had net income of $2.1 million on net sales of $55.8 million. Total assets reached $37.1 million. That year Semitool doubled the size of its plant and introduced three new products: Equinox, Magnum, and Storm.

Semitool lost $303,000 on nearly $28 million of net sales in fiscal 1992 and $447,000 on net sales of $42.8 million in fiscal 1993.

1994–1996

Public Company, 1995-96

Semitool's debt, however, reached $13.5 million at the end of fiscal 1994, so Thompson decided to take the company public. About 30 percent of the outstanding common stock was offered to the public in February 1995 at $13 a share, with 60 percent of the money raised to be used for debt reduction.

Although a Barron's analysis indicated that the offering was pricey, Semitool's stock reached $36.75 a share--nearly triple the offering price--in July. With nine-month sales in fiscal 1995 double that of the same period in the previous year, Semitool announced a three-for-two stock split on July 24. Demand for Equinox, Magnum, and Storm had contributed heavily to a $63-million backlog of orders. Also in 1995, the company won a contract from the research-and-development consortium Sematech for the creation of a new furnace to cook batches of silicon-chip wafers and a $7.7-million contract to supply furnaces to a domestic manufacturer. It also agreed to acquire Semy Engineering, Inc., in 1996 and opened offices in Oregon, Italy, and Japan. During the year Semitool's factory was expanded again.

Semitool recorded net income of $14.9 million on sales of $128.3 million in fiscal 1995. With a five-year average annual return on equity of 42.6 percent, it placed ninth on Forbes' 1995 list of the 200 best small companies in America. Company debt had dropped to $4.9 million by the end of the fiscal year.

Semitool's stock plummeted, however, in September 1995 and was trading at only $11.50 a share one year after reaching its peak. In a class-action suit filed in March 1996, a stockholder charged that the company's executives had issued false and misleading information while unloading their own shares, thereby enabling themselves to pocket $8.3 million before the stock fell in value. Thompson, who had been chairman, president, and chief executive officer of Semitool since its inception, held, with his wife, Leila, 51.2 percent of the stock at the end of fiscal 1995.

In February 1996 Thompson announced the largest sale in Semitool's history, a $23-million multi-year order for the VTP 1500 vertical furnace from a domestic semiconductor manufacturer. The company ended fiscal 1996 with net income of $15.1 million on sales of $174.2 million, both figures topping the previous year's totals. In October, however, Semitool announced it was reducing its work force by about 10 percent because of soft demand in the semi-conductor-equipment industry.

1995

Semitool's Products in the Mid-1990s

Semitool's batch chemical processing tools were incorporating centrifugal spray technology to process wafers and substrates by exposing them to a user-programmable, sequenced spray of chemicals inside an enclosed chamber. The wafers, and the cassette and chamber in which they were loaded, were dried by centrifugal spinning coupled with a flow of warm nitrogen. Semitool's batch chemical processing products included the spray-acid and spray-solvent tools. They were also being used in the manufacturer of a variety of products other than wafers. The purchase price of these tools ranged from $150,000 to $700,000, with prices (as for other Semitool products) depending on configuration.

The spin rinser/dryer was being used primarily for removing chemical residues from substrate surfaces with deionized water and utilized the same enclosed-chamber, spray-processing, and centrifugal-drying technologies employed by the spray-acid and spray-solvent tools. More than 20,000 of Semitool's spin rinser/dryers had been sold since the company's inception. The purchase price ranged from $10,000 to $150,000 in 1995.

The Magnum was a multi-module chemical processing tool that clustered the company's solvent, acid, and spin rinser/dryer capabilities into a single automated unit. It incorporated a company-designed advanced robot that employed fiber-optic communications, absolute positioning, and a linear motor track to ensure precise, reliable, and particle-free automated wafer handling. The purchase price ranged from $900,000 to more than $2 million.

The Equinox was being employed for substrate processing. Its capabilities included immersion, spray, ultrasonics, hydrofluoric vapor, and infrared heating, to address cleaning, stripping, etching, developing, and gold-plating applications. In addition to its customary silicon-wafer applications, the Equinox was being used to process ceramic substrates, thin film heads, and photo masks. It was selling for between $175,000 and $730,000.

The Storm wafer carrier-cleaning system was being used to clean and dry the cassettes and plastic boxes in which the wafers were being transported and stored. It employed a unique rinsing/spinning process that occurred inside an enclosed chamber. The price ranged from $190,000 to $400,000.

1995–1996

Semitool's VTP 1500 vertical furnace was designed to avoid variances in the process exposure times of individual wafers, thereby avoiding the nonuniformity inherent in traditional vertical furnace processing. Semitool's patented double-lift chamber design also permitted the heating element to be lifted away from the sealed process chamber, allowing wafers to cool more rapidly in a controlled environment and thereby saving time. The VTP 1500 also had the flexibility to be quickly reconfigured for varying processes and to be easily upgraded to accommodate larger wafer sizes. The price ranged from $550,000 to $950,000.

Semitool also was fabricating frames, consoles, and the components to fill them itself, rather than subcontracting for these materials. "All this is engineered here, and it's all built here," Thompson told a Montana newspaper. "It's very unusual for a company like ours to actually build the robots [but] we don't hesitate to design products and build products that require workmanship. We know it's tough for the other guys to do that."

Semitool's Properties in the Mid-1990s

At the end of 1995 Semitool had U.S. sales offices in Arizona, California, Colorado, New Hampshire, New York, North Carolina, Oregon, Pennsylvania, and Texas. There were also offices in France, Germany, Great Britain, Ireland, Israel, Italy, and Japan. (Customers outside the United States accounted for about 43.5 percent of sales in fiscal 1995.) The company's chief property was a 170,000-square-foot facility on a 110-acre site in Kalispell. It planned to build a facility in Cambridge, England, in 1996 for its European sales, service, and customer-demonstration operations.