Winning with the right measures

Just have a look at your core competence. What is the driving force?

Almost nobody knows, but we developed the world’s first multi-chip die bonder for complex hybrids in the year 1988/89 as an OEM product. From this it becomes clear that we have deep expertise in packaging right from the very beginning of our business. We were a niche player at that time, not having a range of our own products, and eventually facing plenty of risks. Later, a serious decision was necessary: to keep on going with our own equipment, and to establish our own sales and service network. We developed the insight that we have to engineer an absolutely new generation of manufacturing gear since, in general, the old equipment has reached its usable lifetime and has simply become obsolete for the coming demand in advanced packaging. We had the design and manufacturing expertise, why not do the complete business at our own accord, not depending upon the goodwill of a single partner selling our OEM products? By the way, when we imagine today what could have happened, for example, in the current slump, we would have been dead because not a single partner would have placed an order. So, in summary, our business is built on competence in the backend with die bonding, handling, pick& place, vision technology and dispensing, and is focused clearly on advanced packaging processes.

Apparently, the decision has come at the right time and is aimed at the right kind of equipment.

This was an extremely smart decision from our side back in 95, and we had to play full risk for this. Our platform concept turned out to be a great idea. Delivery of the first machine began in 96, and the customers showed high interest with an avalanche of orders over time. The risk was as follows: at the beginning, we only had a concept and a CAD picture, but our existing machines in the field were bearing another name. It’s almost unbelievable in the production arena, but orders were placed only on this machine concept. Anyhow, we encountered high trust in our work and much goodwill. We started our business in a very realistic way. Because we knew the European market well, we began here and were not pondering about an immediate presence in the US and Asian market places. As a result, we began on a reasonable base: just to work on home turf, make the experience, and then broaden the presence outside of Europe which would be necessary in mid-term. As a result, our revenues showed an increase on average of 50% in the consecutive years until 2000. In 1999 for example, we managed even the 80% mark since the sales agreement with our partner Kulicke & Soffa took effect, and boosted demand especially in Asia. Also, the telecoms have ramped up their manufacturing resources and were in need of modern and efficient machines.

What changes of your current organi-zational structure are relevant for the public?

We have brought all our activities into a holding, based here at the headquarters. The three managing directors sharing equal divides own it privately. We founded Datacon Asia in Singapore and Hong Kong for service & support last year, and have currently acquired 75% of Eurotec in Berlin, with an option for the other 25%. The German company is a handling & automation specialist for customized solutions in component manufacturing. We had already had a long-term relationship, and when the opportunity appeared, we then decided to take the lion’s share of it. In the meantime, it has become our production facility for all equipment which is outside of the area of die bonding. This is still the typical Datacon core business, located at our headquarters. Because of this acquisition, the group as a whole will even grow this year. We now transfer plenty of expertise and experience to our outpost in Berlin to keep it going successfully. This group member is in the same situation in which we were about six yeas ago; this way, we know what’s needed. We have paved the way to common machine platforms and various synergies between Berlin and Tyrol. In this combination we are able to really provide total manufacturing solutions.

How to you see the current situation in the business and its global scenario?

Starting with our own commerce (fiscal from March to April), in our year 2000/2001, we already had two quarters in the downturn because it began in September/October 2000. In August last year, nobody was even dreaming about such a slump coming so fast. Nevertheless, we reached a sales growth of 45% in this period. Now we are facing a year of consolidation and expect revenues for the group of about euro 90m for the current fiscal. The global decline in the electronics business will not change before Q2/2002, but we got very diverse estimations on this issue. For example, there are market researchers still expecting the downturn to come in Q4/2001 (these are those who have no idea of their business), others are more down to earth. We have only seen one researcher who was capable ofpredicting the decline in time. All theothers failed terribly. We have paid plenty of money for studies with akward figures and prognoses. We think it’s uselessto spend a lot of money for those flaws. These expenses are summing up tothousand of US dollars every year. Talks with our customers are more reliable.

What about lay-offs in the company?

We didn’t pursue cost-cutting in the form of lay-offs. On the contrary, we are still hiring R&D people to sharpen our weapons in the area of competition. Honestly, it’s not clear when the business ramp-up will come again. No trustworthy executive expects a recovery before Q2/2002; especially in Asia the situation is awful. After this slump, business may pick up again, roughly in the area of 20% plus. To make it short: the market needs new ideas and inputs. For example, if you have a mobile telephone, why should you buy another one? On the other hand, UMTS may have big potential, and the bandwidth and data rates momentarily available in the internet are an issue crying for innovation. And the expected hype with the WAP phones has not yet taken off.

What is the current regional distribution of your revenues?

More than 50% is made in Europe. That’s one of the reasons that we were not hit so hard by the downturn. Another 38% are made in Asia, the rest comes from the US. In Asia, we are regarded as the leading company in flip-chip technology. Our partner K&S provided an excellent job. Our first quarter shows a growth of 15% in this region. We are very happy about the fact that we didn’t forget Europe in our sales activities. Other executives have focused so narrowly on business in Asia and the US that they have lost contact to the smaller, but not so feverishly behaving business here. Now these executives are sailing in very stormy waters, laying-off thousands of employees and reorganizing endlessly.

You introduced a platform concept for advanced packaging processes six years ago, how has this developed?

The modular platform concept of our very first piece of equipment, the pick&place system PPS 2200, is still employed as our machine standard. An advanced packaging machine, the 2200 apm, joined it. Our concept follows the idea of „one platform fits it all.“ Configuration according to customer requirements is very flexible and doesn’t need much space. This way, cost of ownership is remarkably minimized, including footprint, maintenance, service and operator training. An example for this is our newly introduced dispensing module Epoxy Writer. With its size of 450mm (wide), it fits perfectly in our modular machines. The common platform is a main part in the Datacon success because we have provided the very first equipment in this area of application. To our surprise, no competitor has followed this successful idea. Instead, our competitors are linking machines together. This approach provides a comparable performance in production, but the set-up of all the single machines is very time-consuming. Our latest equipment generation, the 2200 apm+, is a flip-chip machine, capable of processing 300mm wafers, introduced during Semicon Europa in Munich and Semicon West in California. The huge magazine for the pizza-sized wafers are integrated into the machine, reducing otherwise needed extra space. We offer the smallest footprint for 300mm equipment. Every first-class machine maker needs to offer 300mm capability. There is no high demand for such equipment yet, but you have to have it, otherwise you aren’t a superior supplier with a sound product roadmap. By the way, the 2200 apm+ can be integrated seamlessly into the unique platform concept of Datacon. After the downturn, when there is more demand and the manufacturing capacities are working up to the limit again, a push for 300mm can be expected. Such a big wafer delivers about 50% more dies.

How do you handle cross-product development?

Behind our equipment there are, of course, demanding processes. So, another key benefit in our concept is the fact that we can develop a new process in a relatively fast and convenient way on our platform, for example, solutions for die sorting or for glob-top dispensing. The architecture of the machines is adaptable to different manufacturing steps to allow such solutions. This capability acts as a door opener in many cases, because potential customers have often not initially expected such a solution for a necessary step to be realized within the modular concept. This saves money and space and keeps expenses in other manufacturing sectors low. For such a solution, a cross-product development, there are no special machines needed. We just use off-the-shelf modules from our portfolio.

This inevitably leads to the question: how powerful is your R&D department?

Besides the regular engineering forces, we established an Advanced Technology department about five years ago, consisting of ten highly qualified engineers who are not focused on daily business, but rather just look to what we can expect for tomorrow. This is where we take our ideas from, focusing on the next generation in processes and equipment. We have started research projects in order to always remain on the leading edge of our business, and are co-operating with institutes, universities, industry partners and others. In addition to the engineering advances from this project, we have profound information concerning where the trends in the markets will lead to, what developments we may expect within a certain time frame and much more. These are based on different contacts, providing a very wide scope of information we can rely upon. Obviously, this early information on upcoming developments and requirements is not only useful for our engineering, but also for marketing and sales. For example, we are involved in the flexible Si-application project, where the active material will only be 20 microns thick. We see in the flip-chip technology and its different realizations such as C4, BGA, CSP, etc. the biggest potential in packaging technology, and its implementation is just at the beginning. Therefore, bumping technique is very important, and huge investments will soon be made for this process, in order to keep pace with a growing demand after the slump. In the past, the biggest hindrance for the implementation of flip-chip technology in a broad stream was the lack of production capacity. Now, there is enough capacity built up. A wafer that created bumping costs of about 150 to 200 US dollars will be available in the future for far below 100 dollars. But this is only possible running high volumes.

Datacon started with service and support for the existing machine base of Emhart/Dynapert bonders in Europe back in 1986 as a garage-type firm (see how proud big HP was for its roots) in Tyrol/Austria (near the Bavarian border). First engineering also began on digital imaging systems and vision technology, and customized automation gear or special machine solutions were provided. The offspring has designed and built die bonders on OEM agreement for a German supplier, too, but only the insiders knew where the original source was. The entrepreneurs were heading a small specialist commerce for manufacturing and automation equipment, based on a wealth of knowledge in software and machine design. Slowly, the small enterprise gained more recognition on this base, but still was almost unknown and relying on some single partnerships. Then, the big breakthrough was made with the concept of a new series of machines for the manufacturing and packaging of semiconductors based on a modular platform back in 1995. This became visible with a 50% plus from `95 to `96. Now, virtually all big names in the production of passive and active components are in the company’s reference list, and this for a good reason: performance, reliability and service & support are apparently provided according to very high standards.

Today, the group is headed by Gerhard Zeindl (operation and administration), Karl Schweitzer (research & development) and Helmut Rutterschmidt (customer operation). This year, all different activities in Europe, Asia und the US were brought in-line with a new organizational structure under the umbrella of a holding. The turnover again rose remarkably by 45%, to now exceed euro 83m. The group will have about 400 employees at the end of this fiscal, from which more than 100 are in the R&D department. (The company is still looking for qualified people, so hurry up!) Since 1998, the currently renewed sales agreement (very successful for both sides) with the US company Kulicke & Soffa has been effective, distributing Datacon equipment exclusively on a global scale (except in Europe, which the Austrians claim for their home turf). On the other hand, Datacon provides sales and support for the K&S machines in Europe, fitting customer demand seamlessly. For the course of this year and despite the hefty slump in global electronics business, the Tyroleans expect the group to reach about euro 90m. (gbw)

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