By Jeff Dorsch, Contributing Editor
Mattson Technology agreed this month to be acquired by Beijing E-Town Dragon Semiconductor Industry Investment Center, a limited partnership in China, for about $300 million in cash. The deal marks one of the first signs that the “Made in China 2025” policy will include targeting semiconductor production equipment as an element in bolstering the domestic chip business in the People’s Republic of China.
Mattson supplies dry strip, etch, millisecond anneal, and rapid thermal processing equipment for semiconductor manufacturing. The company was founded in 1988 by Brad Mattson, who earlier established Novellus Systems, acquired by Lam Research in 2012.
Mattson served as the company’s chief executive officer until 2001, and was its vice chairman until 2002. He later became a partner at VantagePoint Capital Partners and now serves as the CEO of Siva Power, a solar startup originally known as Solexant.
In 2014, Mattson Technology posted net income of $9.88 million on revenue of $178.4 million, after being unprofitable for the previous four years. Samsung Electronics accounted for about 61 percent of net revenue last year; Samsung and Taiwan Semiconductor Manufacturing were its leading customers in 2013.
China represented nearly 10 percent of Mattson’s revenue in 2014, a percentage that may rise once the acquisition transaction is completed in early 2016, pending shareholder and regulatory approval.
Mattson Technology has remained profitable this year, reporting net income of more than $2 million on revenue of $38.9 million for the third quarter ending September 27, compared with net income of $2.6 million on revenue of $43.3 million for the same quarter of 2014.
For the first nine months of 2015, the company posted net income of $10.9 million on revenue of $140.5 million, compared with net income of $4.9 million on revenue of $123.7 million in the like period of 2014.
In the dry strip market, Mattson competes with Lam Research and PSK. Its principal competitors in thermal annealing are Applied Materials, Dainippon Screen Manufacturing, and Ultratech. Etch rivals are Applied, Lam, and Tokyo Electron, according to Mattson’s 10-K annual report for 2014.
“The Chinese are trying to develop their own semiconductor equipment business,” said G. Dan Hutcheson, chairman and CEO of VLSIresearch. Buying a company like Mattson is “a great way to start,” he added.
Recalling the 1980s, Hutcheson commented, “Mattson was one of the really go-go companies at the time.” There were 10 to 20 vendors in every segment, he recalled. With industry consolidation of equipment suppliers, “it’s become harder for companies like that,” he said. “You almost have to be a billion-dollar company” to stand out in the market these days, Hutcheson added.
Fusen Chen, Mattson’s president and CEO, “has been a shot in the arm, turning it around,” Hutcheson said about the company. “It’s hard to have differentiation from Applied and Lam.”
Noting the dominance of Samsung and TSMC among Mattson’s customer base, Hutcheson said, “There’s only three customers” – those two chipmakers and Intel. “Those guys can develop their own technology,” he added.
Having Mattson as an equipment supplier helps “keep the competition honest,” Hutcheson noted.
The veteran industry observer said such a deal is “good for the Chinese.” The country aspires to become a world leader in computers, networks and telecommunications, without having to import most of the semiconductors it needs. “You can’t do that without semiconductors,” Hutcheson added.
The fabless semiconductor business in China has grown tremendously in this decade. “No one’s graduating designers like China is,” Hutcheson said. “They get their PhDs in the U.S., their visas expire, and we tell them, ‘go back home.’”
China is following the example of South Korea and Taiwan in building up an electronics industry with a comprehensive supply chain, although not all Asian countries have done well in fostering semiconductor equipment vendors, according to Hutcheson.
“It’s a real classical error” to assume that semiconductor production equipment is merely hardware that is easy to design and manufacture, Hutcheson commented. “It’s not just stuff made in a machine shop,” he added, noting the need for extensive software in IC gear.
At its size, “Mattson is one of the last companies you can buy,” Hutcheson concluded.