Rudolph enters back-end lithography market

Rudolph Technologies, Inc. (Nasdaq: RTEC) has entered the back-end advanced packaging lithography market, with the acquisition of Azores Corp., and the introduction of a new 2X reduction stepper called the JetStep. The move puts the company squarely in competition with San Jose-based Ultratech, Inc., which claims 80% of the existing market with a 1X proximity projection system.

The JetStep, based in part on Azores’ 6200 platform which was developed for LCDs, has several advantages over the 1X approach, according to Rudolph, which has added its own wafer handling and software to the system. . System advantages include the largest printable field-of-view, programmable aperture blades and large on-tool reticle library, large depth-of-focus along with autofocus to accommodate 3D structures in advanced packaging, very large working distance, and warped wafer handling (+/- 6mm). The system also feature programmable wafer edge protection, enabling a variable edge exclusion zone of 0.5-5 mm. The system also features a large (17mm) working distance between the lens and wafer, which helps avoid a common maintenance issue on 1X systems. “It’s critical to have an ample depth of focus,” said Elvino da Silveira, president and CEO of Azores (Wilmington, MA), who will stay on to head the Rudolph lithography group.

In addition, with its flat panel lithography heritage, the JetStep System incorporates Azores’ high precision grid motor stage. This provides a flexible platform that can be readily scaled to changing substrate sizes and types in the advanced packaging market. It can handle both standard and reconstituted 300mm and 330mm wafers, all panel sizes and is 450mm capable.

Commenting on the new product and the acquisition, Paul F. McLaughlin, chairman and CEO of Rudolph, said: “The JetStep System is a disruptive innovation in the back-end lithography market, addressing the technical and economic advantages demanded for advanced packaging. The Azores acquisition uniquely positions Rudolph in the back-end stepper advanced packaging photolithography market with a significantly expanded business model, and we believe that by offering the industry’s only total solution to advanced packaging lithography, we can more than double Rudolph’s total back-end addressable market.”

“Specifically, the advanced packaging market needs a stepper supplier willing to be flexible and capable of delivering unique solutions for their requirements, and a process control partner that can deliver improved production systems for advanced packaging applications,” McLaughlin noted. “By leveraging R&D investments from both the Rudolph and Azores organizations, we took a field-proven 2X display lithography technology and applied it to the needs of the high-growth back-end packaging market where Rudolph already has long-standing customer relationships and global brand recognition. In short, we have changed the game,” McLaughlin said.

Strategically, the deal doubles the combined companies’ backend market presence, giving Rudolph a foothold in backend litho for advanced packaging, points out Credit Suisse analyst Satya Kumar. This $150M-$200M market is currently "fragmented among proximity aligners" targeting lower-end bumping and steppers for wafer-level packaging applications, he notes, with the latter (~$100M market) currently dominated by UTEK (as mentioned above).

One JetStep tool has already been placed at a subcontract customer, according to Rudolph; Kumar speculates it’s STATS-ChipPAC.

Financially speaking, the deal should be accretive in 2013, contributing ~$20M in revenues (roughly 10% of the combined company’s total sales). Rudolph expects 100-200 basis points impact to gross margins in the near term, but operating margins should smooth out to corporate average in over the next year or so.

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