ESEC Group on the Ball

Restructuring pays off in revenue

By Carol Haber -- Electronic News, 4/10/2000

ESEC Group reported sharply higher figures in its just-ended quarter vs. the same quarter a year ago, as the semiconductor world continues to turn to smaller and smaller packages for the digital consumer electronics market, especially wireless Internet appliances.

The provider of semiconductor assembly equipment said the gains were due to the rapid recovery of the semiconductor market and improved execution at the production and delivery levels. Also important: cost reductions implemented a year ago, which continue to impact earnings positively.

	Felix Bagdasarjanz, chief executive officer, ESEC Group

The Cham, Switzerland, company's core businesses are die bonding, wire bonding and flip-chip bonding, as well as automation and factory integration, the latter exemplified by the Autoline brand. Ninety percent of all packages produced in the semiconductor industry are manufactured with either wire or die bonding. These techniques "will remain the mainstream for years to come for assembly and interconnect of semiconductors," said Felix Bagdasarjanz, ESEC chief executive officer, appointed last June. He addressed financial analysts and investors at SEMInvest 2000 in New York City recently, along with 53 other chief executives of capital equipment companies.

ESEC is themajor player in the die bonder market, with a 25 percent share, and third largest in wire bonding with a 15 percent market share, Bagdasarjanz said. The newer but fast-growing flip-chip bonding is "relatively low volume, so far."

The company has worked hard to get to this point. Like a number of other industry players, ESEC utilized the multi-year downturn to do some heavy thinking. It emerged later, leaner and more focused.

The result? A change from "a pure technology focus" to a "more balanced" systems- and service-oriented approach. ESEC also redefined "critical success factors," prioritizing price-performance, time-to-market, supply chain management, and delivery times.

The soul-searching resulted in divestment of loss-makers; personnel cutbacks; the implementation of worldwide profit-and-loss responsibility at the business unit level; and customer support centers designed for value-added sales.

It seems to have worked.

Recently ESEC reported $300 million in sales for its 1999/2000 fiscal year vs. $198.5 million in its 1998/1999 fiscal year results; the latter results drove a loss. In its fourth fiscal quarter of 1999/2000, ESEC saw net revenues of CHF 158.0 million vs. CHF 64.6 million in the year-ago period. Bookings amounted to CHF 148.0 million vs. CHF 20.4 ; and backlog stood at CHF 124.6 million at the end of fiscal 1999/2000 vs. the prior year's CHF 75.7 million.

New products are covering the high and low ends.

In the die bonder segment, the new 2008 series used for high-end applications (BGAs) was said to have widely supplanted its predecessor model and bookings continue to be healthy. For applications in the standard leadframe area, ESEC is bringing to market an improved 2007 High-Speed (HS+) model.

In wire bonders, additional preversions of the 3088 model were delivered to European customers, the company said, adding a major order had been won at an unidentified Asian customer.

In the flip-chip bonder arena, ESEC is developing a successor product to its Micron 2 flip-chip bonder oriented toward high-end flip-chip and multichip modules. It has also begun development of a flip-chip bonder based on the die bonder platform and targeted for the low-end flip-chip market. Both products are slated for market introduction in 2001.

Meanwhile, Bagdasrjanz took the opportunity at the conference to talk about the growing importance of supply chain management. It has become "very critical," he said. He called on all suppliers "to share the mentality" of the industry in dealing with the cycles. "Customers are very demanding, especially when they are under pressure to deliver. They want our presence 24 hours a day, not only to keep the machine up-time high, but also to have a continuous learning experience on how to get more productivity out of them."