Mr. Neil Kelly

GLG News by Mr. Neil Kelly, Semiconductor Test Consultant

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Advantest Can Save Verigy From Themselves

December 7, 2010

Advantest makes a good strategic fit for Verigy, combining their strength in memory test with Verigy's competent SOC product line.  Conversely, Verigy's purchase of LTX-Credence will produce a mess of overlapping products that will be difficult to rationalize.

Can We Make a Product Strategy Out of This Mess?

November 19, 2010

Verigy's purchase of LTX-Credence consolidates the third and fourth players in the semiconductor test industry.  All of the failed semiconductor test products are now under one roof - does management have what it takes to turn a garbled collection of overlapping, incompatible offerings into a product strategy with a viable roadmap?

The ATE companies are all headquartered in Lake Wobegon

September 19, 2010

Every semiconductor test equipment company is going to gain market share this year.  Many CEOs of these companies believe in a mythical "historical buy rate" for semiconductor test equipment.

Interesting Investment by ISE Labs

October 17, 2009

Analysis of:Verigy and ISE Labs Collaborate on Memory | www.tmworld.com

ISE Labs is owned by the large outsourced test and assembly company ASE Group, who have not previously been extensively involved in DRAM test.  The purchase of a DRAM tester by one of their feeder labs indicates a change in direction.

Good Deal for both Teradyne and Teseda

October 17, 2009

Analysis of:Teradyne Partners with Teseda to Provide Scan Diagnosis Tool | www.tmworld.com

The exclusive agreement between Teradyne and Teseda to produce Scan Workbench provides Teradyne a competing product to Verigy's Inovys line, without the messy acquisition.  Teseda gets a world-class distribution network for its product, and targets the most popular installed base for SOC testers.

Intel fails in its attempt to create commodity ATE

April 5, 2009

Analysis of:ATE consortium STC folds | www.eetimes.com

The failure of a large semiconductor test purchaser like Intel to exert its will on the semiconductor ATE market likely indicates that the threat of commoditization is over.  The large ATE companies make heavy R&D investments in their equipment, which they recoup with premium pricing protected by a proprietary architecture.  The semiconductor test consortium collapsed because only one ATE manufacturer embraced the concept.

Up from here?

April 5, 2009

Analysis of:Teradyne plans more cost cuts, lowers guidance | www.edn.com

Semiconductor ATE companies are starting to believe current levels of business represent the bottom of the downturn.  There are two problems with this - firstly, the companies have not seen their business stabilize yet, and secondly they will not survive long at these depressed revenue levels, so the shape and timing of the upturn is critical.

Eagle finds a white knight.

September 4, 2008

Analysis of:Teradyne Coughs Up $250M For Eagle Test | www.forbes.com

Industry consolidation in this case will not lead to a reduction in available products in the short term, so is of little immediate benefit to the industry as a whole.  Verigy will be the strongest out of the remaining SOC test companies as they alone benefit from the economics of single platform, and will compete with a Teradyne that is financially weaker after the Eagle acquisition.  Eagle doesn't have any test technology that isn't already part of Teradyne's FLEX platform - indeed Teradyne has recently beaten Eagle in head-to-head competition.

1 + 1 = 1.5; the whole is less than the sum of its parts.

June 25, 2008

Analysis of:Credence, LTX plan merger of equals | www.eetimes.com

Two tier 2 companies forced together by weakness creates another tier 2 company.  The combination will reduce number of test platforms in the industry and enhance the profitability of Teradyne and Verigy.

Advantest picks up a Credence cast-off.

June 20, 2008

Analysis of:Credence sells auto ATE unit to Advantest | www.eetimes.com

Advantest has acquired the remnants of SZ from Credence, giving them power and analog testers and some incremental customers.  The technology won't be integrated into Advantest's SOC platforms - if that's why Advantest bought it, they're fooling themselves.  Credence continues the divestment of assets acquired by their former management team who dreamt of being a tier 1 ATE company.

Good for Teradyne, great for Nextest, a challenge for Verigy.

December 13, 2007

Analysis of:Teradyne expands reach to flash test with $325M Nextest buy | www.edn.com

Teradyne gets a capable entry into flash memory test to allow the company to compete more effectively against Verigy.  Nextest executives get over being swallowed for a second time by Teradyne by negotiating a good price for the company.  Keeping Nextest key employees will be the challenge.

Acquisition not worth the single platform dilution.

December 13, 2007

Analysis of:Verigy signs agreement to acquire Inovys | www.tmworld.com

Acquisition weakens the power of Verigy's single platform strategy.  Demonstrates the failure of standalone structural test in the commercial test marketplace.  Financial terms are not disclosed, so price should be close to zero.

IBM development will increase demand for performance test at probe

April 23, 2007

Analysis of:IBM Develops Chip-Stacking Technique | www.eweek.com

The use of stacked die in a single chip will drive an increase in demand for known good die, which in turn will increase the focus on test at the probe stage.  This will change the accepted strategy in non-memory devices of a crude test to prevent packaging bad die into one of performance test at probe, as there will no longer be package test as a backstop.

BIST isn't differentiated enough to be a company's principal product

April 16, 2007

Analysis of:LogicVision Receives Letter from Nasdaq Regarding Noncompliance with Minimum Bid Price Rule | biz.yahoo.com

BIST (built in self test) is an important tool as part of an overall test suite, but today is largely a commodity that economically cannot stand alone as a product.  Logicvision has tied its fortunes to BIST, and cannot compete with the larger EDA companies that provide BIST as part of their integrated test offerings.

IBM development will increase demand for performance test at probe

April 13, 2007

Analysis of:IBM readies direct chip-to-chip links | www.eetimes.com

The use of stacked die in a single chip will drive an increase in demand for known good die, which in turn will increase the focus on test at the probe stage.  This will change the accepted strategy in non-memory devices of a crude test to prevent packaging bad die into one of performance test at probe, as there will no longer be package test as a backstop.

Verigy CEO stays on message, but avoids key trend.

April 9, 2007

Analysis of:Testing strategies for the long haul: Verigy’s Barnes on semiconductor test. | www.reed-electronics.com

Keith Barnes expounds on the advantages of the single, scalable platform, but in talking about how Verigy continues to drive down the cost of test misses the key factor causing tester price compression.

Teradyne venturing back into memory test.

February 26, 2007

Analysis of:Mosaid to halve workforce, exit memory test market. | www.edn.com

The purchase by Teradyne of memory test technology from Mosaid will help their move back into the memory test business.  Teradyne had been a secondary (to Advantest) DRAM test supplier through the 1980s and 1990s, but exited the business as part of their focus on SOC test and subsequent product line consolidation.  A brief attempt to position a version of the J750 as a flash memory tester was also discontinued.

Implications for Capital Equipment Even More Grim

February 9, 2007

Analysis of:Flash memory makers heading for tough times | news.com.com

Excess capacity, lower margins and price compression among the NAND flash producers will severely constrict investment in capital equipment.  A tough year for the device manufacturer will translate into a catastrophe for the flash test vendors.

The Trend Toward Lower-Cost Semiconductor Test Equipment

January 16, 2007

Analysis of:ATE adapts to meet SOC test needs | www.reed-electronics.com

There is a trend toward lower-cost STE.  Despite the article's assertion that certain device functions don't lend themselves well to design for test (DFT) techniques, the largest cost item in an STE tester is the digital subsystem, and the digital part of a device is well suited to DFT.

This trend will improve the return on investment for users of semiconductor test equipment, but will hurt the equipment vendors as they suffer revenue compression and have to focus their digital engineering groups on lowering cost, rather than chasing premium-priced performance.

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