Micronic Laser Systems AB
Annual Report 2006
Micronic Laser systeMs aB (puBL.) nytorpsvägen 9
Box 3141, se-183 03 täby, sweden tel: +46 8 638 52 00
Fax: +46 8 638 52 90 e-mail: info@micronic.se www.micronic.se
Micronic Laser systeMs strategic DeveLopMent Mölndalsvägen 91
se-412 63 göteborg, sweden tel: +46 31 703 06 80 Fax: +46 31 703 06 90
Micronic Laser systeMs inc.
1922 Zanker road san Jose, ca 95112, usa tel: +1 408 392 2260 Fax: +1 408 392 2261
Micronic Japan K.K.
Mitsugi-Kotobukicho Bldg.
1-1-3 Kotobuki-cho, Fuchu-shi tokyo 183-0056, Japan tel: +81 42 354 1320 Fax: +81 42 354 1321
Micronic Laser systeMs Korea co., LtD.
#9, Dong-a plaza, 1608-4 guanyang-Dong, Dongan-gu anyang-si gyeonnggi-Do south Korea (430-060) tel: +82 31 387 5111 Fax: +82 31 388 0087
Micronic Laser systeMs Far east co., LtD.
2nd Floor, #18 pu-Ding road,
Der-an Building, Hsin-chu, 300, taiwan r.o.c.
tel: +886 3 564 6656 Fax: +886 3 564 6664
Micronic Laser systeMs aB sHangHai representative oFFice 39th Floor, sino Life tower
707 Zhang yang road, pudong shanghai 200120, china tel: +86 215 835 8383 Fax: +86 215 835 8181
Pushing the limits
nnuaL report 20060 300 600 900 1200 1500
1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 group overvieW
1 Highlights of 2006 2 Micronic in brief 4 comments by the ceo 6 the Micronic share 8 Micronic’s operations 10 Micronic’s after market 12 Micronic in everyday life 14 Micronic in a global perspective 16 Micronic’s markets
20 Micronic’s employees 22 Micronic’s technology 25 technological advances in 2006 26 Micronic’s product portfolio
corporate governance 28 corporate governance report 34 Board of directors and auditor 36 executive management and
subsidiary presidents
FinanciaL overvieW 38 Financial overview
FinanciaL caLenDar 2007 year-end report, January 26
annual general Meeting, March 29, 5 p.m. at näsby slott in täby, sweden
interim report January–March, april 20 interim report January–June, July 6
interim report January–september, october 18
the annual report is sent to all registered shareholders. all financial reports and press releases can be viewed on Micronic’s website:
www.micronic.se.
it is also possible to order or subscribe for financial information and press releases via the website or directly from Micronic.
FinanciaL reports
(Figures in brackets refer to 2005)
40 report of the directors 42 risks and risk management
44 consolidated profit and loss accounts 44 comments on the consolidated profit
and loss accounts
46 consolidated cash flow statements 46 consolidated balance sheets
47 comments on the consolidated balance sheets and cash flow statements
47 consolidated statements of changes in equity 48 parent company profit and loss accounts 48 parent company cash flow statements 49 parent company balance sheets 49 parent company statements of changes
in equity
50 additional information and notes 67 audit report
68 glossary 69 Micronic’s history
cover pHoto
Manufacturing of Micronic’s systems places rigorous demands on maintaining a clean and dust-free environment.
the employees are therefore required to wear special cleanroom clothing in the cleanrooms.
Production: Micronic in co-operation with Sund Kommunikation. Illustrator: Mikael Eriksson.
Photography: Paul Allan, Stefan Berg, Östen Mattsson, Jörgen Ulfsgärd. Print: Arkpressen, Västerås. Prepress: Turbin.
1970
Micronic’s history dates back to the 1970s when a group of researchers headed by Gerhard Westerberg began studies in the field of micro- lithography at the Royal Institute of Technology in Stockholm. Their aim was to develop equipment capable of writing photomasks for the semi- conductor industry.
1984
Together with seven employees, Gerhard Westerberg formed a com- pany to commercialize the research results and went on to launch the first laser pattern generator.
1989
Following the death of Gerhard Westerberg, the employees and CEO Nils Björk took over the company with the support of venture capital from Småföretagsfonden.
1993–1995
A weak semiconductor industry forced Micronic to seek other markets for its technology. The company developed a laser pattern generator that gave designers almost total freedom in design of shadow masks for TV displays (CRT).
1996
The LRS1100 became the industry standard for production of shadow masks. Around the same time, laptop computers began to appear on the market. As this market opened up, Micronic worked closely with its customers to continue development of the laser pattern generators that are now used to produce flat panel displays for both laptop and desktop computers.
1999
Technological enhancements in the laser scanning pattern generator for display photomasks allowed Micronic to reenter the semiconductor market, and led to the launch of the first Omega6000 system. Parallel to this, Micronic found several other application areas and developed the MP80+ series. The company’s unique SLM technology was introduced the same year.
2000
Micronic was listed on the Stockholm Stock Exchange and sales reached an all-time high of SEK 704 million.
2003
The highest order intake in the company’s history – passing SEK 1 billion, driven by the display market. A new generation of laser pattern genera- tors for TFT-LCDs was launched. Micronic expanded its product program and launched a metrology system for photomasks for display production. Fully subscribed rights issue.
2004
Micronic set sales record of SEK 839 million, driven by a very strong display market. The first Sigma7300 and MMS15000 systems were delivered.
Asian crisis
Millenium upturn
Semiconductor downturn Display upturn Sales SEK million
Micronic Laser Systems AB founded
First large area system shipped (Asia)
IPO in March
First Sigma accepted Record profit
• Net sales amounted to SEK 1,204 million, the second highest level ever recorded in the company’s history.
• Operating profit was SEK 123 million, equal to an operating margin of 10 percent.
• Operating profit adjusted for net amortization of capitalized development costs was SEK 220 million, equal to an operating margin of 18 percent.
• Order intake reached SEK 604 million.
• Gross margin was 54 percent.
• A subsidiary was established in South Korea at the beginning of the year.
• The FPS5100 pattern generator was introduced for volume production of photomasks for advanced electronic packaging of semiconductor chips.
• A cost-cutting program was carried out in the fourth quarter.
FINANCIAL OVERVIEW
2006 2005 2004 2003 2002 2001 2000
Net sales 1,204 1,276 839 428 496 699 704
Gross margin, % 54.3 54.4 55.8 38.4 47.8 56.2 61.7
Operating profit, SEK million 123 172 126 –194 – 90 17 83
Operating margin, % 10.2 13.5 15.0 – 45.3 –18.1 2.4 11.8
Adjusted operating margin, % 18.2 22.3 5.2 – 86.0 – 44.2 2.4 11.8
Order intake, incl. service 604 1,306 945 1,086 459 633 759
Order backlog, December 31 200 871 794 764 231 279 307
Earnings per share before
dilution, SEK 2.37 3.00 2.77 – 5.59 – 3.3 0.37 3.93
Average number of employees 462 415 359 312 299 284 240
SEK million
97 98 99 00 01 02 03 04 05 06 0
200 400 600 800 1,000 1,200 1,400
Order intake
0 500 1,000 1,500
Net sales Operating margin 06 05 04 03 02 01 00 99 98
97 –50
–40 –30 –20 –10 0 10 20 30% SEK million
Net sales and operating margin
Net sales in 2006 by geographical market
Net sales in 2006 by application
Display 66 % Semiconductor 16 % Electronic packaging 3 %
After market 15 % Rest of Asia
53 %
Japan 45 %
USA 2 %
This annual report is in all respects a translation of the Swedish Annual Report prepared in accordance with Swedish laws and regulations. In the event of any difference between this and the Swedish original, the Swedish Annual report shall have predence.
– –
CAD software is used to design the circuit layout for a semiconductor chip. The data is then transferred to a pattern generator where it is converted to a suitable format for writing.
The pattern generator transfers the design onto a photomask.
Photomasks are needed to manufacture semiconductor chips, displays and elec- tronic packaging. A digital camera contains all three. Micronic makes pattern genera- tors for all of these.
micronic in brief
MICRONIC’S OPERATIONS
Micronic develops, manufactures and markets a range of extremely accurate laser pattern generators for the produc
tion of photomasks as well as mask metrology systems. The tools are used by the world’s leading electronics com
panies in the manufacture of TV and computer displays, semiconductor cir
cuits and semiconductor packaging components.
MARKETS AND PRODUCTS
The primary markets for Micronic’s laser pattern generators are the display and semiconductor industries, with some 60 customers worldwide.
Micronic has a forefront position in the display market, where the compa
ny’s pattern generators and metrology systems are the industry standard. This position has been achieved through patented stateoftheart technology
and an effective global customer ser
vice organization. Micronic’s competi
tive strengths are its strong techno
logical lead, high quality and superior write speed.
In the semiconductor market, Micronic is an established supplier of pattern generators used in the manufac
ture of photomasks for both leading
edge semiconductor devices and volume production of simpler IC designs. Write speed is the greatest competitive advan
tage for the semiconductor products.
Micronic’s share of the semiconductor market is around 10 percent.
A niche market is that for advanced electronic packaging systems, a technol
ogy used to seal and protect semicon
ductor chips, in which Micronic has a strong position. Write speed and high quality are the key competitive advan
tages in this market, where Micronic has a market share of around 30 percent.
CUSTOMERS
Micronic’s customers are photomask makers and can be divided into two cat
egories. The first consists of commercial or “merchant” mask shops that are sub
contractors to electronic manufacturers, such as Toppan, DNP and Hoya. The second category is made up of large electronics manufacturers with captive mask shops, like Intel, Samsung and LG Micron. The majority, 80 percent, of Micronic’s customers are based in Asia.
TECHNOLOGY
Microlithography is a critical process in volume production of components bear
ing minute structures, such as displays and semiconductor chips. Microlithog
raphy is similar to the way photographs are duplicated with the help of a nega
tive. By the same principle, photomasks are used to optically transfer patterns onto a silicon wafer or glass plate for the Our everyday lives are filled with electronic devices that contain components manufactured with a technol- ogy in which micronic Laser Systems plays a leading role. This technology is known as microlithography.
micronic manufactures pattern generators that use microlithography to create photomasks, a critical enabler for mass production of displays and semiconductors.
The finished chip is ready to be mounted in the new product.
A stepper repeatedly copies the photomask pattern onto silicon wafers in several steps.
The result is a semiconductor chip.
The silicon wafers are cut into chips which are individually packaged. The packaging pro- vides both protection and an interface for connection.
production of semiconductor chips or displays. Micronic’s pattern generators are tools for writing microscopic images onto the photomask.
MISSION
To provide customers with innovative pattern generation solutions for the elec
tronic manufacturing industry.
VISION
Leading the way for tomorrow’s inno
vations in imaging technology and elec
tronics.
MICRONIC’S MOTTO
Pushing the limits.
OBJECTIVES
• To extend the company’s leadership in lithography products for the dis
play market.
• To be the leader in the semiconductor pattern generator market.
LONG-TERM FINANCIAL TARGETS
Micronic’s longterm financial targets are an operating margin of 15 percent and an equity/asset ratio of 60 percent.
STRATEGY
To meet its objectives, Micronic employs strategies to ensure that its business is driven by technological innovation and calculated risktaking. Commercial opportunities must be weighed against the technological, marketbased and financial risks.
TECHNOLOGICAL INNOVATION
Technological innovation is not only the backbone of Micronic’s business, but is also critical in satisfying customer needs and requirements. This innovative climate is fostered by close partnership with customers and a flexible approach to development and production.
FOCUS ON CUSTOMERS
Micronic meets the high expectations of its customers through disciplined exe
cution at the highest operational speed.
Fast timetomarket is essential in en
abling customers to meet their own launch schedules.
EFFICIENCY AND QUALITY
Continuous improvement initiatives are taken in development, purchasing, production, installation and service to
optimize efficiency and quality through
out the company.
These improvements are generating in
creased customer ben
efit from numerous as
pects – lead times in
line with customer targets, reliable sys
tem performance and high uptime in production.
ORGANIZATION
Micronic has a headquarters for devel
opment, production and marketing in Täby, just outside Stockholm, and a stra
tegic development unit in Gothenburg.
Micronic has subsidiaries in Japan, South Korea and the USA whose role, aside from providing customer service and support, is to assist the Parent Com
pany with customeroriented activities such as marketing, sales and installation.
In addition, Micronic has a small sub
sidiary in Taiwan and a local office in China, and also works via agent in these countries.
Micronic’s systems are used by the world’s leading electronics com- panies in the manu- facture of displays and semiconductor chips.
– –
comments by the cEO
2006 was a turbulent year marked by both successes and setbacks. Sales fell slightly from the year-earlier level and amounted to SEK 1,204 million. After a booming first half the display market came to a near standstill, forcing us to adapt our costs and organization to the new market conditions. The semiconductor side of the business grew further, but not to the extent we had anticipated.
2006 was a year of highs and lows. Fore
casts in the first quarter indicated bet
ter than expected development across the market. Shipments of display prod
ucts proceeded as planned, a contin
ued increase in order intake was expect
ed throughout the rest of the year and we completed the sale of two Sigma sys
tems for semiconductor applications.
Despite this, the end of the second quar
ter brought a dramatic slowdown on the display side that led to sharp cutbacks in photomask capacity spending. In the semiconductor market, we continued to position the Sigma system but did not meet our goals for order intake and sales in the second half of the year.
Sales fell slightly from the yearear
lier level and amounted to SEK 1,204 million. This means that we succeeded in shipping a large number of pattern generators despite a weak second half.
Operating profit was SEK 123 million with an operating margin of 10 percent.
Adjusted for net amortization of capital
ized development costs, we achieved an operating margin of 18 percent. Our longterm target for operating margin is 15 percent. This figure should be com
pared to the adjusted operating margin.
AFTER MARKET GAINING GROUND
The after market is an increasingly im
portant source of revenue and business for Micronic. In 2006 our service and support revenues rose by 44 percent to SEK 176 million. The explanation is that the number of installed systems has in
creased significantly in recent years and these are now successively leaving the
warranty phase and entering into service contracts. It is therefore crucial for Micronic to continue strengthening its alliances with established customers by offering advanced service on installed systems and providing technical system support to customers for their applica
tions development. Customer relation
ships must be nurtured as a means for re
taining, developing and expanding the existing customer base.
Our operational development and ef
ficiency improvement programs contin
ued during the year. The focus in 2007 will be on enhancing efficiency in after market activities.
NEW SUBSIDIARY IN SOUTH KOREA
After previously using an agent for sales and support in South Korea, Micronic now conducts these operations under its own management since January 2006.
The aim is to develop our service opera
tions and to boost efficiency in market
ing and sales. We already have some 20 installed systems and a number of im
portant customers in South Korea, with an emphasis on display production. In 2006 we also intensified our marketing of tools for semiconductor applications.
HIGHLY CYCLICAL DISPLAY MARKET
A rapidly expanding display market, led mainly by LCD TV, was the main factor behind Micronic’s strong volume growth in 2005. Manufacturers invested aggres
sively to expand their production capac
ity and gain market share, resulting in an overproduction of LCD TVs in par
ticular, which hit the market full force
during the summer of 2006 and caused an inventory pileup. As a result, TV makers scaled back their investments in new capacity, but also in new display models and technology. This triggered a decrease in demand for photomasks among Micronic’s customers and caused a substantial decline in order intake for Micronic as well. The display market regained some momentum in the fall of 2006. A combination of lower prices, better performance and larger displays, together with the transition to digital TV, is expected to drive further growth in demand for display products ahead.
INCREASED SHARE OF SEMICONDUCTOR MARKET
The global semiconductor market was stable with a growth of 9 percent in 2006. Micronic increased its share of the pattern generator market to around 10 percent. We had planned for even stron
ger gains in both market share and sales, but fell somewhat short of our targets.
Micronic has two strategies for posi
tioning the Sigma system in the market.
The first is to establish the Sigma7500 for latestgeneration technology nodes in time for the qualification phase, where Micronic has made significant advances. The second is to ensure compatibility with the Optical Proxim
ity Correction (OPC) methods used for photomask pattern optimization in existing advanced production processes, a strategy that will enable us to generate nearterm sales.
COST-CUTTING PROGRAM
Last summer’s slowdown in the display market prompted a decision to make cost cuts that will amount to more than SEK 100 million on an annual basis.
Numerous contracts with consultants and temporary staff expired during the autumn, and the number of perma
nent employees in Sweden was reduced by 42. This has been a painful and dif
ficult process for Micronic’s employ
ees, but was carried out with admirable professionalism and loyalty. To better cope with industry fluctuations in the future, we need a more flexible organiza
tion where growth spurts are primarily handled through the use of external con
sultants and partners. In this context, it is increasingly important to further enhance the skills of our existing staff.
NEW ORGANIZATION
In conjunction with the company’s cost
cutting program, a decision was made to realign the organization. The new orga
nization was introduced on January 1, 2007, and has involved a transition to joint R&D, marketing and sales for all products. Furthermore, our after market management has been reinforced and tied more closely to the group manage
ment team. The motives for these mea
sures are to optimize and focus our re
sources, to achieve greater clarity and to boost our efficiency.
THE FUTURE
The second half of 2006 was tough and challenging in many ways, but is now behind us. I extend my gratitude to all
of Micronic’s employees and partners for their admirable efforts and stamina.
With our new organization in place, we are well poised for 2007. The solid finan
cial position we have built up in the past few years and our strong costawareness give use the sustainability needed by an equipment supplier to the highly volatile electronics industry.
It has been a stormy year for every
one in the display industry. At Micronic we are working onwards to consolidate our position as the leading supplier of pattern generators to this market, and will be well prepared when the market and order intake revive.
In the semiconductor market our goal is to continue expanding our mar
ket share by deploying the new strate
gies to decisively position the Sigma system for sales in both the near term and in a longer perspective.
I want to thank our customers and partners for their invaluable cooperation in the past year. Efforts to strengthen our customer relationships will continue to be one of our top priorities.
Sven Löfquist President and CEO
– –
The micronic share
The Micronic share was introduced on the O list of the Stockholm Stock Exchange in March 2000. Since October 2006, the share is quoted on the Stock
holm Stock Exchange’s Nordic Mid Cap List, Information Technology sector.
A trading block consists of 100 shares.
The ticker symbol is MICR and the ISIN code is SE0000375115.
SHARE PRICE TREND
In 2006 the price of the Micronic share fell by 32 percent (+69), from SEK 113 (last price paid) at the end of 2005 to SEK 77 at yearend 2006. Over the same period, the SIX General Index rose by 24 percent and the Philadelphia Semicon
ductor Index SOX fell by 2 percent. The year’s highest bid price was quoted at SEK 157 in April and the lowest at SEK 61 in October. Micronic’s market cap
italization at the end of 2006 was SEK 3,015 million, compared with SEK 4,426 million at yearend 2005.
SHARE TRADING
In 2006 a total of 41.5 (37.3) million Micronic shares were traded for a total value of SEK 3,855 (2,886) million.
The average daily trading volume for the Micronic share was 165,231 (147,386), equal to an average daily value of SEK 15.4 (11.4) million. The share turnover rate for the full year 2006 was 105 per
cent , compared with 145 percent for the Stockholm Stock Exchange as a whole.
SHARE CAPITAL
On December 31, 2006, Micronic had 39,166,616 shares outstanding, all of the same class. Each share carries one vote.
All shares grant equal entitlement to the
company’s assets and profits. At yearend 2006, the share capital amounted to SEK 39.2 (39.2) million.
WARRANT PROGRAMS
Micronic currently has no warrant pro
grams outstanding.
OWNERSHIP STRUCTURE
The number of shareholders at the end of the year was 6,141 (6,787), a decrease of 9.5 percent compared with Decem
ber 31, 2005. The 10 largest sharehold
ers held 61.2 percent of the total num
ber of shares, compared with 47.7 percent in 2005. The 100 largest shareholders held 75.1 percent of the total number of shares, up from 68.2 percent in 2005.
At yearend 2006, foreign investors held 23 (28) percent of the share capital and votes and total institutional inves
tors held 30 (21) percent. The Board of Directors and Executive Management controlled a combined 0.3 (0.5) percent of the number of shares and votes.
Of all shareholders in Micronic, 27 (20) percent hold their shares directly and the remaining 73 (80) percent through broker or trustee.
The Annual General Meeting was held in Täby on March 30, 2006. The Executive Management participated in a number of press and analyst meetings during the year.
DIVIDEND POLICY
The Board of Directors and President propose that no dividend be paid to the shareholders but that the entire profit for 2006, equal to SEK 2.37 per share, be re
tained by the company.
The micronic share is traded on the Stockholm Stock Exchange’s Nordic mid cap List, information Technology sector. At year-end 2006 micronic had a market capitalization of SEK 3,015 million and 6,141 shareholders. Of the total share capital and votes, 23 percent was held by foreign investors and 30 percent by institutional investors.
0 25 50 75 100
2001
2000 2002 2003 2004 2005 2006
%
Swedish shareholders Foreign shareholders
Ownership structure at December 31, 2006
Foreign shareholders 23%
Swedish shareholders 77%
– Institutions 30%
– Private investors 12%
– Equity funds 35%
Ownership structure, annual change 2000 – 2006
THE FOLLOWING ANALYSTS MONITOR MICRONIC ON A CONTINUOUS BASIS
Investment bank/Research company Analysts
ABG Sundal collier Patrick clase
carnegie martin Nilsson
credit Agricole indosuez cheuvreux Johan Eliason
Enskilda Securities Andreas Joelsson
Evli Anders Berg
Handelsbanken capital markets Stefan Wård
Kaupthing Bank mikael Laséen
Nordea mats Bergström
redeye Greger Johansson
Swedbank Håkan Wranne
AmF Pensions and Funds 3,871,100 9.9%
robur Funds 3,389,378 8.7%
catella Funds 2,981,100 7.6%
Alecta 2,975,000 7.6%
Skandia Liv 1,984,600 5.1%
SEB Funds 1,833,600 4.7%
Hakuto 1,471,200 3.8%
Banco Funds 829,900 2.1%
Skandia Funds 742,348 1.9%
Total, 10 largest shareholders 23,966,826 61.2%
Others 15,199,790 38.8%
Total number of shares outstanding 39,166,616 100.0%
501–1,000 908 790,799 2.0%
1,001–10,000 823 2,563,558 6.5%
10,001–50,000 100 2,424,525 6.2%
50,001–100,000 28 2,066,553 5.3%
100,001– 62 30,513,731 77.9%
Total 6,141 39,166,616 100.0%
CHANGES IN SHARE CAPITAL
Year Transaction Increase in
no. of shares Total no.
of shares Total share capital, SEK thousands
1989 company founded 500 50
1989 New issue 9,500 10,000 1,000
1989 New issue 6,000 16,000 1,600
1990 New issue 3,300 19,300 1,930
1994 New issue 1,801 21,101 2,110
1997 Share split 100:1 2,088,999 2,110,100 2,110 1997 Share split 5:1 8,440,400 10,550,500 10,551 1997 Exercise of warrants 1,450,000 12,000,500 12,001
1998 New issue 2,000,083 14,000,583 14,001
2000 New issue 4,500,000 18,500,583 18,501
2000 Exercise of warrants 600,000 19,100,583 19,101 2001 Exercise of warrants 102,000 19,202,583 19,203 2002 Exercise of warrants 12,700 19,215,283 19,215
2003 New issue 19,215,283 38,430,566 38,431
2003 Exercise of warrants 736,050 39,166,616 39,167
2000 4000 6000 8000
50 100 150 200 250
00 01 02 03 04 05 06 07
Micronic share SIX General Index No. of shares traded, 1,000s (incl. afterhours)
20
© FINDATA DIREKT No. in 1,000s SEK
– –
in 2006 micronic continued its operational development program to maximize efficiency and quality – from product development to customer deployment in full-scale production. These improvements have led to increased customer benefit from numerous aspects – lead times in line with customer targets, reliable product performance, high uptime in production and better service.
CUSTOMER-DRIVEN pRODUCT DEVELOpMENT
Close partnership with customers has always been Micronic’s strategy for prod- uct development. This closeness to the world’s leading electronics manufac- turers gives the marketing and sales de- partment insight into customer require- ments, supports operational development and generates faster and better results. The development of Micronic’s systems re- quires special expertise in a number of areas, such as optics, mechanics, laser technology, interferometry and data processing. One of the most critical com- petencies is system design, where all of the various subsystems are integrated to achieve the extremely high performance expected by customers. The systems are
subject to rigorous qual- ity and performance standards that must be met cost-effectively de- spite small volumes.
Quality systems must be defined to guarantee consistent quality from the first unit of each new model.
In recent years Micronic has worked intensively to improve product quality, for example through a revised develop- ment model and improved configura- tion and product data management throughout the product life cycle. In the past year this led to higher quality in de- velopment of new products, as reflected in three times fewer modification orders than in earlier product generations.
MARKET AND SALES
Micronic’s customers are found in a nar- row group of advanced manufacturing companies. Because the products rep- resent a sizeable investment for the cus- tomer, sales are carried out with a large degree of personal customer contact. In addition to direct customer meetings, the products are presented at a number of conferences and industry trade shows where it is also possible to reach photo- mask end-users. This target group, the customers of Micronic’s customers, is of great importance for marketing and fu- ture product needs.
pRODUCTION OF COMpLEX SYSTEMS IN SMALL VOLUMES WITH HIGH QUALITY
When an order is received this is nor- mally followed by production, which is broken down into planning, purchasing, assembly and setup. The manufacture of pattern generators, carried out at Micronic’s facility in Täby, places strin- gent demands on the skill, precision and technical expertise of those who build and calibrate the systems.
Production capacity in the exist- ing facilities has risen by 25 percent in recent years. Furthermore, in the past year Micronic reduced production lead times for the LRS pattern generators by 25 percent.
micronic’s operations
Micronic’s systems are subject to rigorous qual-
ity and performance standards that must be met cost-effectively despite small volumes
Production
Setup Calibrationand
Service Marketing
Salesand
Service
concepts SAT – Site
Acceptance Test FAT – Factory Acceptance Test PAT – Production Acceptance Test Order
Development and product introduction
The illustration shows an overview of Micronic’s main processes, from order to delivery.
A pattern generator must be placed in a cleanroom during assembly of critical optics, calibration of sub-systems and testing of finished systems. These clean- rooms also contain all the necessary tools and equipment such as process lab- oratories for development and etching of photomasks and metrology systems for verification of writing accuracy.
SETUp AND INSTALLATION
In the next phase, the installation de- partment takes over responsibility for setup, calibration and acceptance testing at Micronic’s facility in Täby.
The same team is responsible for set- up at the customer’s site, where the sys- tem is fine-tuned and final acceptance testing is carried out. The system is then integrated into production. In many cases, the efficiency improvements of the past few years have considerably shortened the system installation time from customer delivery to attainment of the agreed performance specifica- tions. Reporting systems to ensure that problems are detected and corrected have resulted in a substantial decrease in the number of system errors.
FULL-SCALE pRODUCTION ON THE CUSTOMER SITE
When the system has been accepted by the customer, a new phase begins as the system is made ready to function in the customer’s production environment.
Micronic’s service organization contin- ues its close cooperation with the cus- tomer to adjust and optimize the system for maximum performance. The systems are normally covered by a warranty dur- ing the first year. At the end of the war-
ranty period, most customers sign a service contract to en- sure high equipment perfor- mance.
QUALITY MANAGEMENT
As part of the operational de- velopment program, a project to improve the company’s quality management system was launched during the year. The goals for the sys- tem are to increase organizational effi- ciency, support the employees in their day-to-day work and further improve product quality.
Improvement measures are carried out in close cooperation with customers for whom Micronic, as a supplier, must live up to exacting requirements. In sup- plier development programs, Micronic achieves results that are consistent with systematically basing improvement deci- sions on measurable targets and trend analyses.
The quality management system is being formulated according to ISO 9000 and other relevant industry standards.
For example, the industry organiza- tion SEMATECH has established the PBET, Performance-Based Equipment Training, method for the semiconduc- tor industry, to ensure high quality and effectiveness of equipment training.
Micronic applies this standard in the training and certification of service and installation personnel.
MICRONIC’S ENVIRONMENTAL WORK
The year’s environmental activities were mainly aimed at applying parts of the requirements set out in the ISO 14001 standard. These efforts were concentrat-
ed at the headquarters, where the production facility is located.
Micronic completed the planning phase, which consisted of reviewing and eval- uating the environmental aspects re- lated to consumption of raw materials and compliance with laws and offi- cial requirements. Environmental work in product development was focused among other things on use of the industry standard SEMI S2, which contains per- formance-based environmental, health, and safety guidelines for semiconductor manufacturing process equipment.
After identifying the company’s envi- ronmental impacts, an action plan was formulated to guide the actions of the company and its employees. Measures taken in the past year include reduced consumption of chemicals to minimize environmental impact and to enable safer handling of these.
The plan for 2007 is to continue implementing an environmental man- agement system based on ISO 14001.
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micronic’s after market
To strengthen its position as a global high-tech supplier micronic establishes offices in the key markets, where activities like sales support, marketing and after market sales and service must be conducted locally and regionally. in 2006, micronic took over the customer activities in South Korea that were previously handled by an agent.
LARGE INSTALLED BASE
The after market, consisting of add-on sales, service and support, is an increas- ingly important part of Micronic’s busi- ness. The number of installed systems
has risen sharply in re- cent years and the total installed base among customers now num- bers more than 120 sys- tems.
Micronic’s pattern generators are normally covered by a 12-month warranty, after which the customers generally sign a service con- tract. Revenues from service and add-on sales in the form of upgrades to existing
customers are expected to increase in the next few years.
EXpANSION IN ASIA
Micronic’s Asian expansion is part of an ambitious long-term drive to strengthen the company’s position as a global tech- nology and service provider. Around 80 percent of the installed systems are found in Asia and the customer base in the Asian market is expected to grow further.
Micronic established companies in Japan in 1997 and the USA in 1999.
Investments continued with the open- ing of the ATAC tech center in Japan in 2005. In the past year, Micronic opened
a subsidiary in South Korea to take over the customer activities previously conducted through an agent.
Micronic’s long-term success relies on a continuous transfer of knowledge from the Parent Company to the local organizations. The role of the subsidiar- ies, aside from providing service and support, is to assist the Parent Company with customer-oriented activities such as marketing, sales and installation.
ATAC – ASIA TECHNICAL AND AppLICATIONS CENTER
ATAC in Tokyo, Micronic’s first tech center outside Sweden, was opened in 2005 to serve the entire Asian region.
Masashi Tsutsui, President of Micronic Japan
“The fundamental ambition in Japan is to further increase customer satisfaction by offering well organized support for installed systems. With high up-time, shorter repair times and fewer errors, we create a “win-win” situation where the customers earn a higher return on investment and micronic reduces its costs for service and troubleshooting.
This will be achieved through active quality and cost control measures”.
“our challenge is to provide leading edge applica- tion support to customers for displays, semicon- ductors and image sensors.”
Manny Ferreira, President of Micronic USA
“our primary objective is to offer the best prod- ucts and services in the market, with the highest level of quality and customer satisfaction. We strive to cooperate with our customers in their busi- ness ventures and in new applications. our driving force is to ensure that our customers are success- ful in their operations, increasing their need for additional equipment and services.”
“one of our challenges is to train our engineers in various applications in order to increase the customer benefits of the systems.”
Charles Lee, President of Micronic South Korea
“All of our customers have worked to reduce their costs in view of the difficult market situa- tion. in close partnership, our goal is to develop our organization to meet customer requirements with regard to technical expertise, good inven- tory control and responsiveness. To improve the productivity of our systems, we will provide customized application projects with dedicated teams and a high level of service.”
“our main challenge is to fully address our cus- tomers’ needs while providing quick solutions to their problems.”
Micronic’s local and regional service network assists the customers in attaining optimal sys-
tem performance.
The 1,000-square meter facility contains different types of pattern generators and process equipment that are used for ad- vanced training of Micronic’s local tech- nicians to provide expert diagnostics and maintenance of customer systems.
The center also provides opportunity for Micronic to demonstrate machine operation and performance and to offer operator training courses for its custom- ers. Furthermore, ATAC can be used for applications development and mainte- nance in close collaboration with cus- tomers.
ATAC is proof of Micronic’s com- mitment to providing the industry with advanced customer service and support, where the objective is to strengthen the company’s long-term position and ongo- ing expansion in Asia.
HIGH LEVEL OF SERVICE
The industry in which Micronic operates is complex and demanding. The compa- ny’s local and regional service network helps customers to obtain optimal per- formance from their systems. Because Micronic strives for the utmost quality in its systems, customer service is a vital tool for preventing and dealing with problems. To meet each customer’s spe- cific requirements, Micronic assembles teams of technical experts in Sweden and the local service organizations to offer advanced technical support, skills training and assistance with applications development.
SUBSIDIARIES MICRONIC IN JAPAN
Micronic Japan K.K. was founded in 1997, has 66 employees and assists the
Parent Company with customer-relat- ed activities. The head office is located in Tokyo and there are six regional offic- es in Kyoto, Kusatsu, Kumamoto, Ka- goshima, Omiya and Kanazawa. Mi- cronic also has a longstanding sales and business partnership with HTL Co. Ltd.
Japan is Micronic’s largest market, accounting for more than 50 percent of Micronic’s installed systems.
MICRONIC IN THE USA
Micronic Laser Systems Inc., found- ed 1999, has 15 employees and assists the Parent Company with customer-ori- ented activities in North America. The head office is based in San Jose, Califor- nia, and there are three regional offic- es located in Massachusetts, New York and Texas.
The 17 systems installed across the continent range from the earliest LRS machines to the latest Sigma systems.
MICRONIC IN SOUTH KOREA
Formed in January 2006, Micronic Laser Systems Korea Co. Ltd. has 29 employees and sup- ports the Parent Company in cus- tomer-oriented ac- tivities. The head office is located in Anyang, Kyung- gi do, near Seoul, and a regional ser- vice office was opened in Gumi during the year.
Micronic has been active in the
South Korean market for more than 15 years and has an installed base of more than 20 systems in the country.
MICRONIC IN TAIWAN AND CHINA
In both Taiwan and China, Micronic conducts sales, installation and service through an agent, Hermes-Epitek. In 2002 Micronic also opened a small sub- sidiary in Taiwan, Micronic Far East Co., which has a staff of six people who are responsible for technical support and administration. In Shanghai, China, Micronic has a branch office with one employee to handle administration.
Micronic has been active for more than 10 years in Taiwan and China, where the company has an installed base of over 20 systems.
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micronic in everyday life
All electronic devices contain semiconductor chips and the majority also contain some kind of display. it is no small challenge for consumers to understand the technology behind these products, which are found in virtually every home and office. During the 1990s the electronics market was driven by Pcs and, as the millennium shift approached, also cell phones. Today, consumer products like flat panel TVs, music players, digital cameras and more advanced cell phones (smart phones) have emerged as important growth engines for the industry.
The home electronics market is under- going a dramatic transformation and its manufacturers are competing in two main areas. Which devices should we have in our living rooms and which should we carry around in our pockets?
The key technologies are displays, micro- chips, packaging technology and bat- teries. Battery technology is the only of these areas that does not directly affect Micronic.
LCD TV
LCD TV is the most common type of flat panel TV. Because LCD technology offers superior brightness, it works well in the typical home environment. LCD technology is advancing rapidly and re- cent years have seen vast improvements
in picture quality with regard to contrast ra- tio, color reproduc- tion, viewing angle and response time.
LCD TV displays are currently available in sizes up to 84 inches, but even larger models – exceeding 100 inches – are in the prototype stage. The standard size of an LCD TV display is in- creasing from 32 to 40–42 inches, where they compete mainly with plasma dis- play panels (PDP) which are not made in smaller formats and normally measure at least 30–32 inches. This is due to the fact that plasma pixels are made up of tiny gas tubes that have poor performance if they are too small.
TV FORMATS
The traditional aspect ratio between a TV’s width and height has been 4:3.
However, sales today are dominated by the wide screen standard with an aspect ratio of 16:9, which is better suited for viewing most films and is an increasing- ly common format for TV broadcasts.
Although TV displays are measured on the diagonal, their size is perceived mainly as a function of height. Conse- quently, a wide screen must be larger to be perceived as equal in size to a 4:3 TV. A 29-inch TV in 4:3 format is compara- ble to a wide screen of around 35 inches.
HDTV
High Definition TV is a TV broad- casting system with significantly high- er screen resolution. The current ana- log TV standard displays a picture made up of 576 horizontal lines (PAL system, used in most European countries) or 484 lines (NTSC system, used in the USA and other countries). The HDTV stan- dard is instead pixel-based and has a for- mat of 1280 ✕ 720 pixels. There is also something so called “full HD” which has 1920 ✕ 1080 pixels. So far, the num- ber of HDTV broadcasts is limited. In an HDTV used for standard television broadcasts, more pixels are displayed on the screen than are actually contained in the TV signal. This is the case when HD-ready TVs is used for viewing stan- dard TV content or DVD recordings.
Here additional pixels are interpolated to create the impression of higher reso- lution. A large share of the LCD TV sets
now sold are HDTV-ready and full HD is gaining ground. For plasma displays, which require a certain size for effec- tive pixel function, HDTV sets normal- ly range from around 40 inches and full HD from 50 inches and upwards.
DIGITAL MUSIC pLAYERS WITH ENORMOUS MEMORY CApACITY
Many digital music players and the ma- jority of digital cameras use IC chips to store audio and pictures. IC memories are better than hard drives in compact portable devices that demand low cur- rent consumption. IC memory technolo- gy has made quantum leaps over the past few decades. The first semiconductor memory, introduced in 1970, could store only 256 bits, while today’s largest Flash memory chips have a capacity of up to 8 billion bits (8 Gb).
COMpACT DEVICES
Cell phones, cameras, handheld com- puters, GPS navigators and music play- ers are all vying for space in our pockets.
Extreme miniaturization makes it possi- ble to integrate multiple functions in the same device and there is a constant flow of sophisticated products featuring in- novative new combinations. Technologi- cal advances in electronic packaging, in- terconnection and micromechanics are taking place simultaneously with the de- velopment of more powerful IC chips to create these truly amazing products.
Flash memory has created a platform for the development of ultra-small music players with a very long battery life.
A music player with Flash memory can store up to 2,000 songs, equal to around two hundred compact discs.
