ANNUAL REPORT 2009
Micronic
CONTENTS
OPERATIONS 1 Highlights of 2009 2 Comments by the CEO 4 The share
6 Strategic focus
8 Business area Pattern Generators 16 Business area SMT equipment 22 Employees, environment and quality 24 Corporate governance report 30 Board of directors and auditor 32 Executive management 34 Financial overview 81 Other information
Flap Financial and technical glossary
FINANCIAL REPORTS 36 Reports of the directors 39 Risks and risk management 42 Consolidated profi t and loss account 42 Statement of comprehensive income 42 Comments on the consolidated
profi t and loss account 44 Comments on the statement of
fi nancial position and cash fl ow 45 Consolidated statement of cash 45 Consolidated statement of fi nancial position
46 Consolidated statement of changes in equity
47 Consolidated Pro forma accounts 48 Parent Company profi t and loss account 48 Parent Company cash fl ow statement 49 Parent Company balance sheet 49 Comments on the Parent Company
profi t and loss account and balance sheet 50 Parent Company statement of changes in equity
51 Additional information and notes 80 Audit report
For further information and explanations, please see glossaries in the back of the annual report or visit the web sites www.micronic.se and www.mydata.com.
THE MICRONIC GROUP IN BRIEF
The Micronic Group is active in the electronics industry in two business areas: Pattern Generators (PG) and Surface Mount Technology equipment (SMT). Business area PG operates under the Micronic Laser Systems brand while business area SMT operates under the MYDATA brand.
Micronic acquired MYDATA in 2009.
Business area PG originates from microlitho- graphy research at the Royal Institute of Technol- ogy in Stockholm. Today the business area develops, manufactures and markets a series of extremely accurate, laser-based pattern genera- tors used in the production of photomasks. The photomasks produced are used by the world’s leading electronics companies in the manufacture of TV and computer displays, the production of
semiconductor chips and for advanced electronic packaging.
Business area SMT, which develops, manufac- tures and markets advanced surface mount equip- ment for flexible production of electronics, has more than 20 years’ experience in the electronics industry. Surface mount technology is used for surface mounting of electronic components and stencil-free jet printing of solder paste on Printed Circuit Boards (PCB).
The head office of the Micronic Group is located in Täby outside Stockholm, which in the first quarter of 2010 will also become home to SMT operations. The Group currently has sub- sidiaries in China, France, Germany, Japan, the Netherlands, Singapore, South Korea, Taiwan,
the UK and the US. At year-end the Group had 581 employees.
BUSINESS AREA PATTERN GENERATORS
Business area PG serves a manufacturing industry that operates round the clock and requires high- quality products at the cutting edge of technology.
The business area has about ten major customers around the world. The majority, around 80 percent, are based in Asia. The customers can be divided into two categories. The first is commercial
“merchant” mask shops, which supply electronics manufacturers. Examples of these include Toppan, DNP and Hoya. The second is major electronics manufacturers with captive mask shops, such as Intel, Samsung and LG.
FUNDAMENTAL MARKET DRIVERS FOR THE GROUP
• Globally increasing demand for electronic products
• Increasingly compact mobile electronics
• Increased utilization of displays
• Short product life cycles
• Cost-effective production
Group subsidiaries Sales and support
MARKET POSITION
The business area is a market leader in pattern generators for displays. The systems have become the industry standard. Their competitive advan- tages are its strong technological lead, high writing accuracy and superior productivity.
In the semiconductor market the business area is an established supplier that offers the market pattern generators for cost-effective volume production of photomasks for both leading edge semiconductor devices and volume production of simpler IC designs.
Advanced electronic packaging is a part of the semiconductor market where the business area has a leading position. Electronic packaging is used to connect and protect semiconductor chips.
Write speed and high quality are the business area’s key competitive advantages in this market.
The business area also sees a future market for a new product in advanced electronic packaging, Laser Direct Imaging (LDI).
BUSINESS AREA SMT
The business area serves the market for surface mount technology, where electronics with a rela- tively high added value are produced. Here guid- ing principles such as high quality, short set-up times and flexibility are crucial. The business area has more than 3,500 machines installed at 1,900 sites worldwide. Most of its customers are in the US and Europe. The customer structure consists of many small to mid-sized customers primarily in
industries with short product series and relatively expensive and complex PCBs. They are dependent on flexible equipment that enables rapid shifts in production. The customers include contract manufactures in the electronics industry as well as manufacturers of own brand products in the aerospace, aircraft, computer and telecom industries, which require a high degree of flexibility in electronics production.
MARKET POSITION
The business area has a market-leading position in flexible electronics production that is based on a combination of high quality, innovative production technology and high flexibility.
• Micronic Laser Systems AB acquired MYDATA automation AB through a non-cash issue to MYDATA’s shareholders. Hereby a new business area, SMT equipment, was added.
• Net sales for the new Group were SEK 829 million.
• The company posted an operating loss of SEK –146 million.
• The operating loss adjusted for capitalization and amortization of development costs was SEK –83 million.
• The order intake was SEK 631 million.
• The gross margin was 40 percent.
• Micronic received an order for a Prexision-8 system from an Asian display maker.
• Peter Uddfors took up his post as President and CEO on November 23, 2009.
HIGHLIGHTS OF 2009
ORDER INTAKE
2004 2005 2006 2007 2008 2009 0
200 400 600 800 1,000 1,200 1,400
SEK million
Net sales Operating margin NET SALES AND OPERATING MARGIN
SEK million
0 200 400 600 800 1,000 1,200 1,400 1,600
2004 2005 2006 2007 2008 2009 20 30 40 50 60 70
%
-60 -50 -40 -30 -20 -10100 80
FINANCIAL OVERVIEW 2009 2008 2007 2006 2005 2004
Net sales, SEK million 829 569 523 1,204 1,276 839
Gross margin % 39.5 28.4 29.3 54.3 54.4 55.8
Operating profi ts/loss, SEK million –146 –37 –291 123 172 126
Operating margin % –17.6 –6.6 –55.6 10.2 13.5 15.0
Adjusted operating margin, % –10.1 –15.0 –40.2 18.2 22.3 5.2
Order intake, SEK million 631 378 634 604 1,306 945
Order backlog, December 31, SEK million 42 224 332 200 871 794 Earnings per share, before dilution, SEK –2.21 –0.78 –5.30 2.37 3.00 2.77 Earnings per share, after dilution, SEK –2.21 –0.78 –5.30 2.37 2.99 2.7
Average number of employees 613 398 416 462 415 359
Pattern generator systems
Pattern generator after market
SMT systems SMT
after market
SHARE OF NET SALES 2009 PRO FORMA BY APPLICATION
Europe 24%
Other markets 1%
USA 19 % Asia 56%
NET SALES 2009 PRO FORMA BY GEOGRAPHICAL MARKET
ghl ight s of 20 09
COMMENTS BY THE CEO
The new Micronic Group, which is the result of the merger between MYDATA automation and Micronic Laser Systems in July 2009, can now report its first year-end results. The merger took place in a challenging economic environment, but with our structured integration phase and strategy for long-term profitability and growth, I am confident about the future.
n November , , I took up my post as the Group’s CEO. What brought me to Micronic is the company’s world-leading position, the unique industry- leading expertise of our staff and the big potential of the new group. Few companies in Sweden have leading expertise in such technologically advanced fi elds as Micronic.
By investing aggressively in research and development, the company has outpaced its competitors in the global market in several areas.
The new Micronic is formed by two businesses that are being merged, which means that the company is doubling its volume of business. The Group operates in the markets for surface mount techno- logies, displays and semiconductors.
Micronic’s business area Surface Mount Technology (SMT) offers surface mount products under the
MYDATAbrand while the business area Pattern Generators (PG) offers products for pattern generation on photomasks under the Micronic Laser Systems brand.
PREPARING FOR THE FUTURE
Th e strategic rationale behind the acquisi- tion of
MYDATAis that the two businesses are similar, creating a potential for synergies.
Th e development departments will be inte- grated, as both use similar development models and some aspects of the technical solutions are similar. Th e new, merged development department will have a greater critical mass and will be able to implement projects more eff ectively and in less time.
Th rough the merger the Group will
achieve a more even capacity utilization and be able to consolidate purchases into larger volumes and thus obtain lower prices.
Th e fi xed costs can be spread over a larger operation, leading to improved competi- tiveness. In sales and services we take a cautious and realistic view of the synergies that can be achieved. Selling and providing services for our products are specialized activities that require a high degree of expertise. Finally, the merger will result in a more balanced revenue model, helping to release tied-up capital.
The integration of
MYDATAand Micronic Laser Systems will be implemented based on a -day plan. In spring
operations in Bromma will be relocated to Täby and functions for development, production, administration, IT and accounting will be integrated. We expect the total synergies and savings to exceed SEK million. The full effect of these will be felt in . The costs of the merger were fully charged to expense in .
As part of the merger a new manage- ment team has been appointed and all ex- ecutive positions have been reviewed. We now have a management that is consistent with our new strategy, where the focus is on:
• Developing our leading positions in fl exible surface mounting and pattern generators.
• Continuing to develop an eff ective and profi table service business.
• Investing aggressively in developing new technological solutions and products that contribute to our future growth and profi tability.
Another key task for the management team will be to draw up new long-term fi nancial targets for the Group.
STR ATEGIC FOCUS
To ensure long-term profi tability and growth, it is necessary to continuously invest in technological development. Th e level of technological sophistication and the dynamics of the market require aggres- sive and innovative solutions for today’s and tomorrow’s product off erings.
During we completed the genera- tional shift from our previous pick & place machine series to our new MY series with the launch of two new models. We also introduced a new model of our MY jet printer for application of solder paste. The response from our customers has been very encouraging, and we suc- ceeded in capturing market share in a fall- ing market.
MYDATA’s MY jet printing technology has revolutionized and stream- lined the production technology for appli- cation of solder paste, and we see a big potential in MY.
MYDATA’s jet print- ing technology represents a technological breakthrough that can be used partly to increase in-house sales, and partly for licensed production. By leveraging the potential of jet printing technology while continuing to offer its existing pick & place technology, the business area will work to increase growth.
In the display market, Micronic Laser System’s products are well positioned with products for the next generation of display production through Prexision-. More- over, we have a competitive offer for cost-
O
effective production in the semiconductor market.
Advanced electronic packaging is a part of the semiconductor market. Electronic packaging is used to connect and protect semiconductor chips. Currently traditional lithography with photomasks is used. How- ever, consumer demand for advanced electronic products is driving the develop- ment of increasingly complex integrated circuits, which in turn require innovative production solutions on the packaging side. A new production technology for advanced electronic packaging is direct write, or Laser Direct Imaging, LDI, of integrated circuits on microcircuit boards, or substrates. The company believes LDI technology can competitively meet the industry’s technological and market requirements, and estimates the annual market at more than USD million. We are currently working with other leading companies on the development of LDI.
We also continually review the pace of these development activities to ensure that we are able to meet the market requirements.
In we will continue to develop our service offering with a view to building it
into a profitable business for the Group.
Our installed base is considerable, and our customers are dependent on machines that have a high availability and performance.
This creates a need for services provided by qualified technicians.
NEW OPPORTUNITIES IN STILL CONFIDENCE IN THE FUTURE
We have received the fi rst positive signals of an economic turnaround. However, there is a certain amount of uncertainty as to when our customers’ capacity utilization will reach levels at which investments will rise. At the same time, the Group has unique products, world-leading expertise and employees who are creating new opportunities for the future. It is therefore with great satisfaction and confi dence that I take on the task of leading Micronic.
Finally, I would like to thank all our customers and staff for the past year.
Peter Uddfors
CEO, Micronicn ts b y t h e C E O
THE SHARE
SHARE PRICE TREND
Th e closing price of the Micronic share (last price paid) rose from SEK . to SEK . at year-end , an increase of percent. Over the same period, the OMX Stockholm PI Index rose by per- cent and the Philadelphia Semiconductor Index SOX by percent.
The year’s highest bid price was quoted at SEK . on August and the lowest at SEK . on January .
Micronic’s market capitalization at the end of was SEK million, com- pared to SEK million at year-end .
SHARE DATA AND TR ADING
Th e Micronic share, which is listed on NASDAQ OMX Nordic Exchange Stock- holm, has the ticker symbol MICR. Aro- und lot consists of shares. All shares grant equal voting rights and equal entitle- ment to the company’s capital and profi ts.
A total of . million (.) Micronic shares were traded in for a total value of SEK million (). Th e turnover
2 000 4 000 6 000 8 000
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 5
50 100 150 200 250
No. of shares trades, thousands The share
OMX Stockholm_PI
© NASDAQ OMX
rate, calculated on the average number of shares, was percent. Th e average daily trading volume was , shares (,), equal to an average daily value of SEK . million (.).
NON CASH ISSUE
On July , , Micronic acquired
MYDATAautomation AB through a non- cash issue to
MYDATA’s former principal shareholder Skanditek Industriförvaltning AB. Micronic’s share capital has increased by ,, shares to a total of
,, shares.
OWNERSHIP STRUCTURE
Th e number of shareholders at the end of
was , (,). Th e ownership structure has changed during the year.
Since July , , Skanditek is the largest shareholder with percent of the shares.
At year-end the largest shareholders held . percent (.) of the total number of shares. Th e largest shareholders represented . percent (.) of the total number of shares.
At year-end , percent () of the shares were held by Swedish private investors, while percent () were held by Swedish equity funds and institutions.
Foreign investors held percent (). The Board of Directors and executive manage- ment controlled a combined . percent (.) of the number of shares and votes.
The Annual General Meeting was held in Täby on April and percent of the shareholders were represented at the meeting.
EMPLOYEE STOCK OPTION PROGR AM
Th e Annual General Meeting resolved to approve an employee stock option pro- gram running from to . Under the program Micronic may issue ,,
warrants for subscription to shares, whereby
The share is listed on NASDAQ OMX Stockholm, Small Cap. At December 31, 2009, the company had a market capitalization of SEK 933 million and the number of shareholders was 6,281.
Swedish institutions 48 %
Private investors 15%
Foreign investors 26 %
Swedish equity funds 11%
OWNERSHIP STRUCTURE AT DECEMBER 31, 2009
Sweden 73%
USA 10%
Luxemburg 4 % Norway 4 % Others 9%
GEOGRAPHICAL SPREAD OF OWNERSHIP AT DECEMBER 31, 2009
the maximum dilutive eff ect is percent.
Th e share capital may be increased by no more than SEK ,,. Th e terms of the program have been drawn up in collab- oration with the company’s largest share- holders and have involved allocation to the employees in Sweden on three occasions, after the publication of the interim reports for the second, third and fourth quarters of
. Th e strike price is equal to percent of the average market value on the ten trading days following publication of the respective quarterly reports and amounts to SEK , and SEK , respectively.
Th e members of the executive management together hold , stock options. Th e terms of the program are also described in Note .
DIVIDEND POLICY
So far, Micronic has not paid dividends but has instead reinvested the generated profi ts primarily to fi nance ongoing devel- opment activities and thereby create growth for the company.
The board of directors and CEO pro- pose that no dividend be paid for .
SHARE DATA
Listing NASDAQ OMX, Nordic Exchange
Industry classifi cation Small Cap, Information Technology Sector Electronic Equipment & Instruments
Ticker symbol MICR
ISIN code SE0000375115
Number of outstanding shares 65,277,673
Trading block 100 shares
MICRONIC´S TEN LARGEST SHAREHOLDERS AT DECEMBER 31, 2009
Shareholder No. of shares Holding, %
Skanditek Industriförvaltning AB 24,801,073 38.0
Fjärde AP-fonden 3,524,400 5.4
Swedbank Robur fonder 2,146,865 3.3
Pharos Invest 2,015,825 3.1
Länsförsäkringar fonder 905,513 1.4
Avanza Pension Försäkring AB 817,799 1.3
Stockpicker fonder 779,502 1.2
Skandia fonder 772,744 1.2
Fonds Voor Gemene Rekening Beroeps 664,775 1.0
DnB/Carlson fonder 662,044 1.0
The ten largest shareholders 37,090,540 56.8
Others 28,187,133 43.2
Total number of outstanding shares 65,277,673 100.0 OWNERSHIP STRUCTURE AT DECEMBER 31, 2009
Holding by size No. of shareholders No. of shares %
1–500 3,444 712,642 1.1
501–1,000 1,164 1,038,290 1.6
1,001–5,000 1,192 3,020,044 4.6
5,001–10,000 216 1,699,934 2.6
10,001–50,000 174 3,919,184 6.0
50,001–100,000 22 1,583,361 2.4
100,001– 69 53,304,218 81.7
Total 6,281 65,277,673 100.0
ANALYSTS THAT CONTINUOUSLY MONITOR MICRONIC Investment bank/Research company Analyst
Carnegie Daniel Djurberg
Handelsbanken Capital Markets Fredrik Agardh
Ålandsbanken Mikael Laséen
Nordea Mats Bergström
Redeye Greger Johansson
Swedbank Håkan Wranne
ar e
STRATEGIC FOCUS
MERGER
On July , Micronic Laser Systems AB acquired
MYDATAautomation AB.
Prior to the merger the companies had exchanged experiences and worked together on technological development projects.
Through the acquisition
MYDATAbecame a part of the Micronic Group and formed the Surface Mount Technology equipment (SMT) business area. The operations of the existing Micronic Laser Systems formed the Pattern Generator (PG) business area. The Micronic Laser Systems and
MYDATAbrands will be retained for the respective products and markets.
BACKGROUND TO THE MERGER
Micronic Laser Systems is a leading player in the market for pattern generators for the display industry. Th e company’s products are technologically highly advanced. Th e market is limited and most of the customers are based in Asia. Each purchase of a pattern generator represents a signifi cant investment for the customer. For the business area PG
this results in an irregular order intake.
Periods of high growth alternate with sharp slowdowns. It is expected that this trend will become increasingly pronounced in future and that the cycles will become more protracted. Th e pace of technological development is not expected to remain as high as before, which means that each machine may be used for a longer time.
Th is can result in fl uctuations both in sales and earnings, as revenues are unevenly distributed over time.
For the business area this will require constant flexibility and a readiness to adapt to changing market conditions. In addition to pattern generators for the dis- play market the business area also operates in the semiconductor and electronic pack- aging markets. It also sees a future market for a new product in advanced electronic packaging, Laser Direct Imaging, LDI.
However, growth in the display and semiconductor markets is expected to be limited. A long-term goal has therefore been to grow in new business areas outside its existing markets.
MYDATA
is a market leader in equipment for fl exible electronics production for low- and medium-volume series. Th e customer base is global and the largest markets are Europe and the US. Business area SMT has a much larger number of business transactions than business area PG but the size of individual transactions is smaller.
Th e customers are dependent on fl exible systems that enable rapid shifts in produc- tion. Demand for surface mount techno- logy is driven primarily by growing demands for cost-eff ective production and by technological advances, such as place- ment speed, component size and precision.
The business area’s revolutionary jet printing technology offers the market a more efficient production process for application of solder paste. The jet printing technology can potentially be developed to address the needs of new markets, in- cluding the semiconductor and packaging industries.
The Group’s business areas are active in the electronics industry. The process for electronics manufacture encompasses the business area’s markets in three pro- cess steps: active components, IC assembly and PCB assembly. Micronic Laser System’s pattern generators are used for writing photomasks for active components such as processors, memories and displays. They are also used to write photomasks in the process step for
IC assembly, or in other words, the production step that encapsulates the semiconductor circuit so that it is protected and can be connected to other electronic components. This is called electronic packaging.
Existing lithographic solutions in electronic packaging do not comply with future demands. This has opened the market for new innovative solutions such as Laser Direct Imaging (LDI), which is the business area’s new
development project for direct write on microcircuit boards, so-called substrates, so as to meet the new demands of the market.
The next process step is PCB assembly The MY500 jet printing system is used to apply solder paste on the PCB. The components are thereafter mounted on the PCB with pick & place machines.
THE MANUFACTURING PROCESS FLOW FOR ELECTRONICS
Electronic materials
Passive components
PCB assembly
Finished equipment Micronic Group’s position in the manufacturing process fl ow for electronics
Pattern generators for photomask production and Laser Direct Imaging, LDI, for substrates
SMT equipment and application of
solder paste Active
components
IC assembly
SYNERGIES
Th e new group formed through the merger has the potential to develop into a major supplier to the electronics industry with a wider product range. Th e organizations will be integrated and coordinated to cut costs, expand the pool of talent and improve effi ciency. Units such as purchasing and production, research and development, administration and fi nance will be merged.
In spring , the business area SMT will move into the Group’s premises in Täby to optimize use of the company’s production facilities.
The goal is that all synergies should be visible within twelve months of the merger, which is being implemented according to a defined integration plan. These synergies are expected to improve financial stability.
The merger will smooth out the irregular distribution of order flows, sales and prof- itability in business area PG. The product and customer base will become broader, which will also reduce financial risk.
MERGER CREATES NEW OPPORTUNITIES
Both business areas are suppliers to the electronics industry with product off erings which in certain segments are converging.
Business area SMT has a strong position in Europe and the US. Business area PG’s strong presence in Asia could pave the way for faster growth in Asia for SMT equipment.
With its advanced technology and experience in photomask pattern generation business area PG is in a strong position to develop volume products for direct writing in electronic packaging and eventually advanced PCBs.
Through its new jet printing product line, business area SMT can offer products for direct application of solder paste on PCBs, which is the next step in the value- added chain after direct writing. Business area SMT also has well established products in flexible surface mounting and strong expertise in volume production of complex production equipment. Th e combination of these two business areas creates a strong
platform for the development, production and marketing of production equipment in the value chain from semiconductor chips to fi nished PCBs.
In electronic packaging the increasing complexity of semiconductor chips is driving the need for new, innovative production solutions. Through the use of its established pattern generator technology as well as new development of key technol- ogies, LDI products for cost-effective production of electronic components are developed. With its future LDI products, the Group’s business areas will supplement each other in the production process for electronic products.
STR ATEGIC FOCUS
Th e new Micronic is being formed through the merger of two businesses. In this process there is a lot to that should be kept, some things that should be discarded and interesting areas that should be developed.
THE GROUP ’ S GENER AL OPER ATIONAL GOALS FOR 2010 ARE TO:
• Develop its leading positions in the market for fl exible surface mount tech- nology and in the market for displays to ensure faster growth.
• Create a stable and profi table service operation founded on services and add- on products for the after market.
• Develop new technological solutions and products that will help to generate future revenues.
Both business areas have a large installed machine base. Business area PG has a well functioning service off ering that was further developed in and that has accounted for a growing share of the busi- ness area’s revenues over the years. Business area SMT’s after market does not generate the same revenues, relatively speaking, and there is a potential to develop the off er. Th e company believes after market services can be developed in both business areas and that the installed base is large enough to support a stable and profi table business.
After market services will be developed based on the customer’s need for improved effi ciency, availability and service levels.
The total market for SMT equipment is expected to recover in , albeit from a low level. The business area’s jet printing technology, which is protected by patents, is a revolutionary way to apply solder paste on PCBs. This is a technological break- through that can be used partly to increase in-house sales, and partly for licensed production. The business area will help to increase the growth of Micronic by exploit- ing the potential of jet printing technology and continuing to offer machines with pick&place technology for surface mount- ing of components. The machines for pick
& place and jet printing were upgraded in and have been very well received in the market, resulting in an increase in market share.
For the display market business area PG has products that are well positioned for the market’s demands as well as a competitive offering for cost-effective volume produc- tion in the semiconductor market. How the market will develop is hard to predict.
The LDI development project is aimed at directly writing patterns for advanced electronic packaging. With the LDI market forecast to be worth more than USD
million annually, the merger has placed Micronic in a stronger position to achieve continued success in the project. As the operations of the two business areas are now converging, there are mutual benefits in product development. When the LDI is launched, it is expected to significantly increase sales and earnings.
r a tegi c f o cus
BUSINESS AREA PATTERN
GENERATORS
Micronic’s Pattern Generators (PG)
business area operates under the Micronic Laser Systems brand. The business area is a market leader in laser pattern generators for
the production of display photomasks, semiconductor chips and electronic packaging.
OPER ATION S
Th e business area PG supplies a manufac- turing industry that requires innovative, high-quality products at the cutting edge of technology to ensure reliable production.
A key priority is speed, to ensure that the business area is able to manage rapid changes in the market as well as customer demands for fast deliveries and service.
Th e business area has about ten major customers around the world. Th e majority,
percent, are based in Asia. Th e customers can be divided into two categories. Th e fi rst is commercial “merchant” mask shops, which supply electronics manufac-
turers. Examples of these include Toppan, DNP and Hoya. Th e second is major electronics manufacturers with captive mask shops, such as Intel, Samsung and LG. Pattern generators represent signifi cant investments for the customer, which means that each sale involves a high degree of personal contact with the customer.
The business area’s development, production and marketing are located in Täby outside Stockholm. A department for strategic development is located in Gothen burg. The company has subsidiaries in Japan, South Korea and the US, which, in addition to providing service and customer support, also work closely with Micronic Laser Systems on marketing, sales and installation. There is also a small subsidiary in Taiwan and a branch office in China. In these countries the company also operates via an agent. Japan is also home to the Asia Technical and Application Center (ATAC), which provides support to the entire Asian region.
USA Asia 3%
97%
NET SALES 2009 BY GEOGRAPHICAL MARKET After market
46% Display
49%
Electronic packaging 5%
NET SALES 2009 BY APPLICATION
KEY FIGURES 2009 2008
Order intake, incl. service, SEK million 391 378
Net sales, SEK million 579 569
Operating profi t/loss, SEK million –99 –37
Operating margin, % –17.1 –6.6
Investments, SEK million 6 83
Average number of employees 363 398
1
MICROLITHOGRAPHY IS THE LINK
BETWEEN DESIGN AND MASS PRODUCTION
In order to manufacture electronic components such as displays, semiconductor chips or electronic packaging, the component design, a pattern, must fi rst be created in a CAD system and then trans- ferred onto a photomask blank.
The component design is written with a Micronic pattern generator onto a photomask, a glass or quartz substrate coated with a light sensitive material.
2
The electronic component is ready to be mounted in a TV, computer, cell phone, etc.
Left: Display panel in cross-section.
Middle: Semiconductor, for example a computer memory chip.
Right: The chip is packaged so that it can be connected to other electronic components.
5
Using an exposure system, the photomask can now be repeatedly copied, or stepped, onto the substrate to be manufactured:
glass substrates for displays, silicon wafers for semiconductor chips, etc.
4
The photomask functions in the same way as a negative in the photographic process, and a tem- plate is produced. The size of both the pattern and photomask varies depending on the component to be manufactured. The more patterns that can be fi t onto a photomask, the more cost-effective production is possible.
Left: Display photomask 1220 x 1400 mm.
Middle: Semiconductor photomask 6 x 6”.
Right: Photomask for electronic packaging 500 x 600 mm.
3
Pattern generators are used to write microscopic images onto photomasks which then function as templates for mass production of displays, integrated circuits and electronic packaging. The manufacturing process, called microlithography, is similar to the way in which photographs are reproduced with the help of a negative.
u sine ss ar e a P a tter n G e ner a tor s
OPER ATIONAL GOALS FOR PATTERN GENER ATORS IN 2010
• Consolidate our market-leading position in the display market and strengthen our position in the semiconductor market and in electronic packaging.
• Develop LDI to meet the market’s need for cost-eff ective production and to increase sales and profi tability.
THE DISPL AY MARKET
Micronic Laser Systems is a market leader in pattern generators and measurement systems for fl at panel displays (FPD). Th e systems, which are used by photomask manufacturers, are the industry standard.
Total sales in the display market during
amounted to USD . billion, which can be compared to USD .
billion in . For , the sales forecast is USD . billion (DisplaySearch, December ).
Today TFT-LCD is by far the dominant FPD technology,and it is expected to remain so for the foreseeable future. Among competing technologies, AMOLED is expected to capture market share while PDP is expected to lose market share (DisplaySearch, November ). TFT- LCD and AMOLED both require ad- vanced pattern generators for photomask writing. While the total display area is expected to grow by – percent annually over the next five-year period sales are
expected to grow by – percent annually, as the average selling price per unit area falls. TVs and PCs are expected to remain the two main applications (DisplaySearch, December ).
MARKET DRIVERS DISPL AY
Th e market is largely driven by pricing pressures at the consumer level, which puts pressure on manufacturers to lower their
costs and improve effi ciency. Th anks to continuous price cuts at the end-customer level fl at screens have rapidly captured market share from CRT TVs, which are disappearing completely from the market.
Lower prices are primarily a condition for increasing volumes in China, India and other emerging markets.
An effective way to cut costs for display panel makers is to shift the production of
FLAT PANEL DISPLAYS – MARKET SHARE BY TECHNOLOGY
2007 2008 2009 2010
Other
2011 2012 2013 2014 2015 2016
0 10 20 30 40 50 60 70 80 90 100
%
PM-LCD PDP AMOLED AMEPD TFT-LCD
DRIVING FORCES
• Increasing volumes
• Price pressure
• Thinner
• More energy effective
• Higher frame rate
TECHNOLOGY TRENDS
• Integration of electronics in panel
• Production step reduction
• Higher yield
• Introduction of more cost- effective materials
• More and faster transistors
• Improved panel transmittance
EFFECT ON MICRONIC
• Increasing photomask volumes
• Shift towards more advanced photomasks
• Shift towards larger photomasks
• Cost pressure on photomasks
DISPLAYS
their existing products from older plants to modern, generation- (G), G and G
plants. Thanks to a more efficient produc- tion process, the production cost is often significantly lower. Other methods for cutting costs are to reduce the number of process steps in the plants and to replace expensive components with less expensive alternatives.
The trend towards thinner displays is driven by consumers but is in many ways positive also for the manufacturers. They can demand higher selling prices and cut their storage and transport costs.
A growing environmental awareness has also created a need for more energy- efficient displays. One consequence of this is that in a large share of today’s displays the conventional fluorescent tubes have been replaced by light-emitting diodes (LED) as light source. The cost of materials for LEDs is currently slightly higher but their power consumption is significantly lower. As early as some percent of all displays are expected to be lit by LEDs (DisplaySearch, November ). To reduce the number of LEDs required and thus also the cost of the materials, all manufacturers are seeking to improve the light transmittance of their displays.
Currently only about per cent of the light generated actually reaches the front of the display. LED lighting also makes it possible to further reduce the thickness of the display.
As moving images can still come across as blurred on a fl at screen TV compared with a CRT TV, manufacturers are expected to off er screens with higher frame rates (more frames per second) in coming years. –
Hz displays are already common and even higher frequencies are expected in future. Th e trend towards showing fi lms in D is also creating a demand for higher frame rates.
Overall, the effect of these trends is that panel makers are increasingly demanding more advanced photomasks, which in turn creates a demand for more advanced pattern generators. The business area’s Prexision product series is well positioned to meet these new demands.
MARKET OUTLOOK DISPL AY
Th e sharp increase in sales of fl at panel displays in China led to announcements of a large number of planned investments in G.-G. plants in China in . Th e new plants are scheduled to begin produc- tion in -. Near-term, a number of new plants are also being built in South Korea and Taiwan, and capacity is being increased at existing facilities. Total investments in production equipment are expected to reach USD . billion in
and USD . billion in (Display- Search, January ). Among the business area’s customers the growth in volumes is refl ected in higher capacity utilization in installed pattern generators.
THE SEMICONDUCTOR MARKET
Th e global recession which began in the second half of had a big impact on the semiconductor industry also in .
However, a turnaround occurred in the second quarter of , which is refl ected both in rising sales for the largest companies (Prismark, November ) and higher capacity utilization among semiconductor makers (SICAS, Q-). Despite the recovery in the second half of the year, total semiconductor sales in fell by
. percent compared with , to USD
billion (VLSI Research, January
).
Micronic is an established supplier of laser pattern generators for the semicon- ductor market. Business area PG is mainly dependent on the markets for photomasks and production equipment. The trend to- wards more advanced nodes (nm, nm) is positive for Micronic, as older established laser pattern generators are incapable of writing all capacity photomasks due to increasing requirements. Manufacturers instead have to use electron beam systems or Micronic’s Sigma. Electron beam systems are used for the most critical layers in a photomask set, while the business area’s Sigma system can write the majority of layers much more cost-effectively.
NuFlare and JEOL produce electron beam systems while Applied Materials continues to offer its existing laser pattern generators.
The market for production equipment has largely mirrored the overall semiconductor
u sine ss ar e a P a tter n G e ner a tor s
market, but with even bigger movements.
In the market is expected to have decreased by percent, to USD . billion, from USD . billion in (VLSI Research, January ).
MARKET DRIVERS SEMICONDUCTOR
Pricing pressures remain a strong driving force for the semiconductor industry. In its drive to cut the cost per unit the industry is developing smaller and smaller transistors.
Th is makes it possible to mount more tran- sistors on the same surface, cutting the cost per unit. However, this trend is adversely aff ected by accelerating investments in
new nodes, which means that only large companies with capacity for high-volume production can continue to invest in leading technology nodes.
Demand for more functionality is another driver behind the semiconductor industry. With smaller transistors, more functions can be squeezed into the same space, resulting in bigger memories and more powerful processors. At the end consumer stage the result is smarter phones, for instance.
Mobility is another strong driver. Mo- bility requires a wireless connection, which requires semiconductors. Mobile units also
need a long battery life, which leads to new demands and new design solutions and migration of designs to newer technology nodes with lower power consumption.
MARKET OUTLOOK SEMICONDUCTOR
Th e positive trend in the second half of
is expected to continue, and in
semiconductor sales are expected to reach USD billion, an increase of percent on (VLSI Research, January ).
Th e capital equipment market is expected to grow by percent, to USD billion (VLSI Research, January ).
Micronic’s Omega product series
DRIVING FORCES
• More functionality and higher performance
• Price pressure
• Mobile units
TECHNOLOGY TRENDS
• Bigger memories
• More powerful processors
• Fast, wireless connection
• Lower power consumption
• Miniaturization
• Large companies continue according to Moore’s Law
• Optimized production chain
EFFECT ON MICRONIC
• More advanced photomasks
• Moves designs and photomasks to more advanced nodes
SEMICONDUCTORS
is affected by falling volumes in older tech- nology nodes.
The Sigma product series is well positioned for cost-effective volume pro- duction in today’s and tomorrow’s tech- nology nodes.
THE ELECTRONIC PACK AGING MARKET
Currently, advanced electronic packaging is a two-stage process. Th e fi rst stage, which is performed on the silicon wafer, is to prepare the chip for mounting on a microcircuit board, or substrate. Substrates are produced using traditional lithography in a process where a number of consecutive
pattern layers are transferred (copied) to the substrate. Th e photomasks used at this stage are currently produced using pattern generators such as Micronic Laser Systems’
FPS system. Th e business area has a leading position in this market.
The key parameters at the lithography stage are small structures, extremely precise conformity between the various layers and high-speed copying. Today’s lithographic equipment struggles to meet all three re- quirements, which means that the market has been opened up to new, innovative solutions such as Laser Direct Imaging, LDI.
Th e business area sees a market for LDI
products as a future production technology for advanced electronic packaging. Th e company’s advanced technology and long experience with pattern generators for photomasks puts it in a strong position to develop an advanced, innovative LDI product for the substrate market. A partner- ship close to the leading players in the market is currently under way on LDI products, and the fi rst products are expected to be evaluated by the market in at the earliest.
For that part of the electronic packaging market that uses photomasks the business area’s FPS pattern generator is well
DRIVING FORCES
• More functionality and higher performance
• Price pressure
• Mobile units
TECHNOLOGY TRENDS
• More powerful processors
• System-in-package
• Fast, wireless connection
• Lower power consumption
• Miniaturization
• Consumer electronics become cheaper and more available
EFFECT ON MICRONIC
• Drives the number of in- and output signals, which demands higher performance in the lithography step
• Drives the requirements (price, performance and cost) in the lithography step
• Requires higher productivity in the manufacturing processes
ELECTRONIC PACKAGING
u sine ss ar e a P a tter n G e ner a tor s
positioned to meet the industry’s resolution and productivity requirements.
MARKET DRIVERS ELECTRONIC PACK AGING
Th e growing consumer demand for ad- vanced electronic products, including mobile phones and computers, is driving the development of advanced electronic packaging. So far, mobile phones and computers have developed along parallel tracks but it now looks as if the two types of product are set to merge into “Mobile Internet Devices” (MID), bringing together the performance of the computer with the communications solutions of the mobile phone into a single, compact end product.
The growing complexity of semicon- ductor chips is driving a need for new, innovative production solutions on the packaging side to meet the industry’s need for higher performance at a lower price.
Higher performance is achieved through the ongoing process of miniaturization, where the size of structures is continually being reduced to match the trend in semi- conductor chips, while lower costs are achieved by optimizing productivity in the manufacturing process.
MARKET OUTLOOK ELECTRONIC PACK AGING
Th e semiconductor market has continued to recover following the downturn in late
and the fi rst half of (Gartner
). Th e business area expects to see the same trend in electronic packaging and the advanced substrate segment of the semi- conductor market is forecast to grow by
percent annually over the next few years (JMS ). Growth in the market is driving investments in production capacity, partly through the increase in substrate volumes and partly through a continuous migration of production volumes to more advanced generations, which require new production equipment for performance reasons. Th e business area estimates that the market for exposure equipment for substrate production will exceed USD
million annually.
AFTER MARKET
Th e after market is important and growing.
Customers need to be able to use the pro-
business. The business area continuously drives to improve the support operations.
A new model for efficient spare parts handling securing the right parts, in the right place, at the right time has been implemented. Investments have also been made to further increase the capability of field service engineers with extensive training programs.
These efforts and all the daily activities to serve customers by the entire team have resulted in a continued positive trend with increased system availability (uptime) for the installed base.
To further improve the service offering, the business area is developing new methods and functions to extend the proactive maintenance to meet the customer’s need for even higher yield and production opti- mization.
PRODUCTS
Th e business area’s product portfolio con- sists of pattern generators for photomasks in three areas: displays, semiconductors and electronic packaging. Th e business area also produces measurement systems for display photomasks. Th e photomasks
PRODUCTS FOR ELECTRONIC PACKAGING
System Application Max. photomask size
FPS5300 Electronic packaging 1 100 x 1 100 mm
DISPLAY PRODUCTS
System Application Resolution/Generation
Prexision-10 TFT-LCD 0.75 μm/G11
Prexision-8 TFT-LCD 0.75 μm/G8
LRS15000-TFT3 TFT-LCD 0.75 μm/G8
LRS15000-TFT2 TFT-LCD 1.5 μm/G8
MMS15000 Registration measurement of display photomasks
SEMICONDUCTOR PRODUCTS
System Application Technology node
Sigma7500HA Semiconductor ≥ 32 – 65 nanometer
Sigma7500HT Semiconductor ≥ 90 nanometer
Omega6800 Semiconductor ≥ 130 nanometer
Omega6080 Semiconductor ≥ 250 nanometer
duction systems with a very high degree of availability to be effi cient and meet demands for fast photomask supply. Th e after market consists of upgrades, add-on products, consulting services and, most importantly, service contracts. About
percent of the business area’s installed base has service contracts, where the life cycle of a system is about years. However, because of weak economic activity in
some older systems were taken out of production, primarily in Japan and the US.
To off set the shortfall in revenues, measures have been taken to cut costs in these regions.
The volume of service contracts re- mained fairly constant as old systems are replaced by more modern systems which enter the service phase when the warranty expires. Despite strong pressures to cut operating costs among customers, business opportunities exist in the form of add-on products and services. The market for these products is driven mainly by new panel designs and pressures to cut production costs.
A high service level is key for the busi-
ness area’s customers since Micronic Laser
Systems’ tools are mission critical for their
u sine ss ar e a P a tter n G e ner a tor s
are used as templates for mass production of displays, semiconductor chips and electronic packaging.
The business area also offers add-on products such as new functions and/or improved performance as well as upgrades and consulting services.
RESEARCH AND DEVELOPMENT
Product development takes place in close partnership with the customer. Th e busi- ness Opportunity Pipeline is a process used to ensure that the business area focuses on developing the products and services that customers demand. In the business area’s research and development activities centered on completion of the Prexision-
system and on pre-development focused on LDI.
A factor of key importance for the business area is to protect its rights to new technology through patents and licensing agreements in application areas and markets that are deemed important for the future.
At year-end Micronic’s PG business area had patents registered in the US, Asia and Europe, of which were granted during the year.
PRE XISION -10
Th e next generation of pattern generators for displays, Prexision-, was completed in . Prexision- is designed to meet the extreme demands placed on photo- masks used in Generation (G) display production facilities. Prexision- represents a scaling-up of per cent compared with Prexision-. Over this larger surface area Prexision- is required to meet or exceed similar or stricter precision requirements on mura performance, placement accuracy and image quality as for photomasks for G.
LDI
Pattern generators for direct writing, LDI, with a focus on substrate production require a new product architecture that diff ers signifi cantly from pattern generators for photomasks. Pattern generators intended for photomask production have an extremely high accuracy (< nm) but also tolerate relatively long production times (> hour).
LDI, on the other hand, is a medium-
precision technology (< micron) with extremely high productivity (< min).
Despite this, the systems can share the most complex sub-systems. LDI is to a large extent based on technology developed for Micronic’s Sigma pattern generator and partly on Prexision- but is integrated into an entirely new architecture. Th e architecture as well as the critical sub- systems are based on the business area’s own patents.
The two key sub-systems shared by LDI and pattern generators are:
• SLM – for both Sigma and LDI the business area’s SLM is the most critical component.
• Datapath – LDI has acted as a driver behind a new datapath architecture with a superior price/performance ratio, which is transferrable to pattern generators.
In pre-development and feasibility studies on LDI for substrate production resulted in successful demonstrations for selected potential customers.
PRODUCTION
Pattern generators are produced at the business area’s production facility in Täby.
A pattern generator must be placed in a cleanroom during assembly of critical optics, calibration of sub-systems and test- ing of fi nished systems. In the next phase the installation department takes over responsibility for start-up, calibration and acceptance testing. Once a system has been approved it is delivered to the customer.
Finally the system is installed at the cus- tomer’s premises, where it is fi ne-tuned and fi nal acceptance testing is performed.
OUTLOOK
In response to trends in the display industry, photomasks are growing increasingly complex to manufacture, which is expected to create the need for more advanced pattern generators. At the same time, competition between photomask makers has intensifi ed, resulting in downward pressure on sales prices for photomasks.
Th is price erosion has caused the majority of photomask makers to postpone invest-
ments in new and more advanced systems.
However, growing volumes for G-G
and higher capacity utilization in already installed pattern generators indicate a need for increased capacity.
Th e semiconductor market is continuing to strengthen with rising investment levels among chip makers, albeit from a low level, although photomask makers are still strug- gling with excess capacity in many cases.
Th e substrate market is expected to
show positive development with a recovery
from the previously low levels. Micronic
anticipates continued collaboration with
leading companies in the substrate market
regarding LDI applications. Discussions
are underway with collaboration partners
to decide on the future pace of develop-
ment projects in this area. Th e fi rst LDI
products are expected to be evaluated by
leading companies in in pace with
their successive changeover to more
advanced production.
BUSINESS AREA SURFACE MOUNT TECHNOLOGY EQUIPMENT
OPER ATION S
MYDATA
is a market leader in its segment, with market shares of around percent in the US and Europe. Sales to customers out- side Sweden account for more than per cent of sales. In development, produc- tion and fi nal assembly were performed at the offi ce in Bromma outside Stockholm.
Th e business area has an R&D offi ce in Gothenburg and subsidiaries and sales offi ces in China, France, Germany, Japan, Singapore, the Netherlands, the UK, and the US. Th e subsidiaries and sales offi ces are located in the key geographic markets.
Th ere are also a large number of external distributors and agents around the world.
The business area serves the part of the
market which produces electronics with a relatively high added value. Here guiding principles such as high quality, short set-up times and flexibility are crucial. A typical end customer comes from the advanced industrial electronics, medical technology or defense industries. Key drivers in these segments are a broader spectrum of tech- nology content, expanding areas of appli- cation and shorter product life cycles. This is leading to an increasing degree of com- plexity and a growing challenge to produce cost-effectively.
MYDATA
's history goes back to the mid-s when surface-mount machines were designed for long production series and with long set-up times. An opportunity existed to fill a gap in that segment of the market which produced shorter series and more complex PCBs, where available surface mount systems were less efficient. In
years the ideas have been developed into a market-leading production technology for flexible surface mounting of components on PCBs.
Micronic’s business area Surface Mount Technology equipment (SMT) operates under the MYDATA brand. The business
area has a leading market position in the flexible electronics production segment, offering advanced systems for surface mounting of components on printed circuit boards and stencil- free application of solder paste.
North America 38%
Asia 6%
Other markets 2%
Europe 54%
NET SALES 2009 PRO FORMA BY GEOGRAPHICAL MARKET
Systems
64 % After market
36%
NETSALES 2009 PRO FORMA BY APPLICATIONS
KEY FIGURES, PRO FORMA 2009 2008
Order intake, incl. service, SEK million 463 592
Net sales, SEK million 473 625
Operating profi t/loss, SEK million –73 –69
Operating margin, % –15,5 –10,4
Investments, SEK million 5 19
Average number of employees 259 303
3
5 1
SURFACE MOUNTING IS THE LINK BETWEEN THE
SEMICONDUCTOR INDUSTRY AND THE FINISHED PRODUCT.
The fi nished circuit board can be as small as a few square millimetres in size, and all the way up to 600 × 900 mm with a weight of 15 kg. It can be equipped with any- thing from a few components, up to several thousand. The smallest components are no larger than a grain of sand, and the largest and most complex have several thousand conductors. All are assembled with micrometer precision at dizzying speeds.
MYDATA’s production equipment is used for manufacturing electronic products intended for application areas such as energy technology, the automotive industry, medical technology, aerospace, telecommunications and the aviation industry.
To manufacture a fi nished circuit board, a digital descrip- tion is used – with informa- tion about the circuit board’s dimensions, material list, con- tact surfaces and component location – and then translated into a machine program.
MYDATA’s machines then complete the circuit board in two process steps: solder paste is fi rst applied to the PCB’s contact sur faces, followed by mounting of the components. At a subsequent stage, the equipped board is heated in a soldering oven and the contact sur faces of the components and circuit board are joined.
The circuit board then passes through an additional processing step – fi nal assembly – where the fi nal product is produced.