1
`================================================================================
`SECURITIES AND EXCHANGE COMMISSION
`WASHINGTON, D.C. 20549
`----------
`FORM 10-K
`
`(MARK ONE)
`[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
`OF 1934 (FEE REQUIRED).
`For the fiscal year ended December 31, 2000.
`[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE
`ACT OF 1934 (NO FEE REQUIRED).
`For the transition period from __________ to __________.
`Commission file number: 000-26966
`ADVANCED ENERGY INDUSTRIES, INC.
`--------------------------------------------------------------------------------
`(Exact name of registrant as specified in its charter)
`
`DELAWARE
`(State or other jurisdiction of incorporation
`or organization)
`1625 SHARP POINT DRIVE, FORT COLLINS, CO
`(Address of principal executive offices)
`
`84-0846841
`(I.R.S. Employer Identification No.)
`
`80525
`(Zip Code)
`
`Registrant's telephone number, including area code: (970) 221-4670
`Securities registered pursuant to
`Section 12(b) of the Act:
`NONE
`Securities registered pursuant to
`section 12(g) of the Act:
`COMMON STOCK, $0.001 PAR VALUE
`(Title of Class)
`Indicate by check mark whether the registrant: (1) has filed all reports
`required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
`1934 during the preceding 12 months (or for such shorter period that the
`registrant was required to file such reports), and (2) has been subject to such
`filing requirements for the past 90 days. Yes X No __.
`Indicate by check mark if disclosure of delinquent filers pursuant to Item 405
`of Regulation S-K (Section 229.405 of this chapter) is not contained herein, and
`will not be contained, to the best of registrant's
`
`2
`
`knowledge, in definitive proxy or information statements incorporated by
`
`Samsung Electronics Co., Ltd. v. Demaray LLC
`Samsung Electronic's Exhibit 1066
`Exhibit 1066, Page 1
`
`

`

`reference in Part III of this Form 10-K or any amendment to this Form 10-K [ ].
`As of March 12, 2001, there were 31,555,604 shares of the Registrant's Common
`Stock outstanding and the aggregate market value of such stock held by
`non-affiliates of the Registrant was $409,060,275.
`
`DOCUMENTS INCORPORATED BY REFERENCE
`Portions of the Company's definitive proxy statement for the annual meeting of
`stockholders to be held on May 9, 2001 are incorporated by reference into Part
`III of this Form 10-K.
`
`2
`
`ADVANCED ENERGY INDUSTRIES, INC.
`FORM 10-K
`TABLE OF CONTENTS
`
`3
`
`PART I
`
`ITEM 1.
`
`BUSINESS
`EXECUTIVE OFFICERS OF THE REGISTRANT
`
`ITEM 2.
`
`PROPERTIES
`
`ITEM 3.
`
`LEGAL PROCEEDINGS
`
`ITEM 4.
`
`SUBMISSION OF MATTERS TO A VOTE OF SECURITY
`HOLDERS
`
`PART II
`
`ITEM 5.
`
`MARKET PRICE FOR REGISTRANT'S COMMON STOCK AND
`RELATED STOCKHOLDER MATTERS
`
`ITEM 6.
`
`SELECTED CONSOLIDATED FINANCIAL DATA
`
`ITEM 7.
`ITEM 7.A.
`
`MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
`CONDITION AND RESULTS OF OPERATIONS
`QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT
`MARKET RISK
`
`4
`30
`
`31
`
`31
`
`32
`
`33
`
`34
`
`35
`48
`
`Ex. 1066, Page 2
`
`

`

`ITEM 8.
`
`FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
`
`ITEM 9.
`
`DISAGREEMENTS ON ACCOUNTING AND FINANCIAL
`DISCLOSURES
`
`PART III
`
`ITEM 10.
`
`DIRECTORS AND EXECUTIVE OFFICERS OF THE REGISTRANT
`
`ITEM 11.
`
`EXECUTIVE COMPENSATION
`
`ITEM 12.
`
`SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
`AND MANAGEMENT
`
`ITEM 13.
`
`CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
`
`50
`
`73
`
`74
`
`74
`
`74
`
`74
`
`PART IV
`
`ITEM 14.
`
`EXHIBITS, FINANCIAL STATEMENT SCHEDULES AND REPORTS
`ON FORM 8-K
`
`75
`
`4
`
`3
`
`PART I
`ITEM 1. BUSINESS
`GENERAL
`We design, manufacture and support products and systems critical to
`plasma-based manufacturing processes. These systems are important components in
`industrial manufacturing equipment that modifies surfaces or deposits or etches
`thin film layers on computer chips, CDs, flat panel displays such as computer
`screens, DVDs, windows, eyeglasses, solar panels and other products. Our systems
`refine, modify and control the raw electrical power from a utility and convert
`it into power that is uniform and predictable. This allows manufacturing
`equipment to produce and deposit very thin films at an even thickness on a mass
`scale.
`We market and sell our systems primarily to large, original equipment
`manufacturers of semiconductor, flat panel display, data storage and other
`industrial thin film manufacturing equipment. We have sold our systems worldwide
`
`Ex. 1066, Page 3
`
`

`

`to more than 100 OEMs and directly to more than 500 end-users. Our principal
`customers include Applied Materials, Axcelis, Lam Research, Novellus, Singulus,
`ULVAC and Unaxis.
`We seek to expand our product offerings and customer base. In September
`1998 we acquired the assets of Fourth State Technology, Inc. This acquisition
`provided us with the capability to design and manufacture power-related process
`control systems used to monitor and analyze data in thin film processes.
`In October 1998 we acquired RF Power Products, Inc., which designs,
`manufactures and markets radio frequency (RF) power conversion and control
`systems consisting of generators and matching networks. This acquisition
`expanded our existing product line of RF generators and matching networks.
`Generators provide radio frequency power and matching networks provide the power
`flow control to our customers' equipment. We sell these products principally to
`semiconductor capital equipment manufacturers. We also sell similar systems to
`capital equipment manufacturers in the flat panel display and thin film disk
`media industries. We continue to explore applications for these products in
`other industries.
`In October 1999 we further expanded our range of product offerings when we
`acquired a majority ownership in LITMAS, in which we had previously held a
`minority interest. LITMAS is a manufacturer of plasma gas abatement systems and
`high-density plasma sources for the semiconductor capital equipment industry.
`In April 2000 we acquired Noah Holdings, Inc. ("Noah"), a privately held
`manufacturer of solid state temperature control systems used to control process
`temperatures during semiconductor manufacturing.
`
`5
`
`4
`
`In August 2000 we acquired Sekidenko, Inc. ("Sekidenko"), a privately held
`manufacturer of optical fiber temperature measurement and control systems for
`the semiconductor and related industries.
`In January 2001 we acquired Engineering Measurements Company ("EMCO"), a
`publicly held manufacturer of flowmeters for use in semiconductor manufacturing
`and advanced product applications.
`Since inception we have sold over 200,000 power conversion and control
`systems. Sales to customers in the semiconductor capital equipment industry
`constituted 65% of our sales in 1999 and 70% in 2000. We sell our systems
`primarily through direct sales personnel to customers in the United States,
`Europe and Asia, and through distributors in Australia, China, France, India,
`Israel, Italy, Mexico, Singapore and Sweden. International sales represented 27%
`of our sales in 1999 and 28% in 2000.
`
`DEVELOPMENT OF COMPANY BUSINESS
`We incorporated in Colorado in 1981 and reincorporated in Delaware in 1995.
`In 1995 we effected the initial public offering of our Common Stock. As used in
`this Form 10-K, references to "Advanced Energy" refer to Advanced Energy
`Industries, Inc. and references to "we", "us", or "our" refer to Advanced Energy
`and its consolidated subsidiaries. Our principal executive offices are located
`at 1625 Sharp Point Drive, Fort Collins, Colorado 80525, and our telephone
`number is 970-221-4670.
`
`PRODUCTS
`Our switchmode power conversion and control systems have advanced features,
`which have enabled our customers to develop new plasma-based processing
`applications. In 1982 we introduced our first low-frequency switchmode power
`conversion and control system specifically designed for use in plasma processes.
`In 1983 we introduced our first direct current (DC) system designed for use in
`physical vapor deposition (PVD) applications. This DC system is a compact,
`cost-effective power solution, which greatly reduces stored energy, a major
`limitation in PVD systems. In 1989 we introduced tuners used to match the
`characteristics of the plasma with the RF generators. We carried the state of
`
`Ex. 1066, Page 4
`
`

`

`the art further in 1995 when we introduced the Pinnacle series of DC systems,
`which we updated in 1997 with the Pinnacle-II. In 1990 we introduced the first
`switchmode RF power conversion and control systems for use in semiconductor etch
`applications. This product line achieved significant design wins because of its
`smaller size and its ability to provide more precise control. In 1998 we
`developed the APEX series of RF systems, which use new technology to further
`reduce size and extend the frequency and power range of our RF product line. We
`introduced a family of accessories for the DC product line in 1993. These pulsed
`DC products provided major improvements in arc prevention and suppression. We
`are currently extending the power
`
`6
`
`5
`
`range of our systems to much higher power levels to enable them to supply
`products for advanced product applications. The products in these product
`families range in price from $3,100 to $175,000, with an average price of
`approximately $9,500.
`The acquisition of RF Power Products in 1998 expanded our product line of RF
`generators and matching networks. Solid-state generators are presently available
`for power requirements of up to 10 kW and are sold primarily to capital
`equipment manufacturers in the semiconductor equipment, flat panel display, thin
`film and analytical equipment markets. RF matching networks are systems composed
`primarily of variable inductors and capacitors with application-specific
`circuits that can be designed to a customer's specific power requirements. Our
`RF generators and matching networks have average selling prices similar to our
`DC products.
`In 1998 we acquired an ion source technology which can produce a beam of
`ions for surface modification and other ion beam processes. In that same year we
`also sold our first products having this technology. We also developed and
`introduced products using inductively coupled sources of both the solenoidal and
`toroidal forms.
`In 1998 we also developed sophisticated pulsing power supply specifically
`for electroplating processes on semiconductor wafers, which led to the
`introduction of the E'Wave product in 1999.
`The acquisition of Fourth State Technology in 1998 enhanced our capability
`to design and manufacture RF power-related process control systems used to
`monitor and analyze data in thin film processes. This technology also is
`enabling us to develop power conversion and control systems that incorporate
`advanced measurement and control systems.
`The acquisition of a majority interest in LITMAS in 1999 expanded our
`product line to include plasma abatement systems and high-density plasma
`sources. We market these products to semiconductor capital equipment
`manufacturers.
`The acquisition of Noah in 2000 expanded our product offerings to include
`solid state temperature control systems for use in controlling temperatures
`during semiconductor manufacturing.
`The acquisition of Sekidenko in 2000 expanded our product offerings to
`include optical fiber temperature measurement and control systems. We market
`these products to semiconductor capital equipment manufacturers.
`The acquisition of EMCO in 2001 expanded our product offerings to include
`electronic and electromechanical precision instruments for measuring and
`controlling the flow of liquids, steam and gases.
`
`7
`
`6
`
`The following chart sets forth our principal product lines and related basic
`
`Ex. 1066, Page 5
`
`

`

`information:
`
`------------------------------------------------------------------------------------------------------------------------------------
`PRODUCT
`POWER/CURRENT
`MAJOR PROCESS
`PLATFORM DESCRIPTION
`LEVEL
`APPLICATIONS
`------------------------------------------------------------------------------------------------------------------------------------
`MDX
`Power control and
`500W-80kW
`PVD
`conversion system
`o Metal sputtering
`o Reactive sputtering
`------------------------
`----------------------------
`PVD
`Power control and
`conversion system
`o Metal sputtering
`o Reactive sputtering
`----------------------------
`PVD
`o Metal sputtering
`o Reactive sputtering
`
`----------------
`MDX II
`
`------------------
`15kW-120kW
`
`----------------
`Pinnacle(TM)
`Pinnacle(TM)- II
`
`------------------------
`Power control and
`conversion system
`
`------------------
`6kW-120kW
`
`DIRECT
`
`CURRENT
`PRODUCTS
`
`----------------
`Pinnacle(TM)Plus
`
`------------------------
`Pulsed power control and
`conversion system
`
`------------------
`5kW - 10kW
`
`----------------
`Sparc-le(R)
`
`------------------------
`Arc management
`accessory
`
`------------------
`1kW-60kW
`
`----------------
`E-Chuck
`
`------------------------
`Electrostatic chuck
`power system
`
`------------------
`<100W
`
`PRODUCTS
`
`----------------
`Crystal(TM)
`
`------------------------
`Mid-frequency power
`control and conversion
`system
`
`------------------
`180kW
`
`PRODUCTS
`
`----------------
`PD
`
`------------------------
`Mid-frequency
`power control and
`conversion system
`
`------------------
`1.25kW-8kW
`
`----------------------------
`PVD
`o Metal sputtering
`o Reactive sputtering
`----------------------------
`For use with MDX
`systems - permits precise
`control of reactive
`sputtering of insulating
`films
`----------------------------
`General wafer handling in
`semiconductor PVD, CVD,
`and etch applications
`------------------------------------------------------------------------------------------------------------------------------------
`Astral(TM) Pulsed DC power system 20kW, 120kW, 200kW PVD
`HIGH-POWER
`o Reactive sputtering
`----------------------------
`PVD
`CVD
`Reactive sputtering
`Dual magnetron sputtering
`------------------------------------------------------------------------------------------------------------------------------------
`PE and PE-II Low frequency 1.25kW-30kW
`CVD
`LOW AND MID-
`power control and
`PVD
`conversion system
`o Reactive sputtering
`FREQUENCY
`Surface modification
`----------------------------
`CVD
`PVD
`o Reactive sputtering
`Surface modification
`----------------------------
`Etch
`PVD
`
`------------------------
`Low frequency
`power control and
`conversion system
`------------------------------------------------------------------------------------------------------------------------------------
`HFV Power control and 3kW-8kW
`PVD
`conversion system
`Etch
`------------------------
`----------------------------
`Power control and
`General R&D
`conversion system
`------------------------
`Power control and
`conversion system
`------------------------
`Power control and
`conversion system
`------------------------
`Power control and
`conversion system
`------------------------
`Tuner
`
`------------------
`500W-1kW
`
`------------------
`600W
`
`------------------
`600W-5.5kW
`
`------------------
`600W-5.5kW
`
`------------------
`1kW-10kW
`
`------------------
`100W-5kW
`
`------------------
`500W-5kW
`
`------------------
`1.5kW-5kW
`
`----------------------------
`Etch
`CVD
`----------------------------
`Etch
`CVD
`----------------------------
`Etch
`CVD
`----------------------------
`Impedance matching
`network
`----------------------------
`Etch
`CVD
`----------------------------
`Etch
`
`----------------
`LF
`
`----------------
`RFX
`
`----------------
`RFG
`
`----------------
`RFXII
`
`----------------
`APEX(TM)
`
`RADIO
`
`FREQUENCY
`
`PRODUCTS
`
`----------------
`AZX, VZX,
`SwitchMatch(TM)
`----------------
`RF
`
`----------------
`Atlas(TM)
`
`----------------
`
`------------------------
`
`------------------
`
`------------------------
`Power control and
`conversion system
`------------------------
`Power control and
`conversion system
`----------------------------
`------------------
`------------------------
`----------------
`Impedance matching network
`500W-10kW
`Tuner
`Mercury(TM)
`----------------------------
`------------------
`------------------------
`----------------
`Impedance matching network
`2kW-5kW
`Tuner
`FTMS(TM)
`------------------------------------------------------------------------------------------------------------------------------------
`12cm multi-cell Round ion beam source 1.5kW-2.0kW
`Magnetic media
`ION BEAM SOURCES ion beam source
`DLC deposition
`Optical ion assist
`----------------------------
`
`Ex. 1066, Page 6
`
`

`

`PRODUCTS
`
`Linear ion beam
`sources
`
`38cm, 65cm, 94cm
`
`1.0kW-3.0kW
`
`Architectural glass
`Flat panel displays -
`pre-cleaning
`Ion assist deposition
`----------------------------
`Enhanced reactive
`deposition
`Low energy CVD
`Low energy cleaning
`----------------------------
`------------------
`------------------------
`----------------
`Chamber cleaning
`8 kW
`Toroidal fluorine ion
`RAPID-F
`Reactive gas sputtering
`8 kW
`source
`RAPID-O
`Torodal oxygen ion source
`------------------------------------------------------------------------------------------------------------------------------------
`
`----------------
`Inductively
`coupled plasma
`source (ICP - 3)
`
`------------------------
`3kW linear ICP
`
`------------------
`3kW
`
`8
`
`7
`
`OTHER
`
`PRODUCTS
`
`----------------
`E'Wave(TM)
`
`------------------------
`Bipolar electroplating
`
`------------------
`400W-8kW
`
`------------------------------------------------------------------------------------------------------------------------------------
`PRODUCT
`POWER/CURRENT
`MAJOR PROCESS
`PLATFORM DESCRIPTION
`LEVEL
`APPLICATIONS
`------------------------------------------------------------------------------------------------------------------------------------
`Gen-Cal(TM)
`RF power measurement
`50W-3kW
`Generator diagnostic tool
`----------------
`------------------------
`------------------
`----------------------------
`RF-EP
`RF probe
`50W-5kW
`End-point detection system
`----------------
`------------------------
`------------------
`----------------------------
`Z-Scan(TM)
`RF probe
`50W-5kW
`Impedance measurement tool
`----------------
`------------------------
`------------------
`----------------------------
`RF-MS
`RF metrology system
`5W-5kW
`Plasma diagnostic tool
`----------------
`------------------------
`------------------
`----------------------------
`ID
`Ion-beam conversion
`500W-5kW
`Ion-beam deposition
`and control system
`Ion implantation
`Ion-beam etching/milling
`----------------------------
`Electroplating copper onto
`a wafer
`----------------------------
`Computer control of power
`systems
`----------------------------
`------------------------
`Powering of next
`Low voltage, high
`generation microprocessors
`current power regulators
`and ASICs
`------------------------------------------------------------------------------------------------------------------------------------
`
`----------------
`Virtual Front
`Panel
`----------------
`NPSA Products
`
`------------------------
`Power system control
`
`------------------
`N/A
`
`------------------
`<1 kW
`
`DIRECT CURRENT PRODUCTS
`The MDX Series. We introduced our MDX series of products in 1983. These
`products are most commonly used as DC power supplies for PVD sputtering where
`precise control, superior arc prevention and suppression and low stored energy
`characteristics are required. They are also used as bias supplies for RF
`sputtering, tool coating and some etching systems. The MDX series consists of
`six different product lines that provide a range of power levels from 500W to
`120kW. Our second generation product, the MDX II, was introduced in 1991 to
`support higher power levels, to provide wider output range, and to meet strict
`European regulatory requirements. A model in the MDX series, the MDX-L, was
`designed for especially high reliability and was introduced in 1992.
`The Pinnacle(TM) Platform. The Pinnacle platform, which we introduced in
`1995, including its updated version, the Pinnacle(TM) -II, which we introduced
`in 1997, is the most recent general purpose platform in the DC product line. We
`developed the Pinnacle primarily for use in DC PVD sputtering processes, and it
`provides substantial improvements in arc prevention, arc suppression capability,
`reduced size, higher precision and expanded control capability. The low stored
`energy of Pinnacle, a basic feature of our DC power conversion equipment, is the
`lowest ever achieved in a switchmode power supply, and is due to the patented
`basic circuit topology.
`The Pinnacle(TM) Plus Platform. This platform, introduced in 1999, is a
`pulsed DC power system designed principally for use in reactive sputtering to
`produce insulating films. It is capable of producing up to 10kW of power in
`short pulses at frequencies up to 350kHz, for virtual elimination of arcing in
`
`Ex. 1066, Page 7
`
`

`

`difficult processes.
`Sparc-le(R) Accessories. Our Sparc-le line of DC accessories, first
`introduced in 1993 and updated several times since, is designed both to reduce
`the number of arcs that occur in plasma-based processes and to reduce the energy
`delivered if arcs do occur. The Sparc-le accessories are especially effective in
`applications involving the deposition of insulating materials where the reaction
`between the plasma and target is likely to produce
`
`8
`
`9
`more severe arc conditions. The Sparc-le accessories are most commonly used with
`the MDX product lines.
`Electrostatic Chuck Power Systems. We designed this system of power
`conversion units for a specific customer for use in wafer handling systems for
`the semiconductor fabrication market. The electrostatic chuck is a device that
`uses electric fields to hold or "chuck" a wafer in a vacuum environment without
`mechanical holding force. This permits more gentle handling of the wafer and
`simultaneous heating or cooling of the wafer during processing. When our power
`system applies voltage to the wafer, electric fields are created which hold the
`wafer in position. Exact control and careful ramping of the voltage permits the
`wafer to be picked and placed with precision. The system permits multiple power
`units to be held in a single chassis for ease of integration into the customer's
`system.
`HIGH-POWER PRODUCTS
`These products are designed for use in heavy industrial processes such as
`architectural glass and other large area coating applications.
`Astral(TM) Products. The Astral products, made in 20kW, 120kW and 200kW
`versions, offer a new technology, called "current pulsed dual magnetron
`sputtering." These units are used for development of coatings for CRT and flat
`panel displays, automotive applications and new types of glass coatings.
`Crystal(TM). The Crystal 180kW power conversion unit was developed for use
`in industrial PVD applications such as architectural glass coating, but is also
`useful in PECVD (Plasma Enhanced Chemical Vapor Deposition). The latter may be
`used for deposition of oxygen- and water-vapor-barrier coatings on films used in
`food packaging. In PVD the unit is typically used as a powering source for a
`pair of magnetron sputtering sources in the "dual" configuration in a reactive
`sputtering system.
`LOW AND MID-FREQUENCY PRODUCTS
`The PE and PD Series. We introduced the PE low frequency power systems in
`1982. The PE series systems are air cooled and primarily intended for use in
`certain PVD, CVD and industrial surface modification applications, including
`dual cathode sputtering and printed circuit board de-smearing. The PE series
`systems range in frequency from 25kHz to 100kHz. The PE-II systems are water
`cooled and produce 10kW at 40kHz. The PD series of mid-frequency power
`conversion and control systems, introduced in 1990, represented significant
`technological advancements by applying switchmode techniques to higher
`frequencies. The water-cooled PD systems are used primarily in semiconductor
`etch and CVD applications. The PD series range in frequency from 275kHz to
`400kHz. Both the PE and PD series systems have cost-effective single-stage power
`generation, and include systems with pulsed power technology.
`
`10
`
`9
`
`LF Generators. The LF low-frequency generators were introduced to us as a
`result of the acquisition of RF Power Products. The LF-5 is a 500W unit and the
`LF-10 is a 1kW unit. Both of these units are variable-frequency,
`microprocessor-controlled systems. With a frequency range extending from 50kHz
`to 460kHz, these generators are a good complement to the PD and PE series.
`RADIO FREQUENCY PRODUCTS
`
`Ex. 1066, Page 8
`
`

`

`HFV power generator. The HFV power generator produces 3, 5, or 8kW of power
`at a variable frequency of about 2MHz for powering inductively coupled plasma
`(ICP) systems. It is water cooled and ultra compact, providing up to 8kW of
`power in a 5-1/4 inch rack mount enclosure 20-1/4 inches deep, thereby
`representing the highest power density in the industry at these frequencies.
`The RF Series. The RFX system is a 13.56MHz, 600W, air-cooled platform
`introduced in 1985. This low-power system is used primarily in research and
`development applications. The RFG and RFXII, introduced in the early 1990s, are
`water-cooled power conversion and control systems utilizing a hybrid switchmode
`technology. The RFG and RFXII systems operate at frequencies ranging from 4MHz
`to 13.56MHz. These systems were the first fully switchmode RF designs. These RF
`systems are most commonly used in semiconductor processes, including RF
`sputtering, plasma etching/deposition and reactive ion etching applications.
`During 1998 we developed the APEX series of power control and conversion
`systems, which have the highest power density ever produced at radio
`frequencies. One APEX unit produces 10kW at 13.56MHz in a 5-1/4 inch rack mount
`enclosure. Another APEX unit produces 5.5kW in a 5x7.5x15 inch enclosure, and
`still another produces 3kW in the same enclosure but includes a switchable
`matching network and a voltage-current (V-I) probe measurement system integrated
`in the package. The APEX line also includes power conversion systems that
`produce 1, 2, 4 and 8kW at 27.12MHz.
`The RF-5, RF-10, RF-20, RF-30 and RF-50 units that we produce generate
`power between 500W and 5kW, and are selectively available with frequencies from
`2 MHz to 40 MHz. They use simple AC transformer front ends and employ linear RF
`sections, permitting variable frequency and high-speed pulse operation.
`The Atlas(TM) Series. The Atlas power systems, introduced in 1998, combine
`the advantages of a modernized version of the linear RF sections of the RF
`series with a switchmode AC front end. These systems currently range in power
`from 1.5kW to 5kW at nominal center frequencies of 12.56, 13.56 and 27.12 MHz.
`These units complement our new APEX series. For several applications, the
`ability to sweep the frequency about the nominal center frequency provides
`significant advantages to the customer. Now the customer can choose to have
`either the compact package of the fixed-frequency APEX or, where required, the
`frequency agility of the Atlas systems.
`
`11
`
`10
`
`The AZX Series. The AZX series tuners are RF matching networks designed as
`accessories to match the complex electrical characteristics of a plasma to the
`requirements of our RF series of power conversion and control systems. AZX
`tuners, introduced in 1989, are also sold separately for incorporation into
`other vendors' power conversion and control systems. The AZX tuners typically
`operate at a 13.56MHz frequency range. The VZX series tuners, introduced in
`1998, are digital automatic impedance matching networks which utilize a
`predictive algorithm to provide tuning speeds up to three times faster than the
`older AZX series. SwitchMatch(TM) networks, also introduced by us in 1998, are
`selectable fixed matching units, which we offer both as part of APEX systems and
`as standalone products.
`The AM and Mercury Matching Network Series. The mechanical matching networks
`are available in power handling capabilities up to 30kW. These matching networks
`are extremely compact, utilizing two ceramic envelope vacuum variable
`capacitors. The modular construction of the matching networks allows rapid
`customization without the delays usually encountered in custom design. Since
`most applications require custom refinements for optimum performance, this
`feature has benefited us greatly in achieving numerous design wins. In 1998, we
`introduced the FTMS (Frequency Transformation Matching System), which is a solid
`state matching network with no moving parts. We use this system in conjunction
`with our frequency agile Atlas generators. The FTMS is available in power levels
`up to 5kW.
`ION BEAM SOURCES
`Plasma Sources. We introduced our ion sources and inductively coupled plasma
`(ICP) sources products in 1998. Several versions of the ion sources product
`include a 12cm round source for the magnetic media and optical markets as well
`as linear sources up to one meter long for applications in the flat panel
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`display and architectural glass markets. The ICP product, also developed in
`1998, allowed us access to reactive deposition and cleaning applications where
`low energy is critical to prevent substrate damage. This was followed by the
`development of a toroidal ICP for chamber cleaning with fluorine, called the
`RAPID-F, and a second toroidal source of activated oxygen for reactive gas
`processes. All these products feature high reliability, low maintenance designs,
`and are well suited for the demanding environments in today's production
`facilities.
`OTHER PRODUCTS
`The RF-EP End-point Detection System. The RF-EP reduces length of time to
`end-point on CVD and etch chambers in comparison to optical detection. This
`system uses one of three signals (voltage, current or phase) to precisely and
`accurately detect end-point. The RF-EP also greatly reduces the level of
`greenhouse emissions by consuming less process gas.
`The Z-Scan(TM) Voltage-Current (V-I) Probe. This unit, first delivered in
`1998, replaces the RFZ impedance probe introduced in 1993. Z-Scan measures the
`RF
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`properties of a plasma process and provides condensed information through its
`Z-Ware software. The sensing technology incorporated in Z-Scan probe allows
`accurate, real-time measurement of power, voltage, current and impedance levels
`at both fundamental and harmonic frequencies, under actual powered process
`conditions. Such measurements not only help our customers design their process
`systems, but are also used as sensitive detectors of process conditions,
`including etch endpoint.
`The RF-MS Diagnostic System. The RF-MS simultaneously performs endpoint and
`excursion detection for multiple CVD chambers. Additionally, the system's
`software monitors the long-term transients in the process tool performance such
`as wet clean and transition in the film stress. The RF-MS has demonstrated
`significant cost savings through improved wafer yields, reduced particle
`contamination and higher throughput.
`The ID Series. The ID power conversion and control systems, introduced in
`1981, were the first products we designed. These systems were specifically
`designed to power broad-beam ion sources. ID series systems are composed of a
`coordinated set of multiple special purpose power supplies that are used for
`ion-beam deposition and sputtering, implantation, etching and milling.
`The E'Wave(TM). The E'Wave is designed for the semiconductor industry for
`electroplating copper onto a wafer. The power supply can produce up to four
`channels of multi-step, bipolar, square waveforms, which permit the copper to be
`alternatively plated and etched in precisely controlled ways, in order to fill
`very small cavities on the wafer surface. Each channel can produce 400W
`continuous and up to 2kW peak, for a total supply output of 1.6kW continuous and
`8kW peak.
`The Virtual Front End. This product enables one to operate or control the
`power system from a laptop or desktop PC. It has a graphing capability, which
`permits real-time monitoring of the plasma characteristics and the power
`delivered to it.
`New Power Supply Architecture ("NPSA"). In 1998, we embarked on a program to
`adapt our high frequency technology to the powering of microprocessors, which
`now require higher currents at lower voltages, and which require the powering
`source to be extremely agile (able to handle rapidly changing power drains). We
`sold the first of such products in 1999. Our technology permits smaller, less
`expensive power regulators, which are stable under high rates of change of
`current draw, without the use of expensive electrolytic capacitors.
`
`MARKETS AND CUSTOMERS
`MARKETS
`Most of our sales historically have been to customers in the semiconductor
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`capital equipment industry. Sales to customers in this industry represented 65%
`of our sales 1999
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`and 70% in 2000. Our power conversion and control systems are also used in the
`flat panel display, data storage and advanced product applications markets.
`Following is a discussion of the major markets for our systems:
`SEMICONDU