With a market share of approximately 15 percent in 2006, Applied's business would come in handy over the next few years, especially since Intel and TSMC were big customers.

At first light it would have been fair to assume that both Varian and Axcelis had equal chance of taking 50 percent each of that market share as dual sourcing in what Applied called a ‘commodity market' is widespread.

Wrong!

Having had a chance to listen to both companies' latest conference calls, a rather different picture is emerging.

Varian executives clearly made the claim that they had picked up the Applied business in most instances, that included the high current business at Intel and TSMC but also at Micron/IM Flash and others.

Axcelis executives on the other hand didn't claim anything other than stating that they were in talks with all of Applied's previous customers and expected to see some positive results!

The two conference calls were as different as the technology they use for ion implantation with Varian claiming that it expects 2007 to be another year of significant market share gains while Axcelis actually downplayed previous projections for the year!

Considering that Varian exited 2006 with approximately 43 percent of the implanter market, comments made in the call suggest Varian expects 50 percent or more this year.

If you look at next quarter revenue projections of both companies Varian is actually outpacing Axcelis at an increasing rate.

Axcelis executives did state, however, that the adoption rates of its Optima platform were improving and that it had shipped $60 million's worth of tools that had yet to be recognised on the balance sheets. This alone means that Axcelis will gain market share this year but not against Varian.

Bizarrely, Axcelis said that they were now selling the Optima in Japan, in spite of its licensing deal in that country with SEN. It was noted that the Japanese equipment company has yet to take out licenses for latest Optima range so Axcelis is selling direct at the moment. So it has started competing with its partner, bizarre! 

Varian's confidence in becoming the dominant supplier of implanters was more evident in the latest call than before and some of the financial analysts were vocal in their belief that the company was truly on that path and at a quicker pace than previously projected.

Varian also stated that it was boosting R&D expenditures to the tune of over $100 million and had recruited an extra 188 people into its R&D operations. That's impressive, especially when you consider how thrifty Varian is!

This is a very important sign of confidence but it must be said it could be interpreted differently!

The technology used by Axcelis is newer than that of Varian and has produced impressive results from what I have garnered from some customers. The boost in R&D spending at Varian may therefore be due to the increased threat of Axcelis' technology going forward.

However, it would certainly seem that Varian's first to market ability in the single wafer domain has proved once again that this is a strategic advantage when executed correctly. Being late to market is increasingly showing how difficult it is to compete in the world of the semiconductor.

I think the war is all but over for the next few years/technology nodes with the early bird definitely catching the worm!