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Varian Semiconductor bitten by fab cannibalism

05 January 2009 | By Mark Osborne | Editor's Blog

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Ion implant market leader Varian Semiconductor Equipment Associates would seem to be the first semiconductor equipment supplier ‘officially’ bitten by the return of cannibalism in fabs.

As we noted in this previous blog, chip manufacturers save costs by stripping parts from tools that are currently standing idle to keep other tools operating, without getting new parts from equipment suppliers, saving money in the short-term.

Varian Semiconductor said in a statement that revenues had been revised downward for its first quarter results due ‘particularly [to] the reduction in sales of spares and upgrades.’ Implant tools are particularly heavy on parts so the news from Varian should not come as a surprise.

Varian expects revenues of between US$105.0 million to US$110.0 million, compared to its previous guidance of between US$115.0 million to US$125.0 million. With the hit on spare parts, Varian’s gross margins are expected to fall below 40%.

Unfortunately, Varian may well be the first to highlight the fall in its spare parts business during this downturn but it won’t be the last.



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