Photronics, Inc. · NASDAQ:PLAB
Photronics — CIBC World Markets Communications & Technology Conference 2005
37 slides from Photronics's conference presentation, May 11, 2005
Slide 1: CIBC World Markets Communications & Technology Conference
CIBC World Markets Communications & Technology Conference May 11, 2005
Slide 2: Safe Harbor Statement
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995: Except for historical information, the matters discussed in this presentation that may be considered forward-looking statements may be subject to certain risks and uncertainties that could cause the actual results to d
Slide 3: Today's Business Environment
Today’s Business Environment ¾ Increased design releases 180nm & below Technology, economics and time-to-market ¾ 130nm transition complete forces are driving global semiconductor ¾ 90nm demand accelerating – 65nm development companies to become continuing increasingly more selective in choosing ¾ I
Slide 4: Key Global Objectives
Key Global Objectives ¾ Differentiate from competitors through core values – TECHNOLOGY, SERVICE, SPEED & COST ¾ Consolidate high-end market share gains • 130nm – aggressive market penetration • 90nm – accelerate quals to match customer transitions • 65nm – improve timing and design win opportunity
Slide 5: Key Regional Objectives
Key Regional Objectives ¾ North America: • Accelerate 90nm penetration • Leverage 65nm manufacturing line and early learning cycles • Gain market share at high-end and in mainstream technology nodes ¾ Europe: • Accelerate 90nm penetration • Mix and Match to support global customers • Gain market sha
Slide 6: Strategic Opportunities
Strategic Opportunities Expand IC Mask Share China FPD Masks
Slide 7: Market Dynamics Drive Share Gains
Market Dynamics Drive Share Gains ¾ Take advantage of industry consolidation • Leverages strength in supporting mainstream technologies • Closing technology gap increases high-end market share ¾ 180nm & above account for more than 80% of tape-outs ¾ New customer qualification activity up since Octob
Slide 8: Photronics Positioning in China
Photronics Positioning in China ¾ Match the infrastructure to the size of the market opportunity ¾ Optimize the foundry solutions for fablite and fabless customers sourcing wafers to Chinese foundries ¾ Leverage global customer relationships ¾ Position Photronics as an advanced technology supplier •
Slide 9: FPD Masks…A New Market!!
FPD Masks…A New Market!! ¾ Photomasks are required to manufacture flat panel displays ¾ FPD mask market forecasted to be $450mn in 2005 • FPD mask demand growing at 3x semiconductor mask demand ¾ Strong technology leadership in Korea • Gen 7 products leverages Korea’s technology position ¾ Expanding
Slide 10: The FPD Mask Opportunity
The FPD Mask Opportunity ¾ Leverage existing infrastructure to further penetrate FPD mask market • Synergistic product line, significant technology overlap & higher ASPs ¾ Robust growth forecast in FPD industry: 01-06 CAGR: 35% • Driven by increasing penetration of flat panel product offerings ¾ Cur
Slide 11: Flat Panel Global Demand Outlook
Flat Panel Global Demand Outlook* Flat Panel Monitors Flat Panel Notebooks (Units mm) (Units mm) 22% GR: 118 68 120 6% 70 A GR: 4 ’06 C 100 ’06 CA 97 60 ‘01– 57 ‘01– 49 70 50 80 40 55 40 30 60 30 25 36 40 18 20 20 10 0 0 2001 2002 2003 2004 2005 2006 2001 2002 2003 2004 2005 2006 Flat Panel TVs Tota
Slide 12: Taiwan Expansion…Investing for Future FPD Growth!
Taiwan Expansion…Investing for Future FPD Growth! ¾ Why Taiwan? • Market is expected to almost double from $125mn in 2004 to $244mn in 2007 ¾ Where in Taiwan? • Taichung location is within one hour of major customers to north & south ¾ Initial investment to approximate $50mn
Slide 13: Strategic Taichung Location
Strategic Taichung Location Taipei * Distance (By car) Taoyuan : AUO, Quanta, CPT 40min 1hour Hsinchu : AUO, CANDO, Sintek Taipei Hsinchu Taichung Chunan : Innolux, Toppoly Taichung : AUO, CPT Photronics Tainan : CMO, Hannstar
Slide 14: Taichung FPD Mask Investments
Taichung FPD Mask Investments ¾ Match the infrastructure to the opportunity ¾ Leverage technology advantage with selective capacity additions • Initial focus on Gen 6 and Gen 7, then transition to larger display sizes as customer install production capability ¾ Business Development Phase • Fully uti
Slide 15: Taiwan FPD Market Growth
Taiwan FPD Market Growth Unit : US$M 300 274.0 244.0 250 216.0 200 170.0 150 125.0 90.0 100 57.0 50 0 2002 2003 2004 2005 2006 2007 2008 ¾ Major customers include: AU Optronics, Chi Mei Optoelectronics, Chungwa Picture Tubes, Hannstar ¾ Fast growing market - Taiwan at CAGR 30% ¾ Taiwan will double i
Slide 16: Summarizing the Global FPD Mask Opportunity
Summarizing the Global FPD Mask Opportunity ¾ Market growing in a rate well in excess of 3x the semiconductor mask market • $450mn global FPD market in 2005, up from $350mn in 2004 • Korea and Taiwan represent 70% of the global market ¾ Photronics leveraging strong technology position in FPD masks i
Slide 17: Mask Technology Update
Mask Technology Update
Slide 18: IC Lithography Trends
IC Lithography Trends 193 nm lithography through 45 nm node - immersion exposure systems - lithography friendly design initiatives - improved resolution enhancement methods 193 nm extendible to 32 nm node - multiple exposure options - new chip design and co-optimization solutions Potential new playe
Slide 19: IC Mask Technology: Deployment
IC Mask Technology: Deployment 65 nm and 45 nm roadmap 90 nm roadmap North America Allen,TX Asia Austin,TX Singapore Brookfield, CT Europe Taiwan (PSMC) Bridgend, UK Korea (PKL) Manchester, UK China (under construction) Dresden, Germany Crolles, France Company Sites Under Construction
Slide 20: Expanded R&D Presence in Asia
Expanded R&D Presence in Asia Photronics to establish corporate R&D center in Korea to accelerate technology driven opportunities Market growth and strategy in Asia drives need for even greater regional R&D emphasis Strategically aligned with key global customer roadmaps Pursue industry leading proc
Slide 21: High End Mix: Our Next Target
High End Mix: Our Next Target 2001 2002 2003 2004 2005 2006 2007 2008 130 Emphasis on early 1. Research masks 90 2. Prototype masks 3. Design wins !! 65 45 Solution Sorting Integration and early yield Qualification Ready General yield
Slide 22: Can Photronics Break the Mold ?
Can Photronics Break the Mold ? Should customers need to pick just 2 ? Cost lame ! late ! ? Timing $$$ ! Performance
Slide 23: Photronics positions to deliver 3
Photronics positions to deliver 3 Cost lame ! late ! ? Timing $$$ ! Performance 1. Closing the gap in technology 2. Bringing differentiating products to market 3. Leveraging historical strengths of efficiency & customer service
Slide 24: Making it happen: ILP
Making it happen: ILPTM Prototype phase Integration phase Production phase RIT Demokritos
Slide 25: Timing & Differentiation in IC Masks
Timing & Differentiation in IC Masks 65 and 45 nm market timed roadmaps in place - engaged with key customer drivers - raising the bar on Photronics timing Differentiating mask products and software - targeting performance, cost and cycle time - extendible phase shift solutions - reduced mask comple
Slide 26: Photronics Mask Technology
Photronics Mask Technology Car driving on road Driver Vehicle Destination Cost Roadmap acceleration IC’s Cycle Time Product differentiation Displays and Integration focus MEMS Performance Expanded product line Nanotech Optical components
Slide 27: Financial Performance Update
Financial Performance Update
Slide 28: Photronics Financial Highlights
Photronics Financial Highlights ¾ Matching the infrastructure to the market opportunity • Intense focus on profitability across all levels of the organization ¾ Benefit from technology driven demand ¾ Multiple sources of margin leverage • Improving mix shift & stable pricing • Global presence ¾ Incr
Slide 29: Financial Focus
Financial Focus ¾ Balance sheet management ¾ Maximizing free cash flow ¾ Cost containment/avoidance ¾ Strategic investment ¾ Maintain flexibility
Slide 30: Quarterly Revenue
Quarterly Revenue $M 105 $103.7 $104.2 100 $101.2 95 $97.1 90 $91.5 $90.5 $90.5 85 $85.5 80 Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05
Slide 31: Operating Income
Operating Income Goal 20% 16% 16% 15% 12% 13% 11% 8% 9% 9% 8% 4% 1% 0% Q2-03 Q3-03 Q4-03 Q1-04 Q2-04 Q3-04 Q4-04 Q1-05
Slide 32: Strong Liquidity
Strong Liquidity Solid Financial Position $ in millions Q1-FY 05 Fiscal Year January 30, 2005 Ended 2004 Cash and Short Term Investments $149 $227 Working Capital $190 $255 Current Ratio 3.3:1 3.8:1 Total Assets $831 $873 Long Term Debt $273 $316 Equity $361 $349
Slide 33: Improving Balance Sheet
Improving Balance Sheet $ in millions FY ended 2004 2003 2002 Cash and Short Term Investments $227 $232 $129 Total Debt $319 $374 $307 Net Cash ($92) ($142) ($178) Working Capital $255 $259 $142
Slide 34: Cash Flow
Cash Flow $ in millions Q1- FY05 FY Ended January 30, 2005 2004 Operations $27 $126 Capital Expenditures (18) (80) Free Cash Flow 9 46 Net Issuance of Convertible Debt - - Net Repayment of Debt (44) (55) Increased ownership in PKL (40) - Other, Net (3) 4 Increase/Decrease $(78) $(5) in Cash and Inve
Slide 35: Free Cash Flow
Free Cash Flow Rolling Four Qtrs $70 $60 $50.2 $50 Goal $40 $30 $20 $10 $0 Apr-03 Jul-03 Oct-03 Jan-04 Apr-04 Jul-04 Oct-04 Jan-05
Slide 36: Photronics…Strategically Positioned
Photronics…Strategically Positioned ¾ Expect fiscal 2005 to be a growth year • North America & Europe gain share at both high-end and in mainstream technologies • Asian growth driven by expanding semiconductor mask market and share gains • FPD – an emerging market ¾ Increase profitability & generate
Slide 37: CIBC World Markets Communications & Technology Conference
CIBC World Markets Communications & Technology Conference May 11, 2005
Photronics — CIBC World Markets Communications & Technology Conference 2005 on 6ix