Status Of The ATE Industry

Summary form only given. The financial health of test equipment industry is much improved but excess competition remains a problem. Following the bursting of the 2000/01 technology bubble, test equipment vendors routinely lost money as they dealt with bloated cost structures and excess test capacity across the semi industry. 5 years later, much of the industry's excess test capacity is now being fully utilized, and to a large degree, the test vendors have "right-sized" their cost structures. At this point, we think that the equipment vendors are generally in a position to make money both in the peak and the trough of the cycle. Going forward, however, excess competition remains a critical problem for the industry. With multiple vendors able to offer similar solutions, vendors face the prospect of competing away their improved financial margins over time