CyberOptics – Market and Business Outlook- Interview with Dr. Subodh Kulkarni, President and CEO
Interview with Dr. Subodh Kulkarni, President and CEO, CyberOptics Corporation at APEX 2018
Q: What benefits are you delivering to your customers?
A: Fundamentally, our customers depend on us for higher yield, higher productivity, lower cost and we are helping them with their cost and throughput – better yields, better productivity and avoiding losses from bad production.
Q: How is your proprietary Multi-Reflection Suppression (MRS) sensor technology doing in the market?
A: We are using our MRS sensor technology in different systems today. In the inspection systems area, we launched MRS technology with our 3D Automated Optical Inspection (AOI) product we call SQ3000 a couple years ago and it is doing very well for us, getting great traction, both in number of customers and number of systems we are selling is increasing very rapidly right now. We are growing rapidly in the 3D AOI market share because of our MRS sensing technology and the differentiation.
Now we have taken our MRS technology and incorporated that into our SPI system as well. It’s a new Solder Paste Inspection system that we have called SE3000 3D SPI. We intrinsically are getting significantly better data because of MRS sensor technology – again, higher resolution, higher accuracy and higher speed and what that gives us is much better Gage R&R performance. So, typically a high-end SPI system, whether it’s our SE600 high-end system or a competitive high-end system, you get a Gage R&R of roughly 4-5%, 6 sigma. With MRS and the SE3000, we are getting a 2-3X improvement in Gage R&R so we are getting less than 2% Gage R&R, 6 sigma with the SE3000, spectacular performance for SPI. In addition to the Gage R&R, we can also measure smaller solder pads. Typically, high-end SPI systems, the minimum size you can measure is ~150 to 200 micron print pads. With MRS, we can go well below 100 microns right now in print pads. We feel pretty good about what that can do for the future in terms of SPI.
We just won the NPI (New Product Introduction) award today for the innovative SE3000 system that it is. It deserves to get the award today.
Q: What other customer needs are you addressing with the MRS sensor technology?
A: Fundamentally, with AOI systems. When we are doing Automated Optical Inspection, we are collecting all of the dimensional data – x, y, z information but normally we don’t report on that data because it makes it complicated so instead, what we are doing for AOI is a pass-fail of a circuit board in the typical AOI application. We have extended the SQ3000 platform as a metrology tool now and we call this the SQ3000-CMM. CMM stands for coordinate measuring machine. We are giving our customers the opportunity to actually take the x, y and z data and do metrological tasks with it so for instance draw lines or circles, see the distances between the various points, create datum, reference planes, see the planarity – so all kinds of measurements that one would be doing with metrological kind of equipment, so it’s a unique way to go after metrology. The nice part about SQ3000-CMM compared to a regular CMM is obviously the speed. We can do all of the measurements in less than a few seconds, whereas with a traditional CMM, you would need an hour or two to do those same kind of measurements. In addition, it is much easier to use the SQ3000-CMM – it is faster, easier to use, highly accurate and high resolution – better than a conventional CMM – a significant value proposition for the metrology market. We’re pretty excited about what we can do with the SQ3000-CMM.
Q: Can you update us on the status of MRS sensor technology in semiconductor applications?
A: We commercialized our MRS sensor technology in partnership with KLA-Tencor for their back-end semiconductor inspection systems. KLA-Tencor is a significant leader in back-end inspection systems and today they are pretty much reliant on MRS sensors for all the critical tasks in back-end inspection systems. That partnership continues and it is growing and doing very well for us, as well as for KLA-Tencor.
In the future, we plan to take our MRS sensor technology and adapt it to the mid-end. The mid-end can be differentiated from the back-end based on the dimensions we are measuring, so back-end we are measuring features that are larger than 100 microns. In the mid-end, we are measuring features that are between 10 and 100 microns, so we plan to launch MRS mid-end sensors in the second half of 2018 and we are pretty excited about what that can do in the mid-end inspection market. We do believe MRS gives speed, resolution and accuracy – a combination of the three. Today, the mid-end semiconductor sensors typically are using conventional microscopy kinds of technologies or laser based technologies that are not as accurate or as fast and that’s where we plan to come in with MRS, so with MRS we will be at least 2 times or maybe even 3 times faster than conventional sensing technologies which is a significant advantage for the mid-end applications, so we feel pretty good about the value proposition for MRS for mid-end semiconductor applications.
We think the back-end semiconductor inspection market that we are already present in with KLA-Tencor today is roughly ~$150-$200 million dollar market. Now the sensor opportunity which is where play in, is roughly 10X smaller than the total market so for us the market size if you will in the back-end inspection area, is ~$15 million dollar per year opportunity for CyberOptics and we are partnered with KLA-Tencor.
The mid-end market is roughly 2-3x the size of the back-end semiconductor market, so in terms of sensor opportunity, we think it is going to be ~$30-$40 million dollar per year sensor opportunity for us. Again, we are targeting roughly 50% or so market share with the value proposition and the differentiation we have with MRS, we feel we are entitled to get that kind of market share. That is what we are trying to do right now. We think we will be able to advance MRS beyond where we are right now with the mid-end. In the mid-end, we will be using 3 micron or maybe even 2-micron pixel cameras and that is what enables us to measure from 10 to 100 microns. Fundamentally, there is no limit. We are using blue light and we can go another factor of 2 to 3 lower than what we will be using for mid-end and we do think that will allow us to go down to 5 micron type measurement features, so we do think MRS has potential to play in the front-end but of course, we have to play in mid-end before we aspire to go into front-end.
Q: What are some of the market dynamics in your segments today?
A: So there are some interesting dynamics in not only SMT (Surface Mount Technology), but also the semiconductor market. We see a merging of the two markets and a good example of that is take one of the latest smart phones that got launched – whether the Note S9 or the iPhone X and if you open them up, you really don’t see a conventional PCB anymore. What you see is advanced packages that Samsung and Apple have put together and that’s what’s doing all the tasks and what that is telling you is where the future is going to be and in the future, the PCB industry is going to change dramatically for those kinds of advanced electronic packages and why is that happening and fundamentally the semiconductor industry is beginning to run out of room to shrink the transistor in the second two dimensions to they are beginning to use the third dimension to stack up the chips. In doing so, the packages that are using those three dimensional chips are getting fairly complex and they need all kinds of measurement techniques to make sure that the warpage is not significant, so the performance is not impacted and the speeds are high enough. So this stacking of chips, and in general, the semiconductor industry is running out of room in the second dimension – it’s creating this whole advanced packaging area and measurement is becoming very significant to ensure the yields are high. We are viewing this as advanced packaging metrology and we feel very good about attacking this marketplace because we are already present in the SMT/Electronics assembly and semiconductor space and we have more presence in the metrology vertical, so we feel we naturally belong in advanced packaging metrology. An emerging area is just starting. Probably the first two products that have started showing advanced packaging and what it can do is an iPhone X like product, and we can expect more and more advanced products in this area. We see it as a significant growth opportunity for CyberOptics.
Q: What other growth opportunities do you see with the MRS sensor technology?
A: MRS is a broad technology and it is really a 3D color microscope that can do ~20x measurement at production speeds of 50 cm2/second. We can take MRS into a number of vertical markets. We have started with SMT, semiconductor and metrology and frankly, that is keeping us pretty busy right now and for the foreseeable future. We are finding significant growth opportunities with MRS in these three vertical markets, but that does not mean that we cannot take MRS to other vertical markets. Clearly, it can fit into automotive, telecom, medical markets and more. We do plan to look at select opportunities to grow further.
Q: What other proprietary technologies are driving growth for CyberOptics in semiconductor?
A: Another part of CyberOptics growth that we are excited about is where we play in the front-end of the semiconductor market with our WaferSense® and ReticleSense® portfolio of measurement devices. We make wafer shaped and reticle shaped real-time sensing devices that go into a fab environment that measure leveling, vibration, teaching, relative humidity, gapping, and airborne particles. We offer devices for six applications, it is growing very well for us, and we expect this business to continue to grow for us in the foreseeable future. We continue to increase the number of applications and we have enabled some of our sensors for the flat panel display market as well, so the combination of increasing the applications and expanding into flat panel markets, we feel good about the potential for WaferSense and ReticleSense product line and what we can do for the foreseeable future.
In the flat panel display market, they are processing large sized glass for LCD and other kinds of TVs but even the latest smartphones are coming with OLED-type displays in all these high-end LCD or OLED type technologies, particles are the killer, so you want to minimize the number of particles that get stuck on the display materials that creates a drop-out in the viewing area so our PanelSense™APS (Airborne Particle Sensor-FPD) in particular can very effectively monitor the number of particles in the various different processing areas and help our end-users to save time and improve the yield in the operations.
Q: What is your outlook for CyberOptics?
A: Again, our customers depend on us for higher yield, higher productivity, lower cost and we are helping them with their cost and throughput – that’s where we come in, that’s where we are offering innovative sensing solution that enable them to get better yields, better productivity and avoiding losses from bad production. Our customers depend on us for higher yields, lower costs.
Overall, we feel very good about CyberOptics as a company and what we can do in the next 3 to 5 years. Our growth platforms – MRS and WaferSense – both are growing in solid double digits right now and we expect them to continue to grow solid double digits or even faster for the foreseeable future. In addition, we have a traditional 2D legacy business that is flattish in nature so in the next 3 to 5 years, we certainly are expecting CyberOptics to grow significantly from where we are today. If you look at our last 4 years since we started playing in MRS and WaferSense, we have grown on an average in double-digits but it has been a little zigzag if you will, for growth. Certainly, we would like to be a smoother growth company but that may come with the territory and we have to accept some ups and downs. Again, overall in the next 3 to 5 years we certainly expect the company to be a lot bigger in size than where we are e today.
Note: ® marks belong to companies noted.