Question-and-Answer Session
Operator
Thank you. (Operator instructions) Your first question comes from the line of Suresh Balaraman with Think Equity Partners. Please proceed.
Suresh Balaraman – Think Equity Partners
Thank you. Bill, regarding the pad, have you seen the significant slowdown that you are witnessing with slurries or are you still seeing adoption mostly overcoming the softness in the market?
Bill Noglows
No, we have continued to grow Suresh. We grew 21% in this fourth quarter that we just completed and as we continue to win customers, we continue to see growth in our pad business. Going into 2009, we would expect growth in our pads business to outpace wafer starts as we expect to win more business and ramp more customers. Just to caution us all, we have clearly demonstrated that it is very hard for us to predict when a customer will actually adopt and ramp our product, but as we continue to gain more customer wins we would expect to grow and grow disproportionately in the pad business. I guess the drag on us would be if wafer starts contact faster than we ramp new business, we could see a quarter-to-quarter decline in our pads revenue growth. We will have to watch that very carefully going into what we would describe as very uncertain times. But so far we have been able to grow every quarter since our early introduction in the first quarter of the fiscal year and we are delighted with the traction of the pad business Suresh.
Suresh Balaraman – Think Equity Partners
Is the softening completely correlated to the drop in utilization rates at chip makers or is the cutback more severe than the drop in wafer starts because some of them may be storing lower inventory of slurries in their factories?
Bill Noglows
What I think and what I read Suresh is every one of our customers has pulled in inventories and working hard to manage their working capital. When the foundries – we have described ourselves as, we have pointed people to the foundries as a good predictor about what our future might be or look like. The foundries are talking about a 20% to 30% utilization reduction in the fourth calendar quarter, I think that is real and I think that will happen and we are kind of brazing ourselves for it.
Bill Johnson
But in terms of the supply chain, we think there is not a great deal of slurry inventory in the supply chain. You recall a number of years ago we sold in Taiwan through a distributor and now we sell direct. So the inventory in the supply chain is quite less than it was say a few years ago. So, we don’t think an inventory drawdown is a big part of the downturn we saw this quarter.
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