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KLA-Tencor CEO on Technology Development

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    KLA-Tencor CEO Rick Wallace on the trends in mobile technology.

  • Duration 5:03
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He is is sort of the enabler of the chip industry the semiconductor industry with huge customers like IBM Intel Samsung Sony Toshiba.

Taiwan semiconductor without this company's products.

You would not have the chips that power your Smartphone or tablet joining us now from Mountain View California.

In a Fox Business exclusive as part of our special series inside your got it we're joined by Rick Wallace.

Great to have -- here he's the CEO and president of Kla-Tencor.

And Rick it's it's good to have -- host business to start with something support that I know you're in a quiet period.

So we don't have to get too specific but sort of the generals of the semiconductor world.

Right hi Liz thanks for having me.

I think the business environment right now is probably in in our industry at least has focused very heavily on technology development.

So there has been some reduction in capacity day where customers are certainly working hard to go to the next generation technology.

In order to -- the next generation of devices.

Let's make it clear to people what it is you do you make the equipment that helps make the semiconductor chips so while -- may be.

Twenty dollars a piece is there commodity you make the equipment that I -- -- some of your equipment cost.

Our equipment can get up to over thirty million dollars for a single piece of equipment and our most expensive product lines but but it ranges.

Another way to think about it lenses the semiconductor industry is about 300 billion dollars a year.

And the equipment to do that this last -- around forty billion and we're part of that industry that that makes adequate.

And and you have amazing market share about 60%.

Which of course then there's to talk she and some of the other companies applied materials that we've covered.

-- very heavily but looking at at what you're inside.

You are also in the in an indirect way inside say for example apple products and I know you saw the news today about this this report out of JPMorgan that apple might be slowing down or cutting its production -- something like the iPad.

You've got everybody on Wall Street trying to figure out what the heck is going on -- and do you see any indication that that's true that there may be a slowdown or they're worried.

Say for example about some type of reduction in orders due to the economy and global demand.

I don't have any particular insight what I can tell you is the people that provide to the tablet makers in the cell -- What they're looking out is the next generation so there are working very hard to bring out new technologies.

So the products that are out today like the iPad to actually are technologies that -- develop probably a year ago.

And our customers are focused on the latest technology for the next generation devices.

So in a way it just could be that in this day and age of how quickly things are changing its obsolescence of the last great thing.

So you cut production of that as you look forward to a -- piece of equipment.

Yeah there's no question that our industry who relies on the fact that.

Devices keep getting smaller faster cheaper and use less power and that drives the next generation and that's what we -- Kla-Tencor are busy enabling every day.

You know research firms have cut to 2011 semiconductor forecast on any given day these guys come out with though it's up it's -- it's all around but.

With Asia being a huge part of your business I believe about 80%.

We just saw that economic data coming out of China where it saw a slowdown and its PMI -- -- -- purchasing managers index which is an indication of manufacturing.

Two month low no big deal but what are to use any signs of China slowing for the industry of course keeping the -- Right for the industry I was in a so last week and you know my discussions with the manufacturers they -- -- our customers.

Said they were seeing a slowing overall and demand but interestingly they were gonna continue to invest.

In their new technology and make sure that they brought out the next generation but no question there's been a bit of softening.

In the last few months and in Asia in general and China and specific.

Softening in the last few months as we finish up -- -- were -- using Smartphones and tablets which we might not have anticipated six years ago.

What is the coolest thing you see on the horizon out there in high tech world.

Yeah there's a lot of interesting technologies I think if you think about.

The world is really focused on three major trends right now being social being mobile and being global.

And I think the do devices that are coming out will amaze people in terms of their ability to continue that -- imagine much longer battery life -- enabled by.

Devices that consume less power more connectivity you know every time you get a new device you think wow this is really fast until you've -- a for a while and you think.

-- I wish this could be fast right now and -- just.

The ability to store more information and data and all those trends are in the labs and and gonna be in production in the next several quarters OK well really looking forward to that.

Mobile connectivity and longer battery life those three things will look forward to Rick thank you for joining us that.

Thank you -- Rick Wallace is the CEO and president of Kla-Tencor stock is up about twelve point 8% year over year outperforming some of its come.

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