Semiconductor wafer-maker expanding manufacturing

Semiconductor wafer-maker expanding manufacturing

CHAMPAIGN – Nine years after Quesnell Hartmann and Dave Ahmari started a high-tech company in Champaign, it turned out pretty much as they expected.

It just took longer to get there than they imagined.

Along the way, the founders of EpiWorks had to deal with fallout from the "tech bubble," 9/11 and last year's collapse of the financial markets.

"We didn't expect to have so many large things happen in a handful of years," said Ahmari, the company's executive vice president for business development.

"There are so many things that can affect a business that are out of your control," he said. "You have to take into account how much craziness can happen."

EpiWorks began operations in northwest Champaign in 2000, making specially treated gallium arsenide and indium phosphide wafers.

Clients use those wafers to make chips used in cell phones and in medical and industrial lasers.

As a result of economic turbulence at the beginning of the decade, EpiWorks had to go into "survival mode" during its early years. But the privately held company has been profitable since 2006, said Hartmann, the company's chief executive officer.

That includes the recession-affected fourth quarter of 2008 and the first two quarters of 2009, he added.

EpiWorks employs about 30 at 1606 W. Rion Drive, C, and is expanding its "clean-room" capacity so it can make more wafers.

Helping to fuel the expansion is the company's move into a new market: supplying materials for solar applications. There also may be new applications in products being developed, such as backlit LED televisions and laser TVs.

Hartmann said the company plans to add 10 employees in 2010 and another 20 to 30 the following year.

"A lot of that is tied to solar technology and opportunities," he said, adding the new employees will be a mix of engineers and technical workers.

Hartmann said about two-thirds of EpiWorks' baseline business is tied to cell phones, while the other third is tied to laser diodes.

The cell phone side of the business tends to be high-volume, while the laser side is a smaller, high-performance niche market, he said.

Ahmari said the solar applications business has the potential to become a huge market – with that industry projected to be greater than either the cell phone or laser diode markets.

To create the specially treated circular wafers, EpiWorks starts with bases, or "substrates," of gallium arsenide and indium phosphide.

It adds layers to those bases, much the way a baker adds layers to a cake. However, the wafers generally have more layers than the average cake would.

"The typical structure has 15 to 20 layers with unique optical or electrical properties," Hartmann said. One layer might be indium gallium phosphide; another layer might be aluminum gallium arsenide, he added.

To create the layers, gases are applied to the surface, and under the right thermodynamic conditions, the gases form solid semiconductor crystals.

It may take five hours to complete a run of eight wafers, and about a month to produce an order of 1,000 wafers, made to customer specifications.

EpiWorks operates 24 hours a day, five days a week, with three shifts of employees. It also does work on weekends, though not around-the-clock.

When completed, the shiny circular wafers are packed in plastic carriers. Many of the gallium arsenide wafers have a diameter of 150 millimeters, or roughly 6 inches, and a thickness of less than a millimeter.

Indium phosphide wafers tend to be smaller, with diameters ranging from 50 to 100 millimeters.

The wafers are sent to about 50 different customers, with about 90 percent of them in the United States, Hartmann said. Among the companies are Northrup Grumman, Finisar, Semprius and Coherent, Hartmann said at the Champaign County Economic Development Corp.'s annual meeting Thursday evening.

Customers typically print circuits on the wafers, then "dice" the wafers into tiny chips that are eventually put onto circuit boards with other chips. Eventually, they're integrated into devices such as the Apple iPhone, he said.

The wafers are produced in a 5,000-square-foot clean room, where temperatures and humidity are controlled. Small particles are continuously being removed from the air in that room.

EpiWorks is building a second clean room that's expected to be complete by Dec. 1. To make room for it, EpiWorks moved some of its office and storage space to an adjacent building at 1604 W. Rion Drive.

Altogether, the company occupies 25,000 square feet in the two buildings.

Hartmann said EpiWorks has raised $25 million in capital since 2000. Despite raising $17 million to launch its operation, the company encountered tough times early on as a result of the tech bubble.

"Right after the tech bubble burst, it was a terrible time. ... We laid off 40 percent of staff. We had to cut the price of shares. It was painful for investors," he told the economic development group Thursday.

"It was a very ugly period, not pleasant at all," he said.

But since 2005, the company's sales have been increasing nicely, rising 50 percent in 2005, 60 percent in 2006, 30 percent in 2007 and 20 percent in 2008, he said.

Although EpiWorks has been profitable since 2006, it was not immune to the recession, Hartmann said.

"Like a lot of people, we had a strong dip in sales in November and December," he said. Customers gearing up for the holiday season "put on the brakes hard" and EpiWorks suffered a "very sharp decline in sales," he said. But demand began building up again in February.

Nevertheless, "overall sales for 2009 will be down, compared to 2008," Ahmari said.

EpiWorks' biggest competitors are publicly held companies, most notably Massachusetts-based Kopin Corp. and United Kingdom-based IQE plc.

Hartmann said there are advantages and disadvantages to operating in Champaign-Urbana.

The presence of the University of Illinois is "a distinct advantage," putting the company close to top-notch research and talent, he said.

A disadvantage is not being near West Coast or East Coast customers, and the location isn't convenient from a travel perspective, he said.

Outlining the company's challenges Thursday, Hartmann said the company needs to bring in engineers, manager and executives for its work in solar cells.

He also said the company will need to continue to demonstrate to investors "why Champaign-Urbana is the right place for them."

"I think we can do that with EDC and community support," he said.

About EpiWorks

Nature of business: Makes specially treated gallium arsenide and indium phosphide "wafers" from which computer chips can be made. The chips end up being components in cell phones and in medical and industrial lasers.

Location: 1606 W. Rion Drive, C, near the Olympian Drive interchange with Interstate 57 and adjacent to the Microtel Inn & Suites.

Employees: About 30.

When founded: 1997, with operations at the current location beginning in 2000.

Founders: Quesnell Hartmann, David Ahmari and the late Greg Stillman. Both Hartmann and Ahmari received doctorates from the University of Illinois; Stillman was on the faculty.

Officers: Hartmann is chief executive officer; Ahmari is executive vice president for business development.

Chairman of the board: Ronald L. Chez

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