With the semiconductor industry apparently going down for the third time, and capital tax concessions snatched away in the reform of the US tax system that came into force at the beginning of the year, only the very fittest of the companies that supply the chipmakers seem to have much chance of thriving, and anyone backing such a company right now might be said to need nerves of steel. And yet there is one British company that not only had the right pedigree – founded as long as 106 years ago, and by the youngest son of Charles Darwin, no less – that is not only showing the temerity to come to market in the present climate, but exhibits several reasons why it deserves to be given a very fair wind. That company is Cambridge Instruments Plc, and it has attracted notice across the Atlantic this week for three key sales of its electron beam lithography semiconductor fabrication systems. The customers are Martin Marietta, the US Army at Fort Monmouth, New Jersey, and Gain Electronics. And Gain Electronics is the key to Cambridge Instruments’ attraction. Gain is a pioneer of the coming chip technology of Gallium Arsenide, and the real claim to fame for Cambridge is not its successful fabrication equipment but its equipment for growing GaAs crystals, in which it holds a world lead. The Japanese are plunging into Gallium Arsenide as if Silicon was about to desert the sea shore, and Cambridge has a wholly-owned subsidiary in Tokyo to feed this demand – and is building a plant in Japan to turn out the stuff. The other key strength of Cambridge compared with many of its competitors is that its production control and quality testing equipment goes mainly to manufacturers of full and semi-custom circuits, the one sector of the chip industry that has largely survived the crash in the market for merchant parts. And demand here is only likely to increase as manufacturers turn their commodity fabrication lines over to manufacture of the more profitable applications-specific circuits. Cambridge is still a small company, doing some UKP65m a year, and it does trade in one of the most difficult markets in the electronic sector. But the issue certainly deserves very careful examination when the company, which pulled a planned flotation in July 1985 (CI No 209), comes back to the starting gate in a few weeks’ time. The offer – for the Full List – will be handled by Kleinwort Grieveson.
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