SEMI Oral History Interview - Ken Rygler


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SEMI Oral History Interview

Ken Rygler

Interviewed by Craig Addison, SEMI

Ken Rygler joined DuPont in 1964 and during most of his career with the company has been involved in new business development activities related to electronics, including flexible circuits, resists, printed circuit materials, laminates, packaging, tape automated bonding, connectors, and semiconductor materials. In 1986, he founded DuPont Photomasks and served as executive vice president until he retired from DuPont in late 2001. In 2002, he formed his own consulting company, Rygler and Associates, based in Austin, Texas.

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CA: Can you tell me about your entry into the industry; what you did before founding DuPont Photomasks?

KR: I joined DuPont in 1964 and after a couple of years in the Armed Forces I came back and got into DuPont’s electrical insulating business. And that was a fairly mature business and we decided we would try and see if we could penetrate the emerging electronics materials business. So we took some of the technologies in the electrical area which were basically polyimide chemistry and acrylic chemistry and turned two older technologies into new technologies. The polyimide wire enamel got turned into a spin on polyimide for wafers through a development program with IBM, and the acrylic wire enamel got turned into an adhesive for Kapton for producing flexible circuits. Both of these initiatives were commercially successful and remain so even today, some 30 years later.

I spent most of my career in and around electronics. I had a few assignments outside electronics for broadening -- the kind of thing DuPont does with managers but I won’t talk about that. Over the course of the last 30 years I’ve been involved in a number of new business development activities related to electronics in flexible circuits, resists, printed circuit materials, laminates, packaging, tape automated bonding, passive components, thick film materials for making hybrid circuits and passive components and resistors, connectors, cable assemblies, and finally leading to an assignment in the mid 80s when the DuPont company decided to make a significant investment into electronics as a market. Prior to that DuPont was organized by product or by factory. Now it decided to organize by end market and they created an electronics department. The company was well represented in most segments of electronics materials but not semiconductor materials, so I was assigned by a senior vice president to find a place for us in semiconductor materials because, No. 1 it was a big market, and No. 2 the semiconductor industry was driving the entire electronics industry. That was basically the motivation. That’s what I did prior to starting DuPont Photomasks.

CA: This assignment to get into semiconductor materials, did that lead to Photomasks?

KR: There were some embryonic businesses but they were an emerging niche and we were looking for a business of scale. Photoresist was a natural as DuPont had invented revolutionary dry film resists for printed circuit boards. We attempted to acquire Shipley in the early 80s but a last minute glitch killed the deal. If indeed we had consummated the acquisition of Shipley we never would have done photomasks..

CA: Were you directly involved in the Shipley deal?

KR: No. I was peripherally involved.

CA: Looking back, what was the reason that it didn’t happen?

KR: There were a number of rumors. There were several rumors, but I’ll take the most credible. At the time Shipley was principally a formulator as opposed to a developer. They were getting some of the basic resins from Hoechst in Germany and when Hoechst learned of the acquisition…Hoechst was competitive to DuPont in many different areas…they threatened not to sell those precursors to DuPont/Shipley.

CA: You mentioned tape automated bonding, so DuPont was in the semiconductor packaging area. Was that in a big way?

KR: DuPont made considerable investments in packaging technology, including the construction of a major multi-million dollar facility in Research Triangle Park (RTP) in North Carolina. One of the principal activities was going to be packaging and tape automated bonding was one of the initiatives. Multichip modules were another initiative. They looked at pin grid and ball grid arrays.. DuPont was going to make a major initiative in high lead count, high end packaging. This was in the mid to late 80s period.

CA: How far did that go?

KR: It was not successful. At the time DuPont tried a number of electronic initiatives including extensive joint ventures with Philips in storage, both tape and optical disk, and British Telecom in III-V devices in the U.K. Those initiatives consumed considerable resources and none of them are in DuPont today. But the photomask initiative was a little quieter, under the radar, it didn’t quite get all the visibility and attention and spotlight that these other things got, which I think is one of the reasons that it survived and was successful.

CA: The same question on the other packaging initiatives; why do you think they didn’t work?

KR: They didn’t work because there was too much money put in too soon. The sexy part of the market always gets a lot of attention but the sexy part of the market is small. And this is characteristic, I’ve learned, of new ventures as a whole. One of the biggest reasons they fail is that they get too much resources too soon. And instead of building a blast furnace you should have a Bunsen burner underneath this thing and let it percolate. Putting a very small amount of resources on it, away from management attention, and let the markets develop over time. You’re looking at 500 I/O packages and working with companies like DEC, very leading edge, or IBM, at the very leading edge. Those things took 10 years to become main stream but the senior management wasn’t sufficiently aware of how the electronics industry really worked.

CA: What happened to the $100 million investment in Research Triangle Park?

KR: The building is still there, DuPont is still there. DuPont moved a number of people there and tried to make it effectively the headquarters of [DuPont] electronics because the packaging business never really materialized. At the time RTP was envisioned as another Silicon Valley. There was a lot of money by North Carolina being poured into it but the Silicon Valley which was envisioned never really materialized. So I think part of that building has been leased out.

CA: Were there lessons learned from that were applied to other ventures?

KR: Yes and no. There were initiatives managed at the very senior level, some of the ones I alluded to earlier; the Philips joint venture and the telecom joint ventures. The photomask idea was done one level down from the senior vice president level and [as well as] this attempt to get into semiconductor materials. I took that assignment because I had lived in San Jose for two years in 1970 and ‘71. I knew more about the semiconductor business than virtually anybody else in DuPont by living in Silicon Valley for two years. But living in Silicon Valley is an intense experience and at the time, 1970-71, Silicon Valley was Silicon Valley. Apple, software, and the internet hadn’t materialized as yet. It was pretty much Silicon Valley. There was a lot of activity in the semiconductor industry in those days and it was an intense learning experience. It’s not very well known but DuPont was actually in the silicon business in the 1950s. The guy who ran the silicon business was assigned to me and we were assigned to examine the semiconductor materials supply chain and identify opportunities for DuPont. Since the Shipley acquisition cratered, I looked at trying to buy Kodak’s business, but it looked as if positive resist was going to overtake negative resist and Kodak was almost exclusively negative. So we looked at the supply chain and we looked at molding compounds. Of course we looked at silicon, and polysilicon and silicon wafers but they didn’t look particularly attractive. And then one day my guy suggested that the photomask blank market was interesting, a niche market of a couple hundred million dollars, dominated by the Japanese, specifically Hoya. He suggested it would grow rapidly, driven by rapid growth of the photomask market. To learn more about the photoblank market opportunity, we had to delve into the photomask market.

CA: When you say the blanks, what do you mean?

KR: The substrates. The fundamental raw material that Hoya and others produce is a highly pure and uniform quartz place, coated with an absorber, typically chrome, and then overcoated with photoresist. They are sold to maskmakers which write patterns into the blank using precision electron beam and laser mask writers. In any case, as we began to look at that market, we found it was tightly linked to the mask market, particularly in Japan. In the cases of the big Japanese merchant photomask companies, Toppan and Dai Nippon Printing, they both made their own blanks. So as we began looking at the mask business we found it looked very interesting. We saw some trends that could profoundly change the mask business. And the first trend was ASICs were emerging. The design tools to design chips were getting more powerful, as were the workstations that drove the design tools, so it looked as if custom chips could really grow significantly, which would really drive the mask business. Secondly, the industry was beginning to go through what we saw as an order of magnitude increase in capital intensity. Around the mid 80s people were still using optical pattern generators to make chrome and emulsion masks for the then current 1-micron and above devices. Optical pattern generators cost $300,000. Patterns were getting so fine, the industry was being forced to switch to electron beams.

At the time Perkin Elmer was the principal supplier of e-beams that were invented at Bell Labs [and they] were $3 million. So the writing tools were going to increase by an order of magnitude. We could see the same thing happening to the inspection and metrology tools There were numerous smaller merchant suppliers in those days which would be unable to raise the capital necessary to remain in business. The third thing we realized was that the industry was beginning to disaggregate. Since its inception, the semiconductor industry was highly vertically integrated. Companies like TI, IBM, AT&T and others made their own equipment and materials and design software. They did everything internally. By the mid 80s, you could see the supply chain fragmentation and specialty companies emerging and beginning to assume more of the responsibility. As an independent supply chain emerged, semiconductor companies saw the opportunity to focus their resources and compete on the basis of their core competencies of semiconductor design, manufacturing, and marketing. We believed semiconductor companies could be persuaded to turn over their captive mask making operations to a large, global, technically competent organization like DuPont. [In short], we saw a large market, with significant organic growth driven by ASICs, and an enormous consolidation opportunity of both captive and merchant photomask producers.

CA: Did you talk to the IDMs and ask if they wanted to get rid of their in-house mask making?

KR: Yes.

CA: And they said they’d like to do that?

KR: Well, some did, some didn’t. It depends who you talked to. If you talked to the people in the mask shop, they typically said “no way, we’re too vital.” If you went to senior management and laid out a cohesive story regarding how capital intense mask making was becoming and [we] could provide cost effective masks through effective capital utilization, they were often persuaded. They [the IDMs] understood that the existing merchant marketplace couldn’t handle the capital that was coming on downstream. So we satisfied ourselves that it looked like a growth market, that the trends were working in our favor and that the IDMs would be willing to [outsource]…particularly the ones in the U.S. and to some extent Europe and to a lesser extent Asia with the Japanese. There was no Asian semiconductor market in those days except in Japan and we had no delusions about penetrating Japan. So as far as the U.S. was concerned we were pretty confident…and western Europe. The masks were not as vital then as they are now. People recognized their importance, particularly in the 1X era. But as the industry began to move from 1X masks to 5X reticles, mask making became much easier. It basically became five times easier overnight. People were using 1X aligners, so if they wanted to make a 1-micron line on silicon they had to make a 1-micron mask. You go to 5X and now you can make a 5-micron line on your mask, so mask making became really easy as 5X came in to play. As semiconductor senior management recognized the forces at work, it became not a question of “if” but “when and how”.

CA: Was a driving force the fact that they wanted to have another U.S. supplier, since the Japanese dominated in photomasks?

KR: At the time, U.S. semiconductor companies were more worried about Japanese semiconductor companies, rather than a domestic supply of photomasks. However, all of the U.S. merchant mask makers were indeed quite small compared to the Japanese: MicroMask was the largest with sales of roughly $20 million, and the rest of them were smaller than that.


CA: How did DuPont actually enter the photomask market?

KR: After considerable study, we convinced ourselves photomasks represented a significant growth market around the world, and would give DuPont tremendous insight into the front end of the global semiconductor market. We began looking for a market entry strategy. We scouted around and we found a company called Tau Labs, headquartered in Poughkeepsie, New York. Tau Labs spun out of IBM and was founded by a man named Raymond Auyang. He was the “au” in Tau. We looked at others, but they [Tau] were particularly interesting for two reasons. First, they made masks, blanks and pellicles and were the only maskmaker in the world which made all three. This would enable DuPont to apply its engineered materials expertise to blanks and pellicles. The second reason was they had actually pioneered the first captive-to-merchant deal in the mask industry. Ray Auyang had gone to Delco in Kokomo [Indiana] which had a captive mask shop which was very underutilized…not untypical of captive masks shops of the day. And he went to them with the following proposal: “I will build a mask shop in Kokomo, you give me your tools and equipment and I will make your masks for you at a very attractive price”. The price was competitive with their internal costs. This could be accomplished by deploying the excess capacity to the merchant photomask market. Delco accepted the proposal and the massive captive to merchant shift in photomasks had begun. Over the next 15 years or so, the market went from [a ratio of] 75/25 captive-to-merchant to 25/75.

CA: Did they use the Delco building?

KR: No. They built a separate building a couple miles away. It’s probably still there in Kokomo as DuPont just closed that mask operation last year. Tau moved the equipment out, hired some many of the Delco people, including Dave Heilman who ran the mask shop. And he’s still in Kokomo as far as I know, retired. So those guys pioneered this concept. They built the building. Delco shut down their mask shop and they moved the equipment into Tau Laboratories’ clean room. Tau Laboratories hired a lot of people, gave them jobs, and they began selling masks to them [Delco] and other people. At the time I first visited Tau in 1985, their sales were about $23 million. One of the exciting aspects of the Tau mask business was how well they were doing at customers other than Delco, including in Silicon Valley. Dave Heilman was a guy who I think pioneered the 24 hour quick turn masks. Because he was in Kokomo and he had to compete with mask shops in Silicon Valley, he devised techniques to produce masks fast, which is always prized by mask customers. And he had to get them from Kokomo to Indianapolis, and fly them from Indianapolis to San Jose [California]. But he was very good at it. He was able to penetrate some accounts, LSI Logic being among the first. They were also successful at several mid-west and east coast customers. So we began a negotiation and after six months of negotiations DuPont agreed to acquire them, for about $45 million. The deal was consummated on my birthday, September 19, 1986.

CA: Was Tau Labs a private company?

KR: Yes. And we acquired 100 percent of the company and that was the genesis of DuPont Photomasks. The next stage was to expand to Silicon Valley and we knew we had to be on the west coast. That was the next step. And then we were going to go to Europe and Asia. Our plan from day one was to be the first global photomask producer. However, as to the west coast, there was a considerable debate over whether we acquire Master Images or Ultratech Photomasks; Ultratech was part of General Signal. Without going into why, we decided to acquire Master Image which had sales in the.$12 to 13 million range.

CA: What was the genesis of Master Images, was that a start up?

KR: Yes. The guy who was running it was an entrepreneur by the name of Dave Formby. He had started the company.

CA: So you bought that company, and they were private as well?

KR: Yes, they were private. That was about a $15 million deal. Their sales were principally on the west coast.

CA: With mask making, if you buy different companies, are there integration issues?

KR: Sometimes there are customer overlap issues, where maybe LSI Logic was buying from both and they want a second source so you have to be careful. You have to be aware that you might lose business if a company was dual sourced with Tau Laboratories and Master Images. At the beginning the philosophy was to run these things as separate profit and loss centers and we didn’t really try to integrate them completely until we learned and understood more about the business and how it operated. We understood we were novices [but] we thought it was an attractive business opportunity. None of us knew much about running a mask making operation, so we pretty much left them alone. Dave Heilman and Bill Formby would come to Wilmington [DuPont headquarters] monthly and we’d look for ways of leveraging each other, especially for cycle times and sharing customers and so on. Not until we felt familiar with the business did we begin the task of building an integrated global network.

CA: So you were with DuPont corporate during these acquisitions?

KR: Yes.

CA: But you were full time on the photomask business?

KR: Once we sold the DuPont’s board of directors on this photomask strategy, I was assigned full time to implement the strategy, reporting to the senior vice president of the electronic materials group. I was directing it. But I recognized what I didn’t know about making masks and I spent the time learning and listening. I was more strategic. You guys do what you need to do to operate daily…strategic decisions, capital acquisitions, major pricing decisions, contracts; I want to know about. But other than that you run your businesses.

CA: Did you put a lot of money into these companies, or they didn’t really need it?

KR: It didn’t require a lot of capital at that time because we were consolidating significantly under-utilized equipment. Also, because of the 1X to 5X change, the life of the existing equipment was prolonged considerably, especially the workhorse MEBES III machines, and, later, the laser writers. Each of the captive companies had one or two e-beams as well as optical pattern generators. As the business grew, yes, we knew we’d have to invest in new e-beams and supporting inspection and metrology tools. But it was more incremental than today. Today you have these wildly expensive machines and you have to get them for almost every node or every other node.

Motorola was the first captive deal we did, and was completed not too long after we acquired Tau. In early 1987, we met with Bill George, who was a senior VP of Motorola and proposed basically a Delco-like deal. You shut down your mask shop, we’ll build a new facility in Austin, we’ll hire your guy who was running your mask shop and other appropriate people. The deal was done and we built a greenfield factory in Round Rock, Texas and hired a guy called Gary Kasprzyk who was running Motorola’s mask shop to run our facility. Round Rock was outfitted with state-of-the-art equipment and subsequently became our leading edge facility.

Then we turned out attention to the opportunities in Europe, and identified a company in France called Nanomask, in the south of France in a town called Rousset in 1988. Right about then, I got reassigned to DuPont’s connector business, Berg Electronics. It was about half a billion dollars but wasn’t very profitable. And I went there first to run their new business development and then to run the sales organization. And I did that for three years, from about ‘88 to ’91 when I was reassigned to photomasks just before DuPont sold Berg. Meanwhile DuPont has a guy called Preston Adcox run the photomask business While I was gone, there more acquisitions, including National Semiconductor, which was one of the largest captive acquisitions.

The National deal, which was consummated in 1989 I think, was sufficiently large that it strained the DuPont/Master Image facility. So DuPont ended up buying the Ultratech Photomask facility anyway to accommodate the National business. And now we had two facilities in Santa Clara and a slew of National people as well. The guy who ran the National mask shop was Ken Wishnuff, who stayed on to run the facility. Our typical modus operandi in these deals to close the customer’s facility down, move the useful equipment into our existing facilities, sell off or dispose of the older equipment and bring whatever key people we thought were appropriate or necessary. The idea was to get better and better utilization of these tools and be able to make these masks for lower and lower costs. Depreciation is a major contributor to the cost of a photomasks, particularly leading edge masks. And, unlike silicon which use boats of wafers, masks are very high touch, built one at a time. There is little automation, and relatively high labor costs. So if you view labor as a semi-fixed cost, which DuPont did, depreciation and labor as fixed and semi-fixed costs were very high, 50 or 70 percent of your manufacturing costs. The mask business is a very high variable margin business so capacity utilization becomes key to making money. If you can use your capacity and use up those fixed costs you can make a lot of money. We thought that by consolidating and bringing more business on top of an existing infrastructure we’d make a lot of money.

CA: During this period you were away were there any other deals besides National?

KR: Yes. By then we completed the Nanomask acquisition so we had a merchant facility in Europe. We acquired Philips’ internal mask operation. We acquired principally captives because the captives trusted DuPont. Photronics [our competitor] acquired principally merchants. The Philips deal was different than our typical captive acquisition as we maintained their facility in Hamburg. There was a large volume of business and we wanted a facility in northern Europe to complement the Rousset facility in southern Europe.

There was another significant event in the company’s history in 1988. The Japanese were achieving extraordinary success in numerous manufacturing businesses, including semiconductors. Everybody was emulating Japan, and everybody felt at the time the Japanese were going to take over the semiconductor industry lock, stock and barrel. And they were coming over to the U.S. and they were all scouting out where to build the Japanese fabs and at the same time they wanted to bring their own supply chain. The three Japanese mask makers each took a different route. Hoya bought MicroMask. Toppan bought TI’s captive mask shop. That was to be their foothold in the U.S. [and] they eventually planned to build a mask shop outside of TI. DNP [Dai Nippon Printing) thought about putting a mask operation in Dallas but then rethought it and took a different approach.

Their approach was to set up a formal partnership agreement with DuPont Photomasks. A new company was formed called DuPont Dai Nippon Engineering (DDE). DDE was established to produce masks for Japanese fabs in the U.S. using DuPont’s Santa Clara facility, staffed with engineers from both DNP and DuPont. DuPont/Santa Clara learned to do business Japanese-style, including, for example, modifying and customizing e-beams. We continued to do a relatively small amount of business through DDE with Fujitsu, Hitachi, and NEC. The relationship was an excellent one, even as the demand for masks for DDE slowed, along with the slowdown of construction of Japanese fabs in the U.S.

CA: So up to this stage DuPont Photomasks still doesn’t exist, it’s just all these separate mask shops?

KR: DuPont Photomasks existed as a wholly owned subsidiary of DuPont. We are being evaluated as a P&L like other businesses in DuPont, but we were not yet a separate company. And, until the mid-90s, the sites were managed rather independently, as profit centers. Integration was yet to come.

CA: By this stage did you have anything in Asia, outside of Japan?

KR: Well, the next step was around ’91 when we decided to build a green field factory in Korea. We had a Korean partner whose name escapes me know. But the government required a Korean partner and I think we were the first American semiconductor materials company to build a manufacturing facility in Korea. It was extremely successful, both technically and financially until the Asian Financial Crisis when the Korean Won devalued. Most of our pricing contracts were in Won, not dollars [and] for the most part, equipment and material costs were denominated in dollars. The Won devaluation put enormous pressure on earnings.

CA: When you came back from Berg Electronics did the Korean operation come under your responsibility?

KR: When I was reassigned, Preston Adcox was appointed business director. He was primarily a manufacturing guy and I was the marketing and sales guy. By the time I returned, we had two factories in Europe, the green field factory in Korea, Kokomo, Round Rock, and two facilities in Santa Clara. So we now had seven factories around the world and we were by far the most global mask maker.

CA: In terms of sales where did DuPont rank?

KR: We ultimately became the world’s largest maskmaker in the mid-90s. A few years later Photronics bought the No. 3 merchant in the U.S. -- a company called Align Right which had about $50 million in sales. At that point we were in a virtual tie. However, in the late 1990s, the Japanese captives, who had jealously guarded their captive mask shops, began to divest. They all had them, Hitachi, Sony, Fujitsu, Matsushita, Mitsubishi, NEC, all the big guns had their own mask operations. I don’t recall who pulled the trigger first, perhaps it was Hitachi. But then they all went like cards, except NEC. One by one they began to divest their mask operations. DNP was the biggest beneficiary although Toppan certainly benefited as well. DNP took the lead among merchants for the next few years because of those deals. By the mid to late 90s there were four big players in the $300 to $400 million range that owned 90-plus percent of the mask market. There had been a huge consolidation from probably 100 mask companies to basically four merchants and half a dozen captives.

CA: What about the spin off of DuPont Photomasks as a separate company. When did that happen?

KR: That happened in June of 1996. DuPont was founded in 1803, was one of the oldest continuing U.S. corporations in existence and had never done a spin out, an IPO. We were the first. Chad Holliday, who today is the chairman and CEO of DuPont, was, at that time, president and CEO of DuPont Asia Pacific [in Tokyo) and also had responsibility for DuPont’s global electronics business. We were having difficultly in taking advantage of some emerging captive opportunities for acquisition because DuPont’s planning process and capital allocation process was too slow. The photomask business was becoming even more capital intense, and we had to continue to invest to meet customer needs. I think Chad realized the photomask business could compete more effectively and attract the capital it needed as an independent entity. He decided we would be the first DuPont IPO . It took 14 months. DuPont is a conservative company and this was the first one, a precedent setter. Finally, on June 16, 1996, DuPont sold off 20 percent of the shares and maintained 80 percent for themselves.

CA: Was it a successful IPO?

KR: The stock went out at $17 a share. It was oversubscribed. And within 18 months the stock was at $75 and reached an all-time high of $88 per share. Yes, it was very successful.

CA: Were the factories around the world still operating separately?

KR: We had begun to integrate them, but the first step was to complete the global positioning with expansion in Asia. That was one of my key assignments after the IPO: to develop a strategy and a strong position in the emerging Asia markets outside Korea.

We began talking with the Chinese around 1992, including representatives from Beijing and Shanghai. We decided to pursue discussions with representatives from the Shanghai Institute of Metallurgy which had a very small optical mask operation. And we began talking about building a facility in Shanghai. After lengthy negotiations we ended up putting a joint venture facility in Shanghai in the Pudong area, a high tech tax free zone, very close to ASMC. But we were successful and I think the first tool we put in there was a MEBES III e-beam and [that was] followed with a laser tool. Ken Wishnuff was our first site manager. While there was a tremendous amount to learn about doing business in China and serving Chinese semiconductor customers, it was quite successful. We were the first non-Chinese maskmaker in China.

As far as the Japanese market was concerned, it was clear we would not build a factory in Japan and would serve the Japanese market for leading edge from Korea and trailing edge from China. We established a front end in Japan to take customers tape outs, as well as a sales and service operation in Japan.

And then I had to examine Taiwan and Singapore, which represented significant growth opportunities. I explored several different venues in Taiwan and ended up negotiating a joint venture with UMC in the late 1990s, around ‘98. UMC had put in a small captive operation. TSMC had put in a major internal mask operation, consistent with their philosophy. UMC’s philosophy was that we are going to outsource those activities that are not our core competency. We negotiated a joint venture, with UMC contributing physical assets and people, and DPI contributing technical expertise and people. DuPont maintained controlling interest and it was called DuPont Photomask Taiwan Ltd. (DPT).

In Singapore we decided to build a green field factory. I negotiated an agreement with the Singapore Government, the Economic Development Board for tax relief and training. I’d looked at Malaysia but I just didn’t think Malaysia had the infrastructure. They were doing a lot of the back-end in Penang, but there was no front end fabrication. So we settled for Singapore and built a green field factory in Singapore around 1999.

Around the same time we built a factory shell in Portland, Oregon. Portland was investing considerable capital and effort toward attracting wafer fabs to that region, dubbed Silicon Forest. We negotiated an agreement with LSI Logic to build a factory on their property in Gresham. The crash of 2001 signaled an end of an era and we never opened this site.

We had also built a small, green field satellite facility in Scotland to service the fabs in the UK. Digital Equipment built a fab in the UK, Infineon -- then called Siemens -- built a big fab in Newcastle. And it looked as if the UK was attracting more fabs and we felt we needed a presence there to compete effectively. Unfortunately, as the world was beginning to change, some of these fabs closed, and DuPont eventually closed the Scottish facility.

We could begin to see the model was changing. We could see that proximity to the customer, which had been of paramount importance, was less important as the ASIC market began to decline. And as complexity rose, the idea of scattering factories and resources everywhere around the world, closer to customers, was simply too costly. So we changed the strategy. Instead of the sites being geographically or regionally focused we began to think of factories as technology focused. So there would be leading edge and trailing edge factories and we’d concentrate the leading edge resources in a few sites around the world. The other factories would focus on trailing edge and low cost, and we would equip and scale them accordingly. Traditionally, the sites served a region and served all the customers technology demands from the most leading edge to the low end. So it was a pretty significant change in strategy which required significantly more integration. I mentioned earlier that the sites and regions were run more like P&Ls individually. When we went to an integrated manufacturing strategy, the site’s and the region’s profitability were less important. The enterprise was the key.


CA: To wrap it up, when did you leave DuPont?

KR: I left at the end of 2001. I just decided it was time to try something else. I wasn’t retiring. The mask business is very demanding, very stressful, high octane very fast moving. It drains you. And I questioned the direction of the company.

Rygler was interviewed on January 14, 2005 by Craig Addison of SEMI.

Editor’s Note: Toppan Printing Co. Ltd. of Japan completed its acquisition of DuPont Photomasks Inc. in April 2005. The company is now called Toppan Photomasks.