Xsil ponders IPO window of opportunity

13 Aug 2004

The Dublin-based fast-growth manufacturer of sophisticated silicon micro-machining equipment Xsil is considering the possibility of a public listing on Nasdaq, based upon strong market sentiment for its technology area, siliconrepublic.com has learned. The company is targeting sales of €35m for 2004 and its average customer will spend between €10m and €20m on its micro-machining technology.

In an interview with siliconrepublic.com, Xsil CEO Peter Conlon (pictured) said that sentiment towards high-end manufacturing technology for the production of silicon wafers is very strong at present,;most of the company’s competitors are publicly-quoted and one competitor, FormFactor, had a very successful IPO on Nasdaq last year.

“Financially, we run Xsil as if it were already a publicly-quoted company in terms of internal financial reporting. In-house we have a strong knowledge of Sarbanes-Oxley and our finance department has relationships with Deutsche Bank and Citibank. Our auditing is handled by Ernst & Young and PricewaterhouseCoopers are our tax advisors.

“From the start we would have set the company up to go public or make it an attractive target for an acquirer. At the same time we want to see Xsil built up to its maximum potential. We are growing very fast and an IPO would feature in our short term outlook,” Conlon told siliconrepublic.com.

Xsil was founded in 2000 by serial entrepreneur Peter Conlon and longtime colleague Pat Rainsford, who also run a digital television technology company called Emuse. In March 2001 Conlon and Rainsford sold another tech firm, optical manufacturing systems company MVT, to Hewlett-Packard spin-off Agilent Technologies for over €100m in cash. It now sells primarily into the semiconductor, opto-electronic and bio-medical sectors.

Based in Dublin’s Trinity Enterprise Centre, Xsil employs over 150 people. It works closely with a number of research institutes, universities and laser manufacturers including TCD where some of the research underpinning its technology was carried out.

With more than 28 global patents filed to date, the core software, hardware, laser and optical platforms have been developed using state-of-the-art design tools and laser systems, in parallel with extensive process development. Conlon revealed that the company has signed non-disclosure agreements with more than 60 semiconductor companies and indicated that of its existing customer base, not one company has a market capitalisation of less than US$6bn each.

Approximately 30pc of the company’s revenues come from the US; 30pc from Europe and 40pc of its revenues come from Asia. As well as its Dublin headquarters, the company has offices in Japan, Taiwan and Colorado. The company is also preparing to open new offices in Korea, Singapore and Puerto Rico.

Xsil’s rapid growth in the past few years has attracted it many accolades, including Deloitte & Touche Fast 50 Winner 2003; Irish Software Association Company of the Year 2003; Exporters Association Innovation Award 2003; Tornado Insider Finance & Community Choice Awards 2003; European Semiconductor New Company of the Year Award 2003 and PricewaterhouseCoopers National Innovation Award 2001.

Conlon told siliconrepublic.com: “Research and development (R&D) is critical in our business. We have over 100 people engaged in R&D, which probably makes us the biggest R&D operator in Ireland at the moment. It is genuinely state-of-the-art work that places Xsil firmly on the world stage. The skillset of our R&D people is quite broad, ranging from physics, lasers, optics, material science, mechanical engineering, motion control, software engineering, electrical engineering, electronic engineering, operating systems and graphical user interfaces.

“At the end of the day we produce a tool that is used in high volume manufacturing in the semiconductor industry. Each machine costs €1.5m to €2m and that is only the start of our relationship with a semiconductor manufacturer. R&D would be an ongoing aspect of our sales cycle,” Conlon said.

By John Kennedy