Editor’s Note: I included this story, along with the other two bearing this date, October 14 (Open Architecture vs. Open Standard; Can Chips Make You a Better Person?) not because I thought they were particularly brilliant journalism, but because they bore datelines from three different countries — one from an entirely separate continent — all in the same issue. Pretty cool, no? I doubt I’ll ever win a Pulitzer, but at least I can lay claim to this.
French Component Supplier Relies on Technology to Set It Apart
MONTPELIER, France — Equipment component supplier Qualiflow SA is taking a decidedly different tack than its larger and longer established competitors.
Outsourcing is ruling business models, and component suppliers today are positioning themselves as critical subsystems suppliers, building complete modules for their OEM and chipmaker customers and taking advantage of prevailing trends. But Qualiflow, a smaller newcomer, is instead staking its claim based on its technology. It is depending on technological innovation to gain market share, while at the same time outsourcing manufacturing while keeping final assembly in house.
This is something the company couldn’t continue to do if it were to go into the subsystem module business, explained Chairman and CEO Claude Jacquemin. “We could make more profit, maybe, but it would also require more [capital] investment,” he said. “We feel we can bring value to our shareholders through advanced technology.”
The mass flow controller (MFC) market, for example, is a niche market that hasn’t changed much; the same big players that were there 10 years ago are there today, Jacquemin noted. The challenge is finding ways to improve a relatively simple idea and product with new technology.
Of course the pressure to innovate is doubled by today’s business climate. Qualiflow, spun out of ASM International in 1997, took off at a dead run. Between 1998 and 2001, its revenues grew from about $2.5 million to about $16.8 million (converted from euros to U.S. dollars), split between the optical fiber and semiconductor markets. Of course like everyone else, that dead run has hit a brick wall—the company estimates 2002 revenue to be between $5.8 million and $7.85 million.
But the company has maintained a strong cash position and R&D spending. At current industry spending levels, Qualiflow can maintain its investment levels and continue on for the next two years, according to its CEO. “We believe we will come out [of the downturn] very well positioned … we still have a lot of money in our bank account,” Jacquemin said.
In its brief history Qualiflow has looked for partners outside of Europe to supply advanced technology, notably in Korea and Japan. In Japan it has taken a 33 percent equity stake in liquid MFC supplier Lintec. Liquid mass flow control is a key technology for both next-generation IC and optical fiber markets, Jacquemin said.
There are still market niches such as fluid control where there is room for innovation and a market insertion point for Qualiflow, he said. MFC sensors is another area where Qualiflow sees an opportunity to grow market share.
“Everybody is bringing new technology. We have our solid-state sensor. Do we have the best solution? I don’t know. But the market is demanding … new ways of sensing,” Jacquemin said.
Qualiflow has four product lines: MFCs, valves, gas and vacuum cabinets, and vaporization systems. While it has 20 percent market share in gas cabinets—primarily from the optical fiber market and French telecomm provider Alcatel—Qualiflow has only begun to scratch the MFC market with a 2 percent share of the market.
The company thinks it can increase that share to about 8 percent within three to four years with its next-generation MFC that it plans to introduce next year, said Pascale Garnier, Qualiflow’s marketing director.
Dubbed Helotis, Qualiflow’s next-generation MFC will contain an improved version of the solid-state sensor first unveiled in its AFC 90MD component last year. Solid state sensors have proved troublesome, as MFC suppliers have experimented with stainless steel tubes and struggled with materials and cleanliness requirements, said Jean Frey, Qualiflow’s director of R&D.
“We are correcting these problems, and we should come out with a reliable product next year,” Frey said. Utilizing thin-film technology, the successful trick has been to make the sensor smaller with more stable materials, such as platinum, he said.
In terms of valves, Qualiflow is developing a high-flow, high-temperature diaphragm valve with a piezoelectric activator base.
Editor’s Note: As explained at length elsewhere on this site, this is a news story written by me that originally appeared on the now-defunct Electronic News’ website, which is long gone. It’s former sister pub Electronic Design News (EDN) currently holds the copyright to all Electronic News copy (to the best of my knowledge). You can still see a copy of this story at EDN.