Case Study Market Expansion and Revenue Growth

ENTG's Market Expansion and Revenue Growth

Situation: ENTG, a leading technology company, recently acquired NT for $27 million, aiming to capitalize on revenue growth opportunities and secure market adoption with Original Equipment Manufacturers (OEMs). Key to their strategy are two enabling processes: Photoresist and Chemical Mechanical Polishing (CMP). These processes are crucial for advanced processor Integrated Circuit (IC) process control, with CMP being identified as the key emerging process and photoresist priced at $5000 per gallon.

Challenge: The primary challenges faced by ENTG include securing specifications for next-generation TEL wet process tools and ramping up production and testing outputs to drive revenue growth while maintaining quality standards.

Actions Taken:

Internally:

1. ENTG hired controls engineer and invested in automated characterization and test stations to enhance production efficiency.

2. They updated and improved visual work instructions to aid in understanding work content and facilitate the onboarding process for new employees.

3. A second shift was added to increase production capacity.

   
   

Externally:

1. ENTG targeted Tokyo Electron (TEL) in Japan, a world leader in wet process tools, partnering with industry-leading applications and distribution leader, Horiba.

2. Product characterization was conducted in Japan under TEL engineering oversight to ensure compatibility and quality.

3. Direct company-to-company contacts and communication were established in engineering and management, offering TEL unparalleled support and visibility into ENTG's offerings.

   
   

Obstacles Faced: ENTG encountered several obstacles during this process, including:

1. OEM design cycles taking 2-3 years for qualification and specification.

2. Copy Exact practices by competitors mimicking Intel's strategies, creating challenges in differentiation.

3. Technical language barriers and time zone differences hindered effective communication with stakeholders.

   
   

Results Achieved: Despite the challenges, ENTG's strategic actions yielded significant results:

1. They achieved qualification with Tokyo Electron for wet etch and the retrofit of TEL photolithography, solidifying their position in the market.

2. Revenue from flow control offerings doubled in just 15 months, growing from $8 million to $16 million, with an impressive 65% gross margin.

3. ENTG generated over $500,000 in cash every six months, showcasing the financial viability of their market expansion efforts.

   
   

Conclusion: ENTG's focused approach, combining internal improvements with strategic external partnerships, enabled them to navigate challenges and achieve remarkable growth in a competitive market landscape. Their success highlights the importance of proactive market strategies, effective collaboration, and continuous innovation in driving business expansion and revenue growth.