Industry News, Trends and Technology, and Standards Updates

Acquisition Provides Potential of Unrivaled Intelligence for Semiconductor, Packaging, and Electronics Manufacturing

PDF Solutions, Inc. (NASDAQ: PDFS) today announced it has entered into a definitive agreement to acquire Cimetrix Incorporated. The combination of Cimetrix^® connectivity products and platforms with PDF Solutions’ Exensio^® analytics platform powered by machine learning, is intended to enable IC, assembly, and electronics manufacturer customers to extract more intelligence – not just data – from their factory floor, to build more reliable ICs and systems at lower manufacturing costs.

“Cimetrix is excited to join the PDF Solutions team. Our two companies share the vision and commitment to provide a smart manufacturing platform that seamlessly connects high quality data from the factory floor to cloud based analytics platforms,” said Bob Reback, Chairman, President, and CEO at Cimetrix. “We believe this combination will provide tremendous opportunities for Cimetrix customers to benefit from the cloud, AI/ML, and analytics capabilities from PDF Solutions, and PDF customers will benefit from higher quality data originating from the factory floor using Cimetrix’s connectivity products and platforms.”

To read more, please view press release here.

Cimetrix held its annual shareholder meeting this past Friday, August 16, 2019 at our headquarters in Salt Lake City, UT. It was nice to see many familiar faces as well as some new faces. There was just one proposal voted on at the meeting to re-elect all five Directors, which was approved by shareholders with over 99% of the votes cast in favor of the proposal. Bob Reback, our President and CEO, introduced each member of Board of Directors and provided a brief history of each board member’s tenure with Cimetrix and the specific expertise and value each of them bring to Cimetrix and our shareholders. We appreciate the wisdom, hard work and direction from our talented board members as well as their commitment to fairly represent the interests of shareholders. We are thankful to our shareholders for their continued support of Management and our Board of Directors.

After the formal shareholder meeting was adjourned, Dave Faulkner, Executive Vice President of Sales and Marketing, and Alan Weber, Vice President, New Product Innovations, presented an update on industry trends, our product portfolio and growth opportunities. Following their presentation, Bob Reback, provided an update on the State-of-the-Company, including the company’s increased CAGR of 28% compared to the 6% CAGR as a public company from 2002 through 2013. Cimetrix ended the 2018 fiscal year with profitable operations, no debt, and over $3M of cash.

We continue to be thankful for the support and enthusiasm demonstrated by our shareholders, the hard work of all our employees, and the guidance from our Board of Directors. Thank you for all your contributions to Cimetrix.

Thank you for the trust and confidence you continue to place in Cimetrix. 2018 was an exciting year as we made great progress executing our strategy for long-term profitable growth. Cimetrix posted another year of strong growth as total 2018 revenues increased over 20% year-over-year. Since going private in 2015, Cimetrix has grown at a 20% CAGR (compound annual growth rate). In addition, Cimetrix posted its 9th consecutive year of profitability, which allowed us to further strengthen our cash position and balance sheet. Having no debt and a strong balance sheet gives us the ability to execute our longer-term growth initiatives and withstand short-term market disruptions.

Cimetrix is focused on enabling Smart Manufacturing in the semiconductor and electronics industries. We provide software to make the world’s most sophisticated and expensive semiconductor and electronics manufacturing equipment, as well as factories smarter. The Cimetrix strategy for long-term profitable growth includes:

1. Build great products 
2. Provide excellent technical support
3. Serve global markets
4. Create innovative new platforms 

Some of the 2018 highlights in each of these areas were:

Build Great Products

Cimetrix products are deployed in every semiconductor 300mm manufacturing facility in the world, as well as many leading electronics manufacturing factories. Both equipment makers and factory users have come to rely on the quality and reliability of Cimetrix software to run flawlessly in continuous 24/7 production environments.

During 2018, Cimetrix made continual improvements to all of its products that support the SEMI Standards (GEM, GEM300 and EDA) for equipment connectivity. The Cimetrix connectivity product family supporting these standards includes CIMConnect, CIM300, CIMPortal Plus, HostConnect, HostDeveloper and EDAConnect. With Cimetrix connectivity products operating in hundreds of thousands of installations in factories worldwide, our goal is to keep these products free of all defects. This allows us to respond quickly to new issues or opportunities during the year, which in turn allows our customers to confidently build quality applications. In addition, Cimetrix added support for new factory requirements and implemented several new features that make it easier for our customers to diagnose problems and debug new applications. Finally, we made changes to improve performance and reduce memory usage, which allows our customers to better handle ever-increasing amounts of data.

Cimetrix also developed a major new version of its award-winning CIMConnect product, which is used by equipment makers to meet their factory automation connectivity requirements. Over 100 equipment suppliers worldwide rely on CIMConnect for GEM connectivity. The new version of CIMConnect has been updated to better serve customers using the latest Microsoft .NET environments, supports multiple GEM connections as well as the use of other connectivity protocols.

Cimetrix also made significant investments in its CIMControlFramework product, which is a software platform for equipment makers who want a full software control solution with built-in factory connectivity. Cimetrix refreshed and enhanced many of the user interface screens to improve both look-and-feel and overall usability. In addition, we enhanced the device interface components to simplify the process of interfacing to third-party hardware and I/O, and increased our library of ready-to-use interfaces to support more hardware. During 2018, CIMControlFramework was our best-selling product for new customers.

Provide Excellent Technical Support

We improved our capabilities to better serve our customers by transitioning our Client Training and Support team into a new Solutions Engineering group. This reflects a change in emphasis from the traditional “product training and support” function to a more proactive solutions engineering approach that features a collaborative process for architecting solutions that best solve our customers’ problems. Additionally, the Solutions Engineering group continues to expand in response to growing global customer demand. We were very pleased to add highly experienced local engineers and partners in China, Japan, South Korea, Taiwan and Southeast Asia during 2018 who are working hard every day to ensure our many new customers are successful.

Serve Global Markets

Cimetrix further established itself as the worldwide market leader for standards-based equipment control and connectivity software for the semiconductor and electronics industries. The best evidence of our market leadership position is the number of customers that chose Cimetrix as their platform of choice for their equipment or factory. In 2018, Cimetrix achieved 49 “design wins” from customers worldwide, including 37 design wins from new customers. This represents a 60% increase in design wins from the prior year and set another new record for the Company. Particularly gratifying, the design wins include several customers that converted from products previously purchased from competitors, which means they walked away from prior investments to switch to Cimetrix.

While the primary source of Cimetrix revenue comes from equipment makers, Cimetrix receives a growing percentage of its revenue from factories. In addition, since Cimetrix software is instrumental in helping factories connect to smart equipment, Cimetrix is very active working with leading semiconductor and electronics manufacturers and their associated industry standards organizations on Smart Manufacturing initiatives. During 2018, Cimetrix team members chaired committees, gave presentations and engaged in events with industry thought leaders on Smart Manufacturing initiatives in Austin, Chicago, San Francisco, San Jose, China, Germany, Japan, Korea, Singapore and Taiwan. 

Create Innovative New Platforms

As Cimetrix has grown over the past several years, we significantly increased our investments in R&D, which we are using to create innovative and exciting new cloud, mobile and AI-enabled platforms to fuel our strategy for long-term profitable growth by assisting our customers in their digital transformation. Our new platforms will enable our customers and partners to take advantage of the phenomenal rise in data volumes, computational power, and connectivity as well as the emergence of analytics and business-intelligence capabilities.

Going Forward

2018 was a record year for Cimetrix in both revenues and winning new customers. We now have the exciting challenge of providing our exceptional customer service to the many new customers who have entrusted Cimetrix with their business and to ensure they are successful. Fortunately, we have also expanded our Cimetrix team with some highly experienced, passionate and dedicated new employees. 

We remain very bullish on the longer-term outlook for Smart Manufacturing and Cimetrix. However, with all of the uncertainty in the world, we undoubtedly face risks of potential headwinds in the market that could impact short-term results. We will continue to work hard to respond to any challenges that may arise while we execute our strategy for long-term profitable growth.

From all of us at Cimetrix, we thank our customers, partners and shareholders for the faith and confidence they have placed in our products and our team. We will continue to strive for excellence in satisfying our worldwide base of customers and delighting them with innovative new products.

Sincerely,

Bob Reback
President and Chief Executive Office

It was nice to see so many familiar faces this past Friday, August 17, 2018 at our Annual Shareholders Meeting. The meeting was held at our headquarters in Salt Lake City, UT with over fifty-five percent of Cimetrix shareholders represented at the meeting. There was one proposal submitted by management to re-elect all five Directors, which was approved by shareholders with over 99% of the votes cast in favor of the proposal. We are grateful to have an incredibly talented and experienced Board of Directors who take their responsibility to represent the interests of shareholders very seriously. We are thankful our shareholders recognize and appreciate the value of our independent directors. 

After the formal shareholder meeting was adjourned, Dave Faulkner, Executive Vice President of Sales and Marketing, and Ranjan Chatterjee, Vice President and General Manager, Smart Factory Business Unit, gave presentations on the exciting growth initiatives underway at Cimetrix. Following their presentation, Bob Reback, President and CEO, provided his perspective on the state-of-the-company and outlook going forward. During these presentations and ensuing discussion, management shared that Cimetrix is seeing the results of its growth initiatives, as revenues for the first six months of 2018 were up over 24% year-over-year. In addition, during a discussion on the benefits of going private (which Cimetrix did at the end of 2014), management reported the benefits of going private exceeded its expectations and contributed to growing revenues at a CAGR over 18%, compared to the 6% CAGR as a public company from 2002 through 2013. Lastly, management reported that its balance sheet continues to get stronger, even as the company is able to make significant investments in its growth initiatives. The company continues to operate profitability on a quarterly basis, the company has no debt, and the company now has over $3M of cash.

We continue to be thankful for the support and enthusiasm demonstrated by our shareholders, the hard work of all our employees and the wisdom and guidance of our Board of Directors. Thank you for all your contributions to Cimetrix. 

Wow – what a great year for Cimetrix and exciting time for our industry!

The president and CEO of Applied Materials recently said, “This is the most exciting time in the history of the electronics industry.” The race is on for faster/better/cheaper devices, cloud computing, autonomous vehicles, Big Data, artificial intelligence, the “Internet of Things” and more. This means the world needs not only a lot more computer chips, but also innovations in chip design, packaging and electronics assembly. The fast moving (and giant) electronics companies driving these trends are also pushing to get far more data from the factory floor to support their “Smart Manufacturing” and “Industry 4.0” initiatives.

2017 was a record setting year for Cimetrix. Revenues increased 34% year-over-year. The Company continued to operate profitably on a quarterly basis with operating income over 10% for the year. We invested heavily in R&D to pursue new technologies and products for long-term growth while strengthening our balance sheet with solid increases in cash and stockholders’ equity.

Going Forward

Cimetrix is uniquely positioned as the world leader in developing and using standards that connect manufacturing equipment to factory software systems. We are second to none in knowledge of “equipment connectivity” standards. We chair the relevant global standards committees, and are well known throughout the industry as experts in this vital domain. In addition, our products are used worldwide in hundreds of thousands of equipment connections. We recently expanded the Cimetrix team with some great new employees located around the world to better serve our growing international customer base, which now includes over 30 factories in Taiwan and China.

Based on what we see, the industries we serve will continue to expand their usage of equipment connectivity standards such as the Generic Equipment Model (GEM) to integrate more equipment into their factory systems, while the more advanced semiconductor manufacturers will accelerate their adoption of the latest Equipment Data Acquisition (EDA) connectivity standards.

While we are very bullish on the longer-term trends for our industry and Cimetrix, it is always a little difficult to forecast short-term results. For 2018, industry analysts are currently predicting a single-digit percentage increase in semiconductor capital equipment spending. While you might think we would be satisfied with another year like we had in 2017, we expect to perform better than the overall industry in 2018 for a number of reasons. First, the “design wins” we worked so hard to earn in prior years should lead to market share gains that result in higher percentages of equipment using Cimetrix software products. Second, we believe the adoption rate will accelerate for the newer EDA equipment connectivity standards, where Cimetrix products are the most proven and widely used in the industry. Lastly, we believe our reputation for providing the highest levels of technical support to customers worldwide, especially in the Japanese, Korean, Taiwanese and Chinese markets, will enable us to continue winning new customers.

From all of us at Cimetrix, we thank our customers and shareholders for the faith and confidence they have placed in our products and our team. We will continue to strive for excellence in satisfying our worldwide base of customers and delighting them with innovative new products. 

On Friday, August 18, Cimetrix held its Annual Meeting of Shareholders at our headquarters in Salt Lake City, UT. We were excited that sixty percent of Cimetrix shareholders were represented at the meeting. There were two proposals submitted by management and both approved, receiving over 90% of votes cast.

After the formal shareholder meeting was adjourned, Dave Faulkner, Executive VP of Sales and Marketing, gave a presentation on our Cimetrix products and markets. Following Dave’s presentation, Bob Reback, President and CEO, provided his perspective on the state-of-the-company and outlook going forward. 

We appreciate all of our shareholders and are grateful to those that attended the meeting either in person or via proxy. As always, we thank our shareholders for their continued confidence and support.

You may have noticed that there is a lot of positive news regarding the semiconductor industry and market for capital equipment. As such, we thought it would be appropriate to provide a mid-year update on Cimetrix’s performance.

We are pleased to report that Cimetrix is benefiting from a combination of the industry upcycle as well as the hard work of our employees to improve our products, build long-term relationships with our clients, and provide the highest level of support to our growing base of international clients. In addition, the benefits that Cimetrix is experiencing after going private in 2014 are higher than anticipated. As expected, the company is saving a significant amount per year in accounting, legal and consulting fees that were necessary for SEC filings, Sarbanes-Oxley compliance, and investor relations activities.  However, in addition to these financial benefits,  what we didn’t anticipate was the tremendous increase in focus and energy on our clients, markets and growth initiatives that has resulted, which has greatly exceeded our expectations.Cimetrix revenues for the first six months of 2017 were over $4M, up more than 40% year-over-year. Much of this increase was associated with strong increases in machine shipments from our growing client base. Cimetrix also gained over a dozen new design wins during the first half of 2017, which positions the Company for continued growth. In addition, Cimetrix introduced two new products in the first half of 2017, which have not contributed significant revenue yet, but are both gaining traction in the marketplace.

While Cimetrix no longer submits SEC filings, we have maintained strong internal controls and financial accounting. Our finance team was justifiably proud when a leading regional accounting firm completed its audit of our 2016 financial statements and made no audit adjustments. Cimetrix continues to operate profitably on a quarterly basis, while increasing investments in growth initiatives. For the first six months of 2017, adjusted EBITDA increased to over 15% of revenues to over $600K. All indicators show the markets Cimetrix serves should remain strong for the second half of 2017. The robust growth in revenues has enabled Cimetrix to further strengthen its cash position, balance sheet and stockholders’ equity. We continue to have no debt and now have $2.5M in cash.

Cimetrix continues to build its global brand as the leader in innovative factory automation software for equipment connectivity and control solutions by attending, presenting and exhibiting at industry tradeshows and events. These venues are a great place to meet face-to-face with clients, reinforce Cimetrix experts as industry thought leaders, and interact with many others in our chosen markets. It is exciting to participate in shows around the world as we expand our global presence.

We thank our clients for their business and trust in our products and people. We thank our employees for their dedication, hard work and quest for continuous improvement to provide the industry’s best products and services. And we also thank our shareholders for the confidence they have placed in us, as well as their patience and support.

To the Cimetrix community of clients, partners, shareholders and employees,

Cimetrix had another year of solid progress during 2016. Financial results were in-line with expectations, as Cimetrix continued to achieve profitability every quarter with full-year revenue in the $6M to $7M range.

Our key highlights include:

• Cimetrix continued to enhance its reputation for product quality and the highest levels of customer support in the industry, receiving consistently excellent feedback from our client base.

• Cimetrix continued to invest in building great products with new releases of all our product lines. Substantial improvements were made in both new features and internal testing that will benefit our clients for many years. 

• Cimetrix gained additional “design wins” for its products in North America, Europe and Japan, where the company has an established presence. In addition, Cimetrix won important new clients in China and Korea. 

• Cimetrix strengthened its organization as we added a number of new employees in business development, software engineering and technical support functions. The Company continued to invest in employee development, education and continuous improvement. We believe the concepts and training we’ve received in lean and agile processes will enable Cimetrix to build better products and more efficiently provide our clients with the highest levels of service. 

• Cimetrix made a number of key investments that we believe will lead to future long-term growth. We strengthened our local sales and technical support in a number of Asian countries. We developed a number of new product prototypes in collaboration with key clients leading to the introduction of an exciting new Cimetrix product in 2016. Several other new products are in development and have the potential to significantly expand our markets.

Cimetrix also held its first shareholder meeting since going private in late 2014, which provided a forum to explain to shareholders why the Company took that important step, the progress we’ve made since going private, and our future plans. As a result of generating positive cash flow from operations, Cimetrix was able to continue providing liquidity for shareholders that contacted the Company. Prior to going private, the Company had over 4.5M shares outstanding, adjusted for stock splits. As of December 31, 2016, the Company had fewer than 3.9M shares outstanding. This means that every current shareholder’s ownership percentage has increased by over 15%.

Going Forward

Going forward, industry analysts predict an increase in semiconductor capital equipment spending for 2017. In addition, we are seeing increased traction for the relatively new SEMI Standards for Equipment Data Acquisition (EDA), also known as Interface A. We believe these trends will enable us to achieve short-term incremental increases in revenue that support continued operations on a profitable basis and investments in new products and markets that will lead to longer-term step function increases in revenue.

We will continue to focus on satisfying our worldwide base of clients, improving our efficiencies and effectiveness, and executing our plan to expand the markets for Cimetrix products for long-term growth.

From all of us at Cimetrix, we thank our clients for the trust they have placed in our products and our team. We also thank our shareholders for their patience and support. 

Sincerely,

Robert H. Reback
President and Chief Executive Officer

With unemployment rates at some of the lowest rates in 10 years, keeping good employees can be a challenge. Ownership in the company they work for is one benefit highly valued by many employees. We all want to be part of a growing business, make it successful, and know we will be rewarded for our hard work. Cimetrix wants to provide such ownership incentives to our employees and do it in such a way that is fair and motivating to the employees while being fiscally responsible to shareholders.

One of the impacts of the December 26, 2014 reverse stock split was the price per share value went up and number of shares went down. The pre-reverse stock split value went from $0.15 a share to a post-reverse stock split price of $1,500 a share (as of December 26, 2014). This reduction in shares and corresponding increase in share price made it fiscally impractical to use stock options as part of our incentive program moving forward. Therefore, the Cimetrix Board of Directors approved a transaction to perform a 1,000 to 1 forward split effective December 30, 2015.

The forward split transaction resulted in 3,928,000 shares outstanding as compared to the pre-forward split shares outstanding of 3,928 and decreased the share price by the same ratio. While the ownership position of all Shareholders remained the same pre and post forward-split, it adjusted the price per share to a much more manageable price for granting incentive stock options.

For Shareholders holding physical stock certificates, a letter of instruction from our Transfer Agent, Colonial Stock will be mailed out by February 1, 2016. Shareholders with stock in brokerage accounts should receive notification from their brokerage firm directly.

We believe this transaction will benefit both employees and shareholders by providing the right level of incentives to keep a smart and talented workforce.♦

With the new year, comes a major new initiative for Cimetrix to grow the markets for its products.  The company used the transition to 300mm manufacturing to establish a leadership position for its current product portfolio in the semiconductor industry. However, the company is starting to have success expanding into adjacent vertical markets that includes disk drive, display, LED, and photovoltaic. The objective of this new initiative is for Cimetrix to leverage its experience, technology, and product portfolio gained in the advanced semiconductor manufacturing industry to expand the markets for Cimetrix products. We will be exploring new opportunities in our current adjacent markets as well as possible new markets such as SMT and electronic assembly.

To head up this initiative, Ranjan Chatterjee has joined the company in the role of Vice President, Emerging Business and Technology Office. He will focus on extending and introducing Cimetrix’ portfolio of products into Industry 4.0 and Industrial Internet of Things (IIoT) initiatives by interfacing manufacturing equipment with big data and analytics tools. The data generated by devices connected via Cimetrix products can also be enlisted to bolster another methodology often used with lean manufacturing—Six Sigma. With the improvements in cloud and big data tools and infrastructure, one can use these methodologies on data with much bigger volume, velocity, and variety. This enables process control and a lack of variation of products. Processes can be monitored and corrected in real-time instead of inspecting machines merely at completion, and eventually this will help improve yields and reduce scrap. Specifically, manufacturers will need to establish a robust data infrastructure that works across the broader array of machines on the shop floor while breaking down protocol barriers so the machines can communicate effectively and in real time.

Manufacturers will also need to establish a bidirectional data flow so they are not only collecting information from equipment, but also pushing control back to the machines to optimize their usage. Manufacturers that can capture the right information, sift through it, and use it at the right time will be the ones that succeed.  Cimetrix intends to be a leader in enabling this vision. Ranjan’s decades of experience at Motorola and in the industry as a whole in software development, big data, cloud, process control, and lean manufacturing will enable Cimetrix to both adapt and develop products and partnerships to enable a robust ecosystem for a compelling solution.

Ranjan’s relationship with Cimetrix is not a new one as he is a former client. While at Motorola, Ranjan oversaw the development and deployment of a standards-based factory control system for SMT and assembly, which encompassed 24 factories around the world, and connected to over 20,000 pieces of equipment using the first generation of Cimetrix connectivity software. At that time, it was the leader in cell phone manufacturing and the largest purchaser of SMT equipment in the world. More recently, Ranjan has worked with companies developing and deploying systems using cloud technologies, big data analytics, and various modern technologies with a global software development team.

Ranjan is extremely excited to join the Cimetrix team as he sees many opportunities to leverage the latest cloud and big data analytics with Cimetrix core expertise and product portfolio into new markets for Cimetrix. He sees great potential for expanding Cimetrix in this new direction and we here at Cimetrix are looking forward to Ranjan leading the way.

If you are interested in discussing possible business opportunities and/or partnerships with Cimetrix with this new initiatives, please fill out our contact form to reach the Emerging Business and Technology Office.♦