Tegal Signs Definitive Agreement to Purchase Assets of Simplus Systems; Expands Capabilities into Nano Layer Deposition for Barrier and Copper Seed Applications

PETALUMA, Calif.--()--Nov. 11, 2003--Tegal Corporation (Nasdaq:TGAL), a leading designer and manufacturer of plasma etch and deposition systems used in the production of integrated circuits, today announced the signing of a definitive agreement to purchase the assets of Simplus Systems Corporation, developer of a unique Nano Layer Deposition cluster tool and processes for barrier, copper seed and high-K dielectric applications.

Simplus Systems Corporation, privately held and based in Fremont, Calif., was founded in 1999 to develop unique Nano Layer Deposition (NLD) and Metal Organic Chemical Vapor Deposition (MOCVD) systems and processes. Simplus offers a multi-chamber tool incorporating its patented NLD and Plasma Enhanced NLD processes that are similar to Atomic Layer Deposition (ALD), but with much higher throughput. Tegal's agreement with Simplus, signed yesterday, involves the purchase of substantially all of the assets of the company, the assumption of certain liabilities and the employment of key Simplus personnel. The deal is expected to close later this month.

The market for highly conformal deposition tools, such as ALD and Simplus' NLD, is one of the fastest growing segments of the semiconductor device manufacturing space. According to the most recent VLSI Research data, the current market for ALD deposition tools is over US $100M and will grow at an annual growth rate of 66.5% to reach $1.35B in 2008. ALD (and NLD) are expected to replace current technologies to deposit copper seed and barrier films, ultra-thin nucleation layer for subsequent fill, as well as gate dielectrics, and capacitor dielectrics and metal electrodes where conformal deposition of extremely high aspect ratio structures is required. The combined total market for barrier and copper deposition tools is $900M, and predicted to increase to over $3B in 2008. Overall, the Chemical Vapor Deposition (CVD) market is expected to grow at a rate of 19.6% CAGR to $4.3 Billion over the next five years.

Simplus' first product is a high-throughput, multi-chamber NLD deposition cluster tool targeted for DRAM and logic devices for barrier, copper seed and high-K dielectric applications. The system has demonstrated excellent conformal film deposition with its patented NLD and Plasma Enhanced NLD technology. An 80-90% conformal deposition of TiN metal electrode films has been achieved in 50:1 aspect ratio structure for DRAM applications. NLD also allows the unique formation of thin, nanocrystalline film deposition with superior barrier film performance against copper diffusion. Simplus' technology is protected by its strong IP portfolio, including 16 granted and allowed patents, and more than 12 other patent applications in the areas of NLD, copper and barrier process, and hardware.

"The addition of the Simplus technology provides us a third major complementary product line to leverage into our award-winning, worldwide service, customer support and sales infrastructure, said Michael L. Parodi, Tegal's Chairman, President and CEO. We believe this product has great potential."

Safe Harbor Statement

Except for historical information, matters discussed in this news release contain forward-looking statements within the meaning of Section 27A of the Securities Act and Section 21E of the Exchange Act. Forward-looking statements, which are based on assumptions and describe our future plans, strategies and expectations, are generally identifiable by the use of the words "anticipate," "believe," "estimate," "expect," "intend," "project" or similar expressions. These forward-looking statements are subject to risks, uncertainties and assumptions about the Company including, but not limited to industry conditions, economic conditions, acceptance of new technologies and market acceptance of the Company's products and services. All forward-looking statements attributable to us or persons acting on our behalf are expressly qualified in their entirety by the cautionary statements in this paragraph. For a further discussion of these risks and uncertainties, please refer to the Company's periodic filings with the Securities and Exchange Commission.

About Tegal

Tegal Corporation, headquartered in Petaluma, Calif., is a leading designer and manufacturer of plasma etch and deposition systems used in the production of smart cards, opto-telecom devices, integrated circuits (ICs), and other related microelectronics devices. Both etching and deposition are key process steps and must be repeated multiple times in the production of these devices. Tegal markets and services its systems in all major IC-producing regions of the world. More information is available on the Internet at: www.tegal.com.

Contacts

Tegal Corporation
Thomas Mika, 707/763-5600 (EVP and CFO)
or
Nagle & Ferri Investor Relations
Frank Nagle or Bob Ferri, 415/575-1999

Contacts

Tegal Corporation
Thomas Mika, 707/763-5600 (EVP and CFO)
or
Nagle & Ferri Investor Relations
Frank Nagle or Bob Ferri, 415/575-1999