SEMI Oral History Interview - Karl Lang

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SEMI Oral History Interview

Karl Lang

Interviewed by Craig Addison, SEMI

Karl A. Lang worked for Lindberg in Chicago for 25 years before moving to California and establishing Thermco Systems in 1962. Lang also served on the SEMI board of directors during the 1970s. In 1982 he received the SEMI Award for his contributions to automatic diffusion furnaces. In this interview, Lang is joined by Alfred W. (Al) Giese, who joined Thermco in 1965 and stayed with the company more than 20 years, serving as vice president of international sales.


CA: Karl, can you talk about what you did before Thermco?

KL: I was with an engineering firm in Chicago for 25 years, after graduation from school. At the end of the 25 years, or slightly before that, they made me manager of their plant out here [in California]. That’s where I met John Dannelley. He was a service man at Lindberg Engineering. Then I put him into sales and after he was in sales for about a year, he was supposed to go out and sell to the semiconductor industry. So he was out there selling diffusion furnaces for Lindberg. And Lindberg wasn’t pushing that line very much so we thought things over and I approached him one day and said, “How would you like to join me in a new company.” We were over in Phoenix at that time, visiting Motorola. We were representing Lindberg at that time. And he said, “Oh, that would be great.” So it took a while to get the thing settled, but that’s when we started Thermco. The two of us started it. We were competing with Lindberg and a couple of others that were out there.

CA: What period was this?

KL: 1962, that’s when I started the company. We were in a rental place at the start in Garden Grove, and business just went up, up, up.

AG: At the time when I joined [in 1965], there were 30 employees and I think the sales volume at that time was $3 million a year. The biggest customer at the time was Siemens in Germany.

KL: That’s why [Al] got into the company. We wanted somebody who could go overseas.

AG: And speak German!

CA: You said that Lindberg didn’t push the furnaces very much.

KL: No, Lindberg was a big name in industrial heat furnaces. I was head of a division [back in Chicago]. We made transformers and a lot of other things besides that. There was another company, Heavy Duty, that was the leader then. They primarily made industrial heat treat furnaces. In fact, the people who started Lindberg Engineering, some of them came from Heavy Duty and they started in the early ‘30s. I went down there in 1936 after school and was helping out in the plant.

AG: Those were the founding furnace companies in the U.S. -- Heavy Duty, Lindberg and Thermco. But they all came from the heavy, industrial heat treat furnace industry.

CA: Didn’t Heavy Duty merge with Lindberg later?

AG: Correct, and became Lindberg Heavy Duty. And the furnace part eventually became Tempress.

CA: Can I go back to when you actually formed the company Karl, you said John Dannelley was your partner. How did you finance it?

KL: What I got out of retirement from Lindberg, that was the money that ran the new company. Dannelley didn’t have any money. He was a service man, but he owned a good part of Thermco [in the end].

AG: You also had two partners Karl, if you remember.

KL: Well, I had Ray Class and Doctor Brayshore. Ray was our neighbor in Glenview [Illinois]. He moved back to California, that was his home state. He put some money in, but that was down the road a ways. They were the only other people who put any money in. No, my secretary put some in too. June Axer, she was my secretary at Lindberg. She said, “Why are you doing that, why don’t you just stay here and retire.” And about six months later she was calling for a job at our place and put some money into it.

AG: She became what we called the mother, mother superior.

KL: She stayed with us until the end.

CA: Did you literally start in your garage?

KL: The very start was there. Then we went to a Quonset hut. That was really our first physical place. We had a company name, but we didn’t have many orders, but it went up, up, up. Actually, Lindberg let me do things at their plant, and they made some parts for us. I wound elements there on the weekends.

AG: They didn’t think Karl was too serious so they wanted to give him a hand to get started.

KL: Also, one of the principals at Lindberg died about a year before. And [the other principal], he was about ready to retire, so he didn’t care, so he let me do what I wanted to do there.

CA: What happened to the semiconductor furnaces at Lindberg, did they stop building them?

AG: They built them for another 10 years maybe, then…well, they never folded. They still exist today. There is a company in Japan called Lindberg Industries or something. They had a little office in Chicago they were financing and a little office in Japan, they built a couple of hand made furnaces. They hired an agent in Holland called Art del Prado, ASMI, and Art del Prado represented Lindberg in Europe and sold the equipment for them in Europe. But he only had one customer, which was Philips basically. And eventually he…started his own ASM furnace company. It never built anything but horizontal furnaces. And maybe 10 years ago [del Prado] bought the rights to the Tempress vertical furnaces, and that’s how he got into the vertical furnace business. Tempress and Lindberg Heavy Duty merged at one time.

CA: What kind of customers did you have back then?

KL: Motorola, Westinghouse, Hughes, those were the big ones on the West Coast. Eventually TI got into the picture.

AG: Then of course the [San Francisco] Bay area started to flourish. Fairchild was one of the first customers. And Raytheon was a big company then.

CA: Before these furnaces for the semiconductor industry came along what did the industry do, build their own?

AG: Some of the people made their own. TI made their own.

CA: About what time did commercial production of furnaces for the semiconductor industry take off?

AG: When I came to join the group they [Thermco] had built a single tube diffusion furnace that was the first model for 1-inch wafers. And that was the first production model. I think the first one went to Hughes. And those were different from the Heavy Duty and Lindberg furnaces because Karl and his partner invented the first helically wound heating element. In those days, the old ones were glow bar furnaces. Very difficult to control, not very uniform and Thermco invented the helically wound coil using Swedish kanthal wire. Karl did it in his garage. They were afraid also that the competition would find out so they didn’t really want to patent it. They wanted to keep it to themselves.

KL: We didn’t want people to see what we were doing (laughs). We didn’t have many people, maybe only had 10 or 12 people.

CA: Were the glow bar furnaces used for transistor production?

AG: Probably in some areas they did. Maybe the IBM guys who were working on the East Coast used the glow bar furnaces. The guys at TI probably built their own, also glow bar. And the transistors at Fairchild I’m sure were developed with Thermco furnaces.

CA: Couldn’t somebody buy the furnace, reverse engineer it and copy your inventions?

AG: In those days nobody would do that. They were so damn glad they had a furnace that was performing.

CA: What was the list price of your furnace?

KL: Oh, I don’t remember.

AG: There were single stacks, dual stacks and three stacks -- they were called Pacesetter 1, Pacesetter 2 and the Pacesetter 3. I would say…a single tube furnace in those days sold for $4,000. I know the three-stack sold for $12,000. It was about $3,000 for a heating chamber but you have to remember in those days it was just a heating chamber and controls. There was no jungle as they called it in those days, and there was no loading mechanism in front. Just a furnace without any cords or anything.

CA: When you tried to sell these furnaces did you get resistance from the customers?

KL: I wasn’t doing the selling so I don’t know.

AG: The only resistance we got was at TI because TI had their own in house manufacturing facility…they resisted strongly because they built their own and they were very proud of their own. But they had a staircase built next to the furnace, a mechanical staircase where you had to step up like 6 or 7 steps in order to load the furnace because it was so big. I went down and saw it…these girls with these trays in their hands were stepping up. That’s when I think John Dannelley made a big impression. He said you are wasting a lot of space and a lot of time. I can do this quicker and for less money.

KL: When did TI start buying from us?

AG: TI? We were still in Garden Grove. That was in 1967.

CA: So eventually TI did buy?

AG: They more or less designed their own custom furnace and we built it for them, they directed us how to build it for them. They were very proud of the innovations they put into the furnace. They were a little more expensive because we put extra extension wires. If the furnace would have an accident, burn up, there was wire that was prepared in the furnace. You didn’t have to replace it. You just clipped off the extra feet and reconnected it and it was done. Double thermocouples was another thing, if the first set burned out the second set took over. That was all TI designed stuff.

CA: Were you able to use that for your other customers?

AG: For those companies that wanted to pay for it, yes, we used those features for other semiconductor guys.

CA: And TI didn’t mind?

AG: No, not at all. In those days it was like…they were quite helpful as a matter of fact. There was no, “don’t tell anybody else.” It was also when Motorola helped us build the first laminar flow load station because none of that existed before. It was always open air. There was no class 100 or class 1000 or anything. Those were the first laminar flow loading stations and Motorola helped us develop those…to keep the wafer clean and also they helped us develop the toxic exhaust system because in the old days the gases came almost into the room. It was a little exhaust funnel…where the gases came out of the tube. But these were stainless steel designed exhaust manifolds that were built into the furnace as an intermittent part in the load station and the furnace. Motorola helped develop that one.

CA: Roughly what time period was this?

AG: ’65. It was very fast in those days. All of a sudden the business was exploding, including the business in Japan. That happened at the same time too.

KL: We started Japan about two years later. We had sold furnaces directly (to Japan) before that, but then we set up the factory in Japan, in a partnership, TEL Thermco. They were our sales people, they were representing us.

AG: Karl signed a joint venture with them [in 1967] which became TEL-Thermco.

CA: Whose idea was the joint venture?

AG: I’m not sure…Tom Kodaka [cofounder of TEL] was the guy who came and approached Thermco. I think Tom Kodaka had maybe heard about us through Fairchild because Kodaka was selling components for Fairchild in Japan and he might have heard about the furnace company in Garden Grove, which is Thermco. So they might have come through that connection.

CA: So at first it was a distribution agreement.

AG: Yes, we built here and they distributed and eventually they started manufacturing.

CA: Did the Japanese customers have any different requirements?

KL: Not really.

AG: The power was different in Japan, but that was about it.

CA: Who paid for the factory in Japan.

KL: It was 50/50.

CA: Was that a profitable operation for Thermco?

AG: Let me say this, because I talk to the guys once in a while…it was probably the most profitable joint venture in the semiconductor equipment business that was ever done. That’s what the Tokyo Electron people personally admitted to Karl and anybody else who wanted to listen. It was the most successful joint venture in Japan in the semiconductor equipment business. It started before anything else, it was the first one.

CA: Weren’t there restrictions on foreign ownership back then?

AG: Yes. There was a restriction. Thermco owned 47 and a half percent, Tokyo Electron owned 47 and a half percent and the general manager, who managed the plant for us, was a Japanese gentleman by the name of Ray Sato, he owned the other 5 percent. That’s how the lawyers set it up to get around [the rule] that foreigners couldn’t own a majority [of a Japanese company]. Ray Sato was a TEL employee, but he was really a TEL-Thermco employee. He did an excellent job.

CA: How long did the joint venture last?

AG: It lasted until 1988.

CA: What happened?

AG: Well, an interesting story. I have to give you a little history on Thermco. Thermco was sold to Sunbeam in about 1968, but it retained it identity. It was always Thermco Systems, but it was owned by Sunbeam, which is the big shaver and heat treat company. Sunbeam got absorbed by Allegheny International [in 1981] and the merger didn’t go very well. As a matter of fact it ended up in chapter 11, and during those chapter 11 proceedings the joint venture in Japan, TEL Thermco, was sold, and it was sold for a funny reason. Thermco was on the block too, of course. There were three companies that wanted to buy Thermco. There was BTU Bruce, Semitool (Ray Thompson), and General Signal. Bruce was probably the favorite because they were the most aggressive and they probably offered the highest price. However, they didn’t know what to do with the joint venture in Japan because they had their own arrangement in Japan. So they kind of told Allegheny to sell the joint venture in Japan because they didn’t want it.

Eventually, I think it was the Federal Trade Commission (FTC) that investigated the proposed merger between BTU Bruce and Thermco and ruled it out…it was anti-competitive because the customers would be locked into one supplier. But by that time TEL Thermco in Japan had been sold, which kind of damaged the goods so to speak, because with that the company would have been much more valuable. I can even tell you what the deal was. TEL Thermco was going to go public in Japan at the Tokyo Stock Exchange and the value was estimated at the time at something like $80 to $100 million. In other words, the Thermco portion was worth between $40 and $50 [million], market value. They delayed [the IPO] because there was a plunge in the stock market in Japan and then at that time the company eventually was sold. But when Karl wrote the contract with the Japanese, it [stipulated] that either partner could buy out the other if they were ready to throw in the towel and the other partner could buy the company at book value, not market value. Book value was very low, it was $11 million. So Tokyo Electron bought the 50 percent in the joint venture for $11 million, which was a steal because it was worth probably $50 [million].

When SVG bought Thermco the year later, they said the Japanese tricked the Americans. They didn’t trick anybody, they had the right. It was in the contract. They could have negotiated better. The bankruptcy judge that sold the company could have made a better deal. I remember when the president of Thermco at the time, Dick Pinto, drove to Los Angeles with the documents…and the next day the check was there for $11 million. It was a wonderful deal for Tokyo Electron. During that interim period I’d made a couple of trips [to Japan], because I was on the board of TEL Thermco for a number of years. I tried to convince the Japanese to buy 50 percent of Thermco and then have a 50/50 partnership on both sides of the ocean. However, at that time TEL was already in bed with Varian and was selling their furnaces so I think Varian put a lot of pressure on them not to do that, just to walk away from it. I was part of that discussion at that time but couldn’t swing it.

KL: What year was that?

AG: That was ‘89. Between ‘88 and ‘89.

KL: I was completely out of the picture by then. I had retired in 1976.

CA: Karl, did you travel to Japan very often during those early times?

KL: Oh yeah, nearly three times a year.

CA: What were your impressions of the industry?

KL: Always going, going, going. It was upbeat. For the years that I was going over we never had any problems. They were making money right and left.

CA: How far behind to you think the Japanese device makers were compared to the U.S. ones at that time?

KL: What do you think, Al?

AG: They were way behind. In those days the Japanese visited America all the time. Every time we had a new customer, even if it was a repeat customer, they would come to our factory and visit. Six, seven, eight people and they also asked us to see the customers who were using our equipment, which in those days were like Fairchild, National, Raytheon.

KL: Motorola, Hughes.

AG: And the Japanese would always ask, “Can we visit and see your furnaces in operation?” And of course we made a couple of phone calls, “Sure, bring them up.” So they visited almost every semiconductor company that was a customer of ours and I’m sure they did that for more reasons than one. Not to see our equipment, but to find out what state-of-the art they were at. As you know, all Japanese when they visited, they were all [taking notes].

CA: And taking pictures?

AG: I don’t know if the semiconductor guys let them take pictures, but in our place we encouraged it. It was an advertisement for us. And relatively inexpensive because they paid their own bill to come over and they went home and said “look what we found.”

CA: So these were device guys visiting?

AG: Yes, NEC, Toshiba, Fujitsu, Matsushita, they all came. You name it. They are still all there today. I have to say this, Tokyo Electron had them under control, absolutely under control. They had a one year forecast which you could never get from any American or European customer. One year forecast of what they could do and guaranteed business

KL: What about our business in England with Royce? I don’t know what year it was though.

AG: Yes…in the mid 70s we also had a joint venture in England with EFCO.

KL: Electric Furnace Company.

AG: The joint venture was called Royce-Thermco. Royce was a division of EFCO. And that lasted only for a year I think. They tried to supplement American components with locally made components and just couldn’t make it. The customers wouldn’t accept the furnaces. They shipped a couple of machines and the customers said forget it. They tried to build transformers out of steel rather than copper and that was cheaper but the transformers were four times the size of a copper transformer so the furnace grew tremendously and they didn’t know how to get all the equipment, the hardware into the base of the furnace. So it became a monster and it just didn’t pan out.

CA: Talking about Europe, was there much of a customer base there?

AG: Oh, absolutely. Biggest in Europe was Siemens. The day I joined the company there was a shipment going out to Germany, in Munich. Another big customer was SGS, which today is [STMicroelectronics]. Then there was a company in Rome called ATS, which eventually merged with SGS.

CA: What about GEC Plessey, Ferranti?

AG: Oh, all those English companies were very good customers. Ferranti, Marconi, all kinds of Plessey factories.

CA: Was that a bigger market than Japan in those days.

AG: Well, combined [UK and Europe] maybe, because for a while the English market was a fairly good size. Of course there was Thomson in France and Philips in Holland…in those days they were probably the same size but the Japanese outgrew them fairly fast.

CA: Going back to John Dannnelly, I know that he was also involved in forming SEMI.

KL: He was in an aeroplane accident.

CA: When did that happen?

KL: In ‘71, because it was ‘72 when they found him. I was in Japan at the time and when I landed here my secretary called me and said, “John is missing, but we haven’t heard.” And the next day they heard he was really missing. He was missing for several months before they found the plane. He was going up to Oregon, he was going to buy a ranch up there.

AG: His neighbor in Anaheim was flying the plane, one of those push-pull props, one in the front and one in the back.

CA: Dick Dunne (also of Thermco) told me that John Dannelley was the world’s greatest salesman.

AG: Oh, yes. John would sell stuff that didn’t exist. I mean, he really did. We had a group of artists that used to do renderings for him. And he said, “Here’s what we want to sell.” Thermco built at one time EPI reactors against Karl’s better judgment. But John convinced him to do so. He [Dannelley] didn’t know how to spell epitaxial reactor. He had a friend who said you should build some of those for me because I need some. So he had the Price brothers make a rendering of the box and it said “epitaxial reactor” and he went on the street and said “I’m going to build a couple of those.” So he got an order in the Bay area.

KL: We didn’t built very many.

AG: Maybe 10. Then John hired two engineers from the East Coast to build the reactor for him and they did. We built a couple for Fairchild, we built a couple for TI and Santa Barbara Research.

KL: Did we make any money on them?

AG: No

KL: I didn’t think so either (laughs).

AG: He [Dannelley] was also actively involved in the laminar flow business. We were building laminar flow stations, not only clean air stations, but wet chemical stations. And we built several lines, in those days we called them lines. We built those things out of particle board, with Teflon lining. We shipped them to Scotland, England. ERSO/ITRI in Taiwan, when they were the RCA licensee, bought a big line of furnaces and laminar flow stations. John came up one day and said, “There’s a whole bunch of stations that they need with clean air.” So he hired a couple of experts and put them to work and the Price brothers started making renderings for the layout. John was the inventor of that.

CA: So are you saying that John Dannelley came up with the in-line concept?

AG: Yes. This was the first in-line furnace station. Before people would just plop it in a room someplace. And also he built the first commercially available gas jungles. TI was the first company that bought a commercially made gas system. We had shut off valves, sequential timers that would click on different gases. And TI kind of encouraged us to do that. They were the company that gave us that knowhow. But we were the first company commercially to put gas systems together.

CA: Was there much competition in the furnace business back then?

AG: Oh yes, there was always competition. The early days it was Lindberg that eventually came around and saw there was business out there so they got a little eager. Then there was Sire, the attempt of Sire to kind of participate but that didn’t last very long. Then on the East Coast eventually…it was a different industry. There was Western Electric, AT&T and IBM. So there was a company called BTU, Howard Beck. And Howard Beck’s basic thing was conveyer furnaces which we also built at one time. And so he started building furnaces for the East Coast companies. We never did any business with IBM until later in life. We did the business at RCA, but that was because we had a good agent that got us into RCA. But IBM and Western Electric we couldn’t penetrate. They were BTU houses in those days. Eventually our own Tokyo Electron became the biggest competitor and today is No. 1 in the world in furnaces.

CA: Can I ask you Karl about your retirement. Why you decided to retire when you did?

KL: I had enough of it I guess. And I sold to Sunbeam.

CA: So that’s when you retired?

AG: No, he worked for another 10 years…had two five year options.

KL: I was over all their industrial factories. They had about six of them in the country here. I ended up being a vice president of Sunbeam.

AG: But all this time he still ran Thermco. He ran it for another 10 years.

KL: When John Dannelley died I kind of pulled back from some of that Sunbeam activity. I decided to hang around at Thermco more.

CA: Why did you sell the company to Sunbeam?

KL: My age. It’s like my secretary said when I left Lindberg, “Hell, you’re 50 years old why don’t you just retire with their retirement plan” (laughs). And she’s the one who turned around and came and worked for me. But that really is why. After going through the years I thought it was about time to retire and enjoy life.

AG: Thermco represented Sunbeam. We sold their heat treat furnace and we made a few of them at Thermco, for the big aerospace companies.

KL: We made industrial heat treat furnaces. We weren’t sure that the semiconductor industry was going to grow. The other line Al was talking about (heat treat for aerospace), I was into that Chicago for all those years.

AG: Heat treating airplane wings. In California there was lots of business for heat treat furnaces (for that application). We sold those heat treat furnaces. So I think what happened, Sunbeam was in the heat treat furnace business too and they found out about Thermco through their heat treat furnace area. And they said, “Hey, here’s a company that makes some specialty stuff” and they came over to negotiate with Karl. And maybe John Dannelley had something to do with it too, because he always had his nose out. But it was a good deal at the time, right Karl?

KL: Oh, yeah.

AG: You had been in business for 6 or 7 years and struck it rich. I remember they were going to offer you $7 or $8 million, but you finally settled for $3 (million).

KL: A lot of ups and downs, but I’m still around.

AG: Three million was a big chunk of money [in those days]

CA: This was in 1968?

AG: Yes.

KL: All I got was stock, there was no cash involved. Within Sunbeam, and it’s a big company, I was in the third or fourth rank of stock held by employees. I was up on top with the stock. And they all paid dividends.

CA: Much later didn’t “Chainsaw Al” come in at Sunbeam?

AG: That was under Allegheny…Allegheny went bankrupt and Sunbeam somehow survived and continued their little shaver business and then “Chainsaw Al” showed up and made a mess out of it one more time. By that time Karl had invested his money into better areas (laughs). Look at him smile!

CA: A while ago you made the comment that you weren’t sure the semiconductor industry would keep growing?

AG: It was not a given that the semiconductor industry was going to be what it became. As a matter of fact, John Dannelley talked already like it was history in those days, [saying] if it hadn’t been for the U.S. government the semiconductor industry would have never made it. Because in those days when we sold TI, Motorola, Westinghouse, Raytheon, they were all government contractors. They had the money to invest. It wasn’t a question of price. It was just, “Give me some stuff.” And they had the government contracts to develop new circuitry, including Fairchild. It wasn’t the Intel and the National and Micron and those guys. Those were all later, me-too kind of companies. The original investment all came from government money in those days and Dannelley had that vision…he said if it wasn’t for the government money we wouldn’t be here. He used to run around and say, “Here are my furnaces, you know all this stuff flying in the sky, rockets taking off…my devices out of these furnaces are taking the controls.”

CA: Karl, when you sold to Sunbeam, what was the number of employees?

KL: Maybe we had 100…we ended up with what, 300 or 400.

AG: More than that, maybe 600 or 700 at the peak. When I joined in ‘65 there were maybe 40 people.

CA: Karl, how did you become involved with SEMI?

KL: I was not involved with SEMI until later in life…after Dannelley died. Bill Hugle and John Dannelley worked very close on it. At the start when John died, I don’t know how long after that, they asked me to join the on the board. I had the membership thing on my lap, trying to get more people and contacting them trying to join. But that’s really where I fit in the SEMI picture.

Karl Lang and Al Giese were interviewed August 17, 2006 by Craig Addison of SEMI.