Hologic prepares to close deal with DR component supplier

Firm plans to coat digital detector with selenium

Hologic is negotiating with a European company to supply the critical selenium coating on its digital radiography flat-panel detectors. Problems with the current supplier, Montreal-based Analogic subsidiary Anrad (formerly Noranda Advanced Materials), led Hologic to lock in a second source, according to Glenn Muir, Hologic executive vice president and CFO. A final signed agreement between Hologic of Waltham, MA, and the European supplier, described only as a chemical firm, is expected in the next several weeks.

Anrad will continue as Hologic's primary source for the selenium coating, but the firm wants a backup supplier to avoid the kind of problems that delayed shipment of flat panels to OEMs and led to a $1.5 million shortfall in revenues during the first quarter of fiscal 2003, end Dec. 28. Shipments were held up when the selenium veneer fell short of medical standards, according to Muir.

The selenium coating is just one step in a lengthy and complicated supply chain. Hologic first buys the basic sensor panels, called thin-film transistors, from a Korean company, then prepares the TFTs in its Direct Radiography subsidiary in Wilmington, DE. The flat panels are next sent to Anrad to be coated with selenium. They are coated in batches, then sent back to the Wilmington plant, where the electronics are attached and the finished detector is either integrated with Hologic DR systems or shipped to other OEMs.

"The coating process has been problematic in the past, with variations in quality," Muir said. "But at this point we feel we have a pretty good handle on supply, although nothing has been signed yet with the second supplier. We are a couple of weeks away."

Meanwhile, the problem with the Canadian supplier appears to have been fixed. When the supply problem appeared last quarter, Hologic dispatched its own process engineers to Anrad's plant.

"They lost the magic touch for a while and we're not sure why. But I understand they are now moving detectors through the plant at a normal rate," said Jim Culley, director of marketing for Hologic's digital radiography systems.

The selenium coating is vital to the performance of Hologic's digital panels. When the coating fails to meet specifications, the company has two choices: sell them to Agfa for nonmedical use in nondestructive testing products or scrap them. The coating problem has occurred only in radiography panels, not the company's mammography detectors.

Detectors are being built into Hologic's Selenia full-field digital mammography system and will be supplied to Siemens for integration into that company's FFDM product, which is currently in development. The selenium coating on the mammography detector is thicker than the one on the DR panel, Muir said. Whether that accounts for Anrad's better luck with this panel is not known.