Financial Data and Key Metrics Changes - Third-quarter revenue was $166 million, exceeding the midpoint of prior guidance of $160 million, with non-GAAP operating income at $23 million and non-GAAP diluted earnings per share at $0.36, above the prior guidance midpoint of $0.28 [4][12] - Gross margin for the quarter was approximately 42%, at the top end of guidance, favorably impacted by higher volume and improved product mix [13] - Net income was approximately $22 million, with diluted EPS of $0.36 on 61 million shares [14] Business Line Data and Key Metrics Changes - Semiconductor business reported $118 million, a decline of 5% quarter over quarter, accounting for 71% of total revenue, driven by LSA, IBD EUV for mask blanks, and advanced packaging wet processing systems [12] - Compound semiconductor market revenue was $11 million, down from the prior quarter, totaling 7% of revenue [12] - Scientific and other revenue increased to $27 million, totaling 16% of revenue, driven by an increase in optical deposition systems [12] Market Data and Key Metrics Changes - Revenue from the Asia-Pacific region, excluding China, was 49%, a decrease from 59% in the prior quarter, driven by customers in Taiwan [12] - Revenue from China customers was 28%, an increase from 17% in Q2, primarily driven by LSA and optical deposition systems [13] - The United States accounted for 16% of revenue, while EMEA was 7% [12] Company Strategy and Development Direction - The company announced a definitive agreement to merge with Accellis Technologies, aiming to create a leading semiconductor equipment company with a combined served-available market of over $5 billion on a pro forma 2024 basis [5][6] - The merger is expected to provide growth synergies, expand the product portfolio, and enhance R&D capabilities [6][7] - The company continues to focus on advanced semiconductor technologies, particularly in AI and high-performance computing, with significant opportunities in gate-all-around, high-bandwidth memory, and advanced packaging [10][11] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's performance and the strategic merger with Accellis, which is expected to drive sustainable value creation [5][46] - The company anticipates revenue growth in the semiconductor market for 2025 compared to 2024, driven by demand in gate-all-around and advanced packaging [16] - The compound semiconductor market is expected to see revenue growth opportunities in GaN power, photonics, and solar for 2026 [16][17] Other Important Information - The company ended the quarter with cash and short-term investments of $369 million, a sequential increase of $14 million [14] - Cash flow from operations totaled $16 million, with CapEx of $3 million during the quarter [14] Q&A Session Summary Question: Is there new adoption in the 300-millimeter GaN order activity? - Management confirmed successful evaluations with a leading power IDM and a follow-on multi-chamber order for pilot line tools for data center applications [20][21] Question: Why is GaN being adopted in data centers now? - The efficiency of power conversion in data centers is a limiting issue, making materials that convert electricity more efficiently desirable [22] Question: Can you elaborate on the gross margin guidance? - The anticipated decline in gross margin for Q4 is due to product mix changes, including evaluation sign-offs at favorable pricing and increased business in advanced packaging [23][24] Question: What is the expected trajectory of the advanced packaging business in 2026? - The advanced packaging business has doubled, and while growth is expected, visibility for 2026 is limited due to shorter lead times [26] Question: How are the ordering patterns in the HDD market? - Lead times are approaching a year, with orders received in Q3 for ion beam and wet processing equipment, expected to ship in the second half of 2026 [30] Question: Was the strength in the scientific segment driven by Chinese customers? - Some strength was attributed to Chinese customers, along with demand for optical deposition tools for general industrial applications [31] Question: Is NSA adoption possible for memory customers? - Yes, there is interest from memory customers due to the technology's ability to anneal thin layers, conducive to material modification and 3D stacking [32] Question: Update on thin metal films with IBD evaluations? - Progress is being made in introducing new deposition technology, with customer engagement and evaluations ongoing [36] Question: Will margins improve in the future? - Management expects margin improvement in 2026 over 2025, with good visibility for data storage orders and new product orders [41]