Financial Data and Key Metrics Changes - The company reported third-quarter revenue of $214 million and non-GAAP earnings per diluted share of $1.21, both exceeding expectations [5][19] - GAAP gross margin was 41.6%, while non-GAAP gross margin was 41.8%, below the expected 43% due to a mix of low-margin system installations [21][22] - The company generated approximately $43 million in free cash flow during the third quarter, reflecting better-than-expected profitability [23] Business Line Data and Key Metrics Changes - Systems revenue was $144 million, and CS&I revenue reached a record of $70 million, driven by strong demand for spares and consumables [19] - Bookings in the third quarter declined to $52 million, primarily due to softer power and general mature bookings, but an improvement in memory bookings was noted [5][20] - Revenue from silicon carbide applications grew sequentially, while general mature revenue declined as customers managed capacity investments [10][14] Market Data and Key Metrics Changes - Sales to China decreased sequentially to 46% of total sales, down from 55% in the prior quarter, as customers digested previous investments [20] - The U.S. accounted for 14% of sales, while Korea declined to 10% [20] - The company anticipates revenue from China to decline sequentially in the fourth quarter [20] Company Strategy and Development Direction - The pending merger with Veeco is expected to create a leading semiconductor equipment company, enhancing capabilities and market reach [6][10] - The combined company aims to leverage strengths in silicon carbide and gallium nitride to address growing demand in electrification and AI [7][9] - The company is focused on product development and customer engagement while maintaining cost control [18] Management's Comments on Operating Environment and Future Outlook - Management noted that the second half of 2025 has shown slight improvement in demand compared to the first half, particularly in silicon carbide [29] - There is cautious optimism regarding memory market recovery in 2026, driven by increased DRAM and HBM investments [17][34] - The company expects bookings to improve sequentially in the fourth quarter, with a strong backlog of $484 million [20][51] Other Important Information - The company implemented a one-time voluntary retirement program, with additional expenses expected in the fourth quarter [22] - The company exited the third quarter with a strong balance sheet, consisting of $593 million in cash and marketable securities [24] Q&A Session Summary Question: Dynamics in the other power category - Management indicated that the second half of 2025 has been slightly better than the first half, with Chinese customers adding capacity while non-Chinese customers are not transitioning [29] Question: China demand outlook for 2026 - Management stated that 2025 has been a year of digestion, and future demand will depend on end demand environments and progress on chip self-sufficiency targets in China [32] Question: Memory market outlook - Management noted that demand is currently coming from DRAM and HBM, with expectations for new greenfield capacity to be brought online [34] Question: CS&I revenue sustainability - Management indicated that the current level of CS&I revenue is expected to be sustainable, driven by improved utilization rates and customer restocking activities [38] Question: Bookings expectations for Q4 - Management expects bookings to increase across all customer segments in Q4, with a buildup of pressure leading to purchase orders [39] Question: Silicon carbide adoption outside of EVs - Management highlighted potential applications in the electric grid and data centers, indicating a growing market for silicon carbide beyond electric vehicles [60]