Veeco(US:VECO)2023-08-08 00:23Financial Data and Key Metrics Changes - Revenue in Q2 totaled $162 million, a 5% increase from Q1 and near the high end of guidance, with non-GAAP operating income reaching $24 million and non-GAAP diluted EPS at $0.36, both above guidance [7][27] - Gross margin was approximately 43%, up from 42% in the previous quarter, positively impacted by higher revenue and a favorable product mix [31] Business Line Data and Key Metrics Changes - Semiconductor revenue comprised 65% of total revenue, increasing 14% sequentially and 9% year-over-year, driven by record laser annealing shipments [27] - Compound semiconductor revenue increased slightly to 15% of total revenue, primarily from photonics applications [28] - Data storage business accounted for 9% of revenue, showing a decline from the prior quarter [28] Market Data and Key Metrics Changes - Revenue from the Asia Pacific region (excluding China) increased to 36% of total revenue, up from 25% in the prior quarter, due to significant semiconductor system sales [29] - Revenue from China decreased to 31% of total revenue, primarily due to lower LSA system shipments [29] Company Strategy and Development Direction - The company is focused on expanding its semiconductor growth strategy, particularly in advanced logic and memory applications, with significant opportunities in laser annealing and ion beam deposition [7][19] - The company aims to capitalize on the growing demand for epitaxy equipment in power electronics and photonics applications [12][43] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the semiconductor market, particularly in laser annealing and ion beam deposition technologies, as they are critical for advanced chip production [9][10] - The company anticipates continued demand for its products in AI applications, with expectations for significant revenue contributions from high bandwidth memory in the future [15][46] Other Important Information - The company completed a refinancing of convertible notes, strengthening its balance sheet and reducing cash interest payments [36][37] - Full-year 2023 revenue outlook is reiterated at $630 million to $670 million, with an increase in profitability expectations due to stronger gross margins and reduced interest expenses [40] Q&A Session Summary Question: AI opportunity and HVM exposure - Management estimates that approximately 10% of current revenue is attributable to AI, with expectations for significant growth in this area [46] Question: Gross margin improvements - The increase in gross margin is attributed to higher volumes, favorable product mix, and improved cost management [48] Question: Revenue expectations for Q3 - Guidance for Q3 revenue is approximately $165 million, with expectations for semiconductor revenue to be slightly down from Q2 [51] Question: High-bandwidth memory opportunity - Management sees potential for high bandwidth memory revenue to grow significantly, estimating a future comparable size to logic revenue [55] Question: Epitaxy tool market for silicon carbide - The estimated market size for the epitaxy tool market is currently $200 million to $300 million, with potential growth to $0.5 billion by 2027 [57] Question: MicroLED developments - MicroLED market developments are expected to materialize around 2025, with the company well-positioned to capture opportunities [58]