Veeco(VECO) - 2023 Q1 - Earnings Call Transcript

Financial Data and Key Metrics Changes - Revenue in Q1 2023 was $154 million, with non-GAAP operating income of$20 million and non-GAAP diluted EPS of $0.30, all exceeding the top end of guidance [9][27] - Gross margin was 41.5$17 million, with an effective tax rate of 15% [31] Business Line Data and Key Metrics Changes - Semiconductor products revenue increased by 20% year-over-year, contributing 60% of total revenue, primarily driven by laser annealing [9][27] - Compound semiconductor market revenue decreased to 14% from 16% in the prior quarter, with weak performance in wet processing due to smartphone market softness [28][18] - Data storage revenue increased to 14% from 11% in the prior quarter, with expectations for growth based on backlog orders [28][21] Market Data and Key Metrics Changes - Revenue from China accounted for 40% of total revenue in Q1, driven by LSA systems to trailing edge customers [29] - Asia Pacific region (excluding China) contributed 25%, the United States 20%, and EMEA 15% to total revenue [29] - The HDD industry is expected to see nearline hard disk drive exabyte shipments grow at approximately 25% CAGR over the next five years [21] Company Strategy and Development Direction - The company is focused on investing in semiconductor and compound semiconductor markets with differentiated solutions for long-term growth [10][11] - Key technologies include laser annealing, ion beam deposition for EUV, and advanced packaging lithography [12][14] - The company aims to outperform wafer fab equipment spend in 2023, particularly in the semiconductor sector [15][17] Management's Comments on Operating Environment and Future Outlook - Management noted improvements in supply chain management and expects material lead times to improve in the second half of the year [10] - The company anticipates growth in LSA and EUV mask point product lines to offset weaknesses in advanced packaging lithography due to weak consumer demand [17] - Management remains cautious about the macroeconomic environment but is optimistic about the second half of 2023 based on backlog visibility [34] Other Important Information - The company ended the quarter with cash and short-term investments of $253 million, a decrease of$50 million due to acquisitions and debt payments [32] - The company is committed to improving corporate culture, transparency, diversity, and environmental responsibility [23][24] Q&A Session Summary Question: Areas of improvement in product lead times - Management noted that higher revenue was driven by additional semiconductor and data storage systems, with no structural changes observed [36][37] Question: Data storage guidance amid market softness - Management acknowledged softness in the data storage market but expects revenue growth in the second half based on confirmed backlog orders [39][40] Question: Market size for DRAM memory space - Management estimates the market size for DRAM applications at $25 million to$35 million per customer over 12 to 24 months, with shipments expected in Q2 [43][44] Question: Update on MOCVD and GaN market - Management indicated that the evaluation system for GaN is running, with expectations for meaningful gains in 2024 [46][47] Question: Market opportunity in silicon carbide - The silicon carbide device market is projected to grow from $2 billion to$6 billion by 2027, with the epitaxy equipment market expected to reach $0.5 billion [50][51]