Veeco(US:VECO)2025-08-06 22:00Financial Data and Key Metrics Changes - Revenue for the quarter totaled $166 million, slightly down sequentially and down 6% year over year, but above the high end of guidance [14][15] - Non-GAAP operating income was $23 million, and non-GAAP EPS was $0.36 [4] - Gross margin was approximately 43%, above the high end of guidance, positively impacted by higher volume and improved product mix [17] Business Line Data and Key Metrics Changes - Semiconductor business revenue was flat sequentially and grew 13% year over year, representing 75% of total revenue [15] - Revenue from the Compound Semiconductor market was flat at $14 million, accounting for 9% of total revenue [15] - Data storage revenue increased to $12 million, totaling 7% of revenue, while scientific and other revenue decreased to $16 million, also totaling 9% of revenue [15] Market Data and Key Metrics Changes - Revenue from the Asia Pacific region (excluding China) increased to 59%, up from 36% in the prior quarter, driven by sales in Taiwan and Southeast Asia [16] - Revenue from China decreased to 17% from 42% in the previous quarter, with expectations for China revenue to be about 30% in the first half of the year and around 20% in the second half [16][30] Company Strategy and Development Direction - The company is focused on capitalizing on long-term growth in the semiconductor market, particularly driven by AI and high-performance computing [21] - The company sees opportunities in adjacent mask blank steps and aims to expand its business in advanced packaging and lithography technologies [6][11] - The company is investing in additional systems to drive new business in both logic and memory, with expectations for significant revenue growth in 2025 [12][21] Management's Comments on Operating Environment and Future Outlook - Management noted that global trade dynamics and tariff policies continue to evolve, impacting costs and operational efficiency [20] - The outlook for the semiconductor market remains strong, with growth potential driven by leading-edge investments [21] - The company expects revenue in the compound semiconductor market to decline in 2025 but sees growth opportunities in GaN power, solar, and photonics applications starting in 2026 [22] Other Important Information - The company retired all $25 million of convertible senior notes due in 2027, enhancing financial flexibility [19] - Cash flow from operations totaled $9 million, with capital expenditures of $3 million during the quarter [18] Q&A Session Summary Question: Impact of China on Revenue - Management clarified that the decrease in revenue from China was expected and attributed to delayed shipments due to tariffs, which have since been resolved [27][30] Question: Customer Spending Caution - Management indicated that the caution from a major U.S. IDM customer does not significantly impact the company's business outlook, as they continue to work with leading logic players on their next nodes [35][36] Question: GaN Power Evaluation Timing - The evaluation for the 300mm GaN on Silicon system is progressing well, with potential pilot line business expected to start in 2026 [39] Question: Competitive Dynamics in GaN - Management highlighted improvements in product lines and competitive advantages in productivity and cost of ownership in the GaN on Silicon market [45][46] Question: China Revenue Guidance - Management reiterated expectations for China revenue to be around 20% in the second half of the year, consistent with prior forecasts [50][51] Question: Tariff Impact on Component Costs - Management confirmed that tariffs have impacted costs, with a forecasted 100 basis point impact in Q3 [56] Question: Technology Activity and Demand - Management noted that AI, high-performance computing, and high bandwidth memory are driving significant activity and demand in advanced packaging and lithography [62]