Release Date: May 07, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Veeco Instruments Inc (VECO, Financial) reported strong Q1 2024 results with revenue of $174 million and non-GAAP EPS of $0.45, both towards the high end of guidance.
- Record semiconductor revenue for the second consecutive quarter, driven by strong demand for laser annealing systems.
- Successful expansion in the semiconductor market with multiple new orders, including a multi-tool laser annealing order for a two nanometer gate all around process.
- Continued investment in new technologies, expanding the served available market and expecting growth from $600 million to over $1 billion in laser annealing.
- Strong financial position with cash and short-term investments of $297 million, despite a slight sequential decline.
Negative Points
- Flat sequential revenue growth, indicating potential stagnation or leveling off in the short term.
- Increased operating expenses, totaling $48 million, in line with guidance but still a significant cost factor.
- A decline in cash and short-term investments by $9 million sequentially, reflecting potential liquidity concerns.
- Challenges in the data storage market, with the business expected to be flat to up slightly compared to the previous year.
- Potential risks in relying heavily on the semiconductor market, which comprised 69% of total revenue, making VECO vulnerable to industry-specific downturns.
Q & A Highlights
Q: Can you clarify if the nanosecond anneal (NSA) is an incremental opportunity on top of the existing laser anneal under advanced nodes, or does it replace another technology?
A: (Bill Miller, CEO) The NSA is being evaluated for multiple applications including gate all around, backside power distribution, and 3D structures, alongside the existing laser spike anneal (LSA). It appears NSA does not cannibalize LSA for gate all around applications and opens up unique opportunities in applications like backside power distributions and 3D structures.
Q: Is the LSA now more assertively going into high-bandwidth memory (HBM), and can you confirm if this includes standard DRAM manufacturing?
A: (Bill Miller, CEO) Originally, LSA was qualified in the logic chip and the first level of HBM. Now, it has been qualified with one customer for the peripheral logic on the DRAM stack of HBM devices. The peripheral logic in HBM stack and in standard DRAM are very similar.
Q: Considering the 2024 outlook wasn't updated, are the incremental orders expected to start shipping in 2025? How does this affect the outlook for 2025?
A: (Bill Miller, CEO) The timing of shipping one system at the end of this year or beginning of next year does not significantly impact the full-year view for 2024.
Q: Can you provide an update on the compound semiconductor business, particularly in power electronics?
A: (Bill Miller, CEO) The focus has been on GaN on silicon and silicon carbide, transitioning from six-inch to eight-inch. Some customers are considering leapfrogging to 12-inch, and a 300mm evaluation system is planned to be shipped to a Tier one silicon power electronics manufacturer in the coming quarters.
Q: How much of a pricing uplift do you expect from NSA compared to other sales?
A: (Bill Miller, CEO) A higher price is expected for NSA due to its additional capabilities and value, with an estimated 10% to 15% higher average selling prices (ASPs).
Q: What is the outlook for the data storage market this year, particularly with the impact of AI on data storage?
A: (John Kiernan, CFO) The base storage business is expected to be flat to up slightly compared to last year. The rise of generative AI is expected to drive long-term exabyte growth, with projected growth rates around 20%, which could drive a healthy equipment industry to support it.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
