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spk09: Good day ladies and gentlemen and welcome to the Excellus Technologies call to discuss the company's results for the third quarter 2021. My name is Daniel and I will be your coordinator for today. At this time all participants are in listen-only mode. We will be facilitating a question and answer session towards the end of this conference. If at any time during the call you require assistance please press star followed by zero and a coordinator will be happy to assist you. As a reminder This conference is being recorded for replay purposes. I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Accelus Technologies. Please proceed, ma'am.
spk01: Thank you, Daniel. With me today is Kevin Brewer, Executive Vice President and CFO, and Doug Lawson, Executive Vice President of Corporate Marketing and Strategies. We are all participating in this call remotely, so I would like to apologize in advance for any technical difficulties. If you have not seen a copy of our press release issued last night, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC Safe Harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K Annual Report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Good morning and thank you for joining us. Excellus posted a very strong quarter due to the growing momentum of the Purion product line and strength of the semiconductor industry, particularly the mature process technology segment. Revenue for the third quarter was $176.7 million dollars with earnings per share of 81 cents, driven by strong gross margins of 43.3 percent. Quarterly system sales increased significantly to $126.2 million, an implant systems record. CS&I, our aftermarket business, continued to provide a major contribution to our top line and gross margin, with Q3 revenue of $50.5 million. In the third quarter, 91 percent of shipments went to mature Foundry Logic customers and 9 percent to memory customers, with an even split between DRAM and NAND. Due to growing strength in the mature process technology market, we now estimate that segment will account for greater than 80 percent of system revenue for the full year 2021. The geographic mix of our systems shipments in the third quarter was China, 70 percent, Europe 15%, Korea 5%, and the rest of the world 10%. In Q4, although China will continue to account for our largest percent of systems revenue, we expect the overall regional mix to be more balanced. Turning to fourth quarter guidance, we expect revenue of approximately $190 million, gross margins of approximately 41.5%, operating profit of approximately $37 million and earnings per share of approximately 84 cents. We now expect to exceed $640 million in revenue for the full year 2021. The increase in revenue since the last quarter has been driven by the continued growth of the mature process technology segment and the early stages of a memory capacity build. We believe both market segments will contribute to what we expect will be a strong 2022 for the industry and for Exelis. Our visibility into the first half of next year is very good as we are currently booking systems into Q3 2022. Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including chip shortages, high fab utilization across all segments causing significant new fab investment, government incentive programs creating geographical expansion opportunities for our customers, the rapid growth of the power device market, both silicon and silicon carbide, to support automotive industry plans for electrification, and finally, the fundamental underlying drivers that started this growth cycle, 5G, data analytics, and AI. We believe that the implant TAM has increased significantly. This is driven by an overall increase in wafer starts, by the growth of foundries serving the mature markets where ion implant is a fab bottleneck due to the large mix of products, and lastly, by the power and image sensor markets, which are more implant-intensive and require our more advanced Purion product extensions. The mature and specialty markets are generating sustainable growth with Purion product extensions designed to serve the power device and image sensor market. This is the case across all implant types, high current, medium current, and high energy. We have invested significantly in products for these markets over the last several years, and we continue to invest to maintain the leadership our Purion products enjoy. In Q3, we successfully closed an evaluation of a Purion H200 for a silicon power customer, highlighting our continued strength in the power segment. We believe the power segment will comprise 25 to 30 percent of our system's revenue for 2021, with the image sensor segment accounting for 20 to 25 percent. Strength in these segments contribute significantly to our margin expansion. Our growth in these segments is clear and sustainable, and most importantly, it is tied to long-term trends beyond any increases driven by semiconductor shortages. Turning to the memory market, since the end of Q3 and early into Q4, we have seen an increase in memory shipments for both NAND and DRAM applications. Last week, we announced that we shipped multiple systems to a memory customer, and successfully closed the evaluation of a Purion H for a new NAND high-current customer. This customer now has both the Purion H and Purion XE qualified for production. Revenue for that system will be recognized in the fourth quarter. We maintain a strong and growing position in memory, and we expect 2022 to see continued capacity additions. We believe DRAM will be stronger in the first half of the year with a subsequent pickup in land later in 2022. We continue to see a high degree of activity in the VS logic, where we have a Purion H evaluation underway that is expected to successfully close in Q4. This qualification will open the door for production buys in 2022 and 2023. We are also seeing an increase in activity in the Japanese market, especially related to power devices, image sensors, and general mature devices. Interest is strong for both our Perion and Legacy tools. In fact, earlier this week, we announced the launch of GSD Ovation high-current and high-energy batch implanters. We expect these enhanced Legacy products to be well-received by 200-millimeter customers and to provide potential CS&I upgrade opportunities to our large installed base. Evaluations are key to developing new customers, increasing footprint at existing customers, and penetrating new segments. We currently have five Purion evaluation tools in the field focused on supporting future growth. These include a Purion Dragon, a Purion H, a Purion XE Silicon Carbide, and two Purion XE Maxes, which are positioned across key target segments, including advanced logic, DRAM, image sensor, and power devices. We expect to close multiple evaluations in Q4 and plan to ship additional evaluations in the fourth quarter and throughout 2022. In 2021, we are closing in on our $650 million revenue model thanks to the success of Purion and a very strong semiconductor market. As a result, we are developing an implant-driven revenue model beyond $650 million that we will introduce at a virtual investor day currently planned for December 9th. Now I'll turn the call over to Kevin to discuss third quarter financial details, as well as several operational topics, including supply chain management and progress with our Korean manufacturing site. Kevin?
spk04: Thank you, Mary, and good morning. Excel has delivered solid Q3 financial results, driven by strong gross margin performance and continued revenue growth. With our strength in a growing mature process technology market, we now expect to exceed $640 million in revenue for 2021. Growing systems and CS&I revenue, coupled with strong bookings and backlog, have set up a strong finish to 2021 and position us well for expected growth in 2022. We are seeing significant leverage in our business model and expect full-year operating expenses to be around 24 percent of revenue with gross margins above 42 percent. Full-year gross margin assumptions include higher pandemic and supply chain related costs and the impact of our investment in additional manufacturing capacity. Ongoing gross margin improvement will be driven by the timing of cost of initiatives, customer and product mix, and continued growth in our CS&I business. Based on the strength of the market and demand for our PRM products, we are developing new financial targets that will take us well beyond our current $650 million model. We will introduce these models at our Virtual Investor Day on December 9th. Before discussing the details of our Q3 financial performance, I'd like to provide an update on our supply chain and new manufacturing facility in South Korea. We have and will continue to provide guidance that reflects our current assessment of supply chain challenges. Beyond working closely with our established suppliers, we continue to qualify new sources of supply and carry a higher than normal level of inventory to help buffer supply chain disruption. Our sales team is also working with customers to provide purchase orders much earlier than in the past, which improves visibility for our manufacturing team. We are adding manufacturing operations closer to our customers with a goal of increasing customer satisfaction and capacity. Construction of the new facility in South Korea is complete. Manufacturing began this week with first shipments scheduled for the first quarter. This is an exciting opportunity for us, but I want to reiterate, especially with our recent rapid growth, that we currently have sufficient capacity in place to support our near-term demands and expect the Korea factory to play an important role in supporting future manufacturing requirements. I'll turn to our third quarter financial results. Q3 revenue finished at $176.7 million, compared to $147.3 million in Q2. Q3 system sales were $126.2 million in implant systems record compared to $100.1 million in Q2. Q3 CS&I revenue finished at $50.5 million compared to $47.1 million in Q2. CS&I revenue remained strong, driven by high fabulization, the growing period installed base, system upgrades, and customers purchasing safety stock. We expect Q4 CS&R revenue of approximately $50 million. Q3 sales, our top 10 customers accounted for 77.3% of our total sales compared to 75.1% in Q2. One customer was above 10% in Q3 compared to two in Q2. Q3 system bookings were $244.2 million, compared to $172.1 million in Q2, with a Q3 book-to-bill ratio of 1.86 versus 1.71 in Q2. We are currently booking into the third quarter of next year. Backlog in Q3, including deferred revenue, finished at $406.6 million, a new record for Excellus compared to our prior record of $271.2 million in Q2. Q3 combined SG&A and R&D spending was $40.1 million, or 22.7 percent of revenue, compared to $40 million, or 27.2 percent in Q2. SG&A in a quarter was $23.4 million, with R&D at $16.7 million. We expect Q4 combined SG&A and R&D spending to be approximately 22% of revenue. Q3 gross margin was 43.3%, driven by strength in CS&I, higher appearing power series shipments, and continued cost-out activity. We're guiding Q4 gross margin to be approximately 41.5%, driven by product mix and the expected closure of multiple evaluation systems. We expect full-year gross margins to be above 42 percent, including closure of these evaluation tools. Operating profit in Q3 finished at $36.4 million, or 20.6 percent of revenues, compared to $24 million in Q2. We are guiding Q4 operating profit of approximately $37 million. Q3 net income was $27.5 million, or 81 cents per share, compared to $18.9 million or $0.55 per share in Q2. We are guiding Q4 EPS of approximately $0.84. Q3 cash finished at $271.8 million compared to $220.5 million in Q2. In the quarter, we generated $66.2 million of cash from operations and settled share repurchases of $12.5 million. Also in the quarter, we received meaningful prepayments on system sales. Q3 receivables were $78.3 million compared to $79.5 million in Q2. Q3 inventory ended at $196.8 million compared to $192.3 million in Q2. Q3 inventory terms, excluding ship evaluation tools, finished at 2.4 compared to 2.1 in Q2. Q3 accounts payable were $35.5 million compared to $40.7 million in Q2. As always, I want to thank our employees and suppliers for their continuing efforts and outstanding execution supporting our steep business ramp. It is an exciting time for Excellus with unprecedented growth in the industry and solid customer demand for our products. Our balance sheet is strong, and we have the financial strength to invest in products, infrastructure, and our employees. We have also returned over $62 million of capital to our shareholders under a share repurchase program since 2019. Under the current program, we had $62.5 million of remaining authorization at the end of Q3. Thank you, and I'll turn the call back to Mary for her closing comments.
spk01: Thank you, Kevin. Excellus is currently positioned for significant sustainable growth. The implant market is increasing thanks to strength in the overall semiconductor industry, but also due to a rapidly expanding mature process technology segment. The capabilities of Purion product extensions, like the Purion VXE and Purion Power Series, combined with the implant-intensive nature of the image sensor and power device segment, uniquely position Excellus to benefit from the electrification of the automotive market. We will continue to partner closely with our customers across all geographies in this growth segment. Excellus has the financial means to invest in R&D, global support infrastructure, and capacity to capitalize on all of the opportunities discussed in today's call. We are in the middle of one of the most exciting times in the history of the industry and are confident that we are focused on all the elements required for leadership in ion implantation. With that, I'd like to open it up for questions.
spk09: Ladies and gentlemen, if you wish to ask a question, please press star followed by one on your touchtone cell phone. If your question has been answered or you wish to withdraw your question, please press the pound key. Please press star 1 to begin. Our first question comes from Patrick Ho with Stiefel. Your line is now open.
spk05: Thank you very much, Aaron. Congrats on a really nice quarter and outlook. Mary, maybe first off, in terms of the business environment, you talked about memory picking up, and at least in 3Q, it's split between viewing and then. Can you give a little bit of color in terms of the kind of, a customer mix? Is it primarily with one customer or is it a broader mix with multiple customers?
spk01: At this point, Patrick, we're seeing that it's a broader mix with multiple customers. There's one customer in particular that has actually aggressively started placing orders But based on the quotations that we're doing and the bookings that we have, this is what gives us the confidence to say that it's broader and we'll start with DRAM and then expand into NAND in the second half of the year. Remember, we said we're actually already booking into the third quarter, so we've got pretty good visibility into the first half of the year.
spk05: Right, that's helpful. And maybe as my follow-up question for Kevin, kudos to you guys for managing the supply chain in a challenging environment, and you gave a little bit of color of some of the variables that you're doing to, I guess, mitigate these issues. Maybe specifically for Q3, given that there were more issues that arose, one, how did you manage through a lot more, I guess, complicated issues, And secondly, how are you reacting to kind of mitigate those situations in Q4, which appear to be still persistent coming off of Q3?
spk04: Yeah, that's a good question, Patrick. I mean, there's no doubt that the supply chain isn't very tight. And, you know, really since the start of the pandemic, it was mostly driven by pandemic and closures of businesses and, Of course, then we got into a logistics issue, and part of that's because of the pandemic. Part of it's just because of the volume that's trying to move right now through the industry. But early on, I think we got very aggressive with looking at our lead time offset to MRP with suppliers, putting buffer inventory in. moving from some of our bottleneck suppliers and getting some new capacity put online. So I think some of those early actions certainly are helping now. Now we're doing what we've been doing since the start. We're trying to stay on top of it. I mean, the team is working hard, as all companies are doing right now. We're still adding new suppliers. As we see problems arise, we're We're reacting, and we're trying to be proactive as well. We're looking at, you know, continuing to look at where there may be potential bottlenecks and trying to, you know, beat it off at the pass if we can. So there's a lot of hard work, and as I think you've heard me say before, you know, there's a lot of luck too. I mean, it's a big supply chain, so all we're going to do is continue to do those things that have been working for us. So far, as you point out, we've been able to manage through this, and that's our intentions as we continue to move forward. So I feel, you know, comfortable with our Q4 guidance that, you know, we have a good handle on what we need to do to execute this quarter from a supply chain point of view.
spk05: Great. Thanks again, and congrats.
spk04: Thank you.
spk09: Thank you. Our next question comes from Craig Ellis with B. Riley. Your line is now open.
spk03: Yeah, thanks for taking the questions and Congratulations, really, on two fronts, not just the near-term operating execution, which is remarkable in such a tough environment, but in the vision that you had years ago to really diversify out the Purian product line so you can be so well positioned for the secular drivers that you mentioned. And that's really where I want to start. Mary, as we look at the mature foundry market on the power side, And as we look at EV activity, we're currently low single digit million units of production, but by mid-decade, we should be 10 million, maybe 30 million by the end of the decade. So there's a tremendous ramp coming. And the question is, where do you sense your diverse customers are in getting capacity in place for that ramp? How much of that are we seeing here and now in second half, strengthen the business, and how much would you expect to fill in as we go through 2022 with the visibility that you have in your order book?
spk01: Well, we've talked extensively about power devices and how those are actually being driven by the electrification of the automotive market. Our customers right now who serve that market are adding pretty significant capacity, I would call it, full speed ahead at this point in time. And, again, based on our discussions with them, and we stay very close to them, not only in terms of trying to understand what the forecast is, but also in terms of understanding what the trends are in the products because, you know, we've talked about how our Perion Power Series is really a market leader, and we want to make sure that we stay that, that it remains that way. So I would say that it's quite strong right now, and we believe that it's going to remain strong into the foreseeable future. This is not a trend that's short-term. This is a trend that's longer-term. And again, we expect to be right there with our customers, enabling them to continue to manufacture these chips, even as they evolve over time. So this is a long-term trend, Craig, and we believe it. it's going to remain in place for many years to come.
spk03: Yep, that's helpful. Oh, go ahead, Doug.
spk07: Yeah, I just wanted to add that we are planning to do a deep dive on that market, on the power market and the specialty markets at the investor day in December. So there will be a lot more information.
spk03: Great. And then the second question was also in Mature Foundry and just flipping over and And Doug, you may refer me a bit to the December session, but I wanted to see if I could get some color. On the CIS part of the mature foundry market, certainly we're seeing very strong EV and ADAS demand there. We're also seeing very strong smartphone demand as smartphones continue to have an increase in image sensors per phone. and one of the things we've been looking for is the opportunity for Excellus to potentially gain further share in the Japanese market, and I'm hoping you can provide a little bit of color on whether you've got any increase in optics into tapping that market and growing into a large well-positioned customer there, potential customer there.
spk01: So Craig, Doug can address any of the technical issues, but we're continuing to work with all of the image sensors manufacturers, particularly the large ones. Obviously the target that you're talking about is something that we are working very heavily, not only with our team in Japan, but also really across the business. And, you know, in Japan right now, we actually have quite a bit of interest both in image sensors but also in the power market. And that's something that we'll continue to focus very heavily on. You know, we put a Perion XE into the power device market last year and that's in production and we're using that as a reference site which has generated a lot of interest. We actually just launched a Japanese website, Excellus website, and that should really help our Japanese customers become more familiar with and comfortable with Excellus. So lots of ongoing activities, and that's definitely something that will be a future event for us, a future win for us. Let's put it that way.
spk07: And I think a couple of other things. We are exhibiting at Semi Japan this year with a booth. We expect quite a bit of activity. And the key products relative to the image sensor market, there is the Purion Xe Max, which we have two evaluation systems in the field at leading competitors of that customer you're referring to. We think that that's the product that is going to drive really the next generation of immune sensors.
spk03: That's really helpful, and I'll flip it over to Kevin for a question. Kevin, interesting point on the prepayments that help with cash, $50 million, very, very strong performance. The question is, are prepayments something that, that we should expect to see more of in calendar 22 or were there just unique dynamics that took place in the calendar third quarter?
spk04: Well, it is customer specific. Um, and I will tell you it's, um, one particular geography with some of our smaller and what I would say newer customers. Um, there is a, um, In the PO terms, there are prepays that are associated with that order. So, depending on where the mix is from quarter to quarter, Craig, that could occur more or less. So, it's, you know, I did want to, you know, make mention to this quarter because it was more significant and we had a pretty significant cash generation from operations. So I just wanted to flag that.
spk03: Yep, helpful, and congrats on that, CFO. I'll hop back in the queue. Thanks very much, team.
spk09: Thank you. Thank you. Our next question comes from Christian Schwab with Craig Hallam Capital. Your line is now open.
spk10: Hey, congratulations, guys, on this really fabulous execution. Kevin, did I hear you right that your backlog went from $272 million last quarter to $406 million this quarter?
spk04: Yes, you did. And last quarter was a record, and this obviously was a new record, yeah.
spk10: Okay. Fantastic. So not to steal maybe some of the thunder that might come on December 9th, Doug, but... Can you guys kind of talk about, in particular, the silicon carbide market, where I think you have an implant product where your competitor really does not, and the industry is looking for material for wafer growth, and I'm sure you're aware there's not too many cars per wafer right now. That may or may not change in the future, especially if we go to 300. But can you kind of quantify the opportunity for you guys in that marketplace alone?
spk07: Well, I think, Christian, as I said, we're going to have a deeper dive on this on the investor day, more than we can do in a quick Q&A. But, you know, we expect this year, you know, power, you know, both silicon and silicon carbide power combined will be 25 to 30 percent of our systems revenue. So, you know, that's up from last year, which I don't have the chart in front of me, but I think it was around 17 percent. And so, you know, it is continuing to grow and, you know, automotive is probably the key driver. There's a lot of power switching that goes on in the car, a lot of silicon in addition to silicon carbide. So, you know, so we're seeing a lot of activity across all geographies. There's, you know, there was a lot of activity in Europe really starting at the Japanese market. has always been pretty strong in power. Recently, the U.S. market has really started to go after it aggressively, as seen by several customers' earnings reports in the past week or two. And the Chinese market is very, very active. So, you know, it's a worldwide phenomenon. There's a big push worldwide on EVs. And so we expect it to continue to grow, and we continue to develop the Perium Power Series family.
spk10: Okay, that's helpful. I don't have any other questions. Again, congrats on the high visibility and the great execution. Thanks. Thank you.
spk01: Thank you.
spk09: Thank you. Our next question comes from Tom Diffley with DA Davidson. Your line is now open.
spk08: Yes, good morning. Thanks for the question. So, first, Kevin, I was wondering if you could give us a summary or an update on just where we are, where you are in the evaluation systems, what you expect to close by the end of this year, which looks like the impact margins a bit, and which ones are going into 2022 and might be impactful there.
spk04: Yeah, so... I think Mary mentioned there's five evaluation systems currently out in the field. And in Q4, we expect to convert multiple systems. So, you know, we didn't put the exact number in there, Tom, but it's, you know, let's put it this way. It's three or more. So going forward, I expect we'll still have a few evals in the field in quarter one, but we are also continuing to put evaluation tools out. As a matter of fact, a fairly large portion of our current inventory number, beyond having some buffer inventory for supply chain issues, is evaluation systems, both shipped or work in process in the factory. I don't expect the evaluation tools to drop off in any meaningful way in the near term. We're going to continue to put them out there. And as you know, the more evals we have out there, the more opportunity we have to convert to revenue and future growth. So the margin impact is always a little bit of a disappointment, but it's a short-term disappointment because a lot of these new evals as well are the product extensions which are As we've talked about before, they have higher ESP and the margins are certainly more creative than some of the base products.
spk08: Okay. Yeah, one of those high-class problems.
spk04: Okay.
spk08: Maybe shifting over to the memory market for you, Mary or Doug. A year ago at this time, we were looking into 2021. We thought it was going to be a nice recovery year for memory. It didn't materialize, but it was dwarfed by just the mature business being so strong. I'm curious, when you look out into 2022, How does memory look different this year than it did a year ago?
spk07: Well, I think the, you know, if you look at, you know, pricing trends and so forth, you know, they're beginning to support, you know, growth in terms of additional capacity. The demand, if you look at any of the, you know, Gartner or IC Insights, reports show an increase in overall demand for memory over this next coming five years. We expect that there will be capacity additions. As Mary mentioned in the script, we have begun to see some of that this year. We expect that to continue next year. We expect it to be a better year than last year in terms of of overall memory. But for our business, I think your comment in terms of the mature business dwarfed it this year. The mature business is very big for us and is more implant-intensive actually than memory. So I would expect that next year we'll continue to see percentage-wise a stronger mix towards mature than memory, even though memory will be growing.
spk08: Okay, no, that's helpful. Thank you, Doug. And then the final question, I guess for Kevin again, when you look at the backlog ramping up here, the booking is very strong, and business is going into the third quarter now of next year, are you capacity constrained in any sense? I mean, is it going into the third quarter because that's when the customers need the tools, or is it kind of restrictions on how fast you can get these tools out the door?
spk04: Yeah, I think we've done a very good job – meeting what customers have required for ship dates. So I would say, Tom, that the majority of it really is meeting what the customer's requirements are. As I mentioned, we do have the career facility online now, which I'm extremely excited about because if I look at the time and how quickly we brought that up and running, it's actually quite remarkable what the team accomplished. We did start manufacturing this week, as I mentioned, and we'll start shipping in Q1. So, you know, that's going to certainly help, you know, out into the next year shipments, the near-term, you know, requirements. We've got cover with our current manufacturing in Beverly right now, so there's really not any constraints there. You know, I'll say it again, the teams, you know, both manufacturing, supply chain, across the business, people... We're pedaling the bike hard right now, but we're keeping up with it. I think maybe your question might be coming. I know throughout the year we have heard from others in our peer group that they're pushing deliveries out or they couldn't take any more deliveries in 2021, things like that. We haven't really made that an issue at this point because I think, again, we've kept up with what customers are needing to meet their requirements.
spk08: Okay, that's helpful. Thank you, the three of you, for your time today.
spk04: Yeah, thanks, Tom.
spk09: Thank you. Our next question comes from Charles Shee with Needham & Company. Your line is now open.
spk02: Hi, good morning. Thank you for taking my question. I'm asking on behalf of Quinn Fulton here from Needham & Company. So I want to start with a question. I think you guys mentioned a mature Foundry logic not only on a dollar basis but on a percentage basis next year is shaping up to be even stronger than this year. So I want to ask a question given how strong your bookings are and given your visibility all the way through like third quarter next year. How much of that demand you are seeing today is the underlying market demand, or is there any like a shift of those customers, the purchasing behavior from like just-in-time purchasing to like maybe just-in-case purchasing because the lead time is so stretched out?
spk01: I would say at this point, our sales team does a really good job trying to shake out exactly where people are just trying to get in line versus where the requirements are. And they do a lot of background work on, for example, is the FAB built properly? What's the status of the FAB? Where's the equipment going? We believe that the bookings that we have right now are bookings that will remain in place. Obviously, there are going to be some movement. There always is in terms of FAB readiness. We're very comfortable with the fact that the customers who are actually placing orders are going to take that equipment basically in the timeframe that they've indicated. And we're building to that. So we watch it. We do internal reviews with the sales team and the manufacturing team. It's almost on a daily basis. At a minimum, every week there's a review. to take a look at inventory levels and things that, you know, changes in the forecast. So we manage it extremely closely. So if any of those things do happen, you know, we're on top of it. And at this point in time, you know, again, we feel it's pretty certain. And so we don't think that there's a lot of speculative buying out there at this point.
spk02: Thanks, Mary. So maybe the next question I want to ask is more specifically about power devices, the demand you are seeing. Obviously, there are probably at least three major types of power devices, silicon BCD, IGBT, silicon carbide with various implant intensity. I would say they're all high, but there may be some difference there. Based on your 2022 order book, are you kind of seeing a shift in terms of the mix between these three types of power devices from 21 to 22? Is there more bias towards signal carbide or IGBT, those more sophisticated power device types? Thank you.
spk07: It's a split, Charles. It's, you know, we're still relatively early in the game in terms of I mean, power devices have been around for eternity, but we're kind of in that early game of this new use in EV applications. So I think it's split across the board. It really depends on that customer's primary strategy. Some are focused on silicon and IGBT. Some are focused on silicon carbide. There's other customers that are focused on GAN. I think we're just seeing across the board there's a lot of power device demand across a bunch of industries, but automotive is probably the biggest driver.
spk02: Got it. Maybe my last question, back to the eval. I noticed that your Purion Dragon eval for DRAM and a Purion Xe Max eval for image sensor has been a little bit for a while. I wonder whether you can update the progress there. Those two, obviously, very important for your for expansion in DRAM and the image center market. So we'd like to see if you can provide any color on those two.
spk01: Yeah, you know, as Kevin mentioned earlier, we have five evals in the field, two high currents and three high energies. One of the high currents is the Purion Dragon that you mentioned that is being qualified for a DRAM application. Now, that customer has already qualified the Purion Dragon for a NAND application. and it's in production. So we're going through the paces here. I think, as you know, evaluations, some can close early, some can take a little bit longer. Typically when it takes longer, we're working with the customers to ensure that they have all of the performance that they want, and sometimes those specs actually change from originally what we agreed to, we mutually agreed to, and expand. So that Perion Dragon eval, it's on track. We're working through it, and we're looking forward to having that closed and having that tool go into production very shortly. In terms of, let me just mention the other Perion H eval that's out there. It's for advanced logics. That's going very well also, and we believe that that is a great opportunity for us to further penetrate the advanced logic market in the future. In terms of the high energy, you mentioned the Purion Xe Max. We actually have two Purion Xe Maxes. in the field, both for image sensor development, and both of those are going very well. So there's no delay on that. And again, you know, we didn't really give out a timeline in terms of when those evaluations would close, but I would say that at this point they're both on track. So that's very positive. And then the last eval is a Purion XE. silicon carbide system, which is out with a power device manufacturer, and that's also proceeding very well. So I think we're on track, you know, and again, I'll say the word more or less based on each specific customer experience at this point in time.
spk02: Thanks, Mary. That's all from me. Thank you.
spk09: Thank you.
spk01: Thank you.
spk09: Thank you. As a reminder, that is star then one to ask a question. Our next question comes from David Dooley with Steelhead. Your line is now open.
spk06: Yeah, thanks for taking my questions. Just a couple of clarifications. You gave us a percentage of systems revenue for both power and CIS. Could you repeat those percentages again?
spk01: Yeah, let me find this. So, In terms of shipments for the quarter, we had, well, we said 91% was mature process technology. We have, actually, Doug, did we give that out? Did we give it out by segment, specific segment? I have it, but I don't remember actually saying that in the script, so. Dave, I don't think we actually gave it out.
spk06: I think when we get to... I'm almost positive I wrote it down, but... I said that... It's power and 20-25% of CIS is what I think you said for Q3.
spk01: Oh, I said yes. I didn't give a specific number. Yes, that's what we basically estimated that it would be, but we didn't give out the specific breakdown, and As Doug said, you're going to get more detailed information on December 9th when we actually do a deep dive into that segment. So I'm sorry, Dave. You are right. But we didn't give the exact numbers. Okie dokie.
spk06: And then when you talk about power and CMOS image sensor being more implant intensive, can you help me understand exactly what that means, how many implants per 10,000 wafers, or however you can characterize it? What does it mean to be more intensive for those particular applications with implants?
spk07: The devices that they're building are, in order to adjust the transistor characteristics and so forth, they require more implants. They require deeper implants, and so they tend to have a lot of high energy applications within them. They require fairly significant adjustment implants to get the performance where they want them to be, to adjust for the threshold voltages. and leakages to enhance the device performance and so forth. So they're very optimized types of devices. And so that creates a higher implant intensity. It's hard to break it down specifically to per 10,000 wait for start or per 100,000 wait for start because it's very customer mix and recipe dependent. But they are more implant intensive than most other devices and more so than memory and definitely more than FinFET-type transistors and so forth in advanced logic.
spk06: Okay. And with this record orders and backlog, you know, what should we expect for the first half of next year? You know, given that your manufacturing slots are full for the first half, what implications does it have for revenue in the first half of next year?
spk01: We're not going to give any guidance or forecast into 2022. That'll be something when we, you know, we'll give you some general information. We talked about some new models that are coming out that are implant-specific, and we'll provide that at our investor day. And then, obviously, when we get to the full-year call in February, we'll give you more information on 2022. Okay.
spk10: Okay, thank you.
spk09: Thank you. Thank you. Our next question comes from Craig Ellis with B. Riley. Your line is now open.
spk03: Yeah, thanks for taking that follow-up, and I wanted to direct it towards the CS&I business. Mary, you mentioned the GSD product that had press release recently, and the question is, is that something that, investors should expect would be material to CS&I's potential revenues in calendar 22. And on the topic of revenues, $50 million in the third quarter. I think the company said $50 million in the fourth quarter. So is $50 million kind of the new run rate for that business?
spk01: Well, let me answer the first part about ovation, and then I'll turn it over to Kevin to address the financial part of it. The GSD Ovation is basically available in terms of upgrades to our install base of legacy tools, mainly the high current and the high energy tools. It provides our customers with a path forward for improved performance on the tools that they already have. It can be ordered as a separate configuration, but I think the The main benefits we're going to see is through these upgrades that we have. So it's something that is important, but it's really part of the ongoing investment and innovation that we're making in that aftermarket business. And because the mature process technology segment is so strong and we have such a very large install base there, this is a really good investment for Excellus to be able to you know, continue to drive growth in that area with our customers.
spk04: Yeah, and Craig, I think, you know, there's no doubt that 50 million seems like it's, you know, kind of the new number because we've been at that level for quite a few quarters now, high 40s into the low 50s. Certainly with all of the Buying going on with our consumable business right now has been keeping this number elevated. And I think more importantly, too, our installed base is growing. We've shipped a lot of tools over the last several years, and that's beginning to take hold now with this kind of entitlement that goes with a tool shipment. So, you know, what the right number is, I mean, it's certainly a lot higher than where it was when we were always saying it was in the mid-30s, facing where we're running. When we put out our new models on the 9th of December at the Investor Day, I'll be more than happy to share our assumptions in those models for CS&I going forward, Craig. So I think if you give me a month, I can probably provide a little bit more color on that. But, you know, certainly $50 million at this point is significant. I think it's an area we're going to stay, and, you know, hopefully this continues to grow. And when we product new models again, I can discuss more about that.
spk03: Really helpful caller, Mary and Kevin. Look forward to checking in on the 9th. Thanks. Thanks.
spk09: Thank you. This concludes the Q&A portion of the call. I'll now turn the call back over to Mary Puma, who will make a few closing remarks.
spk01: Thank you, Daniel. I want to thank everyone for joining us today. We hope to talk with you virtually and see you in person at upcoming investor events. In November, we will be participating in the Benchmark Company Technology Virtual Investor Conference, and in December, we will participate in person at the CEO Summit in San Francisco and at the D.A. Davidson Semicap Laser and Optical Virtual Conference. We will also be hosting a virtual investor day on December 9th. We hope to see you there, and we want to thank you for your continued support.
spk09: This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Good day.
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