CyberOptics Corporation

today ladies and gentlemen and welcome to the cyber optics fourth quarter 2021 earnings call today's conference is being recorded at this time i turn the conference over to dr subodh kokarni president and ceo of cyber optics please go ahead thank you good afternoon and thanks for participating in cyber optics earnings conference call for the fourth quarter of 2021. joining me is jeff burdelson our cfo and chief operating officer

who will review our results in some detail following my overview of our recent performance. We then will be pleased to answer your questions at the conclusion of our remarks. In keeping with Regulation FD, we have made forward-looking statements regarding our outlook in this afternoon's earnings release. These forward-looking statements reflect our outlook for future results, which is subject to a number of risks that are discussed in our Form 10-K for the year ended December 31, 2020, and other filings with the Securities and Exchange Commission. We urge you to review these discussions of risk factors. Turning now to our recent performance, CyberOptics reported strong sales and earnings in the fourth quarter of 2021. Sales of $22.1 million rose 31% from $16.9 million in the fourth quarter of 2020. Net income for the fourth quarter of 2021, which benefited from a gross margin percentage of almost 50%, came to $3.4 million or 45 cents per diluted share, an increase of 132% from earnings of $1.5 million or 20 cents per diluted share in the year earlier quarter. We also reported record sales and earnings in 2021. For the full year, Sales totaled $92.8 million, an increase of 32% from $70.1 million in 2020. Net income in 2021 was $12.8 million, or $1.69 per diluted share, up significantly from $5.7 million, or $0.77 per diluted share in 2020. CyberOptics' fourth quarter and record full-year operating results were driven by sales of our 3D, MRS-based sensor and inspection system products, and wafer sense semiconductor sensors. These products accounted for 76% of total sales in the fourth quarter of 2021, compared to 69% in the year-earlier period. For full year 2021, our MRS-enabled and wafer sense products accounted for 78% of total sales, up from 67% for all of 2020. We believe this ongoing shift in our sales mix demonstrates that CyberOptics is continuing to penetrate and gain traction in our targeted surface mount technology and semiconductor capital equipment markets. The competitive advantages of our advanced sensor and inspection system products are enabling us to capitalize upon strong growth opportunities in this market. Demand for our MRS-based products and wafer sensors is expected to remain strong for some time making us optimistic about CyberOptic's outlook for the first quarter of 2022. We also see the full year shaping up as another period of strong operating results. Now, for the next few minutes, I will review the performance of each of our product families. Sales of 3D and 2D sensors increased 40% year-over-year to $7 million in the fourth quarter of 2021. Within this category, sales of 3D MRS sensors rose 41% year-over-year to $5 million in the fourth quarter, driven by demand for these sensors in high-end electronics and semiconductor inspection and metrology applications. Sales of 3D and 2D sensors are forecasted to post strong year-over-year growth in the first quarter of 2022. Sales of semiconductor sensors, principally our wafer sense line of sensors, increased 62% year over year to $6 million in the fourth quarter of 2021. Ongoing demand for semiconductor capital equipment is driving the sales growth of this yield and process improvement sensors. Sales of semiconductor sensors are forecasted to record strong year over year growth in the first quarter of 2022. Sales of inspection and metrology systems rose 11% year over year in the fourth quarter of 2021 to $9.1 million. Within this product category, fourth quarter sales of SQ3000 multifunction inspection systems increased 15% year-over-year to $4.7 million. Of total fourth quarter SQ3000 sales, $1.1 million was generated by sales of systems for mini-LED inspection and metrology. SQ3000 sales related to mini-LED applications totaled $8 million for the full year, and the mini-LED backlog at December 31, 2021 stood at $1.4 million. Additional orders from this growing market are anticipated in 2022. Fourth quarter system sales also benefited from customer acceptances of nearly $1 million for 3D MX3000 final vision inspection systems and sensor kits for memory modules. Additional MX3000 orders of $1.5 million were received earlier in the first quarter of 2022, bringing our current backlog of 2D and 3D MX products to $5 million. These orders are presently scheduled to be recognized as revenue primarily in the second and third quarters of 2022. Sales of inspection and metrology systems are forecasted to post strong year-over-year growth in the first quarter of 2022. Cyberoptics backlog at December 31st, 2021 totaled a record $47.3 million, up from $44.2 million at the end of third quarter of 2021, and $23 million at the end of 2020. We are forecasting sales of $22 to $24 million for the first quarter of 2022, ending March 31st, compared to $17.7 million in the first quarter of 2021. As mentioned earlier, we expect to report strong operating results in the first quarter of 2022 based on the continuation of favorable market conditions and shipments from our order backlog of 3D MRS-based sensor and system products. Cyberoptics made significant progress at penetrating our targeted SMT and semiconductor capital equipment markets in 2021 due to the demonstrated competitive advantages of our advanced sensor and system products. We believe this progress will continue in 2022, which will be shaping up as another strong period for cyber optics. Thank you. Now, Jeff Bertelsen will review our fourth quarter performance in greater detail.

Thanks, Subodh. Our gross margin percentage in the fourth quarter of 2021 was almost 50%, up from 47% in the year earlier period and better than our forecast at the beginning of the quarter. Sales of SQ systems with better price points for more demanding higher-end electronics and semiconductor back-end assembly applications were the primary factor driving the improvement in our gross margin percentage in the fourth quarter of 2021. Our gross margin percentage for the first quarter of 2022 is expected to be down a couple of percentage points from the strong level posted in the fourth quarter of 2021, primarily due to lower price points for SQ system sales. The COVID-19 pandemic has caused disruptions in the global supply chain, including parts and labor shortages and delays in ocean freight and port congestion. It has become increasingly difficult to obtain adequate supplies of certain key components needed to manufacture our products. We are spending an increasing amount of time working with our suppliers to ensure that we have adequate supplies to meet customer demands. To date, these shortages have not had a significant impact on our business and we are confident that we have adequate supplies to meet customer demands for the first quarter of 2022. In addition, we are keeping extra inventories on hand at the present time so we can meet anticipated customer demands for later quarters. Total operating expenses in the fourth quarter of 2021 increased 13% year over year to $7.2 million. This increase was due to higher third party channel commissions resulting from the significantly higher year over year sales and higher compensation costs for new employees. Depreciation and amortization expense totaled $665,000 in the fourth quarter of 2021, and stock compensation expense came to $348,000. Total operating expenses in the first quarter of 2022 are forecasted to increase by about 5% to 8% sequentially from the fourth quarter of 2021, again, due to higher channel commission and compensation costs and also increased participation in trade shows. Our effective income tax rate for the fourth quarter of 2021 was 9% and was favorably impacted by $190,000 of excess tax benefits from stock option exercises investing of restricted shares and restricted stock units. Absent excess tax benefits, our tax rate for all of 2021 would have been about 16%, and this is the tax rate we are expecting for the first quarter of 2022. We presently anticipate that there will be additional excess tax benefits later in 2022, which will drive down our tax rate in future quarters. Cash and marketable securities total $38.3 million at the end of the fourth quarter of 2021, up from $33.5 million at the end of the third quarter and $30.6 million at the end of 2020. We believe our capital resources are adequate for achieving our growth objectives. I want to conclude by saying that we are optimistic about CyberOptic's outlook for the coming year. We expect to make further progress throughout the year at penetrating our targeted markets with our lineup of MRS-enabled sensors and systems and WaferSense semiconductor products. This progress should make 2022 another year of solidly improved operating results. Thank you. We would now be happy to take your questions.

Thank you. Ladies and gentlemen, if you'd like to ask a question, you may do so by pressing star 1 on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. Again, please press star 1 to ask a question. We'll pause just a moment to give everyone an opportunity to signal for questions. We'll take our first question from Dick Ryan with Colliers. Please go ahead.

Thank you. Congratulations on the strong quarter and good guidance. You gave us the $8 million for mini-LED business for all of 2021 and said you anticipate some additional orders. Can you just kind of give us kind of the perspective that you're looking at right now of that market opportunity?

Sure, so MiniLED has already been a good growth contributor for our results in the last two or three years now. And this year is shaping up to be an exciting year for MiniLED scale-up as well. Several large consumer electronic companies have made announcements that they are going to scale up MiniLED-based products as the year goes on. And we certainly maintain our position as the key player in enabling inspections for various process steps in the MiniLED process. So our SQ3000 gets used in the most critical, demanding steps during the manufacture of MiniLED. Now that multiple companies and multiple products are getting scaled up, we feel pretty optimistic that this will be another solid growth year for SQ for the MiniLED application.

Yeah, I was wondering if you're gaining any other additional inspection steps, or are you just getting deeper into some of your existing customers?

It's more customers are joining the activity, and we are getting more from the existing customer and the new customer. So it's coming more, not because of any inspection steps, but because more are coming in and more lines are getting scaled up.

Okay. Switching over to the memory side, 2D, 3D, you had some good commentary as well there. What is your anticipation of order patterns, you know, in 21? And is the first customer shifting more from the 2D to the 3D?

Yeah, so we right now have two customers and their subcoms as well who order those. systems from us. One customer has ordered 3D version of MX, so the MX3000 from day one. Another customer that started earlier started with 2D. They have ordered some 3D, but they also continue to order some 2D depending on their needs. So we expect one customer to continue to buy both 2D and 3D MX systems and one to continue to buy 3D. Overall, memory market is doing really well. Both these customers are increasing the number of lines, and based on the forecast that they have given us, we feel pretty good about growing our MX business to these two customers and their subcons right now in 2022.

Okay. I'll turn to a couple of financials. You said that the supply chain hasn't had much of an impact. Are you seeing any revenues that have been pushed out at this point?

No. To this point, Dick, we really haven't seen any significant revenues push out. We haven't had any significant disruptions. Certainly, we've seen component shortages like everybody's experienced. Thankfully, to date, we've been able to secure the components that we need and the parts that we need to deliver for the customers. And, you know, right now we're in good shape for Q1, and we are carrying some extra inventories to help buffer us as the year progresses.

Okay, great. And just one last one. Jeff, you have the cash flow from ops for the quarter and the year. And then did I hear you right? You said the gross margin from Q4 will drop a couple of percentage points.

yeah yes that's right so first on the gross margin um you know as as the numbers show we were almost 50 so so pretty strong quarter there but you know i am uh thinking those margins might drop a couple of points still a good good showing but i you know i'm thinking they'll be down a couple points in q1 2022 sequentially from the fourth quarter in terms of of Operating cash flow for the full year, it's $10.1 million is what you would see, and about $5 million in the fourth quarter alone.

Okay. Great, thank you. Thanks, Jake.

We'll take our next question from Craig Palm with Craig Helium Capital Group. Please go ahead.

Yeah, thanks, Acebo. Hey, Jeff, congrats on the good results and, frankly, a pretty outstanding year.

Thank you, Greg. Thanks, Greg.

I wanted to start on the gross margin because that number really stood out. So, you know, other than mix, anything that you can point to? And I'm curious, as we think about this year, I know you've given guidance for Q1, but Should we assume any further gross margin expansion based on that SQ cost reduction plan that you've talked about in the past?

Yeah. So, and certainly, you know, when you think or when I think about or we think about gross margins, I mean, for sure, mix is the biggest factor in our gross margin. And You know, Wayfair Sense had a phenomenal year in 2021. We think, you know, that will continue into 2022. And then also the probably the biggest driver in terms of our growth margin is just, you know, the SQ product line and the sales price points there. And as we target into, you know, more higher end applications, for that product. Certainly that's where we expect to go with increasing mini LED sales and so forth. So I think those are really the main drivers in our gross margin profile for 2022. It's really mix dependent, more wafer sense, more MRS sensors, and really driving SQ into those higher end applications. At this point, I don't think You know, we do have SQ cost reduction programs that we're working on, but I don't think that'll be a huge factor, you know, when we think about gross margin in 2022. Certainly our gross margin trend, you know, really throughout 2021 has been good and we're going to continue to work on that. But I think it's a really mix for 2022.

I mean, looking back, you know, kind of this 44% range was sort of the gross margin, at least on an annual basis, for, you know, 2018, 2019, 2020. I mean, do you get the sense at least, you know, excluding any mix, you know, either way? I mean, is gross margin maybe the newer baseline more like mid to high 40s versus the 44% to 45%? Just trying to get – Yeah, I mean, I –

I think when you look at our results, you know, and certainly every quarter, you know, if you look at 2021, we had, you know, one quarter at the second quarter was around 44. The others were north of 45% in 2021. And, you know, we started to see a little bit of that really like in the fourth quarter of 2020. So I think, you know, at, you know, Just assuming mix sort of stays the same, I mean, I think this is a newer baseline for us. Way percents grew 59% in 2021, so that has a huge impact on our gross margins. But if the mix stays the same, I think this is sort of the newer baseline. And our composition of MRS-based product sales and wafer sense product sales has continued to grow, which has helped growth margins. So I think we have made some progress, and I think this is closer to the newer baseline maybe than the 44-ish type percent that we've seen in the past. But definitely, it is mix-dependent.

Yeah, that's great. Obviously, it's a pretty important lever if that's the case. Subodh, can you give us just a little bit of sense on the overall pipeline? You gave a little bit of color on mini-LED and certainly memory, but what are you seeing out there? Anything that concerns you? It certainly seems like it's a pretty good backdrop.

I mean, overall, the backdrop continues to look very healthy. Both semi-cap and electronics markets seem to be growing fairly well. Numbers vary depending on which analyst report you look at and which specific market. I mean, the latest indications are that semi-cap market will overall grow roughly 10% in 2022, and electronics market will roughly, electronics inspection market will roughly grow 10% to 15% in 2022. So it's a very healthy macroeconomic backdrop. But the range varies. There are some analysts who are projecting lower numbers. There are some who are projecting higher numbers. But we believe, in general, the markets we are playing in are growing in the 10% to 15% neighborhood right now. So it's a very healthy backdrop. Within that, obviously, we have our two differentiated technology platforms, MRS and WaferSense. And we continue to gain traction, increase our market share, if you will, within those markets. That's why we feel pretty good about 2022 being another solid year for us. Visibility gets difficult once you go beyond a few months, so most of the reports that we are seeing right now are very relevant certainly for Q1 and Q2. These reports get updated. I think everyone has a tough time projecting, given all the external events that are going on in the world, what exactly will happen in the second half of this year or certainly next year. But overall, I believe semi and electronics industries feel pretty good that this is a solid growth year. And 2023 also is looking like a very good growth year at this point.

And knowing that your end markets, I guess, are still showcasing some good growth, I think you've nicely outperformed those end markets this past year. Is your sort of goal or your target to continue to outperform the actual end market growth?

Yeah, that is our target. Certainly, we want to keep gaining share and do better than what the overall semi-cap and electronics inspection markets will do.

And I guess just last one, any help with the cadence of 2022 based on your current backlog? I know you've got you know, multiple items that are shippable across various quarters. So anything that we should sort of know in terms of the cadence of how the quarterlies will play out?

Well, certainly if we have given, provided guidance for Q1, you know the backlog. So we are certainly expecting a solid Q2. Q2 will, we think it will increase sales in Q2 based on the backlog right now, plus all the orders we'll keep collecting. So at this point, at least, it looks like Q1, we have given you the number, and Q2 will be higher than Q1 at this point. But we'll certainly quantify that once we get into April time period.

Okay, great. All right, I'll hop back in the queue. Thanks.

Thanks, Greg.

As a reminder, star one for questions. We'll go next to Eric Slade with Acme Analytics.

Please go ahead. Eric, your line is open. Can you hear me? Okay, wait.

Yes, we can now.

Okay, perfect. Okay. Hey, unbelievable, those numbers. We'll talk about those in a minute. But I guess this question is for Subodh. On the WX3000, I think you guys have had a PO that hit this quarter. Is that correct, that new system for the mid-end?

We got a PO in Q3 that we will book either this quarter or next quarter, depending on the exact timing of delivery and acceptance and all that. But certainly in the first half of this year.

Can you disclose how much that was for?

We would rather not get into the details because that sends a direct number to our competitors. Okay, I understand. Thank you. It's more than half a million dollars and less than $1 million, so somewhere in that neighborhood.

Okay. And when do you think we'll really start seeing the ramp on that, if you have any guess?

Well, as we have mentioned in the past, we are participating in this advanced packaging market in two ways. We sell our nano MRS sensor to our system integrator customers, and particularly one of our system integrators in China. they are getting some good wins over in China. So one of the largest growing Chinese OSAT companies is using our sensor and our software. And the same product essentially outside China is WX3000. So that's what we are. We have secured one IDM win. So I can say that we have, overall we have secured two large important customers in this area, which is a good start. Certainly we are talking to another five to 10 customers as we speak. And we are confident we will get some of those wins done in 2022. But as far as material impact is concerned, I mean, it's still going to be relatively small. Most of the P&L is going to be dominated by the current line of products like SQ, MX, the sensors.

I understand. I talk with Jeff and I understand, you know, as we get in the fourth quarter, it gets more interesting. Hopefully you don't have any of these things going into the Ukraine. Just kidding. So now I always ask this question, and you always get the same answer. I'm sure I'll get the same answer. On the third memory player, I guess that's hot and heavy, but that could go this year, I would assume.

We continue to talk to them. They continue to be interested in the technology. We are discussing different options. on how to enable their business. But work is very much in progress. We continue to discuss with them.

And the next one for you is any more mini, micro LED customers or you've been talking to as opposed to the end of the third quarter?

I believe we have already mentioned that so far the orders we have seen or mini LED SQ systems are primarily driven by one large consumer electronic companies, but the actual orders come from several sub-cons of that company. So I believe we have sold SQ systems to roughly eight customers so far. And the same sub-cons do service other large consumer electronic companies too. So sometimes it's difficult to know exactly where all our systems are ending up. But at a very high level, I can say that if you look at published reports, three large consumer electronic companies are scaling up products, as we speak, in the mini-LED world right now. And those three large consumer electronic companies have several sub-coms, and some of them are the ones who have been purchasing from us. So before the end of 2022, we certainly expect many consumer electronic products with mini-LED, and we certainly expect SQ to be part of that supply chain.

Okay, I want to make an observation here. I had well-documented, Jeff will tell you, I had you at the end of 20 for 21 doing $1.35 to $1.40 a share. This next year, well-documented, and you guys are making me look conservative already with $1.69 for the year. I have you guys doing $3 next year unless we have a recession. The three other analysts had $0.81 at the end of 20. And I think, uh, you guys came in a buck 69. So they missed by a mile. Then they only have a buck 63 for 22. I have three, you guys already the buck 69 for 21. Come on boys up the estimates. This is the semiconductor industry. This is not packaged foods here. I just want to put that out there because, you know, you got to do a service for the, for these investors out there and get numbers quite close. Uh, That's my phallus industry for 30 years, no, since 1980s. And this is in the 90s cycle. Jeff and I have talked about this. The demand drivers are amazing, what's coming out. It's cloud computing, 5G, Internet of Things.

Eric, do you have any other questions?

No, that's it for me. Well, you guys go. Thanks. Congratulations.

Star 1 for questions. We'll take our next question from Chris Bukowski, private investor. Please go ahead.

Hello, good afternoon, and congratulations again for the great results.

Thank you.

So if you don't mind, I can ask some more general questions for newer investors like me. It seems like... A big part of your growth was taking market share in addition to the usual semiconductor, semi-cap growth rate. Can you tell us at this point what percentage of the market for optical inspections do you have, both in electronics and in wafer inspection, so that we know for how long you can outperform the average semi-cap growth?

These are good questions. Unfortunately, in the wafer sense area, there are no external reports available. Part of it is because we have a very strong IP position and we have fended off any competitors in that area. So, in the wafer sense area, whatever the market is for those kinds of service seven applications right now, we have all of the market, we believe. So there's no market share per se. So when we say our market share is increasing in the overall industry, we are talking about more penetration of the market in wafer sense area. On the electronic inspection system side, certainly there are competitors. There are external reports available. We have shown those reports in our investor presentation that is available on our website. Feel free to take a look at it. But I can mention offhand, the last report we have In the key category, which is the 3D AOI market, we believe we have roughly about 13% market share. But on the high-end side, we don't participate in the bottom half of the market. So if you want to look at our aggregate market share, you can see it's about 6% to 7%. But we are the high-performance, high-price side, which is mostly the top half of the market. So our market share continues to increase in the key category where we compete, the 3D AOI. It's about 13% right now. And in wafer sense, I would say we are 100%. Does that answer your question?

Yes, yes. That's very helpful. And in wafer sense, as you said, it's about penetration. But in terms of wafers being optically inspected, are you inspecting most of the wafers being made now or just a small portion? And you're still kind of trying to convince people to optically inspect their wafers?

The question becomes a little more complicated because we are not inspecting every wafer in wafer sense. If you look at our product line, we are measuring things like leveling or vibration or particle or humidity in the equipment. So we actually go inside the tool and do the in-situ measurements and report the data in real time outside. So we don't really inspect a wafer. We are measuring and monitoring the equipment, if you will. So typically, our products get used when the wafer is not inside the equipment. So we are kind of going and monitoring the condition of the equipment, come out, and then the wafers start continuing. So it's not like we can quantify how many wafers we inspect. We have done bottoms-up analysis of how many fabs there are and how many pieces of equipment And we have summarized that again in our investor presentation. And we believe, based on bottom-up analysis, that the market potential for WaferSense is at least in the neighborhood of $100 million, growing at about 50% to 20%. So we believe we have plenty of penetration opportunities with the existing applications we have. And we continue to increase applications. Suffice it to say that we believe WaferSense has plenty of upside growth potential in the future.

Okay, that's good to hear, and apologies for not reading your presentation, your investor presentation beforehand more carefully. But also in general, and You mentioned that you're taking market share or increasing penetration because of your superior technology. Can you tell us in general how is your technology superior and does that kind of tie in with general trends in the industry such as miniaturization, packaging, SAP packaging and so on?

Sure. So the technology where we compete directly with other competitors is the 3D optical sensing technology. We call it MRS. MRS stands for multi-reflection separation. We have several patents and several pending with that technology. It's essentially a very unique, innovative way of doing 3D non-contact optical sensing, which gives higher accuracy and higher speed both at the same time. There are alternative technologies that are more accurate but significantly slower than what we do. And there are some technologies that are significantly faster but very inaccurate compared to what we do. So what MRS allows us and our customers is a unique combination of higher accuracy and higher speed both at the same time compared to many other conventional technologies. That is the real differentiation we have. What it manifests itself into is superior image quality. So if you look at the images coming from MRS sensor, they are significantly superior compared to conventional technologies. And usually better image quality leads to better inspection and measurement results. And that's what enables us to continue to gain traction with MRS compared to alternative approaches. Hopefully that answered your question.

Yes, yes, it does. And would you say that MRS is becoming more important with the miniaturization of everything? and there being like more 3D features, I would assume there'll be more reflections, right?

In general, I mean, yes, parts are getting smaller, parts are getting more reflective, advanced packaging is becoming more wafer-oriented. By definition, wafer is like a mirror. So yes, MRS is well-suited for where the trends are going. That's what makes us so optimistic.

All right, this is it for me. Thanks for bearing with me. Congratulations again and good luck.

Thanks.

And we'll take our next question from Ash Burla with Burla DK Capital. Please go ahead.

Oh, hey, thank you. Guys, congrats. Amazing job. I just said, you know, outside of cyber optics, I figured I'd use this opportunity to ask a couple of questions. as it relates to like near-term situation? Because I mean, we, I know Jeff and, you know, Dr. Svoboda, we have talked a lot about 3D MRS and we know most of it about vapor sands and the growth rate. I was wondering if you can probably comment on, because I couldn't get on the AMAT and nobody asked to apply materials on this. If the Russia situation does occur, And would you know what impact that would have to the entire semiconductor supply chain? Especially because it will hit vapor sense the most in case, from what I've heard is like the neon gases are all 70 to 90% supplied by Ukrainians. So, and that goes into DUV tools and not the EUV tools, but the DUV tools. So like, would you have any idea what that, impact would be for 3%. And then I have a follow-up.

I mean, you're asking a very difficult question that we don't have much visibility to. I mean, this is like material supply coming from Russia or Ukraine. I'm sure there are some second order or third order effects, but we are not aware of what exact percent of materials from Russia or Ukraine get used in the semiconductor industry and whether there are alternatives or anything like that. As of today, at least, and many analysts follow this area very closely, as you know, no one has said that any of the potential disturbances coming from that part of the world would have any direct impact on FAB output, any FAB output. So I think whatever effect it would be, would be a second or third order effect, not a direct consequence. But again, we are removed from that overall ecosystem, so we really cannot comment much more than what other analysts have said.

Sure. No, that makes sense. I mean, I have never worked in a fab, but that's why I was really curious about some of the specialty gases. And I figured, you know, because you have worked in one, so I figured you might know the impact. The second question I was wondering is, have you broken down how much is the 3MR sales to KLA? Is that available in the 10K? Have you guys broken that out, the revenues?

I mean, yeah, we have commented on significant customers, Ash. And so currently we have one customer who accounts for a little less than 20% of our revenue, but we have not given that customer's name. So we won't comment specifically on what percentage of our sales are specific to KLA.

So, Jeff, I would just, the only, it's okay, I don't need the customer's name. I was just curious if the 3D MRS shipment that's going in, is that mostly for like 10 nanometer, like is that for like the backend testing? Is that for the advanced node chips like EUV chips, or is it the DUV chips, which are 10 nanometer and above, or is it 10 nanometer and below? Do you know the, which, where are those, you know, where is that subsystem going to within the FAB?

Yeah, that we can say. I mean, MRS is... an optical, a visible optical domain technology. So we are using 400 nanometer light in MRS, the highest resolution MRS sensor we use. All the applications with MRS sensor, whether it's the SQ system or what we sell to our OEM customers, they are all in the back end or advanced packaging type applications. So we are not in the front end inspection with MRS. We are in front end with WaferSense, but we are not in front end with MRS at this point. So, we don't deal with the 3 nanometer and 5 nanometer nodes or anything. I mean, at the advanced packaging level, they are, many of the advanced chips, packages rather, are using 3 nanometer and 5 nanometer nodes. So, we are handling them, but at a package level, not at a transistor level, if you will.

Right. That's what I meant. Sorry. The package that they're doing is the 5 nanometer chips, right?

Yeah, absolutely. I mean, MRS is being used to inspect the most sophisticated advanced packages right now. And certainly many of those advanced packages are coming from the 3 nanometer and 5 nanometer very advanced node chips.

Got it. Okay, great. I mean, guys, congrats. And I really wish I was still writing on cyber optics. I mean, these are just – these are fun numbers to write on. So congrats again. Thank you.

We have no further questions at this time.

Well, thank you all for your interest and questions. We look forward to updating you with our Q1 results in April. Thank you again.

Ladies and gentlemen, this concludes today's conference. We appreciate your participation. You may now disconnect.