Veeco Instruments Inc.

Greetings and welcome to the VCO Q1 2024 earnings call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce Anthony Pappone, Head of Investor Relations. Thank you. You may begin.

Thank you and good afternoon, everyone. Joining me on the call today are Bill Miller, Veco's Chief Executive Officer, and John Kiernan, our Chief Financial Officer. Today's earnings release and slide presentation to accompany today's webcast is available on the Veco website. To the extent that this call discusses expectations for future revenues, future earnings, market conditions, or otherwise make statements about the future, these forward-looking statements are based on management's current expectations and are subject to the risks and uncertainties that could cause actual results to differ materially from the statements made. These risks are discussed in detail in our Form 10-K Annual Report and other SEC filings. VECO does not undertake any obligation to update any forward-looking statements, including those made on this call, to reflect future events or circumstances after the date of such statements. Unless otherwise noted, management will address non-GAAP financial results We encourage you to refer to our reconciliation between GAAP and non-GAAP results, which you can find in our press release and at the end of the earnings presentation. With that, I will turn the call over to our CEO, Bill Miller. Thank you, Anthony.

VECO started the year with top and bottom line results toward the high end of our guidance. Revenue total $174 million, non-GAAP operating income $29 million, and non-GAAP VPS $0.45. Semiconductor revenue totaled a record for the second consecutive quarter, primarily driven by strong demand for our laser annealing systems. As announced in our press release earlier today, a customer placed a multi-tool laser annealing order, including a nanosecond annealing system, for their two-nanometer gate all-around process. We're looking forward to supporting their future ramp plans. I'd now like to provide an overview of the technologies driving business today, our served available market expansion opportunities, and our investment strategy. Our portfolio of technologies highlighted by our new products is gaining traction, and we continue to expand our footprint to new applications. New device architectures and shrinking geometries require the precision of advanced annealing solutions to increase performance. Our LSA systems continue to gain share at customers' most advanced nodes, as evidenced by several recent wins. In ion beam deposition, our systems are the technology of choice to deposit defect-free films for EUV mass blank production, and we're working closely with industry leaders to enable their roadmaps. Looking ahead, we're well positioned to serve growing demand for EUV lithography, as well as next generation high NA lithography. Our wet processing solutions are used for advanced packaging applications, and we continue to see strong demand for high bandwidth memory. During the quarter, we shipped several flux clean systems and received follow-on orders from leading foundry and memory customers. VECO's strategy of investing in advanced logic and memory has enabled our semiconductor business to outperform WFE growth for three consecutive years. Moving forward, we're investing in new technologies to expand our served available market to a broad range of new applications. beginning with laser annealing, we expect our served available market to grow from $600 million to over a billion dollars, inclusive of both our laser spike annealing and nanosecond annealing products. We continue to receive follow on LSA business for high bandwidth memory and are making progress towards winning additional memory customers. We're equally excited to expand our nanosecond annealing SAM to a broad range of advanced logic and memory applications. In ion beam deposition, we see opportunities for our SAM to grow to $350 million for front end semiconductor applications where low resistance metals are critical. And in the compound semi market, we're focused on long term opportunities within power electronics and photonics. Investment in our evaluation program has been essential to our growth strategy and will remain a top priority. We have two nanosecond annealing and two ion beam deposition evaluation systems outstanding with leading logic and memory customers. Each are progressing well, and our team is highly focused on executing. We're also targeting an LSA evaluation system to a second leading memory customer later this year, in addition to evaluation shipments in the compound semiconductor market. I'd now like to take a deeper dive into two of our largest opportunities in the semiconductor market. Device scaling challenges at our customers' most advanced nodes are driving the need for new annealing capabilities. Our nanosecond annealing technology offers a substantial opportunity to broaden adoption of laser annealing to new logic and memory applications. Due to our unique laser and architecture, Our system can achieve a lower thermal budget and shorter dwell time versus today's most advanced annealing solutions. This results in a shallow anneal that can impact only tens to hundreds of nanometers into the wafer, enabling industry inflections such as backside power delivery and 3D devices. Our NSA system can also improve performance by changing the structure and properties of the device. opening the door to several material modification steps. As we look ahead, we see potential for initial high volume manufacturing orders from logic customers in 2025. We're also pleased to see strong pull from memory customers excited to evaluate our system's new capabilities. Turning now to ion beam deposition for 300 millimeter front end semiconductor applications. VECO is the industry leader in ion beam deposition technology, which is a key enabler in driving aerial density growth in the hard disk drive industry over decades. This core technology has direct applicability for advanced semiconductor wafer level manufacturing by solving our customers' high value challenges. As device geometries continue to shrink, low resistance metals are essential to maintaining device performance. and traditional deposition technologies are struggling to address scaling challenges. Our ion beam deposition technology differentiates itself from incumbent technologies through its ability to achieve superior thin film properties, making it ideal for advanced applications where low resistance films are critical. Based on Tier 1 customer data, our ion beam deposited tungsten and ruthenium films are demonstrating lower resistance compared to traditional deposition technology. In DRAM, this enables tungsten bitline scaling while maintaining electrical performance of the device. For logic, ruthenium metallization can enable new integration schemes at future nodes. Looking ahead, we see potential for high volume manufacturing orders from memory customers in 2025. I'd now like to touch upon artificial intelligence and the role VECO plays in the AI chip manufacturing process. Growth of AI is having a profound impact on leading edge product roadmaps, requiring the most advanced technologies to manufacture higher performance AI chips. As we look ahead, we expect several VECO technologies to benefit from growing demand for AI chips. Our LSA systems for transistor formation and IBD systems for EUV mask blanks are production tool of record for GPUs and HBM DRAM. Equally as important, we see future opportunities for our nanosecond annealing and ion beam deposition solutions for each of these applications. With that, I'll turn it over to John for a financial update.