Veeco Instruments Inc.

Greetings and welcome to the VICO Q2 2024 earnings call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star and then zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Anthony Papone. 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 delivered second quarter top and bottom line results in line with our guidance. Revenue totaled $176 million. non-GAAP operating income $28 million, and non-GAAP EPS of 42 cents. Our semiconductor business remains strong, highlighted by record laser annealing revenue and new LSA orders and advanced logic and memory. In logic, we received follow-on orders for a leading customer's gate all-around architecture, and in DRAM, we continue to receive follow-on business to support our customer's planned expansion. I'll now provide an overview of the technologies driving business today, our served available market expansion opportunities, and our investment strategy. New device architectures and shrinking geometries are creating scaling challenges for our customers. As a result, new annealing capabilities are required to manufacture the highest performing chips. And our LSA systems are qualified at all leading logic customers for their gate all around architecture. In ion beam deposition for EUV mask blanks, VECO is the market leader for defect-free films. Our ion beam deposition technology is a key enabler of our customers' roadmaps, and we're in a strong position to support growing demand for EUV lithography. Moving forward, we're focused on expanding our business to new mask blank applications. In advanced packaging, growth in high bandwidth memory is driving demand for our wet processing systems, and our customers are expanding capacity. Our investments in advanced logic and memory have enabled our semiconductor business to outperform WFE growth over the past three years. Looking ahead, we're investing in core technologies to expand our served available market. Beginning with laser annealing, We have a substantial opportunity to grow our SAM from $600 million today to over a billion dollars, driven by adoption of laser spike annealing in memory and the introduction of nanosecond annealing. Our laser spike annealing system is qualified at one Tier 1 DRAM customer, and we're making progress with the other leaders. In nanosecond annealing, we're equally as excited to expand to new advanced applications. We also have a significant opportunity in ion beam deposition to grow our SAM to $350 million for front end semi applications where deposition of low resistance metals is most critical. And in the compound semi market, we're focused on long term opportunities within power electronics and photonics. We continue to increase investments in our evaluation program for core technologies focused on solving Tier 1 customers' high-value problems. This is a key element in supporting our long-term growth strategy. In the semiconductor market, our nanosecond annealing and ion beam deposition evaluation systems at customer sites are progressing well, and we're targeting additional evaluation system shipments in early 2025. We're also making progress towards an LSA evaluation shipment to a second leading DRAM customer in early 2025. And we recently shipped a 300 millimeter Ganon silicon evaluation system to a tier one power device customer in the compound semi market. I'd now like to take a deeper dive into two of our largest opportunities in the semiconductor market. Scaling challenges are driving the need for new annealing capabilities, and our nanosecond annealing technology offers a substantial opportunity to broaden laser annealing adoption to new applications. Due to our system's laser and architecture, we can achieve a lower thermal budget and shorter dwell time versus today's most advanced annealing solutions. This enables a shallow anneal with the precision to modify only the surface level of the wafer potentially ideal for new applications 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 new material modification steps. As we look ahead, we see potential for initial high volume manufacturing orders from logic customers in 2025. 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 also enables EUV mass blank production and has direct applicability for advanced semiconductor wafer level manufacturing. Lower resistance metals are increasingly critical to maintaining device performance. And as device geometries continue to shrink, traditional deposition technologies are struggling to lower resistivity. Our ion beam deposition technology differentiates itself 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. I'd now like to touch upon artificial intelligence and the role VECO plays in the AI chip manufacturing process. Growth of AI is requiring the most advanced technologies to manufacture higher performance chips. As we look ahead, we expect several VECO technologies to benefit from growth in AI. Our LSA systems for transistor formation are used for GPU and CPU production at all leading logic customers' most advanced nodes. For HBM DRAM, our first customer has adopted our LSA system for both the logic die and the peripheral logic on each HBM DRAM die. In ion beam deposition, our IBD system enables mass blank production for both GPUs and HBM DRAM. Equally as important, we see future opportunities for our nanosecond annealing and ion beam deposition solutions for each. In wet processing, Our systems support advanced packaging for AI by enabling flux clean of micro bumps at leading foundry and memory customers, as well as OSETs with similar packaging processes. Looking ahead, we're excited to continue supporting our customers' planned expansions. With that, I'll turn it over to John for a financial update.