VECO - Earnings call transcript Q3 2017

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good day and welcome to the Veeco Instruments Third Quarter 2017 Earnings Call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Suzanne Schmidt with Investor Relations. Please go ahead ma'am.

Suzanne Schmidt

good and operator, you, afternoon everyone. Thank

site. on Chairman and me earnings slide Veeco's is with Veeco presentation material. or the being prepared we to our call Veeco's Peeler, release Web the on Veeco recorded John webcast. are available note along Instruments you CEO, a permission. Today's that have today CFO. Joining Please and Maheshwari, It veeco.com. recorded on expressed and to encourage today's slides without This copyrighted cannot by rebroadcast be accompany follow is We the call is Sam

not forward-looking consent our of otherwise market implies acceptance, participation future company's the Your conditions, discusses makes sales future disclosures, to or the extent call that expectations, this and market products, To about expectations future taping. These earnings such are differ in of are are cause about number and a on that releases. Analysis Report any made. future, to actual and to results to statements factors Discussion statements, statements risks the the subject uncertainties materially Description discussed from on Annual could call, and in subsequent statements our to the and and XX-Q, and the reports those current quarterly section company's obligation on and Veeco Form forward-looking reports after this events XX-K shareholders undertake Business Management's to of made update on or future statements. such press including reflect circumstances does Form date report Form any X-K, the of

site. I'll remarks. Information the reconciliation such GAAP is John to to available our During performance, this may opening financial With turn his financial non-GAAP measures call, management that, including measures, over non-GAAP Web regarding call for address of measures. on

John Peeler

Suzanne. you, Thank

share with $XXX $X.XX. strong pleased per third the non-GAAP income revenue earnings and to operating are for results $X.X million of We of of non-GAAP million, report quarter

were in sales conductor PSP driven compounds by of the gap] results strong and [audio MOCVD markets. Our

seeing are We robust our MOCVD we systems, competition. for seeing increased are China also demand in

the more pressure manufacturers reach again pricing driven once gross seeing million and will LED by backlog QX. are grew in and we Sam this this quarter, in result, which That in some and XX% address margins growth in bookings system our improved will a As Asia Backlog call. later $XXX said, from was impact detail Europe. sequentially by orders than multiple to more

Now, Sam turn let a of financials. me over the call to for the review

Sam Maheshwari

good and discussing everyone. John our I afternoon be performance. Thanks non-GAAP will Today financial

in site. can our You a GAAP the detailed on find and results release reconciliation Web and between non-GAAP press

MOCVD which earlier, As last market John continuing earnings our are mentioned call. in we see alluded we the in recovery to

bookings of XX% We with in bookings where received the are lighting QX The display pleased our at and in $XXX the EPIK, performance and main manufacturers from system orders China, in QX. multiple KXXXi over semi family. LED increase in for drivers Korea the or we LED was which systems and Europe compound growth MOCVD came markets increase million Propel our

Additionally, application. we or support in multi-tool PSP electronics to a power a Taiwan systems received order large

million bookings, from As ending last million up $XX the our is $XXX of was a QX which result quarter. by strong backlog our

recognizing coding industrial the to applications. revenue contributed application. MEMS and sales of of $XX Scientific from XX% of was and $XXX systems turning AXX LED revenue Now area into XX% XX% million PSP overall ADE overall continued overall display driven of and packaging and and for advanced Ultratech shipments revenue ADE totaled million PSP revenue. storage deferred compound China annealing revenue. [indiscernible] and continued system. And excludes XX% and semi our systems of driven sales EPIK of from MEMS front-end overall of MOCVD up shipments QX advanced contributed in the contributed optical Geographically, semi and and last Europe, that laser was lighting Sales by RF contributed and by Southeast supported system by packaging, revenue revenue PSP into revenue in driven sales sales by systems data China lastly of for and Ultratech were to Asia. shipments XX% quarter,

record of XXXX. those QX from Malaysia Revenues increased the into tools by and Korea. primarily of expect to driven to XX% We South in sales revenue world rest to

Now, the turning P&L. to

by slightly Our X.X third than mix provided. XX.X% favorable either P&L when lines. many percentage of our across strong was quarter or product performance points was guided the was was QX our range. non-GAAP impact $X.X non-GAAP non-GAAP was end from $XX.X all our were eventually. which our QX high below better margin million. toward up sequentially of within QX ranges of guided end quarter metrics million gross This up range. was of taxes $XX.X the reflecting driven OpEx product non-GAAP million the low $X.X Ultratech QX income full million and the operating

consolidation $XXX finally, $X And Ultratech. expense time. a annual EPS $X.XX on the annual that approximately I million New cash million to was would diluted total our count of is in mention Our our Jersey including share and million initiative is manufacturing QX tax like are largely U.S. million, is non-GAAP around expense XX.X in NOLs also shares. based $X non-GAAP completed tax this

end of close $X quarter. synergies realizing are towards million We this in to beginning annualized the

Long-term with cash We million. of from balance QX flow investments from $XXX our cash sheet $XXX the in million by million which million repatriate. $XXX offshore to to maybe an value ended of cash of sheet. carrying $XXX subject last $XXX ended at moving up represents in inventory driven is receivable short-term taxes Approximately from $XXX strong to held in notes. quarter. order down convertible from in a Now, which million recorded $XX XXX Accounts increase million the the was million million on operations and QX of from was debt million balance and QX million $XX $XXX

turning for guidance QX. to Now,

million expenses between XX% breakeven per $XX range million. XX%. range the expected between guiding are GAAP $X.XX non-GAAP is the is to negative expected $X.XX diluted is of EPS per non-GAAP $XXX $XX million. and of We Non-GAAP share. to operating QX $X.XX in revenues expected million between to negative expected margin gross share. EPS and diluted QX in $XXX are

additional color beyond are deferred be expect and QX, some at to than backlog lower due time, than QX revenues revenues strong revenues QX. to for higher we QX. QX this Generally Now, however,

given product growth we gross current calendar for Overall, competitive be business, expect Secondly, calendar see of certain with synergy better XX% sales back update. pressure, John us will to that, gross we expect turn year. initiatives. margins and of the percentage in environment beyond the in XX% than to for despite in execution, XXXX. the releases MOCVD as a MOCVD I in completion And new this income be to revenues operating margin we we Due to XXXX XXXX a year temporarily range driven may to business operating as move call a leverage,

John Peeler

LEDs to fine LED penetration signage Thanks demand TV primarily with sizes. by of backlighting growth Sam. robust, of MOCVD strong The continues general pitch LED larger be remain continued and lighting, market and LED driven

business product Importantly, despite to maintain confident China we continuing and win execute increased as our feel and competition our technology in on we roadmap. in to lead our ability

the highest developed the and productivity competition. we compared most in of important productive can The industry. MOCVD for quarter, released needs reduction the and technology, newly four XXX be cost to system, XX% cost compared in XX% reactor footprint greater the EPIK carrier EPIK customers EPIK proven XXX, TurboDisc During tool previous designed meet offers and the wafer to in demonstrating Based has long-term effective latest for the Furthermore, on the the the per of Veeco's the region. to systems generation increased our formally savings this XXX throughput of China capacity was our our better even commitment per wafer batch. to MOCVD customers platform

the initiative which XXX accelerate announce millimeter LEDs of the propelled with wafer Allos very the wafers completion we LED believe our We pleased help Semiconductors blue GAN-on-Silicon demonstrate strategic and will single production. are adoption using platform, green of also micro to for to micro to

have for We is KXXXi photonics and are and into communications The adoption of also for for photonics exciting We Veeco. In very key and other are red, LEDs lasers. recently an rapidly engaged to sales multiple VCSELs a for market product the and development lasers VCSELs we growth customers we company continued which when well yellow positioned optical are excited and orange market our that generation growing of photonics opportunity leading and packaging, includes achieved applications. report were next represents the advanced seeing with to strengthens.

our we AP large and quarter, is As mode last discussed system XXXX. pause early a in in purchases following business XXXX currently

in have phone smartphone design IDC, mobile high-end by volumes. approximately certain of Fan-Out unit the in chain QX lower delayed through product XXXX. level packaging the overall, declined According to X.X% either unit companies wafer of supply actually or shipments Additionally, adoption

market And offerings with for us account to the you know, advanced leader opportunities. all space, will will needs term. believe of a capitalize additions continue capacity coupled we exciting smartphones the to packaging and in near current our on in allow tablets and resumption roadmap this of product majority As these the our as

its and With build devices our further RF intelligence to manufactures their front-end our positively utilization switches, computing which see regard our high baseband clearly LSA of business is as smartphone expected business. which beyond artificial of expand is transceivers, increased performance advanced continuing Fan-Out advanced utilization such XX out business, our see and will to packaging, all packaging nanometer all as China level where well packaging more Looking and applications we LSA of such ahead, and in high-end semi PMICs wafer impacts for continues positioned. emerging processors, smartphones automotive, strengthen fabs, tablets, and to

focusing excited process that initial XX architecture firmly generation is expect Korea, integrate a have additional our our actively the X are and lead X process also supporting into and encouraging our nanometer are systems and nanometer processors. our begin next customers are technology We ramp nodes, meeting of customer. development now the very and nanometer potential working we unique on actively orders. year, in tools have two will of their China melt nanometers and The our one field could the in for to next requirements. X we about melt the major XX customers believe our which for advantages tool In And customers' we data installed to and to

Ion patenting MRAM. seeing We system our traction for Etch for are Beam positive also

customers to the progress forces and of to it MRAM. technology duplicative our systems and multiple memory embdedded Beam tremendous placed suited is areas have expenses made panel. sales for been for organizations service All applications integrated. as in key the been and our have in We've number successfully Ion multimedia merged year relates been expect Our volume integration of field eliminated, magnetic like multilayer automotive, at start Ultratech. high well have a manufacturing company we've stack public display next used And etching

services and where force result completing us today. when of Very organization we have a a sales pleased As actions we loan. with a either these stand of stronger had

also We closing, and third are and ahead. continues the a our R&D proud much delivered of working target and have of progress quarter with progress. heavy the what non-GAAP greater and lifting we of hard synergy strong integration today enthusiastic the us our sales provide In new future that solid with in profitability a to key with remain greater on to grow extract you are we with the Completed will update Bookings continue clarity Ultratech accomplished we goals. and towards efficiencies products process on have on to I'm quarters basis. growth. expense with

company Veeco into very are the Veeco and of are excellent growth the happy to a of and lead our about positioned well making in customers Initially, we teams are executing progress Our diversified multiple combination transformation more markets. Ultratech. in

believe wafer immediately preliminary a a won AMEC Equipment SGL suit to and you -Fabrication Micro As We worldwide This as wafer including will takes And and that, a ruling we environment. Carbon. effect infringement look development and in questions. we we of that patent shipping patented bottom take Veeco's strength top is competitive issued and IP authorization. happy of and its hesitate year against carriers and U.S., not and have press and Europe enforcement Veeco's and without to XXXX, And portfolio. I your particular Carbon technology the growth anticipate line release in from China. Asia prohibits the ruling our to will a seen, research with seriously announcing property the expressed we afternoon protect of have affirms significant China. this We SGL in this Inc., Advanced finally, Veeco's to or injunction despite be Sam of investment take in patent strong intellectual our supplier using out a SGL carriers or patents

Operator

first our Lynch. take [Operator ahead. from of We Instructions] go you. Thank Merrill Bank question America Krish will Sankar with Please

Chirag Odhav

some your Krish. a on market And update local from Hi. give year in on about This region, that I share and us how for now? competitors Could you your just China Odhav a see you Chirag have follow-up. is

John Peeler

market multiple key and Sure. to a competitive through strong with investment become The and from AMEC LED new It systems more at compete this there environment China has as capacity large ship a investments are going Veeco. is time begins in manufacturers.

see As we well the looking market to continue backlog, product you which in share the don't will long-term. launched new do do a to expect our We over from though. EPIK China successful be forecast we think can We XXX, tremendously well. forward we and recently

Chirag Odhav

cars. in in position position this semiconductors has you. you like of value help Got gallium gallium how potential hoping market the [ph] power has you Okay. self-driving strong was a lot applications a and And understand space, there could and interest nitrate, us I your in arsenide just opportunity? also VCSEL-based [Axon] some been

John Peeler

a Sure. have think products in diversify offering our new there the we XXXi and Propel RK We our working to opportunity do develop to like to markets. and expand been hard is good and product new

wafer a I forward. is participate We is single really that that forward. market moving looking reactors power future and with good series Propel there GAN think for in think our a and is we that of

Chirag Odhav

right. you. All Great. Thank

Operator

Thank you.

next will Sachs. ahead. We our from Please take Lee now with Goldman go question Brian

Hank Elder

opportunity? the This just Do Hey, carbide have market on there for to is exposure Brian. follow-up guys maybe guys. to silicon that. And any a you Hank

John Peeler

the We in are. do silicon play carbide not

We have opto but GAN and not products silicon segments VCSELs lasers carbide. GAN power, and RF for for

Hand Elder

run in or you recover? switching advanced that XQ, we to expect Packaging. All expect XXXX then maybe And do we quarterly right. rate moving to Is when Thank what bit little you. market gears a through of packaging saw should Advanced kind guys the

John Peeler

in is last XXXX the packaging early that strong predicted the look, were after and slowed advanced we Well, I XXXX a There think down. very quarter, of purchases pause. as bit market in a has market and

and up. We are that activity is regions They talking be to key growth year. multiple should a XXXX us customers in are telling picking

But, we So, to be. to quarter that pick exactly will we up. things hard which as looking out. predict expect do look are It's better

Hank Elder

then, in this you And will competitive from Okay. China or I does more, what do anything one directly on to the the expect maybe dynamic change squeeze this? realize injunction, in

John Peeler

received first the today. think of I look, Well, all, we just ruling

our that factored it's wafer environment. have and a haven't our qualified see It's R&D think impact of have the And upheld it carriers wafer their this competitive it's run systems, But, customers MOCVD into and our in to on to portfolio, great systems. of a and will And a lot we all lot systems court actually supply it a MOCVD AMECs -- the I our operate think results. carriers we consumable area. of it by it's of was invested a powerful our or very need So, very required thing. technology a reliable to reaffirmation a patent MOCVD of I

Hand Elder

Thanks to the question. taking for hear. great That's

John Peeler

you, Thank Hank.

Operator

Thank you.

our go next ahead. question Needham & Mok Please take from will with We Edwin Company.

Edwin Mok

Thanks question. Hi. my taking for

point? -- First, we a go actually ship competitor quick legal that to by still just or now, you can't that can the last does that court are they that some give to before from follow-up have mean do the shipping proceedings prevent for on question, your

John Peeler

granted providing are from about In SGL. And AMEC. infringing extremely infringement patent the wafer are the that. case about granted against SGL and injunctions patents is legal and been they compelling to rarely ruling that they The on infringing hi-tech the only infringements, damages. we was our have is doing and believe preliminary And carriers when stopped

of away. will wafer major source go a supply are and that carriers they So,

Edwin Mok

for partially much, Okay. offering, growth. give same has your are on the down commentary full not But, talked XXXX clarify, mentioned Sam, the color some then, clarifying us will gross mean, quarter? to that can a have for is just XX% margin. top margins everything you it I or question of talked it to year right, is obviously, you that that? because you range XX% I increase a Thanks to your on the I gross that. range think on is year, And down is offering is full about you this first I you for quite -- obviously come do line bit, margin as the if math, plan --

Sam Maheshwari

Sure. Yes.

to So, first at at fully terms of as sales a all, related that to is you that in operating compare as comment entire of income percentage XXXX. of fully XXXX

sales So, to we the for a than again, same be of repeat, better operating as XXXX. XXXX expect income percentage metric to

in first pricing revenues that overall terms a time, effect, the the the gone has more there part a margin, the your the what's the significantly I'm of China, mix that company to temporary at in back of the highlighting is same due question business up. proportion But, as coming pressure. also happening to margins degraded Now, gross of have MOCVD it's in

be that company So, that for entire margin level I and last last XXXX. to expected quarters gross temporary, it to might two expect at not the do or the one and it the compresses

Edwin Mok

That's very was the for mentioned customer, you great. I that. of color framework Last can development around -- have have, you started wondering, Okay, you VCSEL, helpful John clarifying. you with some How us I think real revenue opportunity give do if look there revenue think guys some company? this about opportunity opportunity about how long-term, potentially your that for a would take years, think before for few this you you I and if can out become becomes a anyway the do question

John Peeler

working some diversify have revenue MOCVD company in at and the we been time; quite business for our Look stream Sure. level. to the

the the MOCVD but opportunities. grow in leadership time lighting is to at our backlighting revenue goal other continue and our Our same in to market

has been we -- launched We last that well. product doing are the year, KXXXi

at and wafer targeted likely we with to of launched are related And devices. reactors also VCSELs, are our growing single business now diodes, electronics a We laser diodes. applications RF revenue power family

I we is revenue expect streams. and continue it now think revenue to So, broaden our to

Edwin Mok

you market this that think be point position? the do Who to as could do few as people VCSEL some right right? where think it knows this that Do now but get you that some is eventually what happen project big can't you road, at or LED to market, your foresee leading some in position market and VCSEL, analysts a you years, will on

John Peeler

going think how LED Yes. Look, that get it's as I don't don't and would to you become conclusion. the I know big market to as

in we as we been introducing think is I are to that will strong products number two product pipeline And think well market. and the our goal always us number in do business this have become have and to I very a allow one.

Edward Mok

I you. it. That's great. Thank Appreciate Okay, all have.

John Peeler

Edward. Thanks

Operator

you. Thank

We will Shah Bank. now move on with go Deutsche to ahead. Please Vishal

Vishal Shah

you question. you. for the a have I Yes. Hi. assumptions John, Thanks my expect market do MOCVD as market, your grow for guidance up. then, for follow taking And the well? what year, are on the next to Thank

John Peeler

I a MOCVD half XXXX market well should and the for strong our grow Remember, and a you market the we can as the most book you and growth think was real look a to trough expect it's move think the in back think growth in into receiving been to XXXX. both year, XXXX in will of ratio, and I at have very if XXXX. orders we as backlog of XXXX XXXX with bill grow

period. and lighting coming adoption has growth. out that are lot There other and a of we LEDs been So, of of

So, a here. growth we solid expect

Vishal Shah

Chinese consistent suggested looking somewhere So, recently year just is to -- is mean clarify, the do that focused MOCVD was And that this or pressure also China, the next was some you what year to you evidence [indiscernible] market other pressure looks year then competition you mostly market in starting are the this competitive as with see similar reports on at markets guys I think like. of really around well. how there and out on that

John Peeler

Yes.

that. call I talking it we as and it of were to we that XXX been I have this haven't first year to we XXX XXX market are moving sounds going harder be optimistic. think we And up the about reactors on a projection. to think, than well pretty seen last went I is above the lot the through up year, all, clearly, that

higher And year think would look But, And a the in that very I a XXXX probably pick happening. lot that it. we business than think we do would market be little will well XXXX. So, is we there think of than will bigger a in. do I be

Vishal Shah

Thank you.

John Peeler

from lot Let me Chinese is, not taking and China, their about think go of to Outside my with customers are think we have say their of bringing their fab be seen into competition Chinese people and I your two and very things. part a conversations that from risking that I I would and and recipes would and back we customers, seeing tool a IP and concerned that players. other

we So, not that. seen have

Vishal Shah

Thank great. Okay, you.

one will Thank question, of you. year? next last what total roughly percentage year, your be China revenues Just this MOCVD

Sam Maheshwari

Yes.

Vishal, market. generally display So, has semi market the trajectory. compound roughly is about China and the blue lighting our of been Generally half LED that

more than that However, business of part a looking like it because in would or of it be in market probably significant the that future near region. just that activity is

Vishal Shah

Okay. Thank you.

John Peeler

Thanks Vishal.

Operator

with you. we from now next take our will Coster Paul JPMorgan. Thank And question

Paul Coster

to is same for that mid-XX%, correct? related only, the is Thanks I ones, But, margin, apologize mid-XX% low to the that quick back question. the to gross few Sam subject. going taking A MOCVDs

Sam Maheshwari

at I suggest Packaging It Market largely the going talked is a also also this through time, But, about we've would correct. Advanced that pause.

And impact business the that we margin. back But, overall does beginning back, into expecting looks are that there on but to an some indications it So far, come are come company's so maybe not gross yet. XXXX. to like solidly have that

market gross new are say, should to So, gaining and term to low at proportion And go John time margins. term to we additional we RF so of gross looking down, margin in the and near exposure in talked the company's once improve the exposure. blue as the what's in China happening it MOCVD then, a beyond that should activity meaning, market. pressure where pricing LED due same other that near lift particularly And here greater MOCVD also MOCVD and Red VCSELs overall are is and Ultratech the China expect so from that future have the I areas LEDs we should pressure about business also mix at that

should that also our margin. So, gross help overall

Paul Coster

that I Got with think a you power John it's success Taiwan, bit [indiscernible] PSP, had say power heard applied it. more Thank just application based to? you. being that this you And I a in can specific technology be

John Peeler

Yes.

was in PSP I that LEDs, our related script we into to sell LEDs, good think this been the was that's there. and power PSP we sell actually into -- to in with PSP one sell markets, we of things electronics into the we PSP, MOCVD, addition sell products

sell So, opportunity. carbide are to kind silicon number This of a in product was of not we able markets. both lines a

Paul Coster

think got think Thank or we would that you percentage instance, helpful. silicon maybe carbide, be will today, some got be it to a year okay, Was revenue would think MOCVD for It's do out then, do question I think shift mix I it. you as have the you. not last from relative increased your And how now, about of is, diminished as helpful. a sense

John Peeler

I comes get and and will over the growth fast be now, seeing year that's Look, back in what Ultratech would AP we I as the expect business a market super Sure. mix LSA some strong the some our traction from current think as business.

the condition. this weak has packaging advanced well year secondly, been PSP of is done in because think, I our market which reasonably also business

we products get back some I&B front-end Mitch expect growth there. and So, and gaining will come to our be semi will more revenue. that I new

last non-MOCVD But, I lasts we while. clearly ramp it's long So, how good we other MOCVD think I some substantial of our businesses show should sources will revenue see think And and of then, a to the got going some growth. for have growth.

some So, do see and growth. we substantial MOCVD having

Paul Coster

All you much. very right. Thank

John Peeler

Paul. Thanks

Operator

Thank you.

take We Nicolaus. Patrick will our from with Ho question now next Stifel,

Patrick Ho

me comments, you of of it are advanced litho you some out the be correct very will and that assume drivers maybe much. -- advanced in buys customer applications on that for are one that Based to towards still package primarily XXXX. lithography the it the believe broadening packaging potentially first is projecting Thanks additional of, focused maybe on specifically your versus potential John for of terms for fan-out you sales.

John Peeler

see to other broadening definitely to other out plans OSATs in customers and talk a as expansion we people and talked key about We their IDM.

that little there will will probably a be be less provide beneficial think customer base And lumpiness. I broader and a year. So, next

Patrick Ho

going the things Okay. MOCVD mention you terms That's of you you side EPIK, a helpful. the did mix Maybe China, Difficulty]. that's in [Technical so sales of evolving, different back from to in environment believe broad I how system of competitive saw

advantage your products. have. or or from Given from out products the tools a perspective your technology new perspective? EPIK these shape targeting that Are How towards Chinese of systems of all price a competitive some does older

John Peeler

our EPIK The main Chinese competition is targeting products. and really targeting the stream LED applications lighting

launched EPIK we intense XXX. where the competition new comes that's and the So, where that's

Patrick Ho

Great. Thank you.

John Peeler

Okay.

Operator

you. Thank

comes ahead. go Company. Miller Benchmark question next from Our Mark Please with

Mark Miller

reliability China, getting their pricing competition respect it? are Do up other certainly Again to getting into is tool it the to a appears back through competitive advantages issue. with they they have it in any primarily throughput is our yield, pricing foot time operation

John Peeler

it it terms and poor fighting what over performance and time case the deliver in to did if for back still good years, we had Look a early in is, go had a market. competitive looked very -- where a the up although And both we that market product discounting number very beginning factors. product. it's a in some maybe time And we we were and competitor and it the we few of new similar And a launching heavy product at failed happened had a share. situation launching a other of

conclusions in early too much really these it's So, factors. market the on make all to of

product and a copied our us that like our have their look does they our customers in cases. product So, some told lot product

tell to great a a record and just track having in early launched them the situation. leadership having introducing of too new this little take position have products or we look product. we a well, it's So, either But, sustain perform them

situation. of we of think a this I lot type the So, have in experience

Mark Miller

the just expanding In you this replacement that are market. terms drivers market? the tools, their seeing expected the of is an of in capacity, [indiscernible] are I MOCVD older expect Are increasing you because what growth significantly in wondering

John Peeler

to sometimes point. It's less read to or reliable on old replacement. Traditionally, hard tools a get start at XX people them little that after years they they seven and replace become

On shipping that happened are as shipped than productive few last that these tools were other the years hand, over years, things are XX more the we ago. much what's now

obsolete the because before but enough turning market this turning from LEDs. older anything few customers shipped will adding happening of we and XXXX. exactly frankly tools it so, of not more than they know have see case, kind I and more And can't And is Question start the much systems basis. do pretty forward. In off a economics XXXX that what's years. will clear that think before were just now It's plain off we is, we anything is going see old that also capacity next more make over been

Mark Miller

Your for tools tools -- older the is in estimate the XXX ballpark? that these

John Peeler

and insignificant reactors compete. away. scale the out off. that the turned actually is shipped have shipping are lot the of of don't of most And that already XXXX. fade or It's And reactors, recently invested twice the they are today shrink than to we the of know before kind it's they of were happens way more been lower capacity older they become course, reactors today, because business of with -- we than go customers this times, that. well, of have reactors A capacity haven't some And

may market So, somebody of just it's newer business not a supply. the the it products real be pick-up and goes always replacement, out

Mark Miller

Thank you.

John Peeler

Thanks Mark.

Operator

hear Capital Daniel will now Instructions] We from Baksht with KeyBanc [Operator Markets.

Daniel Baksht

are on and allocating segments, roof you much. packaging how Ultratech R&D businesses comment you Wondering or under be recently one for could whole programs if MOCVD you more color launched, are on between have expenses great. very semi your Thanks different you any now say advanced now would that front-end or of kind Yes. Thanks. your you quarter focused

John Peeler

see. Let's

we in time. and of some R&D emerging investments focused of making MOCVD, spending. look for have So, a been significant a -- new been the effectiveness quiet areas Ultratech, investing a number opportunities we each in improving are market on our we that quiet see we of In have these

also are because there. we it We certainly investing more But, on opportunity, some in see with front-end getting the opportunities out market. of lithography, focused we also our great we does line move what amounts very getting as substantial are so but are spending and spending see around. semi products to we in market in And more R&D

going new I have very a to year think are over year product we the So, in introductions. next good

Daniel Baksht

well? MOCVD, to mentioned you then, right. or that are also China outside in as And seeing of pricing All you that pressure China is limited

Sam Maheshwari

China, It's all Daniel. limited in

Daniel Baksht

And on quarter. XX% did just than customer of represent any you concentration, Okay. that have sales then, customer more n the

Sam Maheshwari

I don't so. think I so. think don't

Daniel Baksht

I That's Thanks. all Okay. have.

John Peeler

XXK not We announced to that XXQ. in but

Daniel Baksht

Thanks. Okay.

Sam Maheshwari

Daniel. you, Thank

John Peeler

Thanks.

Operator

you. Thank

with final Tom take question Diffely from will our We DA Davidson.

Tom Diffely

afternoon. Good Yes.

you So, you several pressures increases there seen increasing lithography well, are competitive talked pressures Have sounds in players a in lot that competitive as side space China. about in now? some on the like it

John Peeler

of We've into here XX% a are market We or had of have you some period market done get are to and people there kind lithography And share coming the when well, niche last there. to XX%. very share in always that at trying there. over well

our doing So, needs very customer there the the we is of have to product But, of new been what always too needs and our performing cost very high and the on with terms pressure. platform ownership having the really of costing reliability. a without best do best forward addressing much moving customers competitive and focused in

in think good really we place I So, are a there.

Tom Diffely

Okay.

a the back, packaging blend. once the sufficient best So, that it's nice the to margins comes overall still added

John Peeler

Yes.

Tom Diffely

for Thanks great. Okay, your time.

Sam Maheshwari

you, Thank Tom.

Operator

for turn over the additional or any to closing concludes like That for Mr. and conference the question-and-answer to now Chairman back Peeler, session you. remarks. I today. would CEO Thank

John Peeler

tonight. joining you And forward for future. near the we look us in you seeing Thanks. to Thank

Sam Maheshwari

you. Thank

Operator

conclude does your may conference. That you. for you Thank today's Thank now disconnect. all you and participation

Veeco Instruments (VECO) 2 Nov 172017 Q3 Earnings call transcript