ACLS - Earnings call 4 2023 | Axcelis Technologies, Inc.

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Operator

Good day, ladies and gentlemen, and welcome to Axcelis Technologies Call to Discuss the Company's Results for the Fourth Quarter and Full Year 2023. My name is Michelle, and I will be your coordinator for today. [Operator Instructions] Please be advised that today's conference is being recorded.I would now like to turn the presentation over to your host for today's call, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. Please proceed.

Doug Lawson

Thank you, operator. Executive of Lawson, Strategy. Marketing Doug is Vice Corporate President and This with Low, Vice Coogan, Russell today President and CFO. And is Jamie President me CEO; and and Executive

under safe are issued current a Playback we statements and review. made risks website. SEC will statements today detail are that for in Form also our expectations annual based These our not are our the on on in service copy forward-looking future forward-looking provision. available about and These in XX-K business. as report the harbor you've to is available our are you our seen press If other on revenues, comments release expectations website yesterday, inherent be which press it and urge our to described note our results of filings, risks other management's profits, described in subject SEC release.Please

may assume over results and actual the differ call Russell expectations. to our to current statements.Now turn forward-looking Low. obligation Our these CEO, any do I'll from not President materially We update

Russell Low

quarter the XX%, represented the our the with power world at of $X.XX.Looking at $X.XX strength, you million in to and for full our revenue geographic segment. XX%, growth earnings continued segment XXXX device year achieve year-over-year per the rest and a Good The to U.S. record revenue, XX% per of Japan earnings fourth In Fourth mix, of Axcelis thank provide share year billion the our earnings share came exceeded revenue guidance, end during the morning at system fourth us in XXXX joining quarter industry call. XX% at quarter fourth power implant-intensive for while and XX%, X%. delivered for $X.XX revised Korea year $XXX.X and China for X%, XXXX. full especially the downturn. Europe of enabled Axcelis significant quarter, device China

revenue. has to XXXX, NAND our in are Geographically segment X%.Looking detail, the overall XX%, an total DRAM for total Europe The with and the the memory system U.S. and systems of was to shipments made general Taiwan of continuing towards segment when the silicon to of represented up revenue dependent in start our relatively systems NAND of projects.The we XX% year. second profile the to more pick Japan X%, for first Currently, image of X%. XX% be technology strength IGBT China is for XX% expected recover advanced mature segment XXXX, systems to not XX%, and spread XX% and customer year, the full the X%, in remaining Axcelis. in power XX%, XXXX. until world in shipped XX%, represent have expected carbide and is XX% systems to revenue, revenue, memory forecast distribution less XX%, specific entire strong the was end driven XXXX. Silicon device the mature segment, China For a system represent DRAM particular combined contribute geographies are the Silicon at silicon dependent carbide, and revenue to power Korea revenue similar market the slower evenly the growth to market of revenue, our will XX% XXXX, XX% with the system Breaking area respectively. revenue.In continued carbide were to other mature and represented of than sensors down XXXX, logic quarterly expect up segment of in power with lead XX%, conditions. of XX% the systems across on improve was the system economic expected half, second silicon XXXX on DRAM XXXX out be half X%, and expected rest in represented of very the process the shipments to year general The consecutive is approximately mature XX% of year. total and

and business customer We customers. is developed product Power we customers. by and footprint large this base products of customers portfolio in our a new well to continue from with expanding full market, The diverse have Series as valued existing as win these Purion

use Purion projects customers silicon and Purion HXXX core a silicon ownership, up and then silicon of New device adopt cost start improve and tools systems carbide M XE by carbide of establishing performance. Purion the fab of and carbide to productivity, often the

we customers higher using productivity-limiting utilizing volumes. Also, tool, the capabilities the and prepare for by HXXX to to have carbide great success customers to on result, with that systems.Additionally, further work HXXX silicon to device in with can ion these dose a to significant seen Axcelis continue optimization adoption Purion XE Purion and increase and applications. a can all energy As the the the we this are company is XXX mm. increase Customers Purion X X multiple these work silicon power system begin with have HXXX evaluations only in carbide is complete they devices deliver we one period. carbide XXX Purion silicon during customers evaluation units of are and opportunity underway currently mm evaluation the higher implantation ramp systems geographies. of their and recipes recipe qualify as coverage

Axcelis expect slow base technology We future installed remains of plans.We and later our and their the with and lowest to to are but memory leader ramp providing path supporting customers, working them mature this This needs. manufacturing manufacturing on Axcelis high-volume using the required and that product markets risk capabilities. aggressive supplier recover manufacturing choice, and the best will tools close the this year, support the fab technology provides means to period, during family considered

and in customers with across system that help on this, segment their of slowdowns and next our efforts market with current opportunity shipping Japan. segments.We in segments new Axcelis systems focus collaborate that XXXX, all logic to to our a and across market improve grow We industry customer technical capabilities. areas on and will be phase a multiple enter advanced leading product Currently, use development. share. growth. in During have and high like footprint to joint Ultimately, as to engagements logic our the shipped to engagements to in designed we results initiatives geographically implanter, customers focused process focused increase grow have evaluation technologies critical advanced time more they In we have all share our capabilities customers development an this Purion research us to this Dragon, institute expected customers nearly R&D most advanced key evaluation

have in multiple under technology. logic initial advanced engaged tools collaboration development will These due additional Purion power the In have Dragon evaluation of segments. Japanese to next-generation seen with logic also market be critical Japan, Series, and the We leading of customer's a another the customer. technical success the market strength with to the customers Purion in we we are and Power associated

geography.As and segment, drive the revenue with this in will $X.X combined downturn, to to We and Purion exits efforts XXXX. memory growing the is in continued billion footprint industry the expect Axcelis this markets. the our Axcelis power model in expected these increase in growth to important mature This, strength to return healthy

beyond and help continued Jamie. made our like Additionally, Japan investments drive advanced to logic growth in will I'd it to XXXX.Now being over turn

James Coogan

and you, morning, everyone. good Russell, Thank

year especially during the for the revenue year-over-year industry with financial We fourth XXXX, results the our and quarter pleased with for downturn. XX% this are full growth

strong for As to recovery a industry there with and we weakness, continues discussed, expectation of market the as signs enter an are XXXX, XXXX. clear deal Russell but also

As with a result of XX.X%, we the conditions, $XXX share are operating margins million gross of around earnings current per quarter approximately income million, first of guiding $X.XX. approximately about market $XX of of revenue and

markets XXXX, revenue of to weighted the expected towards the XXXX expect second half. similar throughout and memory in Power recovering the to be year revenue remain We year. the half with full the to with solid is year levels second mature

the in strong the Full a especially memory markets, of $XXX quarter, revenue revenue continued quarter at XXXX.Looking and $X.XX $XXX.X guidance and billion share execution power Purion, achieve to solid million operating $X.X earnings $XXX the at million $X.XX to $X.XX.Despite power revenue share driven for $XXX.X million, our fourth for backlog stretches revenue and the and expected market. systems per carbide with Our recovery earnings higher-than-expected demand continued and portion $X.X with our above million Bookings up silicon year per revenues finished at earnings bookings billion million. to systems per and target of which our due gross these This our expenses. segment and sets margin, revenue of in the expectations. were $XXX.X backlog markets and of softness to remained overall billion, revised systems in was us QX share CS&I in million. in $XX.X system mature revenue support XXXX. was QX at solid at into of revenue our quoting general was led lower CS&I by well as full-year performance as maintaining and activity

the we to increase in systems, revenue expect XXXX installed CS&I XXXX. Given in increase Purion over

margin to quarter, revenue Although expect for QX be should full $X.X see In $XXX finished modeled will we for approximately to at million gross $XXX billion CS&I improvement our gross XXXX XX.X% year-over-year XX.X% the approximately revenue fluctuate quarter margin. model. in year. for million at at and XXXX, and

number gross laser of of fourth revenue, quarter our and focused our mix. on than the will underway initiatives will expenses. of us operating model initiatives Execution to to fluctuate cost sales margins goods lower these quarterly a year. Purion extensions. revenue guidance, billion margin We improvement to of gross However, in at product XX% XX% sold margin product to have ended model.Turning revenue higher full for drive based greater and The on better allow the than and remain at at XX.X% $X.X of on

of in of to incremental the in is the continued focused volumes the over Purion we as the future. the XXXX support compared our of of the increase of of given in will increase to upgrades. the as first OpEx lower volume of a higher X.X% The incremental be product sales be extensions approximately the first revenue revenue we is and in XX% quarter invested in the R&D revenue investments of percentage the XXXX. result expect we've course and to anticipate We the sales on R&D higher of of a a revenue. X.X% Investments of in the development OpEx The approximately expected to to second quarter in funding loads decline year. made percentage half will revenue expected XXXX XXXX

employees As to skills, to importantly, memory and the infrastructure financial to ensure for in while necessary the models.Moving to and expect, support our our of required of We business we available ended the balance to continuing with million specialty most and and advantage operations the $XXX.X sheet you cash by our we the $XX.X achieve have and logic technology tightly advanced flow. our year. and solidifying equipment, spending future footprint generated to the manage in cash our growth will million increasing would from million continue $XXX.X of QX invest full markets, cash continuing facilities in markets, the in period and

on will We for total, to execute Francisco In Wolfe February final call quarter. our March Research's Russell over a number repurchase upcoming buying continued of virtually that of we and over you remind XXth inaugural Susquehanna's share to the million wanted back program, of repurchase the including in $XX Annual share participating events, to XX X. to turning semiconductor XXXX through $XXX remarks, in conference against investor we've shareholders on million our Technology since returned cash stock I Conference programs.Before San in be

and next new our of Francisco financial this Axcelis year intend will to XX will host we this slot usually market, Capital our long Day that time members our Markets next San we of in we phase the growth. discuss towards a our symposium. innovations, expectations introduce the At review addition, hold range its in on for In help team technical drive provide model, product the event, July

I many of more provide and look coming Russell forward there.With closing will the that, to on back will for in call you to this now seeing we the turn event comments. We details his months,

Russell Low

you, in Thank to billion of Axcelis XXXX growth $X.XX discussed achievable Jamie. This due and last revenue billion is same in is factors achieved of the $X.X targeting XXXX. quarter. record revenue

total doubled to last XX% mature has TAM. continue to TAM greater more few the and in implant than is market years the representing expected grow segments than with the of First,

Second, devices, at and highly implant power general nodes are increasing have carbide the devices, especially mature XX-nm. intensity silicon intensive, peaking implant

desire capable Third, mature only high-value were key covering benefit device uniquely Axcelis of And extensions process technology from Axcelis product in markets. to our image a to Axcelis, employees, these growth turbulent markets. power high by the relationships was throughout and for Axcelis long-term like for making to suppliers, XXXX company questions. year support cultural but Purion year a and in your customers, customer XXXX positions I'd industry. strong making product thank win to into the our designed up finally, investors the record for This and to for a line manufacturing, fundamental with recipes all customers it sensor a that, I successful. has optimize open XXXX.With continued want and implant

Operator

comes Craig Securities. Riley Ellis from [Operator B. Instructions] The with first question

Craig Ellis

on intermediate-term with some that XXXX, a items. off question to items to very the start Congratulations guys. exit strong some wanted with I combines near-term

first and the the half linearity even in and what customer foundry, out And then Jamie, So, see that quarter that? the second then as as part you et across your mature, that it inflection systems at from in within of that Can the inflection latter mix the you the like and engagements, look would XXXX's calendar be half, conviction are guidance at you confirm things memory. the cetera? look Russell with your fairly give color, plays and way second backlog sounds on you that, we

Doug Lawson

this Craig, I'll half the of that take question. Doug. first is

be So to mix power strong. wise, continues

the will XX% for systems our XX% about power silicon We continue year revenue. expect and total to revenue of of to represent total our be carbide

expect be we to So to do that continue strong.

of tied thing. really economy expect to return. the to ahead than and more mature And of DRAM into the get as start being we anything, markets recover consumer, we half, more automotive, expect to to a with we the As NAND, industrial then second XXXX recover NAND

and look updated come the from presentation, to you markets from close it of the if mature. about overall So mature the to XX% our we're expecting business of general at XX%

Russell Low

about our second half, regarding conviction the Craig. And

business And do half we yes, of second power, to with businesses in backlog. year. in they're customers, We strong especially So a have China. have the speaking looking do their ramping our solid the start in in

Craig Ellis

That's really Jamie. is one helpful, guys. And second for more the

other can as see on Jamie, resilient to what give color So, impressive year company-specific quarter it's of margins we of any And the color playing provide on gross margins indicated some calendar could you do on rise decline. you factors see? I'm year. mix Can that hoping you how the magnitude first volumes And how real that is are might are out. 'XX us gross and the some increase

James Coogan

to, of Yes, that's a some having in great raise initiatives for question, products, Craig. The team environment. and has done greater cost place for the competitive a fantastic here some putting to without given prices drive sold to of efficiency job our try these systems necessarily lower one, goods of some the

that memory bit also expect our the towards top continue the mix out that, some we there of identified margin the of course the opportunities have incremental systems incremental year. our that In upgrade the shifting in that year. contribute the addition some of coming little base given mix service light to volume we and And providing higher-margin that, lower platform, the product the over year.And opportunity on where to of build installed is that, volume a And from in over of light to part of XXXX going we opportunities products, we to then higher seeing of which over margin especially continue are in of are some are the of in course it's Purion higher CS&I business. CS&I grow continue to year

they not bit are there. our know, are on Margins areas. guys strong some products is in other a market of those competitive As as little more you as memory

benefit we're with that. lower memory seeing so the And volume, also from

Operator

Diffely question next with comes The Davidson. from Tom D.A.

Thomas Diffely

Probably actually TAM for slides, flattish. 'XX about you're it the talking Doug. for your business but the When in you for up full look have being your year, at going you

as sectors you're doing strong Just that curious there certain Are are what the not that are in there. differences well?

Doug Lawson

exactly in be we second see, XXXX, XXXX. markets continues the the seeing going But we we're into smaller next the implant in in grow the to for that; as continue up; And grow, smaller. can where expect grow to a is Tom, half, taking as And will it as is we'll one expecting years. while we is in, that a you on, markets recovery mature we're to 'XX, we in of early see intensive, where from going that logic, over benefit the across which, there TAM as has are Axcelis all are TAM Yes, get the advanced then good TAM implant less advantage year much what's strong, power, position increased well. we

Thomas Diffely

Okay. out. Russell, just then, year question how a about the And general is playing

X did back business the the you of couple look first half think continuous of you or of in the more year the half dip a ago? quarter before ago, quarter, If a second quarters first were expecting a or book strength,

Russell Low

guess power has stayed solid. I'd I business say is what the

I softened mature think the general significantly. it's has

from that a heard you've think our number of I customers.

an that QX So more months now I'd visibility rest and the really, a it's say ago. have few bit picture, have that wouldn't had little we a and of in the evolving we year

James Coogan

revenue as that relative the and strong call, noted of fourth had we this bookings quarter in point, you in on had Yes, and very Tom, very -- our to the we our backlog, systems we a of carrying. we we full meaningful maintain where the year. today, see we're that that in don't look backlog change above are the again, we for amount And backlog $X.X as really year billion

as the shifting customer have deliveries. of on has Russell our what timing seen noted, with consistent commentary that's in And However, we that. some been

Thomas Diffely

to at us pretty de just next what forward? to minimis expanding guess and confident stopped really to, year. you're look the I going take back you that the in Jamie, expansion, Maybe 'XX, had 'XX nice you're going margin revenue over then, very healthy expansion question. and I yet projecting accelerates margins 'XX versus it When margins And here 'XX, growth, last from why margin back

James Coogan

that's efforts mix on memory on memory, are that that we service period CS&I Yes, incremental But a related has with good a us. the and to the other business upgrades are right? of XXXX. lot mix to question. to item, the put of multiyear in then our and So relative opportunity of do the to that savings, to within of year cost cost and then see specifically say providers taking, number A that, sales for place line opportunities really we benefit on initiatives we sets in top drive the we

some So these center here investments the of the are upgrades you to in on are where made CS&I we've like automated the continued Beverly And team all things then on that footprint consolidated new does opportunities, in area. we've which, provide R&D and services front, mix. meaningful the the our also uplift identify the aware, guys work logistics as

Operator

next The The from question Benchmark comes with Miller Company. Mark

Mark Miller

you and X underway mentioned your there a an Are had You advanced any Dragon currently for customer. other logic eval underway? also evals with evals HXXX Purion

Doug Lawson

application. VXE device, also And mentioned in for we advanced you H power logic. have Yes, got a We've Mark. sensor one Purion at tools a in the that's general medium a silicon under an Dragon an power image eval underway, HXXX company, Purion tool the current then there's Purion mature, and then ] for [ Purion Purion evals X carbide XEmax customer, and DRAM device a

Russell Low

customers, and products across many board many there. many So the applications, different

Mark Miller

customer? I'm current, medium sorry, the was what And

Doug Lawson

DRAM.

Mark Miller

will curious first them Wolfspeed indicated I'm from Wolfspeed automotive. weaker, be what was would They're week just they're a think XX% ago that are of major carbide, be okay. design-ins. I silicon seeing design-ins. know, to manufacturer. strong very what half DRAM, you strong very your given indicating, why appear as And a

Doug Lawson

Yes.

there's strength Mark, low-cost carbide silicon rate. in that Chinese breadth the now, they growth coming Chinese we be think, of more press on are carbide, to offer, China, a I EV provider. in well, only slowing the it strength they When see you globally. silicon from not product lines the of the internal getting very in market, lots global number look of its customers. terms The at to so Right for focused of China but companies, EV

up little but strong the talking exact and we're China. of Throughout last that about over So it quote strong product to of the quarter, bookings seeing many the settle course activity slowed as as their automakers world, continued from rest you the bit picking a start plans. our are on comment, of customers the back

Operator

from comes Jed question William Dorsheimer next The with Blair.

Jonathan Dorsheimer

it QX sure. I guess be the first any a the X X I by put that as have off want to just that, previous you that did just to see had to when Is positively weeks? Russell, weeks be question, up. over weaker, one. I sounds the QX case And you ago insight make want I the a you would like that preannounced point, would you started, follow that XX% or knew then a you pushouts last finer

James Coogan

take I'll that. Jed, Yes.

We shifting over firming the customers couple CapEx past as requirements those Jed. seen, our are of in course over especially again, and weeks, now the have the year, of of timing up the requirements the those delivery requirements their

call. is, reality done provide relative historical we to for on historically most through thought we to our meaningful that have the sure And that guidance this the can the guide that. has So to folks we the practice XXXX, make been as

timing was a the to there that it factors relative combination So of of preannouncement.

Jonathan Dorsheimer

Most and same around China I The And utilization XX%. I know on along are how average can heard positively things I China. dynamic is things I appreciate guess below speaking those be. XX%. fabs lines, Doug in fluid for

tools just So additional the see unless the would being confidence with CapEx for orders something I'm materialize. repurposed Typically you spend low what are you such wondering gives those that else. not utilization

additional I'm pushouts in confidence that that you the China? So gives what in see the curious, market that power in bookings you don't

Doug Lawson

lot plan think government EVs. the think, I has it for Chinese fact is Yes, carbide a I the the silicon long-term Jed, a Chinese that of so companies, and

over little a And so few probably the is investment years. utilization of policy the determining the a course next less their factor in of

to the in larger customers in lot a see we so China. silicon new addition of carbide customers And

a despite your so on lower of there's activity, comment quite utilization. And bit

of fact that little is also the of years. China, I growth course automakers their we'll have think bit Most plans preparing outside significant in they're expected the to the be a say, the over of XX globally, next over last But significant be the months of are and there'll that number a a hybrid, course, electric the electric, of X are of vehicles. from inverters moving fact and none combination power and as especially. away well. there backing still course hybrid a changed a EVs really And of for lot the utilize devices to

Jonathan Dorsheimer

question assuming of for equipment and by but you in local in last to and reengineered want one is exception, the anyways. which And implant. guys, it just I'm have vendors, into I it's companies sold now software, are probably have being ask supplied with the China, Most been that

solution? gauge government do to confidence subsidies your to happen you much reengineering just are that how of a with I'm curious, so with have market won't So literally tooling? that tied that How exposure you the do

Russell Low

is this Russell. Jed,

of does that suppliers, been So for current domestic are couple One been a us knockoff huge I'd is a of part. implanters. the working them, that huge component recipe, highly-complex the a of bit setup it. that medium the tuning and a is operation software these the couple say there technical XX-odd machine, insulate have The have probably a there's years, of little products thing is on

that working an have manufacturers get tool they with customers to success much that innovator, And So think well we and couple things would whereas that here them sure very typically solutions left moving on a say as go there's are difficult and we technology too keep faster make up-to-date it's faster, to People the domestic I to without date. trying of behind. most the I have another that make replicate. been our competitive,

So technology run over. in areas. vendors get a of plateau, starts other to I a then couple saw that's that foreign when once happen And

Operator

from The Steelhead David comes Duley next with Securities. question

David Duley

curious XXXX. was memory about about you I recovery talked the in

between pretty I breakout and little mentioned this be split XX% is a you I what I peaks, are just think. was that's NAND talking you're And memory And peaks that XX% And would behind were DRAM. think of that the the there? DRAM. DRAM, And about historical around if I memory it's it Could going evenly elaborate XX%. about But just of historical think XX%, year. revenue mostly you bit about that to to be revenue drivers business. close talk think

Doug Lawson

Dave. Yes,

XX%. that is number the the in be we've So got under presentation it'll

So that on, drivers memory it are wafer closely start very point getting to second it's the start the to since situation. a monitoring both where by for half companies DRAM as see goes year basically NAND. and we on we're back additions The a

NAND, like consumer for and expect the PCs will HBM, and look demand. as capacity is they're to all AI and requiring Microsoft drivers and back, stuff, to of per respond capacity PC driver to we capacity Windows happen over. a XX customers And starts, XX utilizing could ahead be they happening a drivers bits more gigabytes auto like We DRAM. demand get then the it We of of PC. expect to our start comes AI has said allow are they'll big DRAM out AI wafer for shift before which seeing currently lot shrinks them see that add they add or

by start a good expect towards indicators see a there's be So that as to lot it very of don't XXXX, to we data device driven both see centers. that's to NAND get until going into a and in end storage to good year the and where DRAM. into we of be we of on for capacity additions driving expect get activity really of this the so beginning second and we'll half next, year we lot

Operator

Needham Company. from & Shi The Charles next question with comes

Yu Shi

some of in to the with expected general of want start mature around recovery the Maybe the second year. of commentary I the half the

with what of market? the you investors the recovery that do And or mature general the Because mature So half very of CapEx comfortable outlook my a of announcement I is part customers, of considered first of the do what XXXX? kind for assume some that mature can second larger analog part as That's as us of signal from general question. kind and you how remind comfortable people how isn't CapEx considered mixed a positive. with microcontroller get get their IDM, applications foundries

Doug Lawson

Okay.

to to the of the So very likely economic recovery general perception recovery mature the or economic much is be tied I recovery, guess.

it's the RF, so into these devices device types, of analog, all products; that widgets products, terms we that go in buy. And little consumer microcontrollers, all industrial-type automotive,

and we And for do a We is second place on activity public announcements, will about healthy strong AI does I of and of expect reasonably adding as be capacity customers and hog, We IoT think capital we that continuing customers the their devices. half off, if drive to takes Internet our most it Things. another are happen. AI plan. our it data as listen wave you Another talking that a directly expect Since see with listen, do building. to

Yu Shi

question the China. So is second about

to of number think last The a year's China to XX% I talking about heard probably I year. seems be little that. revenue you bit contributing XX% the below this

that a takes understand really Is China the growth manufacturing the let's there's down and of like the feels to of or going the you further this of the guiding a the demand may be backfill little almost did whose non-China China slots you're actually say, organic by here. help that? some bit bit to customers it this What's slots XXXX? underlying just So orders for road, And some to year, customers So revenue want terms be out? puts pushout parked driving of year. little the in up dynamics meaningfully China

Doug Lawson

Okay.

on in So, power and demand, continued especially silicon Chinese no, the especially market. the is carbide, there strong

and think the the And general especially of their that's first to start the weeks. activity would so mature -- And half over worldwide of that where general then releases recover, would XXXX. of then expect is, all public we of consistent couple through last with I foundries foundries is most the

with And whatever so it's slots or less level customers. more and to and do the for seeing creating from movement China activity backlog that bookings Chinese we're and the the

Yu Shi

XX% know, between 'XX. somewhere the numbers half would total great. Lastly, like within expecting little the of maybe XX% with definitely the the the similar, in be I power you're to don't to second certainly something compared a bit Is silicon lower still half color being first expected first be half XX% that Any are XX% power, mix carbide. 'XX,

Doug Lawson

Yes.

be sensors, ] or So, mixed of revenue around mature, remainder our [ silicon ], of And revenue, the primarily. image and and be between XX% the will ] DRAM, carbide. XX% power is [ Charles, our systems [ general for XX% year, the total will

we other so first markets would power higher expect contribute see see and the the percentages. and we would to that come half the of percentage And then we in half start and would second change the in

Operator

Schwab question next Craig-Hallum The Christian from comes with Capital.

Christian Schwab

legacy advanced curious China, in chip and start some it's nodes. guys' for this because point a restrictions consequences said mature the meaningfully come mature the to situation attempt production share with extremely What investment now similar a chips, your legacy production, into based chips on revenue, the material thoughts would leading limiting which now that could some that. obviously, I'm China just equipment, they XX% be of as of you at chip which led node selling are production market But gain going strong competitive look of U.S. government year chip making of U.S. on mature what has back XX% to to increased semicap to to to unintended companies with they're they've as in China's semblance risk. possible tries is risk

Doug Lawson

mature closely. first the on we can't is, closely, watch which point, expect Yes, on We predict that But this especially half. Christian, strength so happen it very especially there. we government nodes, is the future on power where the don't something watch at that is side, in very the we the actions to

just have So to. monitor we and it's to react something

Christian Schwab

It's is X now to people memory DRAM in that the seen from that demand capacity, in back. take hand. chips But greater. time that moving available, quite in utilization for in billion equipment money And equipment the the then of taking we've get making lost the memory production significantly and On reduce leading 'XX, DRAM manufacturer recovery it DDRX to which their Korea on every that the going $XX are is DDRX, memory XXXX. some all big to

you're trying they it's profits, am we've would amount which a think why making money. increase when seen not that substantial by difficult if have you investments those What DRAM actions. memory missing? to improvement I'm of all an just may I those recovered there timeframe make because to very in not So pricing lost of be future in understand substantial a of

Doug Lawson

better capacity now, to on size they've performance gives to has and improve change. which And converting also reduces improved. their I higher and Well, lower ultimately cost wafer which capacity die and They've ASPs the you a throttling are said, as shrink, point. HBM, think right margin which of next Yes. to been converting a them the chips the pricing, been they due them, number to is higher for

for we the cycle the turnaround.The items. all that that of next them doing and type higher intensive of lower-cost, things and ASP do demand to need, get forth are lower-performance they're parts normally they in has So so turnaround will and that very the still it, as prepare see next consumer drivers for the that bottom drive call products AI DRAM I'll the

add any in it cycle see now. IoT type to than no And industrial, demand markets, then be consumer moving end next computing as out automotive, those meet we and technology which AI, they'll of the other of and the then So investing environment. different capacity markets, where will growing edge to right they're

Christian, other different, don't than it's think that I So for any seen cycle we've any memory.

Operator

from comes next The Bank Jang with question America. of Duksan

Duksan Jang

question. XXXX a have I

year-over-year So system you sales billion model and the target reiterated the implies $X.X for growth a in that side. XX%

core opportunities, to in other but logic visibility advanced markets what of in power that the general of some do in have order and you as mature You your Japan mentioned drive growth? types

Doug Lawson

discussed, us. our directly from you the as plans market with Well, customers I then trends then in on discuss it they lastly, more area and terms of their think expansion footprint. that see And of both we

advanced X do And areas opportunity and opportunity the we in see Japanese rate so as penetration see market has we in now. right lower a logic, Axcelis that

do and the those.The is more So number in probably XXXX driven, recovery though, overall grow expect mature. general to memory by market we

the significant half gain this year this lot now and very, good we've really really make could trends of 'XX very like be XXXX in to a of they industry as and There's into start XXXX. good said, off second look that long-term that expect, We for right into momentum years. as go we

very market position saying based and trends and what confidence right the and now. the based So family Axcelis product they're on have good on on our we and Purion customers based

Duksan Jang

talked so you're couple growth Onto low-single-digit of Is those area growth a this growth Because rate about, or that you advanced been not there how logic. but years, much run obviously and would markets at talked in it's guiding, that any for for while. quantify way a estimate about you've to be? a

you do have you coming and how do there? So growth expected us assure that is some wins

Russell Low

Okay, good question.

So things. just a couple of

the the what or to So I There's $X.X Japan into add advanced to was not a billion. said logic about Doug going of lot $X.X billion. baked

have not you Doug actually can also a of those see this unless paths going to think think I clear And go that get long I we we to enough us multiple there's as indicated, model. out and known said, path, we've are state this. to

through That Design then to advanced logic, a the Record. when Record in is into work go as Higher-Volume to after logic, Tool of to process Going with Tool advanced we has get time-consuming a customers R&D. of think, get Process I qualified it

to advanced at one's one our region. think managed We an is have we've going where locations get where an their learnings; now: customer actually X R&D our the logic to significant institute second we're in position placed we Dragon tool advanced now and Dragon

And It of ] play. going So It's going to not those to penetrations ownership are always making play. differentiation penetrations. cost be a driven. has be [ are to technically we a be

application. working the of to our we're goal with partners valuable can really obviously a to different we differentiate So is work how lot problems. technology solve in their And out customer

Duksan Jang

And up OpEx. Understood. as onto follow a

And $XX of roughly coming down. little despite sales sequentially think, a it's implied QX, the So I bit increase in obviously an OpEx guide million. is

how and run at level. the the about think onto about we So think that's rate at million. already from XX% 'XX here $XXX-ish $X.X you're for as I 'XX well, billion, because should 'XX sales, calendar that of And

James Coogan

Yes.

about think as historically, investments incremental talked that make and in we in prepared are remarks we So to we we've today, mentioned OpEx continue going the it to forward, R&D. going

investments to in you'll that see And increase incremental research period and here. of with do the our development has so team period some over

addition growth future. hold that, We to built coming flat. SG&A In support to here that type the the we've our to in a try see base that we're can relatively continue we going to expenses believe of

of process.Largely it and judicious we've year. we'll we sales organization to move XXXX, of out investments sure the come of types and other at course through a rate we're to the exit down you're changes of in percentage number XXXX, terms see going very And so going of to as year the make want tightly we the, to in back the of that normal the development. speaking, over of our SG&A maintain volumes of research still SG&A salary appreciation over the manage our would And as increase expenses type that call that to continuing around we'll efficiency as got absent those our cost flow half be that the, making while

Operator

Benchmark next The The from Mark Company. with question Miller comes

Mark Miller

a spending? capital housekeeping issue. was What Just

James Coogan

in full For million approximately year. the quarter million $XX and the $XX was quarter, the it for

Mark Miller

cash million, your is $XX.X operations And Okay. from was that correct?

James Coogan

quarter, yes. Yes. the In

Operator

Steelhead comes The David question from Duley next Securities. with

David Duley

on gross A margins. question

second being margins quantify. trying we the recovery. about to a you flat half revenue gross should just XXXX for about or exiting how year think Just throughout talked the up, margins about progression the When talk with being much? You've Where year?

James Coogan

XXXX's it are up we're as the well direct as what CS&I volumes Yes. the system contribution going given the some over being mixes, gross of where we're overall. not forecasting, do on higher the over period, Again, provide year. expectations to Right for over the course we of margin the margin see guidance now,

David Duley

And quarter? was the there think in bookings the Okay. strong were reason what million. the $XXX behind I

and like I or What were think was that in that $XXX markets like was bookings? increase applications the that. million something drove number quarter. the It key end the last

Doug Lawson

It's driver. silicon carbide China. the big That's in

Operator

Ellis from B. question Craig Securities. comes next Riley The with

Craig Ellis

that follow more upgrades do we for 'XX? up change revenues can you'd that driving and is last to in Is can there's has developed annual what that company little different some through you year. this next and that specifically wanted in that heard you're than It and what And area. seems color what about regarding on expect view messaging a seems CS&I like that correct? the on optimistic a year. I 'XX any growth year other the provide doing And it's a offerings

Russell Low

Russell. it's Craig,

rapidly, installed strong grown So, platform. our particularly has terms in really Purion. as base a very aware, that of And has you're

high-value So as contracts, looking we upgrades. look we're on at on and we're aftermarket focus business, focus our to to looking CS&I

at those. buying see are machines. we add see the And to cycle, customers and utilization support significant capacity, customers you then could start is increased our point often sell up, we so upgrades back you upgrades they buying can that So go developing the actively starts this that then what for value of

working building is this a stronger. So part perfect our these and time business to with that these upgrades, working be qualifying of our out with customers, upgrades,

Operator

Thank concludes question-and-answer you presentation. conference. today's your in and This session for participation today's

You a may day. Have disconnect. now great

Axcelis (ACLS) 8 Feb 242023 Q4 Earnings call transcript