Release Date: November 06, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
- Veeco Instruments Inc (VECO, Financial) delivered solid third-quarter results with revenue totaling $185 million, surpassing the midpoint of guidance.
- The semiconductor business achieved record revenue, increasing 26% year-over-year and 13% sequentially.
- Recent orders for wet processing systems, driven by AI, totaled over $50 million, extending visibility into 2025.
- Veeco is the market leader in laser annealing and ion beam deposition technologies, crucial for advanced semiconductor manufacturing.
- The company forecasts its semiconductor business to grow approximately 10% in 2024, outperforming WFE growth for the fourth consecutive year.
Negative Points
- Revenue from the compound semiconductor market declined to $16 million, comprising only 8% of total revenue.
- Data storage revenue decreased slightly to $33 million, with expectations for further decline in 2025.
- Revenue from China decreased to 30% due to a decline in semiconductor sales, with further decline expected in 2025.
- The transition to 200-millimeter production in the silicon carbide market is delayed due to weaker demand from a slowdown in EV adoption.
- Veeco expects a $60 million to $70 million reduction in data storage revenue in 2025 as customers are not planning to invest in new systems.
Q & A Highlights
Q: Recently, ASML gave a forecast that was somewhat below expectations. Are you seeing any impact from that?
A: William Miller, CEO: Our outlook for 2024 is flat, similar to ASML's outlook. We expect 3 to 5 system shipments in 2025, with potential growth from new application wins. As ASML's shipments increase, our business is expected to grow in parallel.
Q: You mentioned that China will be down somewhat. Is that primarily driven by the slower EV market or other factors?
A: William Miller, CEO: Our China market is mainly in the semiconductor space. Demand has been strong in 2024, but recent engagements have moderated. We expect China revenue to decline as customers digest capacity, but it's too early to say by how much.
Q: Can you provide any directional color for the different business segments for the first quarter of 2025 or guidance for the full year?
A: John Kiernan, CFO: It's early for detailed guidance, but we see growth opportunities in the semiconductor business driven by AI, wet processing, and AP lithography. In compound semiconductors, we see potential in GaN power and solar applications. However, we expect a $60 million to $70 million reduction in data storage revenue in 2025.
Q: Regarding the $50 million worth of orders in the wet processing business, how is it split between DPUs and high-bandwidth memory?
A: William Miller, CEO: The orders are from leading foundries, high-bandwidth memory manufacturers, and OSATs. It's hard to specify the exact breakdown, but we have exposure in all those areas. We expect AI-related business to grow significantly in 2025.
Q: What is the expected impact of Chinese revenue normalization, and when do you expect it to happen?
A: William Miller, CEO: It's too early to predict the exact impact, but over time, we expect Chinese revenue to return to more normalized rates, possibly by the end of 2025 or into 2026. Historically, China has accounted for about 20% of our business.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
