Axcelis(ACLS)2024-11-07 16:45Financial Data and Key Metrics Changes - The company reported revenue of 1.49 for Q3 2024, which was largely in line with expectations [7] - Bookings in the quarter were softer than expected, with a total of 758 million at the end of the quarter [29][30] - Gross margin was 42.9%, slightly below the target of 43.5%, primarily due to systems mix and lower CS&I revenue [30] - Operating profit was 3.4 million [30][31] - The company generated 579 million [32] Business Line Data and Key Metrics Changes - Revenue from power markets was approximately 57% of total revenue, down from 63% in Q2 2024 [9] - Image sensor revenue was strong, driven by demand from China, particularly for smartphone applications [16] - Advanced Logic did not generate revenue in the quarter, but progress was made with evaluation systems [17] - Memory customers showed early signs of activity, with expectations for additional revenue in Q4 [18] Market Data and Key Metrics Changes - China accounted for 71% of total shipped system sales, primarily due to higher sales to the image sensor market [26] - The company expects revenue from China to decline sequentially in Q4 and the first half of 2025 as customers digest previous investments [26][27] - The silicon carbide market is projected to grow significantly, with a CAGR of 24% from 2023 to 2029 [11] Company Strategy and Development Direction - The company is focused on long-term growth opportunities in silicon carbide, memory, and advanced logic markets [22][23] - There is an emphasis on transitioning customers to trench MOSFETs and supporting the shift from 150mm to 200mm wafer capacity [12] - The company aims to penetrate the Japan market and extend its success in power to other segments [24] Management's Comments on Operating Environment and Future Outlook - Management noted continued softness in bookings and a moderation in growth expectations for key markets in 2025, particularly in China [20] - The preliminary expectation is for revenue in the first half of 2025 to be lower than in the second half of 2024 [21] - Management remains optimistic about long-term growth driven by the adoption of silicon carbide and a cyclical recovery in memory and general mature markets [22][23] Other Important Information - A correction was made to historical backlog numbers, with the backlog for Q2 2024 revised from 879 million [27] - The company recorded a bad debt expense related to a European customer that filed for bankruptcy, impacting operating expenses [30] Q&A Session Summary Question: Order activity context and geographic basis - Management noted that softness in general mature and power markets is driving lower order activity, impacting expectations for the first half of 2025 [36][37] Question: Positives and headwinds for 2025 - Bright spots include memory, with expectations for increased activity in Q4, while headwinds include digestion periods in general mature and power markets [38][39] Question: Actions regarding Chinese components - The company actively reviews its supply chain to improve localization and reduce costs, with a strong supply base outside of China [44] Question: General mature market leverage to end markets - Each end market (consumer, industrial, automotive) drives demand, but recovery is needed for a rebound in business [46] Question: GaN opportunity and future outlook - GaN is considered a niche application compared to silicon carbide, which drives more implant steps [51] Question: Transition from 150mm to 200mm wafers - The transition is picking up speed, with many customers working on 200mm capabilities while optimizing existing 150mm processes [54][56] Question: DRAM spending recovery - The company is optimistic about DRAM due to increased utilization and upcoming new fabs, while NAND remains quiet [62][64] Question: Utilization rates of equipment - Utilization rates are generally down, with some spikes in memory due to HBM, but overall demand remains soft [85]