Veeco Instruments (VECO) Stifel 2024 Cross Sector Insight Conference summary

Company transformation and strategy

• Shifted from data storage and LED to focus on differentiated semiconductor capital equipment technologies, especially laser and ion-based solutions.

• Transitioned to a functional structure, reducing executive layers and focusing on core competencies.

• Strategy centers on leveraging laser annealing and ion beam deposition for advanced semiconductor applications.

• Aims to double served available market by 2028, driven by new product introductions and market expansion.

• Repurposing ion beam technology from data storage to semiconductor is a key growth vector.

Product innovation and market opportunities

• Laser annealing is the primary product, with strong adoption at advanced logic nodes and growing presence in memory applications.

• Nanosecond Annealing, a next-gen product, targets new applications like backside power delivery and 3D stacking, representing a $400M+ opportunity.

• Ion beam deposition is positioned as a fourth deposition technology, offering lower resistance films for higher device performance.

• Two evaluation systems placed at memory makers for ion beam deposition, with positive progress.

• No direct competition yet for Nanosecond Annealing; evaluation tools are not facing head-to-head rivals.

Financial performance and outlook

• Revenue has grown from under $200M in 2020 to over $400M in the semiconductor segment, now comprising 60%+ of total revenue.

• Compound annual growth rate in semiconductor outpaces wafer fab equipment market, driven by evaluation programs and laser annealing.

• 2024 guidance projects a 5%-10% increase in semiconductor revenue, with other markets flat to up.

• Targeting $800M in revenue and 45% gross margin; currently operating at 43%-44% gross margin.

• Operating income and non-GAAP EPS have consistently improved, with a clear path to 20% operating margin.