Q4 2020 Onto Innovation Inc Earnings Call
Good day and welcome to the onto innovation fourth quarter earnings release Todays conference is being recorded at this time I would like to turn the conference over to Mr. Michael Schafer with Investor Relations. Please go ahead Sir.
Thank you Joe and good afternoon, everyone onto innovation issued its 2024th quarter and full year financial results. This afternoon. Shortly after the market close if you have not received a copy of the release. Please refer to the company's website at www dot onto innovation from where a copy of the release is posted joining us on the call today on Michael <unk>, Chief Executive Officer.
And Steven Roth, Chief Financial Officer.
As is always the case on need to remind you on the safe Harbor regulations anti bodies today that are not historical facts, especially comments regarding the company's future plans products objectives forecasted unexpected performance consist of forward looking statements within the meaning of the private Securities Litigation Reform Act on 1995, you got so much whether expressed from Florida game every day.
The current currently available information on the company's best judgment at this time was it needs with a wide range of assumptions that the company believes to be reasonable. However, it must be recognized that these statements are subject to a range of uncertainties that could cause the actual results to vary materially Lucky company cautions that these statements are no guarantee of future performance those factors that may impact on.
Onto innovation is also currently described with lots of innovation form 10-K report, where do you go after December 2019, as well as other quarterly filings with the Securities and Exchange Commission lots of innovation does not update forward looking statements on expressly disclaims any obligation to do so.
A discussion of our financial results will be presumably going to non-GAAP financial basis, unless otherwise specified as a reminder, a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release I will now go ahead and turn the call over to Michael is that right.
Thanks, Mike Good afternoon, everyone and a happy healthy new year to each of you and your families with 2000 Twenty's successfully behind US the onto innovation team is looking forward to a new year fuelled by strong markets and our strengthening customer partnerships we have.
Proud to already have five of our six new products announced in 2020 accepted by top tier semiconductor manufacturers clearing the way for further adoption in 2021. In addition, we added new markets such as high end image sensors planar film metrology and heterogeneous packaging in total we estimate that by the end of 'twenty 'twenty.
We expanded our available market by over 500 million cash.
Successful integration of Rudolph and net metrics strong financial Foundation.
Already achieving the gross and operating margins outlined in our long term operating model. This foundation enables growth from both organic and inorganic investments such as our recent acquisition of inspect <unk> a leader in overlay metrology for the expanding compound semiconductor market.
Now, let's start with some highlights from the fourth quarter.
Our growth in the fourth quarter exceeded the high end of guidance, increasing 23% over the prior quarter, while our operating income grew 58% over the same period.
Revenue from customer expansions and advanced nodes doubled over the third quarter.
The strongest growth came from NAND customers, but we also saw double digit growth from both DRAM and logic customers in total we delivered standalone systems to 10 customers to support these expansions build.
Building on the broad appeal of the current outlook. The current Atlas platform, we shipped our newest Atlas five systems to multiple logic customers for evaluations at five and three nanometer design rules as well as evaluations for leading DRAM devices for the onesie and one alpha nodes.
Complementing our Atlas platform impulse integrated metrology revenue increased significantly in the quarter, but more importantly, we added a new DRAM customer after an extensive evaluation the customer selected impulse for the most critical process steps in their next generation memory product expected to ramp in 2021.
We estimate these critical steps will represent over half of this customer's integrated metrology volume.
We also recognized revenue on our industry first aspect IR city technology, providing high aspect ratio channel hole measurements critical for three D. NAND with over 170 device layers. We have successfully demonstrated the capability to other NAND customers and expect to deliver several evaluation units in the first half of the year.
Yeah.
Demand for element composition on metrology is expanding driven by the impact of slight material variations on transistor performance at the most advanced nodes in the quarter, a second memory supplier selected the element system for inland composition metrology of incoming wafers. In addition, a leading supplier of <unk>.
Material deposition equipment.
Shipment of an element system for the characterization on development of next generation dielectrics for advanced three D NAND and logic devices.
While we don't expect large volumes from this customer we do anticipate additional orders.
Now, let's review, our packaging and specialty device market, which resulted in our largest source of revenue for the second quarter in a row.
Growth in the fourth quarter was up another 3% following a 44% jump in the third quarter.
Revenue from our customers supporting five G represented the strongest growth in the quarter estimates from Mediatek and Qualcomm of another 500 million five <unk> enabled phones in 2021, an increase of.
Holds over 200, 250% over 2020 suggests continued strong growth in the new year.
To support rapidly shrinking interconnect geometries customers are demanding more precise and repeatable measurements. This trend has contributed to revenue from our flagship dragonfly platform doubling in 2020 over 2019 net.
In collaboration with our leading customers. We recently released the third generation Dragonfly system.
This new system increases <unk> sensitivity by 40% and throughput by 30% on.
<unk> metrology throughput has increased by a very impressive 50% we have shipped multiple third generation dragonfly systems to both <unk> and top five semiconductor manufacturers. In addition, the dragonfly G. III was selected by another top three manufacturer of image sensors for mobile devices.
Dragonfly platform is the only tool capable of detecting a critical yield defect at full production speed. We expect follow on orders from this customer in the first half of 'twenty 'twenty one.
To conclude the fourth quarter highlights our new products are well positioned to support the transistor packaging architectures that are enabling new devices for AI and data center applications and the transition to <unk>. The timing of these inflections are setting the stage for a strong 2021, which I'll discuss after Steve covers the fourth.
Financial highlights Steve.
Thanks, Mike and good afternoon, everyone before I begin my remarks, Michael like mentioned that recently closed Inc. Spectrology acquisition.
It occurred at the end of December however, after our close of our fiscal year.
Therefore that acquisition had no effect on the results that we will be discussing today.
So let's begin.
Our fourth quarter revenue was $155 1 million slightly above the high end of our previous guidance and up 23% from the third quarter of $126 5 million.
As we discussed on our last conference call, we expected to see strong recovery in our advance node business, which increased over 100% quarter driven by definitely on logic.
Our fourth quarter revenue would've been approximately $4 million higher however, a few tools, we had shipped to a Chinese customer were halted because the customer was placed on the entity list.
S government lakes on late December.
Applied for a license to ship those tools.
On the high end of our Q1 guidance assumes that the licenses will be approved on time for shipping in the quarter.
Breaking down revenue by market, 42% of sales were in our advanced packaging, especially device market strength related to the five G RF market.
And that's nodes was 37% of revenue on a quarter on software and services and the remaining 21%.
Turning to gross margin our gross margin continued to stay strong at 54% consistent with third quarter.
Fourth quarter margin was impacted by product mix, including the sale, although lithography system, which typically has a lower margin profile.
We expect to see continued improving margins on new product provide enhanced value to our customers on our supply chain synergies continue to impact our product cost.
As we look forward to Q1, we expect increasing revenue in our key markets and currently anticipate margins to be in the range of 54% to 55%.
Moving to operating expenses fourth quarter operating expenses were $46 3 million an increase from $45. One thing in the third quarter of 2020.
The change was primarily due to an increase on project expenses is a contracted R&D projects that provide the R&D credit in the third provided R&D credits in the third quarter was lower in Q4.
In addition.
Employees, taking pay time off in the fourth quarter also contributed to the increase.
For the 2000 and for the 'twenty 'twenty, one first quarter, we're seeing an increase in operating expenses as a result of the technology acquisition.
As such we expect Q1 operating expenses to be in the range of $47 five to $48 5 million with the majority.
The increase over.
Over the fourth quarter being from the acquisition.
We've identified cost synergies totaling about 20% on the historical operating expenses other than Spectrology. However, we do not expect to see the realization of those synergies to start until the second half of 2021.
On our last call I noted that at the midpoint of the revenue guidance. We provided we will be operating at quarterly revenue levels that would put us entering our long term operating model, which we established for the move up net metrics merger.
As you can see from today's results our gross margin.
North of 4% on our operating margin.
24% both in line with that model.
We expect those results to continue to strengthen as we drive from the upper end of our long term model with operating margins of 32% to 33% and greater than $5 per share earnings.
Our effective tax rate for the fourth quarter was 5% and 12% for the full year 2020, which was below our normal rate of approximately 17%.
The lower rate with through the conclusion of an IRS audit and a net operating loss carryback claim we filed in the fourth quarter tax years with higher statutory rates.
'twenty 'twenty, one we expect the tax rates returned to a normal level of between 16 and 17%.
Net income increased from the fourth quarter and was $35 6 million or 72 per share above the high end of our guidance.
From the 2023rd quarter, we reported net income of $19 6 million or 40 cents per share.
Higher revenue than the lower tax rate that I, just discussed contributed to the stronger performance.
Moving to the balance sheet, which is on a GAAP basis, we ended the quarter with cash with a cash position of $374 million up $33 million from Q3 on our cash from operations was $105 million for the full year.
Accounts receivable increased in the quarter two on higher revenues and then they had 147 to 149 million net inventory increased in the quarter to $191 million on anticipated higher Q1 sales.
Finally, turning to first quarter guidance, we expect revenues to be in the range of $155 million to $169 million.
In this range, we expect earnings to be between 60 and 76 per share.
I will turn it back from like for additional insight into Q1 and 2021 Mike.
Thank you Steve.
We see several secular trends contributing to another year of strength for the semiconductor equipment industry. The continued proliferation of billions of connected devices in the massive amounts of data. They send every second to the cloud is driving demand for the most advanced memory and logic devices to support new applications and artificial intelligence and high performance.
Compute.
The transition to five G, which is only just beginning will drive an estimated 250% growth in five G enabled handsets in 2021 further increasing demand for advanced logic memory and the numerous specialty devices that go into those handsets.
<unk> packaging is playing a more pivotal role in the Roadmaps of many device manufacturers as they drive smaller geometries and heterogeneous packaging to deliver products with higher performance and lower power consumption.
We expect to play a prominent role on the transition to heterogeneous packaging by leveraging our jet step lithography Firefly inspection and discover software suite to overcome challenges from shrinking geometries across larger packages, we expect to start shipping those.
These new solutions to customers beginning in the second quarter.
Another important secular trend is the transition to electric vehicles, driven by consumers and supported by various government initiatives. The EU has announced the plan to ban new fossil fuel.
Car sales by 2030, California, Japan, and others have announced their plans to ban the sale of new combustion engine vehicles by 2035.
This transition to electric vehicles is accelerating demand for power power control smart vehicle sensors and other systems to optimize.
Drivetrains battery life and charging.
Many of these critical devices are produced using compound semiconductor processes, such as gallium nitride on silicon carbide and Spectrology as a leading supplier of overlay metrology specific to these unique processes by augmenting their overlay metrology with our discover run to run software defect inspection and process.
It's a software.
We'll provide a unique integrated solution to help customers meet aggressive ramp and yield targets and.
In addition to growth in the secular markets. We serve we are strengthening our customer relationships. For example, we recently completed two record level volume purchase agreements each representing over 100 million on target revenue for 2021.
These agreements cover the breadth of our product lines across both front and back end applications.
Though not a guarantee of revenue the agreements are a good indication of business health and our growing importance to these customers.
Specific to the first quarter the midpoint of the revenue guidance that Steve mentioned is up four 4%.
We project revenue from advanced nodes, increasing by double digits led by logic customers investing in both five nanometer and three nanometer process technology.
We also see modest growth in DRAM and a slight contraction in NAND after an incredibly strong fourth quarter.
Packaging and specialty will remain essentially flat with the fourth quarter with strong investments in packaging technology by leading idms offsetting the decline, we typically see due to effects of seasonality.
Considering the strength of our current backlog and the growing visibility we have into the second quarter. We expect the first half of 'twenty 'twenty, one will be over 20% stronger than the first half of 2020.
It's an exciting time for onto innovation and we appreciate the continued support from our customers. So as we look at the many opportunities in front of us.
I also want to acknowledge and thank our dedicated team at onto innovation.
Thanks to their incredible teamwork and tireless commitment to our customers' success, we're positioned to have a more critical role in driving the future of our industry.
With that we'll open the call for your questions Sarah.
Yeah.
If you would like to ask a question. Please signal by pressing star one on your telephone keypad. If you are using a speaker phone. Please make sure you're on mute function is turned off to line of signal to reach our equipment again that is star one to ask a question.
And we'll go ahead and take on first question now from Craig Ellis with B Riley.
A question and Mike and Steve Congratulations on the products and Sam expansion successes and entering into the target financial model range Michael.
Mike I wanted to start just by following up on a couple of other points you made the first one is regarding the true 100 million dollar volume purchase agreements I don't remember you commenting on such a night before so can you put some context around that.
Mentioned that those may or may not be for revenues in the current year any further color on their ability to either fall into this year or may be spread over a multiyear period would be helpful.
Sure. So as we've grown as we merged and brought together the two companies.
Both companies were serving these large idms and we add back and you know it's a lot of strength from the Rudolph side from the back end.
From the nano metric side, some from and when our customers are looking at the total spend together theyre looking at.
Putting together a more.
Comprehensive plans, so giving us more visibility letting us understand where their expansion plans are coming across both the front end and back end and making sure that we have the.
No visibility to ramp along with them. So the volume purchase agreements are meant to give that indication in some cases, there more formal than others. All of it is meant to differ.
Define a year. So this isn't over multiple years I think that was part of your question. It's all for this year. So it's an indication of what they see what they expect to spend this year.
That sound across our profit very constructive.
And would you expect to to.
Enter into more of these types of agreements with other idms or.
Or is this really something that is unique to these two customers and we wouldn't expect this to occur with others.
No I think we would see this as we continue to grow our position in and integrate more deeply into our customers' Roadmaps I think this would be a.
More common.
Our current.
Okay.
On the.
Got it.
And then the second question was related to the color on the first half of 'twenty. One so congratulations on on the 20% year on year growth that you see.
The question is this can you just comment on the visibility that you have issued look out across the full year, Mike you know to what extent does that exist or might it be greater in some parts of the business in other settings, and we have had some companies indicate that they would expect industry spending to be a little bit more.
From a cap weighted.
Then you know steady are backend waited linearity and any sense from your end in terms of what that.
For your car.
Contour might look like for onto.
Yeah.
I think some of our customers in the front end will be.
More more front end first half weighted although when I look through the list there was a mix in a number of them number of them are balanced.
So I think there'll be.
Maybe a slight bias to the first half if I remember half of our businesses is a volume driven business switch really sees the pick up in the Q2 and Q3 timeframe.
So and in addition to that we see the new products that we've announced and gotten acceptance on we would expect more of a impact from that revenue in the second half. So all things considered you know I would say that we.
We would expect first half second half to be read.
Relatively on.
On a conservative basis relatively the same for us.
Drive enough Theres a slight.
A slight bias towards the first half spending from some of our customers I think with the new products and the traction we're gaining in some other areas that we would offset that.
Yes.
Very helpful. Thank you and then finally, Steve.
54% gross margin second consecutive quarter end and first quarter guidance built on that so so congratulations can you comment on the extent to which we have any lingering COVID-19 costs or other costs that are in gross margins that youre working on.
Yeah.
And then maybe related to Cogs just.
Express your comfort with supply sufficiency for the type of demand environment, Mike's talked about whether we should expect there would be any incremental costs down the road for expedites or other things that are that would be more common in a tight environment like we seem to be seeing out there.
Yeah I.
I think we've talked about in the past the COVID-19 side.
There's some incremental costs for cleaning and stuff like that in the factory and they're just they're there.
Minimal comparatively I mean, it looks like probably on the travel side obviously.
Throwing some above.
Kind of the cleaning protocols or putting us on kind of thing that was somewhat of an offset so I wouldnt I don't think theres anything you have to worry about for from the Covid impact.
Supply chain I think the Oh was the risk as you know.
How does COVID-19 effects.
Some of our other.
Agents suppliers and things like that if someone gets more of those factories gets hit or something like that so far we've been able to manage through that we have had some impact on.
At a supplier I think we've talked about in the past but.
We've been able to work through that so you know.
It's something that's clearly on our radar screen and something that we're all concerned about because that's where a COVID-19 effect could really hurt.
Not just on us but.
All of us in the industry, depending on which that which vendor that is but right now we're on it would manage through it.
Thank you very much Steven guys. Congratulations on the strong start to calendar 'twenty one.
Thanks, Craig.
Well take our next question from Quinn Bolton with Needham <unk> company.
Hey, guys I'll also offer my congratulations on a nice finish to 2020 on a strong 'twenty one outlook I guess, maybe just starting with that 'twenty one outlook.
Mike It looks like many in the industry, we're calling from <unk> to be up.
About 15% this year when I take your commentary about the first half of 'twenty one for on keep growing 20% year on year, you would get to about $330 million first half from your comments about a balanced first half second half could imply youre going to do about 660. This year that says Europe, maybe 19.
Percent year on year, so outperformed AWS be pretty nicely is that mostly true share gains and some other new products you talked about gaining customer adoption is that kind of a good way to be thinking about.
How you outgrow GAAP you have to you this year.
Yeah, it's it's around the expansion within the markets, we were serving but also expanding expanding our served markets. So we talked about a heterogeneous packaging and that and the.
Transition towards panel packaging that that's going to kind of drive and of course, we would expect to be shipping steppers to support that in the second half. So that's an upside and so there's a series of things as you may have picked up we've released a lot of new products those products are gaining traction and some other and gained.
Traction through share gains in the existing markets others through opening up new new applications and new markets.
Sort of related question you mentioned the impulse, we ended up top three DRAM manufacturer.
The other next generation node is there any way you could sort of quantify how big that opportunity is I mean.
It's the only pre DRAM guys. There theyre all pretty large so just trying to sort of think about what that could could be per rep for onto but that win.
Yes.
Well, we the way we quantified it was it's it's over half the share so as you know.
It also depends on how big the customers ramp is.
But and that's why I'm hesitating because they.
They are still working on that that ramp plan, but it's.
From an integrated perspective, its very significant let's put it that way. So from a you know if that's an overall 100 hundred and $25 million $150 million market.
It's a it's a meaningful move in and share gain for us.
Great. Thank you interest for for Steve.
Given the outlook for panel lithography systems to start shipping in the second half of the calendar year I know those systems carry lower gross margins how much of a headwind would that be to gross margin in second half or do you think some of the other.
On the Iris the aspect.
Tools could can offset some of the higher shipments of both biography in the second half.
Yeah I think.
Good way to look at it I mean, the lithography systems, you know, obviously high ASP and.
Lower lower volume so it's not like we're seeing a ramp up lots of units, but we are obviously, we've talked about the backlog we have in lithography for this year already.
For this year.
So again I think you know, having one or two targeted tools go on a quarter.
Can easily be offset by some of the newer products. We've got I talked about the value added on some of these new metrology products that we've added.
So I don't think youre going to see a real big you won't see that headwind I don't think other numbers.
Great. Thank you.
Well take our next question from Patrick Ho with Stifel.
Thank you very much on a belated happy new year and congrats on the really nice finish to the year, Mike maybe first off a little more color on the DRAM.
Metrology Wayne talked about it in the prepared remarks, one can you give us what type of applications those wins were for and secondly.
We see the process control intensity increased from both NAND and logic over the last several years are you seeing that now more in OCD metrology as the DRAM side as well.
So on your first question.
It's for integrated metrology applications, which are primarily CMP.
We're working with.
Several customers are.
To expand based on the stability and the speed at which we're making these measurements they're looking at other process steps were integrated hasnt been traditionally used but they see potential benefit based on the quality of the measurements that we're able to provide but for for this when it was.
CMP.
Sure.
Second question.
What was the second question sorry, I missed your second question I'll process control intensity in day rate do you see that Oh.
OCD metrology and the impact for you.
Yeah, we.
We definitely see process control intensity, increasing at first in logic, we mentioned that in before and we're seeing that.
Consistently growing as the nodes are shrinking in DRAM I'd say, it's a it's a little bit less.
Certainly less.
Ramping.
Meaning less accelerating.
Intensity, increasing while we do see as the customers migrating down that they are increasing the number of.
Tools, they need but not at the same rate as the as the logic.
Great maybe as my follow up question for Steve I check on working capital management, given that you're seeing more and more.
Especially in the near term you know you've worked on the working capital front.
Pretty well one what have you improved upon particularly since the merger given that there.
Diverse products.
And that combination.
From the inventories product how are you managing that right now you just come on the supply constraints in the whole ecosystem as well as you are.
To meet increasing customer demand.
Yes. So I think there is you probably get on both area to area could be obviously focused on a lot.
Since the merger.
Our edge inventory and I think you know putting the companies go through integration and kind of comes with a common process for accelerating acceptance is everyone else see shifts when we get there.
<unk> 80, 90% upon shipment type of scenario, but theres always cleaning up those acceptances and I think.
On the team's done a very good job.
Doing that this year, so I think our dsos have been.
Been trailing down pretty much quarter over quarter over the last couple of years or last couple of quarters. So that's that's been a you know on improving area from a working capital perspective on the inventory side. It's two stories right. We've got the obviously, the litho inventory or purchasing for the it seems on some of the products we're putting in.
And coming out with but at.
At the same time, you're right as I mentioned on the.
Craig I think a minute ago.
We were obviously constantly looking at the supply chain the impact with Covid. They can have on the on the plant and on.
So we're doing on forecasting where we think the based on the comments Mike made about the force out from here.
Right now we're you know, we're obviously looking at it.
We're making sure that we're ahead of the curve as best we can.
And we haven't seen anything that really has yes.
Impacted us yet.
Great. Thank you very much.
Well take our next question from Tom definitely with da Davidson.
Yes. Good afternoon. Thanks for the question I guess I'll start with <unk>.
I guess first on the margin side when you look at the new 100 million dollar volume purchase agreements.
Includes volume discounts on might have impacted the margin structure.
Yes, you could imagine if we're doing.
Doing that through obviously, a big it's a package deal, but because of the portfolio of products, Mike talked about it's a it's a it's not just a one product $100 million how do we do if the mix of all of our products on a lot of these cases, both funding and backend. So overall the margins are actually pretty strong.
And yes, as I had mentioned that I don't think that you're seeing.
Any major impact on our margins. This year is obviously revenue growth I think we're going to continue as I mentioned in my comments, because we continue to drive revenue. So I think youre going to see continued improving gross margins obviously they flow so pretty strong on the operating model for us.
Okay and when you look at your long term model, you're going from 600 to 800 million dollar range of about 500 basis point improvement in the operating margin is most of that just driven by increased revenue or are there any programs or projects you have to do that achieve those operating margins.
Well I would say too I don't think there needs to be much to hit that model I think as we drive the revenue will get there, but I also don't want to say on complacent with the model we have because as he talked.
From a synergy standpoint with the company. It's got a there are some longer term engineering programs that are two three years in the making you're always getting to common platforms things like that those will work their way into the into that model on her into our operating on our results as we proceed on the up that.
That model revenue growth.
Okay, and then finally from Mike when you look at the yeah potentially.
Potentially $70 billion at WPZ spending this year and you look at the business you have in the second half.
On the lithography side are you going to need another slug of tools in 2022 to handle the big equipment spending this year or is that correct.
Moving up in correlation to or in conjunction with the spending this year.
Specific to the lithography you're asking.
Yeah, just kind of the front end versus background on the timing of the two segments.
Yeah, No we would expect several years of growth on the lithography side to keep up with the demand based on the multi year range and multiyear discussions that we're having with our customers.
This is a transition that's going to be happening for well like I said for several years and it's a you know.
At least what with what they're sharing with us the expectations are for a day.
Really decent growth over those next several years.
Okay, well that's great news. Thank you.
Welcome.
Well take our next question from Goldman.
Okay.
Yeah. Thanks for taking my question on all of a couple of them.
Could you just pile on I think you in your prepared remarks, there Mike you were talking about the increase in Pam or stay on from your new tools could you just talk.
Can you elaborate on that give us the total organic growth.
How it breaks out amongst the four or five new tools.
So there is a slide on our investor deck that also will will break this out so it'll be a.
Little more clear there but.
You know just.
First a quick summary.
The biggest piece is the opening of the optical mature the planar film metrology, which is are you know roughly half the optical metrology market.
No.
809.
$900 million market, so roughly half of that is this planar films and so the iris platform opens opens that up.
<unk>.
On the.
The aspect or the the impulse that lets stick in the optical metrology market the impulse.
Is really around share gains within the existing integrated metrology market, where we haven't really participated we haven't had a new product in six years, that's about a $150 million market and we like the traction that we're seeing as I mentioned.
Pretty strong growth.
In the in the fourth quarter driven by three net three D. NAND customers and then adding another DRAM customers. So that's that's nice growth there than on the continuing the Sam expansion as the.
Heterogeneous die or the panel level packaging, which including the day.
<unk>.
Inspection software and lithography, we estimate can be over 100 million annually.
And.
Then the aspect in.
And the elements there on the on the compositional and three D. NAND side, they're more you know expansions within our existing OCD space. So.
So we didn't count those into the into the mix.
Expansion opportunity.
And then.
I think that covered most of it.
From the new product perspective of course in Spectrology.
We see that opening up with the electrification of vehicles and we see that opening up an.
In area four compound semi where we play with just the inspection tools and some of the software today, but by pulling that altogether through the C. D. The overlay metrology, which is quite unique and challenging for those compound semi devices.
That's on the estimated I think we said $80 million.
<unk> expense expansion for the Sam.
There as well.
Great.
So it sounds like Youre filing business will grow a little bit quicker, but overall wafer fab equipment business.
Curious about the bathroom business, it's always a little bit harder.
But as far as your inspection business growth, if we have let's say, 7% volume growth this year.
Non memory units, what would you expect the inspection business growth rate could be.
We are still expecting inspection to be you know.
Double digit growth this year.
So and.
And another Sam expansion.
Forgot to mention which is an important one that we're excited about not just for this year, but following years of Cmos image sensors. So we estimated that to be about an $80 million market, which we don't currently play in but over the last two quarters. We've added two of the top three.
Manufacturers of Cmos image sensors for their tie in front end applications, and we expect to expand to some of their.
Simpler, but higher volume applications as well.
Hum.
Can you did you guys reported backlog was.
We didn't disclose the backlog, but it.
Well first on first year out of the companies combined.
But it's over $100 million.
Okay.
Hum.
Just a little bit more on.
On the film.
That's obviously being the biggest new Tam expansion.
And I think you've already won from Brazil.
And that might be wrapped up on the volume purchase agreement.
If you could elaborate on what you're kind of already.
What to say.
I guess the theater throughout the world relative to book volume here, what would be what would you target.
What kind of run rate for that business, let's say in 2022.
I would say.
The $80 million.
And my team is probably far enough the chairs, but no that's only 20% of the market and if we're successful on some other penetrations that we're planning this year some of the repeat business that we're delivering against already.
Yeah, I don't think that that's an unreasonable expectation for 2022 and I also see the roadmap from some of the additional work.
Work, we're doing on the platform that will.
Make it even more valuable to our customers and another unique.
You know capability, we're providing the customers as they upgrade ability. So these systems are part of a platform strategy that gives the customers the best price performance for the.
Optical metrology.
Needs and that means these systems will be upgradable to full OCD.
If you know as their needs expand then and there.
And their needs change so the capital usage of these tools is more flexible than you know.
Competitive solutions. So I think that's gonna have additional value as well.
And helped drive so much.
Youre welcome.
As a reminder from star one if you would like to ask a question kind of stars line by Posco question.
Well take our next question from Mark Miller with Benchmark company.
Congratulations on your quarter.
The new year.
Just was wondering if you have a large tax benefit last quarter and in two.
2021, you're going to be going to a tax expense is that correct for all the quarters.
Yeah, I mean, we had.
We had a I think I mentioned in my prepared remarks, we called out at an IRS audit that's been going on for a number of years as well as we get from carry backs that drove down the principal driver of the rate down historically kind of the rates would have been somewhere in that 17% range. So.
I think for 2020 again non-GAAP will be back into those that look.
GAAP and non-GAAP will be in that 17 16, 17% range.
Can you kind of give us an estimate in terms of percent of business per ships, DRAM NAND and logic.
What's your dominant.
Some are more and more time on the other from in terms of the chip.
Revenue.
Related.
They're pretty balance if you look at memory and logic, there, they're pretty balance between the between the two broad categories breaking down DRAM and NAND then it varies.
You know quarter to quarter, but in general I'd say, the NAND is a little stronger than DRAM for us.
And it's gonna be somewhat softer this quarter is that correct.
Yes, somewhat softer quarter yet.
Okay. So thank you for other than the first quarter of 2020.
I'll note.
Thank you.
Youre welcome Mark.
There appears to be no further questions at this time.
All right.
Thank you on mute.
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That concludes our remarks for the call Sara please wrap it up.
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