Q3 2021 Axcelis Technologies Inc Earnings Call
Good day, ladies and gentlemen, and welcome to the <unk> technologies call to discuss the company's results for the third quarter 2021.
My name is Daniel and I'll be your coordinator for today.
At this time, all participants are in listen only mode.
We will be facilitating a question and answer session towards the end of this conference.
If at any time during the call you require assistance. Please press star followed by zero and a coordinator will be happy to assist you.
As a reminder, this conference is being recorded for replay purposes.
I would now like to turn the presentation over to your host for today's call Mary Puma, President and CEO of <unk> technologies. Please proceed ma'am.
Thank you Daniel.
With me today is Kevin Brewer Executive Vice President and CFO, and Doug Lawson Executive Vice President of corporate marketing and strategy.
We are all participating in this call remotely so I would like to apologize in advance for any.
Nickel difficulties.
He has not seen a copy of our press release issued last night. It is available on our website.
Playback service will also be available on our website as described in our press release.
Please note that comments made today about our expectations for future revenues profits and other results are forward looking statements under the SEC's Safe Harbor provision.
These forward looking statements are based on management's current expectations and are subject to the risks inherent in our business is.
These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review.
Our actual results may differ materially from our current expectations, we do not assume any obligation to update these forward looking statements.
Good morning, and thank you for joining us.
<unk> posted a very strong quarter due to the growing momentum of the Purion product line and strength of the semiconductor industry, particularly the mature process technology segment.
Revenue for the third quarter was $176 $7 million with earnings per share of <unk> 81 cents driven by strong gross margins of 43, 3%.
Quarterly system sales increased significantly to $126 $2 million and implant systems record.
Yes, and I, our aftermarket business continued to provide a major contribution to our topline and gross margin with Q3 revenue of $55 million.
In the third quarter, 91% of shipments went to mature foundry logic customers and 9% to memory customers with an even split between DRAM and NAND.
Due to growing strength in the mature process technology market. We now estimate that segment will account for greater than 80% of system revenue for the full year 2021.
The geographic mix of our systems shipments in the third quarter was China, 70%, Europe, 15% Korea, 5% in the rest of the world 10%.
In Q4, although China will continue to account for our largest percent of systems revenue, we expect the overall regional mix to be more balanced.
Turning to fourth quarter guidance, we expect revenue of approximately $190 million gross margins of approximately 41, 5% operating profit of approximately $37 million and earnings per share of approximately 84 cents.
We now expect to exceed $640 million in revenue for the full year 2021.
The increase in revenues since the last quarter has been driven by the continued growth of the mature process technology segment and the early stages of a memory capacity build.
We believe both market segments will contribute to what we expect will be a strong 2022 for the industry and for Telus.
Our visibility into the first half of next year is very good as we are currently booking systems into Q3 2022.
Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including chip shortages high fab utilization across all segments, causing significant new fab investment Gov.
Government incentive programs, creating geographical expansion opportunities for our customers.
The rapid growth of the power device market, both silicon and silicon carbide to support automotive industry plans for electrification and finally, the fundamental underlying drivers that started this growth cycle five G data analytics and AI.
We believe that the implant Tam has increased significantly this is driven by overall increase in wafer starts by the growth of foundry, serving the mature markets, where ion implant is a fad bottleneck due to the large mix of products.
And lastly by the power and image sensor markets, which are more implant intensive and require our more advanced purion product extensions.
The mature and specialty markets are generating sustainable growth with Purion product extensions designed to serve the power device and image sensor markets.
This is the case across all implant types high current medium current anti energy.
We have invested significantly in products for these markets over the last several years and we continue to invest to maintain our leadership our purion products enjoy.
In Q3, we successfully closed an evaluation of a purion H 201st Silicon power customer highlighting our continued strength in the power segment.
We believe the power segment will comprise 25% to 30% of our systems revenue for 2021 with the image sensor segment accounting for 20% to 25%.
In these segments contributes significantly to our margin expansion.
Our growth in these segments is clear and sustainable and most importantly, it is tied to long term trends beyond any increase is driven by semiconductor shortages.
Turning to the memory market since the end of Q3 and early into Q4, we've seen an increase in memory shipments for both NAND and DRAM applications.
Last week, we announced that we shipped multiple systems to a memory customer and successfully closed the evaluation of a purion H for new NAND high current customer.
This customer now has both the Purion H and Purion XE qualified for production.
Revenue for that system will be recognized in the fourth quarter.
We maintain a strong and growing position in memory and we expect 2022 to see continued capacity additions.
I believe DRAM will be stronger than the first half of the year with a subsequent pickup in NAND later in 2020 two.
We continue to see a high degree of activity in advanced logic, where we have a purion H evaluation underway that is expected to successfully close in Q4.
This qualification will open the door for production buys in 2022 and 2023.
We are also seeing an increase in activity in the Japanese market, especially related to power devices image sensors and general mature devices.
Interest is strong for both our Purion M legacy tools in fact earlier this week, we announced the launch of GST ovation high current and high energy batch implants.
We expect these enhanced legacy products to be well received by 200 millimeter customers and to provide potential see us tonight upgrade opportunities to our large installed base.
Evaluations are key to developing new customers, increasing footprint at existing customers and penetrating new segments.
We currently have five purion evaluation tools in the field focused on supporting future growth.
These include a purion dragon, a purion H, a purion XE silicon carbide in two Purion, XE, Max's, which are positioned across key target segments, including advanced logic, DRAM image sensors and power devices.
We expect to close multiple evaluations in Q4 and plan to ship additional evaluations in the fourth quarter and throughout 2022.
In 2021, we are closing in on our $650 million revenue model. Thanks to the success of Purion in a very strong semiconductor market.
As a result, we are developing an implant driven revenue model beyond $650 million that we will introduce at a virtual investor day currently planned for December nine.
Now I'll turn the call over to Kevin to discuss third quarter financial details as well as several operational topics, including supply chain management and progress with our Korean manufacturing site Kevin.
Thank you Mary and good morning.
<unk> delivered solid Q3 financial results driven by strong gross margin performance and continued revenue growth.
With our strength in our growing mature process technology market, we now expect to exceed $640 million in revenue for 2021.
Growing systems in CSI revenue, coupled with strong bookings and backlog have set up a strong finish to 2021 and.
And position us well for expected growth in 2022.
We are seeing significant leverage in our business model and expect full year operating expenses to be around 24% of revenue with gross margins above 42%.
Full year gross margin assumptions included higher pandemics and supply chain related costs.
And the impact of our investment in additional manufacturing capacity.
Ongoing gross margin improvement will be driven by the timing of cost out initiatives customer and product mix and continued growth in our CSI business.
Based on the strength of the market demand for our Purion products, we're developing new financial targets.
Take us well beyond our current $650 million model.
Introduces models at our virtual Investor day on December nine.
Before discussing the details of our Q3 financial performance I'd like to provide an update on our supply chain and new manufacturing facility in South Korea.
We have and will continue to provide guidance that reflects our current assessment of supply chain challenges.
Beyond working closely with our established suppliers, we continue to qualify new sources of supply.
Carry a higher than normal level of inventory to help buffer supply chain disruption.
Our sales team is also working with customers to provide purchase orders much earlier than the paas, which approach improves visibility for our manufacturing team.
We are adding manufacturing operations closer to our customers.
The goal of increasing customer satisfaction and capacity construction.
Construction of the new facility in South Korea is complete.
Manufacturing began this week with first shipments scheduled for the first quarter.
This is an exciting opportunity for us, but I want to reiterate especially with our recent rapid growth that we currently have sufficient capacity in place to support our near term demand.
Expect to Korea factory to play an important role in supporting future manufacturing requirements.
Now turning to our third quarter financial results.
Q3 revenue finished at one $176 $7 million compared to $147 3 million in Q2.
Q3 system sales were $126 $2 million and implant systems record compared to $100 1 million in Q2.
Q3, <unk> revenue finished at $55 million compared to $47 1 million in Q2.
She F&I revenue remains strong driven by high fab utilization growing purion installed base system upgrades and customers purchasing safety stock.
We expect Q4 see F&I revenue of approximately $50 million.
Q3 sales to our top 10 customers accounted for 77, 3% of our total sales compared to 75, 1% in Q2.
One customer was above 10% in Q3 compared to two in Q2.
Q3 system bookings were $244 2 million compared to $172 1 million in Q2.
So the Q3 book to Bill ratio of 186 versus 171 in Q2.
We are currently putting into the third quarter of next year.
Backlog in Q3, including deferred revenue finished at $406 $6 million, a new record for excel as compared to our prior record of $271 2 million in Q2.
Q3, combined SG&A and R&D spending was $40 $1 million or 22, 7% of revenue compared to $40 million or 27, 2% in Q2.
SG&A in the quarter was $23 4 million with R&D at $16 7 million.
We expect Q4, combined SG&A and R&D spending to be approximately 22% of revenue.
Q3 gross margin was 43, 3% driven by strength in CNI higher Purion powers series shipments and continued cost out activity.
Regarding Q4 gross margin to be approximately 41, 5% driven by product mix and the expected closure of multiple evaluation systems.
We expect full year gross margins to be above 42%, including closure of these evaluation tools.
Operating profit in Q3 finished at $36 $4 million or 26% of revenues compared to $24 million in Q2.
We are guiding Q4 operating profit of approximately $37 million.
Q3, net income was $27 $5 million or <unk> 81 per share compared to $18 9 million or <unk> 55 per share in Q2.
We are guiding Q4 EPS of approximately <unk> 84.
Q3 cash finished at $271 $8 million compared to $225 million in Q2.
In the quarter, we generated $66 $2 million of cash from operations and sell those share repurchases of $12 $5 million.
Also in the quarter, we received meaningful prepayments on system sales.
Q3 receivables were $78 3 million compared to $79 5 million in Q2.
Q3 inventory ended at $196 8 million compared to $192 3 million in Q2.
Q3 inventory turns excluding shift evaluation tools finished at $2 four compared to $2 one in Q2.
Q3 accounts payable were $35 5 million compared to $47 million in Q2.
As always I want to thank our employees and suppliers for their continued efforts and outstanding execution supporting their steep business shrimp.
It is an exciting time for sellers with unprecedented growth in the industry and solid customer demand for our products.
Our balance sheet is strong and we have the financial strength to invest in products infrastructure and our employees.
We have also returned over $62 million of capital to our shareholders.
Our share repurchase program since 2019.
Under the current program, we had $62 $5 million of remaining authorization at the end of Q3.
Thank you and I'll now turn the call back to Mary for closing comments.
Thank you Kevin.
<unk> is currently positioned for significant sustainable growth.
The implant market is increasing thanks to strength in the overall semiconductor industry.
It also due to our rapidly expanding mature process technology segment.
The capabilities of Purion product extensions like the Purion EXE and Purion powers series.
Combined with the implant intensive nature of the image sensor and power device segment uniquely position <unk> to benefit from the electrification of the automotive market.
We will continue to partner closely with our customers across all geographies in this growth segment.
<unk> has the financial means to invest in R&D global support infrastructure and capacity to capitalize on all of the opportunities discussed in today's call.
We are in the middle of one of the most exciting times in the history of the industry and are confident that we are focused on all of the elements required for leadership in ion implantation.
With that I'd like to open it up for questions.
Ladies and gentlemen, if you wish to ask a question. Please press star followed by one on your Touchtone telephone.
If your question has been answered or you wish to withdraw your question. Please.
Please press the pound key.
Please press star one to begin.
Our first question comes from Patrick Ho with Stifel. Your line is now open.
Thank you very much and congrats on a really nice quarter and outlook are married maybe of course block in terms of the business. The Barbie talked about memory picking up and I agree with.
With between DRAM and NAND flash.
Can you give a little bit of color.
The kind of.
Customer mix is it primarily with one customer.
Or is it a broader mix with multiple customers.
At this point, Patrick we're seeing that it's a broader mix with multiple.
Customers. There is there's one customer in particular that has actually aggressively started placing orders, but based on the quotations that we're doing in the bookings that we have.
This is what gives us the confidence to say that it's broader and we'll start with DRAM and then expand into NAND in the second half of the year remember, we said, we're actually already booking into the third quarter. So we've got pretty good visibility into the first half of the year.
Great that's helpful and maybe as my follow up question.
Kudos to you guys, who are managing like pay TV environment, and you gave a little bit of color.
The variables that you'd be willing to mitigate these issues.
Maintenance specifically.
We've given back there were more issues that arose.
100 men.
A lot more I guess complicated issues.
Currently.
How are you reacting to kind of mitigate those.
Situated.
Which appear to be still consistent.
Coming off of Q3.
Yes.
That's a good question, Patrick I mean, theres no doubt that.
The supply chain is very tight and you know really since the start of the pandemic. It was mostly driven by pandemic and closures of businesses and of course, then we got into a logistics issue.
Followed us because of the pandemic part of it's just because of you know.
The volume is trying to move right now through the industry, but.
So early on I think we got very aggressive with looking at our lead time offset to an MLP with suppliers.
<unk> buffer inventory.
Moving from some of our bottleneck suppliers and getting some new capacity put online. So I think some of those early actions certainly are helping now.
Now we're doing we're doing what we've been doing since the start where we're trying to stay on top of it I mean, the team is working hard as all companies are doing right now.
We're still adding new suppliers.
As we see problems arise.
We're reacting and we're trying to be proactive as well we're looking at continuing to look at where there may be potential bottlenecks and trying to.
Beat it off in the past if we can so.
There was a lot of hard work.
I think you've heard me say before.
There's a lot of luck too I mean, it's a big supply chain. So all we're going to do is continue to do those things have been working for us. So far as you point out we've been able to manage through this.
And that's our intention is to continue to move forward So I feel.
Comfortable with our Q4 guidance that.
We have a good handle on what we need to do to execute this quarter from a supply chain point of view.
Great. Thanks, again and congrats.
Thank you.
Thank you.
Our next question comes from Craig Ellis with B Riley Your line is now.
Yeah. Thanks for taking the questions and congratulations really on two fronts not just the near term operating execution, which is remarkable in such a tough environment, but in the vision that you had years ago to really.
Diversify out the Purion product line. So you can be so well positioned for.
The secular drivers that you mentioned and that's really where I want to start.
Mary as we look at our mature foundry market on the power side.
And as we look at EV activity. We're currently low single digit million units of production, but by mid decade, we should be $10 million, maybe $30 million by the end of the decade, So theres a tremendous ramp coming and the question is where do you sense you're diverse customers are.
And getting capacity in place for that ramp how much of that are we seeing here right now in second half strength in the business and how much would you expect to fill in as we go through 2022 with the visibility that you have in your order book.
Well, we've talked extensively about power devices and how those are actually being driven by the electrification of the automotive market our customers right now who serve that market are adding pretty significant capacity I would I would call. It full speed ahead at this point.
Time, and again based on our discussions with them and we stay very close to them not only in terms of trying to understand what the forecast is that also in terms of understanding what the trends are in the products because.
We've talked about how our Purion power series is really a market leader and we want to make sure that we stay that it remains that way. So I would say that it's quite strong right now and we believe that it's going to remain strong into the foreseeable future.
This is not a trend it's short term this is a trend that that's longer term.
And we.
Again, we expect to be right, there with our customers, enabling them to continue to manufacture these chips, even as they evolve.
Over time. So this is a long term trend Craig and we believe that it's going to remain in place for many years to come.
Yes.
Correct and then Oh go ahead Doug.
Yeah, just just wanted to add that we are planning to do a deep dive on that market on the power market and the specialty markets at the Investor day in December so so there'll be a lot more more information.
Great.
And then the <unk>.
Second question was also in mature foundry and just flipping over and Doug you may refer me a bit too.
At December session, but I wanted to see if I could get some color on the.
On the <unk> part of the mature foundry market.
Certainly we're seeing very strong.
E V E V.
And a desk demand there we're also seeing very strong.
Smartphone demand as smartphones continue to have an increase in image sensors per phone.
Hum.
And one of the things we've been looking for is the opportunity for <unk> to potentially.
Gained further share in the Japanese market and I'm, hoping you can provide a little bit of color on whether you've got any increase in optics into tapping that market and growing into a.
A large well positioned customers or potential customer there.
So Craig Doug can address any of the technical issues, but we're continuing to work with all.
<unk>.
Image sensors manufacturers manufacturers, particularly the large ones.
Obviously, the target that Youre talking about is something that we are.
Working very heavily.
Not only with our team in Japan, but also really across the business.
And.
In Japan right now.
We actually have quite a bit of interest.
In image sensors, but also in the power market.
And that's something that we'll continue to focus very heavily on we put a purion XE into the power device market last year and that's in production and we're using that as a reference site, which has generated a lot of interest.
We actually just launched a Japanese web.
Website <unk> website.
'twenty, two or where they're just unique dynamics that took place in the calendar third quarter.
Well it is customer specific and I will tell you it's.
One particular geography with some of our <unk>.
Smaller and what I would say newer customers.
There is a in the P. O terms there are prepays that are associated with that order so deep.
Depending depending on where the mix is from quarter to quarter Craig.
That that could occur more or less so it's you know I wanted I did want to.
Mick mentioned it this quarter because it was more significant than we had a pretty significant.
Cash generation from operations.
So I just wanted to flag that.
Yeah helpful and congrats on that CFO I'll hop back in the queue. Thanks very much team. Thank you.
Thank you. Our next question comes from Christian Schwab with Craig Hallum Capital. Your line is now open.
Hey, congratulations guys.
Really excellent execution, Kevin did I hear you right that your backlog went from 272 million last quarter to $406 million this quarter.
Yes, you did in the last quarter was a record and this obviously was a new record yet.
Okay.
Fantastic so.
No.
Maybe some of those countries.
December night, but.
<unk>.
Can you guys kind of talk about it, particularly with the silicon carbide market, where I think you have.
And play a product where your competitor really does not.
And the industry is looking for you know material.
Wafer growth.
Im sure Youre aware.
There's not too many cars per wafer right now.
That may or may not change in the future, especially if we go to 300, but can you can you kind of quantify.
The opportunity for you guys in that marketplace alone.
Well I think Christian the.
As I said, we're going to have a deeper dive on this at the Investor day more than we can do in a quick Q&A, but.
We expect this year power.
Both silicon and Silicon carbide power combined will be 25% to 30% of our.
Systems revenue.
So that's up from from last year, which I don't have the charter in front of me, but I think it was around 17% and so.
It is continuing to grow and.
Automotive is probably the key driver.
There is a lot of power switching that goes on in the car.
Silicon in addition to silicon carbide so.
So we're seeing we're seeing a lot of activity across all geographies.
There was a lot of activity in in Europe really starting at the Japanese market has always been pretty strong in power.
Certainly the U S market has really started to go after it aggressively as seen by several customers earnings reports.
The past week or two.
And the Chinese market is very very active so.
It's a worldwide phenomenon there is a big push worldwide on Evs and so we expect it to continue to grow and we continue to develop the Purion power series.
Family.
Okay. That's helpful I don't have.
Any other questions again congrats on the.
And the high visibility of the great execution.
Thank you.
Thank you.
Okay.
Thank you. Our next question comes from Tom <unk> with D. A Davidson your line is now open.
Yes. Good morning, Thanks for the question.
So first Kevin I was wondering if you could give us a summary, or an update on just where we are where you are in the evaluation systems.
What you expect to close by the end of this year, which looks like the impact margins, a bit and which ones are going into 2022, it might be impactful there.
Yes so.
I think Mary mentioned Theres five evaluation systems currently out in the field and in Q4.
We expect to convert.
Multiple.
<unk> systems.
We didn't put the exact number in that time, but it's.
Let's put it this way, it's it's three or more.
So.
<unk> going forward.
I expect we'll still have a few evolves in the field in quarter one.
But we are also continuing to put evaluation tools out.
As a matter of fact a.
A fairly large portion of our current emerged sorry number beyond having some buffer inventory for supply chain issues as evaluation systems both shipped.
Or work in process in the factories so I.
I don't expect this eval.
<unk>.
The evaluation tools to drop off.
In any meaningful way.
In the near term, we're going to continue to put them out there and as you know.
E valves, we have out there the more opportunity we have to convert.
To revenue in future growth, so the margin impact as always.
So a little bit of a disappointment, but it's a short term disappointment because a lot of these new email as well are the product extensions which are.
As we've talked about before they have higher asps and the margins are.
Certainly more accretive than some of the base products.
Okay, Yes, one of those high class problems.
Okay, maybe shifting over to the memory market for either Mary or Doug.
A year ago at this time, we were looking into 2021, which is gonna be a nice recovery year for memory.
Didn't materialize, but it was dwarfed by just the mature business being so strong but I'm just curious when you look out into 'twenty two.
This memory look different this year than it did a year ago.
Well I think.
If you look at <unk>.
Rising trends and so forth.
They are beginning to support.
The growth in terms of additional capacity.
The demand if you look at any of the.
Gartner or IC insights.
Reports show.
The increase in overall demand.
For memory over this next coming five years. So we expect that there'll be capacity additions as Mary mentioned.
In this in the script was we have begun to see some of that this year.
We expect that to continue next year.
Yes.
And so we expect it to be a better year than last year in terms of overall memory.
But.
For our business I think your comment in terms of the mature business.
This year the mature businesses.
He is very big for us and is more implant intensive actually than the memory. So.
I would expect that next year, we will continue to see percentage wise, a stronger mix towards mature memory, even though memory will be growing.
Okay. That's helpful. Thank you Doug and then the final question I guess for Kevin again, when you look at the backlog ramping up here.
<unk> is very strong.
And this is going into the third quarter now next year.
Are you capacity constrained in any sense I mean is it.
In the third quarter, because that's when the customers need the tools or is it kind of restrictions on how fast you can get these tools at the door.
Yeah, I think we've done a very good job.
Meeting what customers have required for ship dates.
So.
I would say Tom that the majority of it really is.
Meeting with the customers requirements are.
As I mentioned, we do have the Korea facility online now.
Which you know.
Im extremely excited about because if we if I look at the timing of how quickly brought that.
Up and running.
It's actually quite remarkable what the team accomplished and we did start manufacturing this way because I mentioned that we will start shipping in Q1 so.
That's going to certainly help out into the next year shipments the near term requirements. We've got cover what our current manufacturing.
And Beverly right now so.
There's really not any constraints there.
I'll say it again the teams you know both manufacturing supply chain across the business people were pedal on about the bike hard right now, but we're keeping up with it so yes.
Thank you know maybe your question might be coming I know throughout the year, we have heard from others in our peer group debt.
Pushing deliveries out or they couldn't take any more deliveries in 2021 things like that we haven't.
We haven't really.
Made that an issue at this point because I think again, we've kept up with what customers are needing for to meet their requirements.
Okay. That's helpful. Thank you <unk> for your time today.
Yes, Thanks, Tom.
Thank you. Our next question comes from Charles <unk> with Needham <unk> Company. Your line is now open.
Hi, Good morning. Thank you for taking my question I'm asking on behalf of Quinn.
Bolton here from Needham and company.
So I wanted to start with a question.
I think you guys mentioned.
Mature foundry logic.
On a dollar basis, but on a percentage basis next year is shaping up to be even stronger than this year. So I wanted to ask a question given how strong the bookings are.
And given good visibility all the way through.
Third quarter next year.
Much of that that demand youre seeing today.
Is underlying market demand or is there any like shift of those customers' purchasing behavior from Justin.
Adjusting time or do you think to maybe jumping case purchasing because the lead time is so stretched out.
I would say at this point.
Our sales team does a really good job trying to shake out exactly.
Where people are just.
I'm trying to get in line versus where the requirements are and they do a lot of background.
Work on that for example is the SaaS belt, what's the status of the SAB, whereas the equipment going and so we believe that the bookings that we have right now our bookings that will remain in place.
Obviously, they are going to be some.
Some movement there always is in terms of SaaS readiness, but we're very comfortable.
With the fact that the customers who are actually placing orders are going to take that equipment base.
Basically in the timeframe that they've indicated and.
We are building to that so we watch it there is that we do internal reviews with the sales team and the manufacturing team.
It's almost on a daily basis at a minimum every week to review if you take a look at inventory levels and things that changes in the forecast. So we manage it extremely closely so if any of those things do happen.
We are on top of that and at this point in time.
You know again, we feel we feel it's pretty certain and.
So we don't think that Theres, a lot of speculative buying out there at this point.
Thanks, Mary So maybe the next question.
Want to ask more specifically about power devices are the demand you are seeing.
Obviously, there are probably at least the three major type of power devices Silicon BCD IGT silicon carbide with various.
I think tendency I would say, they're all high but that may be there may be some difference there.
Sure so.
Based upon Google quantity pointed to order book are you kind of seeing a shift.
In terms of the mix between these three types of power devices from 'twenty one to 'twenty. Two is there more buyers towards silicon carbide rgb's heaters more sophisticated.
Power device types. Thank you.
It's a it's a split Charles.
It's it's we're still relatively early in the game in terms of power devices has been around for eternity, but we're kind of in the early game of this.
New use in an EV applications. So I think it's split across the board it really depends on that customer's primary strategy. Some are focused on silicon in <unk>. Some are focused on silicon carbide.
As others other customers that are focused on Gan so.
I think I think we're just seeing across the board there's a lot of a lot of power device demand.
Yes.
Each of industries, but automotive is probably the biggest driver.
Got it maybe my last question back to Eval.
I noticed that your Purion Dragon Eval for DRAM, and a purion XE Max Eval for image sensor has being a little bit.
For a while.
I Wonder whether you can update the progress there.
Those two obviously very important for your.
For your expansion in DRAM in the image sensor market. So we'd like to see if you can provide any color on those two.
Yeah as Kevin mentioned earlier, we have five E mails in the field.
Two high currents in three high energy.
One is the high current is is the Purion Dragon that you mentioned that is being <unk>.
Qualified for DRAM application now that customer has already qualified the purion dragon for NAND application.
And it's in production so.
Going through the paces here I think you know I think as you know evaluations. Some king close early some can take a little bit longer typically when it takes a longer we're working with customers to ensure that.
They have all of.
The performance that they want and sometimes those steps to actually change from originally.
What we agreed to we mutually agreed to expand.
So that Purion Dragon eval.
It's on track, we're working through it and.
We're looking forward to having that close and having that tool go into production very shortly in terms of let me just mentioned the other the other purion H E Mail that's out there it's for advanced logic, that's going very well also and we believe that that is a great opportunity for us to firm.
Other penetrate the.
The advanced logic market in the future.
In terms of the high energy you mentioned the Purion XE Max we actually have two purion XE Max's.
In the field both for image sensor development in both of those are going very well. So there's no delay on that and again.
We didn't really give out a timeline in terms of when those evaluations would close but I would say that at this point. They are both on track. So that's very positive and then the last E. Val as the Purion XE Silicon carbide system, which is out with a power device manufacturer and that's also proceeding very well.
I think I think we're on track.
And again, I'll say that we're more or less based on each specific customer.
Experience at this point in time.
Thanks Mary.
That's all from me thank you.
Thank you.
Thank you as a reminder that is star then one to ask a question.
Our next question comes from David Duley with Steelhead. Your line is now open.
Yeah, Thanks for taking my questions.
Just a couple of clarifications you gave us a percentage of systems revenue for both power and Cif could you repeat those.
<unk> again.
Yeah, let me find the so in terms of shipments for the quarter we had.
Well, we said, 91% with mature process technology.
We have.
Uh huh.
Actually does do weekend did we get that out you would give it out by segment.
Specific segment.
I have it.
No.
We are seeing that in the script so.
Yeah, Dave I don't think we actually gave it out I think when we get it right.
I almost positive I wrote it down but.
I said that revenue.
Power in 2025% of Gis is what I think you said for Q3.
Yes, I didn't give a specific number I get yes, that's what we basically estimated that it would be but we didn't give out the specific breakdown and.
Doug said youre going to get more detailed information on December 9th when we actually do a deep dive into that segment. So I'm sorry that you are right.
We didn't give the exact numbers.
Okay. Okay, and then when you talk about power and Cmos image sensor being more in trapped intensive can you help me understand exactly what that means how many implants as per 10000 wafers or however, you can characterize it you know.
What does what does it need to be more intensive for those particular applications within plan.
Yeah. So so the devices that they are.
Building.
Our.
In order to adjust the transistor characteristics and so forth they require more implants.
They require deeper implants.
So they tend to have a lot of high energy.
Applications with within them.
<unk>.
They require.
Early significant adjustment implants too.
To get the performance, where they want them to be to get the address.
<unk> for the threshold voltages and and we could use to enhance the device performance and so forth. So theyre very optimized types of devices and so that.
That creates a higher implant intensity.
It's hard to break it down specifically to.
Per 10000 wafer start per 100000 wafer start because its very customer.
Mix and a recipe dependent and so but they are more implant intensive than most other devices.
More so than memory and definitely more than finfet type transistors, and so forth and advanced logic.
Okay.
With this record orders and backlog.
What should we expect for the first half of next year, given that you're manufacturing slots are full for the first half.
Implications does that have for revenue in the first half of next year.
We're not going to give any.
Guidance or forecast into <unk>.
Into 2022 that will be something when we.
Well, we'll give you some general information, we talked about some new models.
Are coming out that are implant specific and we will provide that at our Investor day, and then obviously when we get to.
This full year call in February we'll give you more information on 2022.
Okay. Thank you.
Okay. Thank you.
Thank you. Our next question comes from Craig Ellis with B Riley. Your line is now open.
Yeah, Thanks for taking the follow up.
I wanted to directed towards the CSI business Mary you mentioned, the GST product that had.
The press release recently and the question is is that something that.
Investors should expect would be material to see us and is potential Rev.
Revenues in calendar 'twenty, two and and on the on the topic of revenues $50 million in the third quarter I think the company said $50 million in the fourth quarter. So it was $50 million kind of the new run rate for that business.
So let me answer the first part about ovation and then I'll turn it over to Kevin to address the financial part of it.
GST ovation is it's basically available.
In terms of as upgrades.
To our installed base of legacy tools, mainly the high current and the high energy tools. It provides our customers with a path forward for improved performance.
On the tools that they already have it can be ordered as a separate configuration, but I think the main benefits we're going to see.
Through these upgrades that we have.
So it's something that is important but it's really part of the ongoing investment in innovation.
That we're making in that aftermarket business and because the mature process technology segment is so strong and we have such a very large installed base. There. This is a really good investment for <unk> to be able to.
Continue to drive growth in that area with our customers.
Yes.
Greg I think.
There's no doubt that the 50 million seems like it's.
Kind of the new number because we've been at that level for quite a few quarters now of high forty's into the low fifty's.
Certainly with all of the.
Buying going on and what our consumable business right now has been keeping this number elevated and I think more importantly, too.
Our installed base is <unk>.
Growing <unk>.
<unk> a lot of tools over the last several years and that's beginning to take hold now.
There's kind of an entitlement that goes with a tool shipment.
So what's the right number is I mean, it's certainly a lot higher than where it was when we were always saying it was in the mid <unk> based on where we're running.
When we put out our new models.
Ninth of December at the Investor Day.
I'll be more than happy to share our assumptions in those models for CSI going forward, Craig So I think.
If you give me give me a month.
I can probably provide a little bit more color on that but certainly $50 million at this point is.
I think a scenario, we're going to stay and hopefully this continues to grow and when we brought a new models again I can discuss more about them.
Really helpful color, Mary and Kevin look forward to checking in at midnight.
Thanks.
Thank you.
This concludes the Q&A portion of the call.
I'll now turn the call back over to Mary Puma, who will make a few closing remarks.
Thank you Danielle.
I want to thank everyone for joining us today, we hope to talk with you virtually and see you in person at upcoming Investor events.
In November we will be participating in the benchmark company technology virtual Investor Conference and in December we will participate in person at the CEO summit in San Francisco and at the da Davidson semi cap laser and optical virtual conference. We will also be hosting a virtual investor day.
On December 9th we hope to see you there and we want to thank you for your continued support.
This.
<unk> presentation.
You for your participation in today's conference you May now disconnect good day.
[music].
Yes.
[music].
Yes.
Yes.
[music].
[music].
[music].
[music].