Q3 2021 Veeco Instruments Inc Earnings Call
Ladies and gentlemen, you're currently on hold for today's Vigo instruments. Hosted Q3 2021 our earnings conference. Call this time. We're still making additional participants and Dupont be annoying momentarily. We appreciate your patience and ask that. You please remain on the line.
Good day and welcome to the Vico instruments in corporate hosted. Q3 2021 earnings call at this time. I'd like to turn the conference over to mr. Anthony bencivenga investor relations, please go ahead.
Thank you and good afternoon. Everyone. Joining me on the call today are Bill Miller because Chief Executive Officer and John Kiernan our Chief Financial Officer. Today's earnings releases available on the decal website. Please note that we have prepared a slide presentation to accompany today's webcast. We encourage you to follow along with the slides on vk.com. This call is being recorded by Biko instruments and is copyrighted material. It cannot be recorded or rebroadcast without vigoss, express permission your participation implies consent.
To our recording to the extent. This call discusses expectations about market conditions Market acceptance and future sales of the company's products future disclosures future earnings expectations, or otherwise make statements about the future. Such statements are forward looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made including as a result of the COVID-19, pandemic. These factors are discussed in the business description, Management's discussion.
Ian and Analysis, and risk factor sections of the company's reports on Form 10-K and annual report to shareholders. And in our subsequent quarterly reports on Form 10-Q current reports on form 8-k and press releases speaker. Does not undertake any obligation to update any forward-looking statements, including those made on this call to reflect future events or circumstances after the date of such statements.
During this call management. May address non-gaap Financial measures information regarding such non-gaap Financial measures, including reconciliation to gaap, measures of performance is available on our website with that. I will turn the call over to our CEO. Bill Miller. Thanks Anthony. Good afternoon, everyone and thank you for joining the call. The veeco United team did an outstanding job. This quarter. We posted solid Q3 Financial results were continuing to invest for growth.
And we're making progress towards our long-term Financial targets. We shared at our analyst day on September 9th.
With all our Q3 guided metrics came in at or near the high end of our Guidance, with revenue of 150 million dollars, driven by record semiconductor sales and strong data storage Revenue. Our non-gaap gross margin came in, at 43 percent and we to non-gaap operating income of twenty four million dollars leading to diluted non-gaap EPS of 47s.
Our quarterly revenue is up 34 percent year-on-year. Looking at year-to-date Revenue compared to the same period last year. We achieve 37 percent Revenue, growth driven by a 67 percent increase in semiconductor sales.
And we generated 30 million dollars in cash flow from operations, which is the highest quarterly amount generated in almost seven years.
We've been.
I mean the company to take advantage of lasting Global megatrends, part of the transformation includes making fundamental changes such as developing and practicing a set of core values to improve our culture. This afternoon. We published our second sustainability report, many of our transformational improvements over the last few years are reflected in this report, But it includes so much more. We greatly improved, our environmental and social disclosures and continue to make progress.
Dress in these areas, minimizing our environmental footprint, becoming more inclusive and continuing our commitment to good governance. All aligned with vigo's core values. We know these actions will help us improve our operations to better serve our stakeholders while building a more sustainable and transparent company.
Now, let's turn to an update on our specific Market opportunities.
Beginning with our semiconductor Market. It's been well publicized that wafer Fab equipment spending is expected to be over 80 billion dollars in 2021 and that 2022 is expected to grow further from there, the strength and Equipment spending reflects, both technological advancement and capacity. Additions. We address this Market with three major product lines, where our innovation has resulted in solutions that drive better performance for our customers.
Enabling better performance allows us to win in targeted applications and expand our service Market. In fact, we shared at our analyst day that over the long term. We expect our semiconductor Market opportunities to grow at a kegger of approximately 23%, much faster than forecasted long-term wfe growth.
The three product lines are laser annealing, which is currently used in production at both Advanced and trailing logic notes. I end beam deposition systems for euv, mask blank, production and lithography for advanced Packaging.
Our laser annealing products are used by device manufacturers and their most critical process steps, customers choose vigoss, laser, and healing Solutions, because of its Superior capability, this enables a kneeling with the shortest dwell times for improved device performance. We're currently Production Tool of record at multiple customers. We expect growth of this product line to come from Market expansion, in a few ways.
In the near term, we'll continue to work with our existing logic customers on their next nodes and we're making progress with a significant New Logic customer in the longer term. We've engaged memory, customers with evaluation systems and demos and expect to penetrate this important Market over time.
We had another strong Revenue quarter and laser in Daily driven by systems to existing logic customers as they build out, current modes.
Our next product, serving the semiconductor Market is RI and beam deposition system for euv, Mass plant production. The UV lithography is critical to the progression of Moore's. Law is device geometries in both logic and memories continue to shrink. We expect continued adoption of euv, lithography. We've seen public remarks from Intel, Samsung tsmc hynix and Micron. Confirming their commitment to euv as they seek to advance their product road maps.
In addition, asml recently announced plans to double their euv scanner.
Foot from 35 systems in 2022, approximately 70 systems in 2025 consequently, we expect demand to grow for our ion beam systems used for euv. Mask blank production. In fact, we recently increased our outlook for euv, mask blank systems from two to four systems per year, to three to five systems annually on average.
Moving to Advanced packaging for a few quarters. Now, we've expressed increasing confidence in our Advanced packaging opportunity. We had a strong equipment, shipping quarter for our lithography systems, and we had a repeat multi-system order from a leading oset to support production of gpus and high performance Computing chips.
All three of our products serving the semiconductor Market are performing well and are expected to continue this momentum for the foreseeable future. As expressed in our analyst day. The semiconductor Market is our biggest driver of growth over the next three to five years and we're making progress towards that goal.
We serve The Compound Semiconductor Market primarily with two product lines are wet processing equipment for our of power, amplifiers and filters and mocvd equipment for power and photonics applications are wet processing. Equipment has broad appeal in material liftoff and solvent. Based applications. In addition to the continued demand for our wet processing equipment across our filter and amplifier applications. We're seeing demand in photonics applications as well.
Are mocvd systems, enable, fast charging, another Power Management Solutions, as well as micro LEDs. We ship single wafer systems for power and micro LED applications during the quarter. And continue to work towards penetrating these growth markets.
Our third Market is data storage in the near term. Based on our order activity. We expect data storage Revenue to decline. However, our customers continue to invest in their areal density, roadmaps and increase the heads. They produce both driving more ion beam system Demand with the amount of data stored forecasted to grow at 35 percent. Annually, we're confident about the long-term prospects of our data storage business.
In summary attraction, in the semiconductor Market demonstrated by application wins, backlog position and visibility. We are confident, we will grow Revenue in 2022. Now for an update on our 2021 priorities. First regarding our resilience. There are a couple of updates with safety being a priority for the company, and one of our core values. We've decided to delay, our COVID-19.
In return to facilities plan. This keeps our manufacturing employees safer while ensuring continuity of our operations.
Regarding the status of our supply chain, like many of our peers, we're experiencing the effects of global supply chain disruptions such as longer lead times and cost increases. We've been buying an advanced and resourcing components on a more frequent basis each quarter in order to proactively manage the impact to our business. I'd like to thank our supply chain team for minimizing disruptions to our customers.
Next, we continue.
Focus on profitability, and we're on track to meet our long-term Financial targets. And from a growth perspective, were solidly on track to deliver more than 25 percent Revenue growth in 2021.
Our investments in evaluation systems and service. Infrastructure are setting us up for success in 2022 and Beyond by keeping these priorities. Top-of-mind. The veeco United team is committed to making a material difference and building a stronger V. Go now, I'll hand it over to John.
Thanks to all and good afternoon. Everyone. I will be discussing non-gaap Financial results and encourage you to refer to the reconciliation to gaap results, in our press release, or at the end of the earnings presentation.
Looking at our revenue revenue for the quarter was $150,000,000 representing a 34 percent year-on-year. Increase in top, 3% sequentially. Semiconductor at a record. 76 million dollars made up 51% of the court has Revenue, increased 42% sequentially and a hundred and twenty seven percent year-on-year. The Investments. We've made in evaluation systems service product development.
Manufacturing capacity have enabled success in our semiconductor business.
Data storage at 39, million dollars made up 26% of Revenue, and reflected both capacity and Technology. Additions by our customers. Revenue, was up six percent from a year ago and as expected down 25% sequentially.
Compound Semiconductor was relatively flat sequentially at twenty three million dollars which represented 15 percent of Revenue, driven by mocvd and what processing system sold for power RF and photonics applications and scientific and other came in at 11 million dollars and made up eight percent of Revenue.
A few comments on Q, three Revenue by region.
Asia-pacific region, excluding China was 40% of the total, which sales of ion beam and Laser kneeling systems the semiconductor customers as the main contributor.
The United States region made up 33 percent and was driven by IBM system shipped to data storage customers.
China made up, 18%, primarily from semiconductor system shift to a variety of customers. And finally, the me and made up nine percent.
Now, turning to our non-gaap quarterly results, gross margin came in at forty two point, six percent, which was a percentage Point higher than last quarter and toward the top end of our guidance.
Operating expenses for the quarter with thirty, nine point, six million dollars flat to last quarter and 26.4% of Revenue, which was a reduction from last quarter. Operating income of twenty four point three million dollars for the quarter, increased 14% sequentially and 72 percent from the same quarter last year.
Tax expense for the quarter was.
$500,000 with net income coming in at twenty point, five million dollars non-gaap EPS was 40 cents on a diluted share count of 50 1.7 million shares. Now moving to the balance sheet and cash flow highlights. We ended the quarter with cash and short-term Investments of 336 million dollars. A sequential increase of 6 million dollars.
From a working capital perspective, our accounts receivable decrease 287 million dollars. This drove a decrease in dsos to 52 days from 67 days in the prior quarter.
Inventory increased approximately 7 million dollars, to 171 million dollars to support increased shipment volume in procuring components earlier to address longer lead times and availability days of inventory. Increase to a hundred and seventy-three from 167 in Q2.
Accounts payable decreased to 49 million dollars. As a result dpos decrease to 51 days from 58 in queue to reduce our working capital by seven million dollars. During Q3 this along with our earnings, in the quarter, resulted in 30 million dollars of cash flow from operations.
Long-term debt on the balance sheet was recorded at 332 million dollars, representing the carrying value of 389 million dollars in convertible note.
Capex during the quarter was 22 million dollars. This includes 18 million dollars for the San Jose Expansion Project and approximately 4 million dollars in other Capital spending. Our San Jose facility is coming along well, and we expect the ship out first systems from this location in the coming weeks now, turning to our guidance.
The queue for revenue is expected to be between 140 and 160 million dollars. With non-gaap gross. Margin between 41 and 43 percent. We expect Q4 non-gaap objects to be between forty, 1 million and 43 million dollars. An increase from Q3. As we continue to invest for growth. We are on Pace, however, full-year objects as a percentage of Revenue to decline as compared to 2020.
Gap, EPS. The Q4 is expected between four cents and 22 cents per diluted. Share non-gaap. EPS is expected between 27 cents and forty-five cents per diluted share, diluted. Non-gaap. EPS is based on approximately 52 million share count for reference. We've included a table in the back up section of the earnings presentation to provide detail on the effect. Of the convertible notes on diluted share count.
At the midpoint of our queue for Guidance, full year 2021 revenue is expected to be approximately 580 million dollars with a dollar thirty five and nine gas EPS. This raises our full year 2021 guide once again with Revenue up 28 percent year-on-year and non-gaap EPS up more than 50%.
Point. Now for an update Beyond Q4 in the first quarter of 2022. We will be adopting the accounting standard ASU 2020 - oh six for convertible debt, accounting upon adoption. Our convertible note tool be accounted. Holy as debt for model purposes, when calculating non-gaap EPS, starting in Q1 2022? Quarterly cash interest expense in the amount of 3.2.
Million dollars should be added back to non-gaap net income.
And approximately fifteen point, six million. Gluten shares should be added to the weighted average basic shares outstanding to reflect. If converted method of accounting replacing the dilution assume using the current treasury stock method of accounting. We provided a table in the back up section of the earnings presentation with details, both the gas and non-gaap effect of the new. If converted method of accounting for our convertible notes.
Please note. There is no cash flow impact resulting from this accounting change.
Regarding how visibility into Q1 2022 business levels. We see Revenue in a similar range to our queue. For guidance, looking further into 2022. We expect full year Revenue to grow compared to 2021 as we continue to gain Traction in our semiconductor business, as Bill highlighted earlier. We will also continue to make the necessary investments in people material and infrastructure to support our growth.
And with that bill and I will be happy to take your questions.
Thank you. If you'd like to ask a question, please. See my pressing star one on your telephone keypad. If you're using a speakerphone, please make sure that your meat function is turned off to allow your signal to reach our equipment.
Don't once again, that is star one. If you would like to ask a question and we'll take our first question from Tom O'Malley with Barclays, please go ahead. Could you please walk through, you know, some of the tools that you still have yet to ship this year and then talk about any kind of new way.
You may have on the tool from that, be really helpful.
Yeah, Tom, that's a timely question. We've been telling the street. We plan to ship 10 tools this year at this point. We've shipped nine of those. So of the play and 10-8 are in semi to are in compound semi of the in the semi space. The Big Driver is LSA where we have five LSA tools shipping, or eval tools out in the field, the most interesting ones.
Our to 1/3 Advanced logic customer. We've actually turn that tool over to the customer. They're running qualifications. And the News were hearing is positive. I would say. And then, similarly, in D Ram. We've shipped to eval systems to D Ram customer. And once again, there are there tools are have been turned over to the customer. They're running device, Qualls, and the news
Is I would say, is positive at this time. So that's pretty exciting. And in The Compound Semiconductor space, we have shipped to evaluation systems. One is our Lumina for red micro LED applications, and we recently shipped an 8-inch Gann on Silicon single wafer, Propel tool to a large Foundry for Power Electronics, applications. So I would, I would characterize.
Is our progress at this?
All right, as I was pretty positive. I think we are really on track or maybe a little bit ahead of where we kind of laid out our plan this time last year. So we're we're pretty bullish about about the progress. We're making.
Right, so helpful, and then, my follow-up is just about the, the upside in the quarter from the semiconductor business. Obviously record highs there. Is that a function of timing for that business. Or are you seeing increased Traction in different areas of the business where, you know, you're getting new tool orders that you hadn't had before? I understand lead times are are long but can you just describe kind of what happened in the quarter? And then it also sounds like with some some new traction with new customers that that business is looking like it's going to be really strong.
Next year, you talk about some of the different areas where you're seeing increased order activity in the semi business right now. And how that may impact next year. Thank you. Yeah, Kyle, I would say regarding the quarter John. I would say we did reach record revenues and really that's on the back of all three legs of our stool in semiconductor. That's was laser annealing. We shipped and euv, Tool in the quarter.
And the tremendous progress, we're making an advanced packaging. So I think the step up there was, I would say, on all three of our sub markets within sem easily, screw that tune. Yeah. That's a, an accurate statement bill. Yeah. It's so, you know, if I kind of look out a little farther Over the Horizon, we're really excited about the growth opportunities for us and semi this year, our semi Revenue through Q. Three is up.
Percent compared to the same year last year, you know, we're forecasting, doubling our backlog, and semi from the beginning of the year, to the end of 2021. And I would say, we're experiencing tremendous, pull across the board from, as I said, laser annealing with our existing customers. Obviously, I just spoke about the opportunities with New Logic and memory customers euv, mask blank.
And remain strong with, you know, both logic and memory customers adopting euv. We've taken up our annual forecast from two to four systems to 325 systems, based on asml is remarks. And then also in the advanced packaging space, we've been getting increasingly more constructive on this opportunity and we are seeing actually during the quarter.
System orders from multiple customers and that was 400 sets IDM xand foundries. So it's it's very much a broad growth in advanced packaging lithography. We are. We're also seeing is that as customers are buying multiple tools Fleet matching is becoming more important and our AP 300 is really up to the task compared to the competition and
We believe we're gaining some.
Here in this growing Market.
Congrats again, guys.
Thanks, Tom.
Thank you. We'll take our next question from Patrick. Ho. What's default.
Thank you very much and congratulations. Well, in the nice quarter and Outlook Bill, maybe just to follow up on the advanced packaging comments. You just provided. Can you give a little bit of color? Whether you're seeing a broadening of applications or is it primarily still for quote, like fan out applications for Mobility? Or are you seeing greater a quote adoption in areas, like heterogeneous integration and other types of processes. Can you just give a little bit of color on that?
Absolutely Patrick. We are clearly seeing a broadening of this Market that not only are you know, the typical markets for fan-out wafer level packaging copper pillar and bumping for you know, mobile Ai and high performance Computing. But you know, what we're seeing is more focus in the heterogeneous.
Integration opportunities and it seems it that seems to be driving it. So I would Clearly say it's a broadening of the opportunity as opposed to very mobile focus a few years ago.
Great, that's helpful. And maybe as my problem question. You guys did a really good job. Both in terms of the revenue line, as well. As on the margin front. Given the supply can constraints that are existing in the industry today. Can you just give a little qualitative color on? Some of the measures you took that allowed you to avoid some of the missteps that other companies, you know, have come across.
Sure. Patrick, this is John. And thanks for the question. So certainly, we're not immune to the challenges that have are are well documented in people experiencing and supply chain constraints. And I would say that, you know, Q3 was more challenging than Q2, but we've been successful manager, mitigating these challenges and met or exceeded our Revenue targets by doing a few things, you know, first of all, working closely.
With our suppliers to monitor Upstream risks, I would say that making selected buys of head of demand and you see that to some extent in increased inventory and when a supply chain issue has been identified. We move quickly to execute alternative Supply. So I would say, you know, Patrick, despite the supply chain constraints, you know, we're really happy.
And expect, you know, Revenue to grow to approximately 580 million dollars this year, 28 percent increase year on Year and have been able to meet our customers important requirements.
Right. Thank you very much.
Much. Thanks, Patrick.
Thank you. We'll hear next from David Dooley with steelhead.
Ed. Thanks for taking my questions. Just a couple As far as the I think I've asked this question the past. Could you take a gander at what? You think the size of that market is going to be in this year? And next year. I imagine next year. It's going to show a fairly significant growth. So that's really what I'm trying to dig at.
Sure. Yeah, I would say, you know, we've been, I would say with historically sizing this Market at say a hundred million dollars this year. We expect that to grow, you know, in excess of 20% plus in 2022, and I would think our market share is going to increase from
Kind of mid 40s to maybe over sixty percent.
And who owns two trillion? I'll go ahead. I'm sorry.
It's just a combination of Market expansion and and some decent chair gain.
Excellent. Now, as far as the balance of the market, if you own 40 to 60 percent, share who do use, who's number two in the marketplace at this point?
At this point, I would say the primary competitor for us is canon.
And we also see competition from me. Those are probably the primary competitors.
Okay, and you mentioned that your semi business I think is going to have a kegger of 23% over the next few years. Could you just help us understand the three segments that you mentioned? How would we handicap the three verses that growth rate? What's going to be the fastest growing up? The three?
From a market sizing standpoint.
Point for you, I would. I'm sorry. Say that again. Yeah, I think you mentioned that your semi business is going to go 23% over the next few years and you have three segments. I'm just kind of trying to handicap the three segments. Yep. Yep, and kind of in that 20 to 25 kind of range. I would say the largest growth when I look at our taggers from 20 to 25. I would say
R.
Laser annealing Sam is going to grow pretty significantly. At our existing semi-products are going to grow. We have lists of grow, a little less than 20% are lithos, am over that full period of time. We're forecasting it about 10%.
The one big impact is we announced activity in the eye and beam deposition tool for low resistivity metals. And today obviously, we don't have any any business there at all. But if we are successful that would add an additional 250 million dollars of Sam in 24 and 25. So that's a big chunk. But that's really out.
Farther in time.
Okay, and then find a question from me. Is you've met you you've been pretty clear about the data storage Market being down, you know sequentially and I guess I'm guessing it's down in 2022, you know, do you have a handle up now about how much it's going to be down and if you don't, I understand, but if you could take a stab at all. So when you think the inflection point is, when do you think the that business grows again sequentially?
Dave, I would say, you know, as you know, our data storage customers have an adding capacity over the last three years and we have a lot of order visibility this time last year and we've actually hit all of our Revenue objectives in data storage as planned for this year, what we're seeing from an order standpoint over the last three quarters.
We expect customers to slow that pace of capacity addition in 2022. So we believe revenue for data storage will be lower in 22 than 21. I think it's, it's important to note though that on a longer term basis. We really see data proliferation driving. This industry data, stored is forecasted to grow at 35 percent per year. Head shipments are expected to grow at 8:00.
To 10% the complexity of these heads is continuing to grow at 8 to 10% So long term. We feel pretty good about the long-term prospects. But but Dave, I want to make a pretty important Point here that at the vehicle level. I can tell you that even with significantly lower data storage Revenue. We're seeing strong demand in order activity, in the semiconductor Market with laser annealing, Advanced packaging, litho and euv mask blanks that work on.
It in Revenue growth in 2022.
Excellent. Thank you very much.
Thanks, Dave.
We'll take our next question from Rick, Shafer with Oppenheimer.
So today we have with the business, we have Leading Edge logic and we have trailing Edge customers. I would say, John would say about two-thirds is Leading Edge. Yeah. So if I'm just kind of focusing in on the Leading Edge logic, we have two customers today, and we have one application step with one customer and three application steps with the second customer.
Omer. And what we announced is that we've one process to love record at their next advancing node, so what that means, then as a node rolls out for an application step with a customer at their next note, that would be about a 25 to 35 million dollar opportunity over, you know, one and a half to two and a half year period. That's that's about how
We size that.
All right. Thanks. That's very helpful. My second question is on eval tool. You guys are deploying tiny Val tools to customers this year. How should we think about eval Tools in 2022? It seems like with semi bookings, being strong based on your analyst, a slide that was a hundred percent half and half. Can you use any of those originally expected, eval tools to fulfill those backlogs orders, or do you have capacity to support both?
We have capacity to support both. So we expect, you know, during next year to to turn these eval tools into into revenue. And so that number would decrease but at the same time, we have a plan to ship some of our newer product out into the field is eval. So I would think
from an ongoing business standpoint. We are building a business plan to meet our Revenue growth plus ship new eval systems and keep then keep the evals in the field at about 10 at a time as we kind of move forward, will be in this mode for I would fit, I would guess the coming years as we continue to grow.
And and will also be bringing on new capacity as we bring our San Jose new facility, you know online. We mentioned that we expect to ship tools from that facility in the upcoming weeks and be fully, you know, transitioned into that new Facility by Q3 of 2022. And this would effectively double the amount of output
From our facility compared to our current facility there as well. And support of requirements coming from the semiconductor industry.
Great. Thanks guys.
Thanks. Once again, as a reminder that is star 1. If you would like to ask a question, we'll hear next from Mark Miller with Benchmark company. Data storage. As you know, has been very strong there. There's now some cyclical slowing. But as the industry translates to hammer and Emer heads, are there new process, new processes coming in which will require increasing.
Usage for your tools, whether it's at your deposition.
Yes, Mark, that's it. That's a very true statement. I would say that that's really driving a lot of the complexity of the heads as they advance and then moving from you know, shingled magnetic recording to energy assisted recording that will continue and and a lot of that buying is not yet happened. Actually, so we're mean paas.
On the data storage market for the long term, and we're just expecting a down period in 22. Frankly, just given our bookings activity and our lead time.
What these new process steps require upgrades to existing equipment, whether it's at your deposition?
Yeah, we're working closely with our customers to meet their process requirements. And yes, we are. Introducing some new technologies that hopefully can be upgradeable. Lastly, any COVID-19, you didn't mention any COVID-19 impacts, how you're managing through that was that of any cost addition. That was significant during the quarter?
John spoke about supply chain challenges, I would say from a factory labor standpoint. I think the company has performed very well and I wouldn't say we've had any significant mrs. Year-to-date either from a supply chain or from a vehicle labor standpoint.
Yeah, thank you. You know, we have seen some, you know, inflationary on material cost. I think, you know, the area that that's impacting costs, increase logistic costs. I would say that, you know, for the for the third quarter Mark and what we're forecasting for the fourth quarter, that combination had about a one-point impact on our gross margin.
Thank you.
Thanks, Mark.
Thank you. We'll take our next question. From Gus. Richard with Northland.
Thanks for taking the question and I'll offer my congratulations as well. Just you made a comment about your winning in packaging because you had better matching. Could you could do flesh that out a little bit.
Our. Yeah, our our architecture is is much simpler than our competitors. And, you know, it's a very robust rugged design as I think, you know, many applications required g h. And I line as opposed to some competitors are only eyeline. That's that's one area where differentiating. And then on fleet matching we just have
Have tighter specs and I believe that's largely due to Optical design. Are you talking about? You know overlay resolution. Are you competing against the scanner? Is that that's what's going on?
Now, this is our Legacy AP 300 product at applications. Typically, we're seeing a lot of them that were winning at say 2 Micron and up.
Okay, I understand and then just have you shipped the ion beam deposition system for eval in semi. No, we have not shift that were in the midst of demos with, with customers and expecting the ship that hopefully this quarter. And if not early early in want to Q1.
Go ahead and then on the compound semi like you mentioned, power, RS and photonics and I was just wondering if you give a little bit of color on the mocvd side. You know, how much of your business these days is photonics and how much of it is is power and how much of it is our up.
Sure, let me we try to pick that apart a little bit. I would say, Gus, our mocvd business is really operating at historically low revenues today. Post exit of a commoditized LED business, you know, we did a lot of work restructuring the business and pivoting towards new markets and New Opportunities. And as you know, we go after the gallium nitride applications with our Propel single wafer reactor and that can be used for.
Power Electronics, RF devices as well as disruptive silicon-based micro LED applications. And we have a second product for arsenide phosphide called the Lumina for applications in photonics such as indium, phosphide lasers, pixels, as well as red micro LEDs. I would say we are starting to gain Traction in mocvd. I would say in the near term, we expect to see Revenue growth.
with in,
A stage micro LED next year in from a number of opportunities, including a rvr as well as other photonics applications. Also, as I mentioned, we did seed the 8-inch gain on Silicon power Market with multiple customers and placed an eval for 8-inch, Power Electronics at a large Foundry.
We also, as I mentioned, placed an eval tool for red micro LED, so to answer your question, I would say this year. We did have a fair amount of power electronics business with our single wafer, reactor at eight inch. But I would say we're not seeing most of the production today is on six and so I would say we're in a bit of a seeding waiting game for that.
Market to develop. So as I look forward, I would say our business is largely more predominantly going to be in micro LED applications where that's disruptive or traditional red micro LED going forward. So I don't know John. If you have any more color, you don't think that's a good. A good summary bill that has, you know, the market
ins which we believe the eighth eighth inch for and power that we're well, positioned with what we seeded so far this year and with the evaluation that we sent to a leading leading Foundry. I just want to make sure the whirring seating like planting not seating as in giving up on. Right, right? No, I get it. Um, and then just this probably isn't a fair question, but you know, any any color on
Who is ahead? You know, the arsenide phosphide on gallium nitride or for the, you know, the micro LED on Silicon the bread on Silicon, which, which program looks like it's advancing more quickly. I would say Gus that we're actually, it looks like, at this time. It looks like both are proceeding.
You know, we are seeing activity in the traditional.
The traditional approach of red green and blue pixels for luxury TV type markets. It looks like that's that's starting to happen and we're seeing
You know, a rvr applications with with non-traditional kind of gal on Silicon type solution. So right now I would say it's fairly hard to handicap where we are. But I would say it looks like they're both moving forward.
My last question is so it sounds like it's more application specific in terms of which approach is going to be used.
Today, I would say that seems to be the case. I want to see kind of how it all plays out over all.
Okay, awesome. All right, that was real helpful. Really? Appreciate it. Thanks so much. Thanks Gus.
Thank you that does conclude today's question and answer session. I'd like to turn the conference back over to management for any additional closing remarks.
Thank you, operator, and thanks for joining our call today. I'd like to thank our customers and our veeco United Team for their continued support and to our shareholders. We look forward to seeing you at upcoming conferences. And in DRS as we close out 2021 and execute toward our growth in 2022. Have a great evening.
Thank you. That does conclude today's conference. We do. Thank you all for your participation. You may now disconnect.