Q4 2021 Onto Innovation Inc Earnings Call
Speaker 1: Good day ladies and gentlemen and welcome to the On2Innovation fourth quarter earnings release conference call. Today's conference is being recorded. At this time I turn the conference over to Mike Schafer, investor relations. Please go ahead.
Good day, ladies and gentlemen, and welcome to the onto innovation fourth quarter earnings release Conference call. Today's conference is being recorded at this time I will turn the conference over to Mike Shaffer Investor Relations. Please go ahead.
Speaker 2: Thank you, Keith, and good afternoon, everyone. Onto Innovation issued its 2021 fourth quarter and full year financial results this afternoon, shortly after the market closed. If you have not received a copy of the release, please refer to the company's website where a copy of the release is posted. Joining us on the call today are Michael Plazinski, Chief Executive Officer, and Steven Ross, Chief Financial Officer.
Thank you Keith and good afternoon, everyone onto innovation issued its 2021 fourth 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, where a copy of the release is posted joining us on the call today are Michael <unk>, Chief Executive Officer, and Steven Roth Chief Financial Officer.
As always I need to remind you of the safe Harbor regulations any matters today that are not historical facts, especially comments regarding the company's future plans products objectives forecasts and expected performance consist of forward looking statements within the meaning of the private Securities Litigation Reform Act. These estimates whether expressed or implied are based currently on infer.
Speaker 2: As always, I need to remind you of the safe harbor regulations and he matters today that are not historical facts, especially comments regarding the company's future plans, products, objectives, forecasts and expected performance consist of forward looking statements within the meeting of the private securities litigation reform act.
Speaker 2: These estimates, whether expressed or implied, are based currently on information and the company's best judgment at this time. Within these is 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 can cause actual results to vary materially. Thus, the company cautions that these statements are no guarantees of actual results.
<unk> and the company's best judgment at this time within these is 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 can cause actual results to vary materially. Thus the company cautions that these statements are no guarantees of future performance risk factors that may impact once the renovations results.
Speaker 2: Risk factors that may impact Onto Innovation's results are currently described in Onto Innovation's Form 10-K report for the year ended December 2020, as well as other quarterly filings with the SEC. Onto Innovation does not update forward-looking statements and expressly disclaims any obligation to do so.
Currently described at onto innovation Form 10-K report for the year ended December 2020, as well as other quarterly filings with the SEC.
Onto innovation does not update forward looking statements and expressly disclaims any obligation to do so.
Today's discussion of our financial results will be presented on a 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.
Speaker 2: Today's discussion of our financial results will be presented on a 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.
I will now go ahead and turn the call over to Mike Lozinski Mike.
Thanks, Mike Good afternoon, and happy new year to everyone. We're pleased to start the Eros die reporting fourth quarter revenue exceeded the high end of our guidance growing 12% over the third quarter and resulting in our equipment business growing nearly 50% for the year.
Speaker 3: Thanks, Mike. Good afternoon and a happy new year to everyone. We're pleased to start the year off by reporting fourth quarter revenue exceeded the high end of our guidance, growing 12% over the third quarter and resulting in our equipment business growing nearly 50% for the year. This was our fifth straight quarter of revenue growth and it was our eighth consecutive quarter of increasing operating margin.
This was our fifth straight quarter of revenue growth and it was our eighth consecutive quarter of increasing operating margins. They onto the team has done a great job unlocking operational synergies even in this environment of rapid expansion and disruptions from the pandemic and global supply chains.
Speaker 3: The On2Team has done a great job unlocking operational synergies, even in this environment of rapid expansion and disruptions from the pandemic and global supply chain.
Speaker 3: Despite these ongoing challenges, we expect to maintain our growth momentum into the new year with projections for first quarter revenue up slightly at the low end and up approximately 7% at the high end of our guidance range.
Spite these ongoing challenges, we expect to maintain our growth momentum into the new year with projections for first quarter revenue up slightly at the low end and up approximately 7% at the high end of our guidance range, but before looking to 2022, let's begin with a few highlights from the fourth quarter, starting with the advanced package.
Speaker 3: But before looking to 2022, let's begin with a few highlights from the fourth quarter, starting with the advanced packaging and specialty device markets, which grew by a very healthy 21% over the prior quarter.
And specialty debase markets, which grew by a very healthy 21% over the prior quarter.
Speaker 3: Revenue from compound semiconductor and RF manufacturers increased by 140 percent in the quarter and represented roughly 40 percent of total revenue from our specialty and packaging customers in the quarter. Our powerful combination of process control technology and process analysis software is delivering higher levels of productivity to our customers and contributed to this strong demand.
Revenue from compound semiconductor and RF manufacturers increased by 140% in the quarter and represented roughly 40% of total revenue from our specialty and packaging customers in the quarter.
Our powerful combination of process control technology and process analysis software is delivering higher levels of productivity to our customers and contributed to this strong demand.
Speaker 3: As an example, a recent customer leveraged our integrated solutions to increase factory output by an estimated 10%.
As an example, our recent customer leveraged our integrated solutions to increase factory output by an estimated 10%.
We see similar opportunities to increase productivity for our advanced packaging customers, especially in heterogeneous packaging for example by integrating our.
Speaker 3: We see similar opportunities to increase productivity for our advanced packaging customers, especially in heterogeneous packaging.
Speaker 3: For example, by integrating our complementary inspection lithography and software technologies into a solution we call StepFast, we simultaneously improve productivity and yield.
Laments or inspection lithography and software technologies into a solution we call steadfast, we simultaneously improved productivity and yields in the fourth quarter, we delivered our third step fast solution to a leading supplier of panel level fan out technology used for packaging high performance <unk>.
Speaker 3: In the fourth quarter, we delivered our third step-fast solution to a leading supplier of panel level fan out technology used for packaging, high performance, 5G device.
Devices, we expect to uncover additional opportunities to provide productivity solutions to our jet step X 500 customers as we begin to deliver against our $100 million of backlog.
Speaker 3: We expect to uncover additional opportunities to provide productivity solutions to our JetStep X500 customers as we begin to deliver against our 100 million of backlogs.
Speaker 3: In parallel to heterogeneous packaging, we see a universal acceleration of interconnect strings, creating demand for more precise metrology and higher resolution inspection systems.
In parallel to heterogeneous packaging, we see a universal acceleration of interconnect shrinks, creating demand for more precise metrology and higher resolution inspection systems. The dragonfly platform meets these new industry demands by providing accurate three D metrology clarifying reliability and sub micron.
Speaker 3: The DragonFight platform meets these new industry demands by providing accurate 3D metrology, clearfinder liability, and sub-micron inspection resolution in a single system. In addition, we leverage our software to automate the analysis of these data streams to provide not just critical data, but critical decisions. As a result, revenue for our DragonFlight platform increased 67% over the prior year.
Inspection resolution in a single system and.
In addition, we leverage our software to automate the analysis of these data streams to provide not just critical data, but critical decisions as a result revenue far dragonfly platform increased 67% over the prior year.
Turning to our advanced nodes customers revenue from this market increased 6%, resulting in another quarterly record.
Speaker 3: Turning to our advanced nodes customers, revenue from this market increased 6% resulting in another quarterly record. Our Atlas platform is proving to be a powerful base for optical metrology. It can be configured to measure everything from the most advanced 3D transistor structures down to common planar films.
This platform is proving to be a powerful base for optical metrology. It can be configured to measure everything from the most advanced three D transistor structures down to common planar films.
Speaker 3: We see increasing capital intensity for the ATLAS platform, especially in advanced logic, where we provide measurement sensitivity required for complex transistor structures such as advanced FinFET and GATE all around at speeds orders of magnitude faster than X-ray systems.
We see increase in capital intensity for the Atlas platform, especially in advanced logic, while we provide measurement sensitivity required for complex transistor structures, such as advanced Finfet and gate all around at speeds orders of magnitude faster than X Ray systems in fact, 60% of our advance.
Speaker 3: In fact, 60% of our advanced logic revenue in the quarter was to support metrology for the 3 nanometer node.
Logic revenue in the quarter was to support metrology for the three nanometer node.
Speaker 3: Metrology for DRAM memory represented the strongest growth in the quarter with revenue from several large capacity expansions in Asia.
<unk> for DRAM memory represented the strongest growth in the quarter with revenue from several large capacity expansions in Asia the.
Speaker 3: The combination of our Atlas platform and AI Defract software delivers improvements in sensitivity and modeling times by again aggregating data from multiple sources.
The combination of our Atlas platform and AI Diffract software delivers improvements in sensitivity and modeling times by again aggregating data from multiple sources. We've shown this hybrid metrology solution provides a five fold increase in sensitivity for our integrated metrology platform, resulting in a.
Speaker 3: We've shown this hybrid metrology solution provides a five-fold increase in sensitivity for our integrated metrology platform, resulting in a 74% increase in integrated metrology revenue for the advanced nodes in 2021.
74% percent increase in integrated metrology revenue for the advanced nodes in 2021 .
Speaker 3: with several memory customers forecasting additional expansions in 2022, we're optimistic that this growth will continue into the new year. Before we discuss our outlook for 2022, I will turn the call over to Steve to review our financial highlights for the quarter.
But several memory customers forecasting additional expansions in 2022 we're optimistic that this growth will continue into the new year.
Before we discuss our outlook for 2022 .
I will turn the call over to Steve to review, our financial highlights for the quarter.
Steve.
Thanks, Mike and good afternoon, everyone I will start by providing some details on our Q4 results and then follow with our guidance for the first quarter of 2022.
Speaker 3: Thanks Mike and good afternoon everyone. I will start by providing some details on our Q4 results and then follow with our guidance for the first quarter of 2022.
Speaker 4: As Mike mentioned, we had another record revenue quarter. In fact, we had several company financial records this quarter.
As Mike mentioned, we had another record revenue quarter. In fact, we had several company financial records this quarter.
Speaker 4: Our fourth quarter revenue was 226 million above the high end of guidance, up 12% over the last quarter and up 45% over the same period last year.
Our fourth quarter revenue was 226 million above the high end of guidance up 12% over the last quarter and up 45% over the same period last year.
The revenue growth was broad based with metrology inspection and software all experiencing record revenue in the quarter.
Speaker 4: The revenue growth was broad-based with metrology, inspection, and software all experiencing record revenue in a quarter.
Breaking down the revenue by market, 48% of the sales were in our specialty devices and advanced packaging markets, which continue to strength from the previous quarter and increased 21%.
Speaker 4: Wrecking down the revenue by market, 48% of the sales were in our specialty device in advance packaging markets, which continued to strengthen from the previous quarter and increased 21%.
That increase was driven by RF Mems empower customers as well as growth from the <unk>.
Speaker 4: That increases driven by RF, MEMS and power customers, as well as growth in from the OSET.
Speaker 4: The advanced node markets represent 33% of sales with strong memory sales being partially offset by weaker logic foundry sales in the quarter.
The advanced node markets represented 33% of sales with strong memory sales being partially offset by weaker logic foundry sales in the quarter.
Speaker 4: Finally, software and servers have increased slightly and represented 19% of revenues.
Finally software and services increased slightly and represented 19% of revenue.
We continue to maintain strong gross margins at 55% in both the third and fourth quarters.
Speaker 4: We continue to maintain strong growth margins at 55% in both the third and fourth quarters. Higher revenues including stronger software sales were offset by supply chain and logistic cost increases in the quarter.
Higher revenues, including stronger software sales were offset by supply chain and logistic cost increases in the quarter.
Speaker 4: We continue to work on product margin improvement programs and supply sourcing programs to mitigate the impact from the supply chain on our gross margin.
We continue to work on product margin improvement programs and supply sourcing programs to mitigate the impact from the supply chain on our gross margin.
For the fourth fourth quarter operating expenses were $64 9 million, an increase of $3 3 million from $51.6 million in the third quarter. The increase is primarily due to onboarding of new head count to support the growth we're experiencing a variable compensation plan adjustments.
Speaker 4: The fourth quarter operating expenses was $54.9 million and increased the $3.3 million from $51.6 million in the third quarter. The increase is primarily due to onboarding of new headcount to support the growth we're experiencing, a variable compensation plan adjust.
We continued our quarterly operating margin improvements each quarter since the merger with a record fourth quarter operating margin of 31% and well within our published long term operating model on a quarterly run rate basis.
We also published a new long term operating model just after the quarter closed with revenue targets of 1 billion to $1 4 billion odd.
Speaker 4: We also published a new long-term operating model just after the quarter closed, with revenue targets of 1 billion to 1.4 billion, operating margins of 31% to 36% in those revenue ranges, and earnings powered north of $8 per share at the high end of that model.
Operating margins of 31% to 36% in those revenue ranges and earnings power of north of $8 per share at the high end of that model.
Net income increased in the fourth quarter and was $61 2 million or $1.23 per share above the high end of guidance. The third quarter. We reported net income of $48 7 million or <unk> 98 per share.
Speaker 4: The income increase in the fourth quarter and was $61.2 million or $0.22 per share above the high end of guidance. The third quarter reported net income of $48.7 million or 98 cents per share.
Moving to the balance sheet, we ended the quarter with cash position of $511 million up 15 million from Q3.
Speaker 4: Moving to the balance sheet, we ended the quarter with cast position of 511 million up 15 million from Q3.
Speaker 4: Our free cash flow for Q4 was 51 million or 23% of revenue. And for the year we generated 153 million of free cash flow.
Our free cash flow for Q4 was $51 million or 23% of revenue and for the year, we generated $163 million of free cash flow.
Accounts receivable decreased to $177 million in the quarter and our days sales outstanding declined to 72 days.
Speaker 4: The gas receivables decreased to $177 million in the quarter and our day sales outstanding declined to 72 days.
Speaker 4: Our inventory increased to 243 million in the quarter on higher plan sales for 2022, and continued acceleration of inventory deliveries as the hedge against our supply chain, against supply chain disruptions.
Our inventory increased to 243 million in the quarter on higher planned sales for 2022 and continued acceleration of inventory deliveries as a hedge against our supply chain against supply chain disruptions.
Now I'll turn to the first quarter guidance.
Speaker 4: We currently expect revenue to increase from the fourth quarter and be in the range of 226 to 240 million.
We currently expect revenue to increase from the fourth quarter and be in the range of $226 million to $240 million.
Speaker 4: As noted last quarter, we currently have several of our new lithography systems which have shipped or are shipping in Q1 with the revenue being deferred awaiting acceptance from the customer.
As noted last quarter. We currently have several of our new lithography systems, which have shipped or are shipping in Q1 with the revenue being deferred awaiting acceptance from the customer is.
Speaker 4: is currently unclear whether those systems will be accepted by the end of the quarter and recognizes revenue.
He is currently unclear whether those systems will be accepted by the end of the quarter and recognized as revenue.
The high end of our revenue guidance anticipates inclusion of those with lithography systems.
Speaker 4: the high end of our revenue guidance and tith space inclusion of those lithography systems.
Speaker 4: Learning for share in the revenue range are expected to be between $1.13 and $1.20 per diluted share and are partially affected by a reset of our effective tax rate for 2022.
Earnings per share in the revenue range are expected to be between $1 13, and $1 20 per diluted share on a partially affected by a reset of our effective tax rate for 2022.
Speaker 4: We also expect our gross margins to be between 53.5 and 55.5%.
We also expect our gross margins to be between 53.5 or 55, 5%.
Speaker 4: As we've briefly discussed, our new lithography systems will put some pressure on our gross margin during 2022 due to manufacturing inefficiencies as we ramp our production throughout the year.
As we've previously discussed our new lithography systems will put some pressure on our gross margins during 2022 due to manufacturing as inefficient manufacturing inefficiencies as we ramp our production throughout the year.
Speaker 4: For operating expenses, we are aggressively hiring to support our growth and typically have higher operating expenses in the first quarter as payroll taxes and other compensation plans reset.
For operating expenses, we are aggressively hiring to support our growth and typically have operating expense higher operating expenses in the first quarter as payroll taxes and other compensation plans reset there.
Speaker 4: Therefore, we're currently anticipating our operating expenses will increase in the first quarter and be in the range of 55.5 to 57.5 million.
Therefore, we're currently anticipating our operating expenses will increase in the first quarter and be in the range of 55.5 to $57 5 million.
Speaker 4: With that, I'll turn the call back to Mike for additional insight into Q1 and the remainder of 2022. Mike.
With that I'll turn the call back to Mike for additional insight into Q1, and the remainder of 2022 Mike.
Thank you Steve looking.
Speaker 3: Thank you, Steve. Looking broadly at the industry, we see a growing number of end markets being enabled by advances in semiconductor technology for wireless communication, high-performance compute, power devices, and sensors.
Looking broadly at the industry, we see a growing number of end markets being enabled by advances in semiconductor technology for wireless communication high performance compute power devices and sensing.
Speaker 3: These new end markets are simultaneously increasing the need for additional chip capacity, as well as advances in manufacturing process technology to make future devices faster, smaller, and greener. At onto innovation, we're collaborating closely with leaders across the semiconductor value chain to deliver the manufacturing solutions needed to accelerate their roadmaps and fulfill expanding end market demands.
These new end markets are simultaneously, increasing the need for additional chip capacity as well as advances in manufacturing process technology to make future devices faster smaller and greener.
At onto innovation, we're collaborating closely with leaders across the semiconductor value chain to deliver the manufacturing solutions needed to accelerate their roadmaps and fulfill expanding end market demand.
Speaker 3: These partnerships strengthen our ability to serve core markets while also opening the door to new markets. We estimate an increase of 650 million in new addressable markets spanning substrate, device, and packages.
These partnerships strengthen our ability to serve core markets. While also opening the door to new markets. We estimate an increase of 650 million of new addressable markets spanning substrate device and packaging.
Speaker 3: This should provide additional tailwinds independent of projected industry growth over the next several years.
This should provide additional tailwind is independent of projected industry growth over the next several years.
Zooming into the first quarter guidance, Steve just outlined we project revenue from memory customers in both DRAM and NAND will increase by over 50% in the quarter as we mentioned earlier, our integrated suite of metrology is providing important value to our customers. As an example, we're contributing to yield improvement at one of our.
Speaker 3: Zooming into the first quarter guidance Steve just outlined, we project revenue from memory customers in both the Rem and NAND will increase by over 50% in the quarter.
Speaker 3: As we mentioned earlier, our integrated suite of metrology is providing important value to our customers. As an example, we're contributing to yield improvement at one of our largest 3D nanocustomers by aggregating Atlas OCD with integrated and films metrology data.
The largest three D NAND customers by aggregating Atlas OCD with integrated and films metrology data.
Speaker 3: This aggregation is providing a more complete view of deposition etch and CMP process steps. Again, it speed suited for high volume production.
This aggregation is providing a more complete view of deposition etch and CMP process steps again at speed suited for high volume.
Production.
Speaker 3: For the air, we see NAND continuing to be strong with capacity expansions for 128 to 176 layer NAND devices.
For the year, we see NAND continuing to be strong with capacity expansions for 128 to 176 layer NAND devices. We also see technology ramps to 192 and above increasing during the year. We expect similar strong demand from several DRAM customer expansions, which we also.
Speaker 3: We also see technology ramps to 192 and above, increasing during the year. We expect similar strong demand from several DRAM customer expansions, which we also believe will remain at elevated levels through the year. The strength in DRAM memory this year is being driven by the positive impact the work from home trend is having on cloud and server markets, as well as the growing number of memory hungry AI applications.
I believe we will remain at elevated levels through the year the strength in DRAM memory. This year is being driven by the positive impact the work from home trend is having on cloud and server markets as well as the growing number of memory hungry AI applications.
Speaker 3: Simultaneously, continued 5G handset and device adoption, creates a 2X increase in NAND demand over prior generation.
Simultaneously continued five G handset and device adoption creates a two X increase in NAND demand over prior generations and the increase in our mobile workforces pushing up demand for reliable solid state drives.
Speaker 3: And the increase in a mobile workforce is pushing up demand for reliable solids. They drive.
Within our specialty devices and advanced packaging markets and we expect to see demand for our advanced packaging solutions grow by over 40% private primarily from the top Idms. In addition, we see solid traction in the advanced image sensor market with revenue in the first quarter from three leading customers and six manufacturing sites.
Speaker 3: Within our specialty device in advanced packaging markets, we expect to see demand for our advanced packaging solutions grow by over 40% primarily from the top IDMs. In addition, we see solid traction in the advanced image sensor market with revenue in the first quarter from three leading customers in six manufacturing sites.
We do see a reduction in spending in the first quarter from advanced logic and compound semiconductor manufacturers. After each contributed so strongly last quarter.
Speaker 3: We do see a reduction in spending in the first quarter from advanced logic and compound semiconductor manufacturers after each contributed so strongly last quarter.
Our positive outlook for the first quarter reflects our best understanding of the risks presented by global supply chain shortages in Covid. So far the onto team has been managing admirably through the unpredictable nature of these challenges.
Speaker 3: Our positive outlook for the first quarter reflects our best understanding of the risks presented by global supply chain shortages in COVID. So far, the onto team has been managing admirably through the unpredictable nature of these challenges.
Speaker 3: However, we are certainly not immune to these challenges, and so they remain an ongoing risk.
However, we are certainly not immune to these challenges and so they remain an ongoing risk. We expect this uncertainty, especially in the supply chain will continue to be a factor through at least the first half of 2022 and possibly the entire year.
Speaker 3: We expect this uncertainty, especially in the supply chain, will continue to be a factor through at least the first half of 2022 and possibly the entire year.
However, if we look more broadly at the year, we see demand across several end markets continues to be robust and response industry estimates for semiconductor equipment spending continue to increase across all of the markets. We serve as a result, it appears 2022 will be another double digit growth year for the.
Speaker 3: However, if we look more broadly at the year, we see demand across several end markets continues to be robust. In response, industry estimates for semiconductor equipment spending continue to increase across all of the markets we serve.
Speaker 3: As a result, it appears 2022 will be another double-digit growth year for the industry.
Industry.
Speaker 3: With the solid demand we see today for our products and our core markets and from new serve markets, we feel we are well positioned to outperform industry growth. With that, we'll now open the call for your-
With the solid demand, we see today for our products and our core markets and from new served markets. We feel we are well positioned to outperform industry growth.
With that we'll now open the call for your questions Keith.
Speaker 1: Ladies and gentlemen, if you'd like to ask a question, you may do so by pressing star 1 on your telephone keypad. Please make sure the mute function on your phone is turned off so the signal can be read by our equipment. Star 1.
Thanks.
Ladies and gentlemen, if you'd like to ask a question you may do so by pressing star one on your telephone keypad. Please make sure the mute function on your phone is turned off so the signal can be read by our equipment.
Darwin for questions, we'll pause a moment to assemble the phone queue.
We will take our first question from Craig Ellis with B Riley Securities. Please go ahead.
Speaker 1: We'll take our first question from Craig Ellis with B Riley Securities. Please go ahead.
Yeah, Thanks for taking the question and.
Speaker 2: You had thanks for taking the question and congratulations on the very strong performance in the quarter and the Outlook guys. I wanted to start just understanding a little bit more about panel with though, really a two-part question. I believe there's a hundred million in backlog there and if you could provide any color on the pacing of how that backlog might chip through 22 and 23, it would be helpful and then Steve.
Congratulations on the very strong performance in the quarter and the outlook is.
I wanted to start just understanding a little bit more about panel litho really a two part question.
I believe that there is 100 million in backlog, there and and if you. If you could provide any color on the piecing of.
How that backlog might ship through 22 and 23 it would be helpful and then Steve.
Speaker 2: with the commentary on gross margin in the near term being impacted by by rep wreck of that product and in a 53 to 55 percent range. The question is, is that impact something that's in the initial part of the manufacturing ramp or is that something that would persist through the the period where we have the 100 million issue with this expption flows under the lead of directly to the
The commentary on gross margin.
In the near term being impacted.
Bye bye, Brett bracket that product and in a 53% to 55% range. The question is is that impact something that's in the initial part of the manufacturing ramp or is that something that could persist through the.
The yacht the period, where we have the 100 million in backlog.
Alright, so Greg I'll guess I'll answer that one first yeah. So I think we're going to see the the manufacturing impact throughout the year I mean, we're not shipping a lot of systems.
Speaker 4: So Greg, I'll get to that one first. Yeah, so I think we're gonna see the manufacturing impact throughout the year. I mean, we're not shipping a lot of systems.
Yeah, we only shipped several a couple systems each quarter and so you know that that $100. We said go through 2022 and through 2023.
Speaker 4: We can only ship only several, a couple of systems each quarter. And so that 100 million, as we said, goes through 2022 and through 2023. I would say maybe less than half of it going this year and then going into 2023. And I think some of it might even be driving into 2024 now. The margin they, as we ramp, I think is going to be a kind of a full year event in 2022. I mean, we'll obviously summon proficiencies as they get better at building the systems, as well as no.
I would say.
You know, maybe less a little less than half of it going this year, and then going into 'twenty 'twenty, three and I think some of it might even be driven into 'twenty 'twenty four now the margins as we ramp I think is going to be a kind of a full year event in 2022.
I mean, we'll always see some inefficiencies as they get better at building the systems as well as now.
Speaker 4: That's the manufacturing side of it as well as we continue to work on cost downs from the engineering side and quantity buys and things like that as we grow. So I think it's going to be for the pretty good impact throughout 2022 and then you'll see improving in 2023, the impact of the Litho business on our business.
The manufacturing side of it as well as we continue obviously to work on cost downs from the engineering from the engineering side and quantity buys and things like that as we grow so I think it's going to be for the <unk>.
Pretty good impacts throughout 2022, and then you'll see improving in 2023, the impact of the litho business on our business.
Got it and then combining that with a longer term question related to the target model and I'm not sure. If this is better for you or for Mike, but with.
Speaker 2: Got it. And then combining that with longer term question related to the target model, and I'm not sure if this is better for you or for Mike, but with the target models, 1 billion, 1.2 billion, and 1.4 billion dollar points, were those anchored either in points in time or specific
With the with the target models 1 billion, one 2 billion and 1.4 billion dollar points, where those anchored either end points in time or specific levels of W. P. How should we think about the way.
Speaker 2: level of WFE. How should we think about the way?
Speaker 2: the executive team and the broader on two team is looking at some of the underlying.
The executive team and a broader onto team is but can get some of the underlying.
Speaker 2: drivers to attaining those different levels and over which time period?
Drivers to retaining this different lob, all sent over which time period.
Yeah.
Yeah, So Craig what we look at as a pretty conservative estimates for wf fee. So we look at the you know industry growth and we consider growth as well as potential contractions, but the bulk of the model is based on the tailwind that we can create through <unk>.
Speaker 3: Pretty conservative estimates for WFE, so we look at industry growth and we consider growth as well as potential contractions.
Speaker 3: But the bulk of the model is based on the tailwinds that we can create through SAM expansions, through new product introductions, through some of the solution solutions that we have either recently introduced or in the pipeline, where we know where the customers
Sam expansion through new product introductions through some of the solution our solutions that we have either recently introduced or in the pipeline, where we know where the customers' demand.
Demand drivers are in and what their needs will be so our model is really a combination of the market, but mostly what we're.
Speaker 3: drivers are and and what their needs will be so our model is really a combination of the market but mostly what we're
Trying to drive and have a little bit more control of if that makes sense.
Speaker 3: Trying to drive and have a little bit more control of, if that makes sense.
Speaker 3: and it's not that time you want to look at a timing uh... you know we don't
And there's some guidance on time.
You want to look at a timing are you know we don't we.
We don't.
You know, we don't have a set time, but you could guess that you know based on the last models and we achieve that in this relatively quickly in this industry you know a kind of a five year time frame would be a reasonable one plus or minus on either side.
Speaker 3: You know, we don't have a set time, but you could guess that, you know, based on the last models and we achieved that in this...
Speaker 3: relatively quickly in this industry, you know, kind of a five-year time frame would be a reasonable one plus or minus on either side. More to the plus.
More to the P S.
Yeah, well certainly the annualized level of the first quarter's earnings guide is making very robust progress towards the 1 billion dollar model. So.
Speaker 2: Yeah, well, certainly the annualized level of the first quarter's earnings guide is making very robust progress towards the $1 billion model. So that's good for you. But clearly, there are some, you know, gives and takes with gross margin based on some of the things that Steve said about panel of two. Okay, very helpful guys. I appreciate it and congratulations again. I'll hop back in the queue. Thanks.
So good for you, but but clearly there some gives and takes with gross margin based on some of the things that Steve said about panel. Okay. Very helpful. Guys. I appreciate it and congratulations to Ken I'll hop back in the queue. Thank you.
Thanks, Craig.
Speaker 1: We'll take our next question from Quinn Bolton with Needham. Please go ahead.
We will take our next question from Quinn Bolton with Needham. Please go ahead.
Hey, guys, let me Echo my congratulations on the results and outlook I guess.
Speaker 2: Hey guys, let me echo my congratulations on the results and outlook. I guess, you know, in 21, you saw a number of product lines.
You know in 'twenty, one you saw a number of product lines growing it at all.
Speaker 2: growing at rates well above the WFE industry and it looks like you guys expect to do that again in 2022.
Rates well above the Wi Fi industry and it looks like you guys expect to do that again in 2022 wondering if you might you know rank order for us or if not rank order just just give us your thoughts on which segments of the business do you think will be the fastest growing in 2022 I mean, it sounds like you've got good tailwind and lift though you've got.
Speaker 2: wondering if you might rank order for us or if not rank order, just give us your thoughts on which segments of the business do you think will be the fastest growing in 2022? It sounds like you've got good tailwinds and litho, you've got...
Speaker 2: good tailwinds and advanced packaging but also in metrology. So you know kind of hit on a lot of cylinders. So how would you rank the growth drivers in 20?
Good tailwind and in advanced packaging, but also in metrology, so youre kind of hitting on a lot of cylinders. So how would you rank the are the growth drivers in 'twenty two.
So clinton from a percentage basis, obviously litho would would have would be the top because it's starting from such a small base. So I'm going to put that to the side from the core products.
Speaker 3: So Quinn from a percentage basis obviously Litho would have would be the top because it's starting from such a small base. So you know, I'm going to put that to the side. From the core products, the the metrology, the advanced node metrology products, we think are going to have the strongest demand and support of the very strong demand we're seeing in the market.
The the metrology the advanced node metrology products, we think are going to have the strongest demand in support of the the very strong demand, we're seeing in the market and the share gain opportunities that we see what some of the new products and the traction we see with the solution.
Speaker 3: and the share game opportunities we see with some of the new products in the traction we see with the solution
Speaker 3: approach we're taking with the hybrid metrology leveraging the AI to fracks software.
The approach, we're taking with the hybrid metrology leveraging the AI to Frac software.
You know not too far behind that we see real strong demand for dragonfly and the advanced packaging and the advanced are primarily to support some of the initiatives that I mentioned on the call for much much smaller interconnects more dense interconnect bumps you know starting to approach 500 million per wafer and the knee.
Speaker 3: Not too far behind that. We see real strong demand for a dragonfly in the advanced packaging, in the advanced, primarily to support some of the initiatives that I mentioned on the call for much, much smaller interconnects, more dense interconnects, bumps, starting to approach 500 million per wafer, and the need for not just inspection, but metrology and also that reliability.
<unk> for not just inspection, but metrology and also that reliability.
Speaker 3: pass that we can do with the clearfine technology that we have. So there's several drivers on the Dragonfly platform, including the CIS, which we've seen some really nice traction in the last two quarters. So Dragonfly would probably be the, an advanced packaging, probably be the next. Then third would be the compound semi, and that's going to bring in our overlay metrology, as well as our,
Paths that we can do with the clarifying technology that we have so there's there's several drivers on the on the dragonfly platform, including the C. I S, which we've seen some really nice traction in the last two quarters are so so dragonfly would probably be the and the best packaging would probably be the next than third.
It would be the compound semi are that that's going to bring in our overlay metrology as well as our our.
Our inspection and software and that's a much smaller market, but from a growth perspective, the traction has been pretty robust in the last I'd say four quarters, maybe even going back six quarters, and we expect that to continue.
Speaker 3: inspection and software and that's a much smaller market but from a growth perspective the traction has been pretty robust in the last I'd say four quarters maybe even going back six quarters and we expect that to continue into 2022.
Into 2020 two.
Speaker 2: It's great. Then I wanted to follow up on Craig's question about gross margins. Steve, would you expect, I mean, obviously that that litho pressure sounds like it's going to be with you for most of 2022. So would you sort of expect gross margins to trend relatively flat during the year or do you think, you know, growth in other product lines?
Great and then I wanted to follow up on Craig's question about gross margin, Steve would you expect I mean, obviously that that litho pressure sounds like it's going to be with you for most of 2022. So would you sort of expect gross margins to trend relatively flat to read the year or do you think you know growth in other.
<unk> lines.
Speaker 4: you know, cost out hopefully lower COVID related and logistics costs through the year that, you know, Q1 might be at a drop in gross margin with, you know, modest.
You know cost out hopefully lower COVID-19 related and logistics costs through the year that you know Q1 might be a trough in gross margin with with modest increases.
Speaker 4: increases in the following quarters.
And in the following quarters.
Yeah, it's it depends.
Speaker 4: Yeah, it depends. So obviously Q1, we have several list of tools if they get accepted. That's obviously a low end of my Martin guidance there. Obviously without those foot tools, we're up north of 55. I mean, on the high end of my guidance, the range bands were at.
So obviously Q1, we have several litho tools if they all if they get accepted that's probably that's obviously, what's kind of the low end of my my margin guidance. There obviously without a those are the tools, we're up north of 55 right. I mean, it is above the high end of my guidance is kind of the range bounds. We're at so it's going to depend.
Speaker 4: So it's going to depend on how the LITO tools layer in each quarter. But I would say we've been at around 55%. So the room to be anywhere 55 and a half is probably the top end. If we have level LITO throughout the year, somewhere in that, I think we're going to be in that 53 and a half, 55 and a half, probably all year. If the LITO tool layer is the LITO tool layer, it's the LITO tool layer.
On how the litho tools layer in each quarter, but yeah I would say you know we've been at around 55%. So is there room to be unaware of <unk> 55, and a half is probably the top end if we have level litho throughout the year.
You know somewhere in that I think we're gonna be in that 50, 53, 555, and a half probably all year.
If the litho is evenly spread.
Speaker 4: Coding the internal via, obviously, if it gets one field, it'll have a different more of an effect. G
Got it and the concern will be obviously as if it if it if it gets lumpy it'll it'll have a different more of an effect.
Where are you there and I'll hop back in the queue.
Yeah no. Thank you.
Okay, and we'll take our next question from Brian Chin with Stifel. Please go ahead.
Speaker 5: And we'll take our next question from Brian Chin with Steve Holt. Please go ahead. Hi there. Good afternoon. Congratulations on the nice results and execution of a quarter. And thanks for letting us ask a few questions.
Hi, there good afternoon, congratulations on the nice results and execution in the quarter and thanks for letting us ask a few questions.
Speaker 5: Maybe just fine tuning, maybe the question or two that was just asked, Mike, Steve, once you get beyond the revenue recognition and acceptances, and maybe that happens in Q1 for a customer or two, maybe it happens in Q2, but from their alley, it should be pretty much you're rebiting against your linear shipments. Is that a fair way to place that dynamic?
Maybe just fine tuning maybe the question or two that was just asked.
Mike and Steve once you get beyond the revenue recognition acceptances.
And maybe that happens in Q1 for a customer to maybe it happens in Q2.
But from there it should be pretty much your revenue against server linear shipments.
Is that a fair way to put quite that dynamic.
Yes, that's for sure.
Yep.
Speaker 5: Okay, great. And then, again, looping back on the substrate opportunity, it sounds like there is some room over the next, say, 12 to 18 months to drive Litho margins up. But are you more focused on wrapping higher margin firefly inspection and software around the Litho tools replacing the customers? Is that really the bigger focus? And that will obviously drive a good margin point for that sort of blend.
Okay, Great and then.
You know again looking back on the substrate opportunity. It sounds like there is some room over the next say 12 to 18 months to drive margins up.
Are you more focused on wrapping higher margin Firefly inspection and software around the litho tools, replacing their customers that is that really the bigger focus and that will obviously drive a good margin point for that sort of blend.
I wouldn't say, it's a what one focus is above the other both both our other focus.
Speaker 3: I wouldn't say it's one focus is above the other, both are other focus. So we see opportunities for both where we're aggressively pursuing both areas and we have the organization to do more than one thing. So if nobody gets a free-
So we see opportunities for both where we're aggressively pursuing both areas and and we have the you know the organization to do more than one thing so.
Nobody gets a free pass on that one.
Okay, Okay fair enough.
And maybe kind of a bit of a technology question, but.
Hybrid bonding it certainly enables significant interconnect density and I realize we're still a ways out from broader industry adoption, but given that systems are hitting your backlog now vis vis your press release can.
Can you describe the impact hybrid bonding will have on inspection intensity in the years ahead.
Yeah, I think that's going to drive a significant shift in some of the metrology and inspection requirements are when you. When you were talking about bonding wafers and expensive wafers together just one interconnect.
Or or let's say co planarity across these interconnection and when you bring them together and they don't match or they don't mesh are tightly enough to make a good bond.
Speaker 3: or let's say co-planarity across these interconnects and when you bring them together and they don't match or they don't mesh tightly enough to make a good bond. You know, you're destroying not just one chip, but multiple chips. And so they, the,
You're you're destroying not just one chip, but multiple chips and so the the knot.
Speaker 3: not just the co-planarity, but also the surface roughness and the surface shape of these interconnects is gonna be critical. We're developing, you know, we're in the process of developing technology now that'll be able to address some of these.
Not just the co planarity, but also the surface roughness and the surface shape of these interconnects is gonna be critical we're developing you know we're in the process of developing technology now that'll be able to address some of these future challenges as hybrid bonding moves from what we're seeing in semi.
Speaker 3: future challenges as hyperbonding moves from what we're seeing in CMOS image sensors which are fairly larger interconnects advanced but larger compared to what we expect to see in advance packaging for
Cmos image sensors, which are fairly larger interconnects advanced, but a larger compared to what we expect to see in events packaging for.
Speaker 3: you know logic and other more advanced compute devices.
Logic and and other more advanced compute devices.
Okay, great. Thank you.
Yeah.
Speaker 1: Take our next question from Mark Miller with the benchmark company. Please go ahead.
We will take our next question from Mark Miller with the Benchmark Company. Please go ahead.
Let me add my congratulations on another very strong quarter I'm, just wondering what type of pressures are you seeing from your component suppliers in terms of pricing and how you're handling that.
Speaker 6: Let me add my congratulations on another very strong quarter. I'm just wondering what type of pressures are you seeing from your component suppliers in terms of pricing and how you handle
Well, we've started to I think I mentioned in our in my discussions about the fourth quarter margins, we are seeing some price increases.
Speaker 4: Well, we've started, I think I mentioned in my discussions about the fourth quarter margins. We are seeing some price increases being passed through, I think.
Being being pass through I think the big thing for US is we honestly for critical components. We we lay out a relatively long lead purchase order. So so we've seen a little bit of that so far we've been able to you know, obviously, obviously higher revenues that offset that but I do think that's going to continue to be a.
Speaker 4: You know, the big thing for us is, you know, we obviously, for critical components, we...
Speaker 4: We lay out relatively long lead purchase order. So we've seen a little bit of that so far. We've been able to obviously hire revenues that will offset that. But I do think that's going to continue to be a challenge for everybody for all of 2020.
A challenge.
For everybody for all of 2022 for sure.
Are you started there's a number of new Fabs I think there's at least five new fabs that are ramping next year.
Speaker 6: Are you starting? There's a number of new fabs. I think there's at least five new fabs that are ramping next year. Are you starting to see any orders or are you expecting to see them late in the year or early next year?
Are you starting to see any orders or are you expecting to see them late in the year early next year.
Oh for sure we're starting to continue to see better visibility through our backlog and I don't think we're taking.
Speaker 3: For sure, we're starting to continue to see better visibility through our backlog. And I don't think we're taking...
Significant amount of orders for 'twenty 'twenty three but we are taking are taking some and we are seeing.
Speaker 3: significant amount of orders for 2023, but we are taking some and we are seeing you know, customers approaching us and starting to understand the slotting plans and wanting to reserve slots in 2023. So for sure, visibility is improving, but I wouldn't, I think right now the focus is really on making sure we meet all the demand that we see right now in 2022. Thank you.
No customers approaching us and starting to understand the slotting plants and and wanting to reserve slots in 'twenty 'twenty three so for short visibility is improving.
But I wouldn't I think right now the focus is really on making sure. We meet all the demand that we see right now in 2022.
Thank you.
Yeah.
We will take our next question from David Duley with Steelhead Securities. Please go ahead.
Speaker 7: If you'll head securities, please go ahead.
Speaker 8: Yeah, thanks for taking my questions. I had a couple. I guess in reference to the $100 million of orthography backlog.
Yeah. Thanks for taking my questions I had a couple I.
I guess in reference to the $100 million lithography backlog.
Speaker 8: I think you've mentioned Steve that just under half of it might ship this year with the balance in 2023 and 24. I'm assuming that's just the lithography systems. Could you help me understand since you're kind of packing?
I think you've mentioned, Steve that you know just under half of it might ship this year with the balance in 2023 and 'twenty four.
I'm, assuming that's just the lithography systems could you help me understand since youre kind of packaging, they use with inspection or metrology and software what the total opportunity might be for that $100 million is the other tools, adding another 100 million to that opportunity or is it less or maybe help me understand how the.
Speaker 8: inspection or metrology and software. What the total opportunity might be for that 100 million is the other tools adding another 100 million to that opportunity or is it lesser? Maybe help me understand how the bundling of things impacts the $100 million of the fog.
The bundling up things impacts the $100 million of lithography backlog.
Yeah, that's a great question, David and so al Al maybe add some some color or clarity. The we've proven used cases for panel level fan out so panel level fan out applications. We've developed a very nice integrated solution as.
Speaker 3: Yeah, that's a great question, David. And so I'll maybe add some color or clarity. The, we've proven use cases for panel level fan out. So panel level fan out applications, we've developed a very nice integrated solution as I described, combining the inspection, lithography, and software together to solve certain inherent process issues with panel level fan out.
I described combining the inspection lithography and software together to solve certain inherent process issues with panel level fan out.
Speaker 3: The X500 is going after a different panel market, the substrate market, and the challenges are going to be different. So the solution doesn't directly...
The X 500 is going after a different panel market the substrate market and the challenges are going to be different so the solution doesn't directly.
Speaker 3: apply, although we think several pieces of it will, but what we said in the commentaries, as we begin to install these systems and understand more deeply the process and challenges, we'll have a better understanding of what other components we can bring to bear from the portfolio of technologies we have in order to provide increased productivity and yield for these customers. And for sure, that's a big need for our X500 customers.
Apply although we think several pieces of it will but we're what we've said in the commentary is as we begin to install these systems and understand more deeply the processing challenges, we'll have a better understanding of what other components. We can bring to bear from the portfolio of technologies, we have and.
Order to provide increased productivity in yield for these customers and for sure. That's a big need for our for our Rx 500 customers yields are not you know, there's certainly not at 90% there well well below that and they're you know, they're feeling tremendous pressure to ramp and increased <unk>.
Speaker 3: yields are not, you know, they're certainly not at 90%, they're well, well below that, and they're, you know, they're feeling tremendous pressure to ramp and increase production capacity.
Reduction capacity.
So can you characterize the 100 million how much is for the.
Speaker 8: So can you characterize the 100 million how much is for the fan out versus the...
Fan out versus the I.
I guess the substrate market.
Or how it's nearly all X 500, so it's it's nearly all for the for the substrate market.
Speaker 3: It's nearly all X500 so it's nearly all for the substrate market.
Okay.
Okay and then.
Speaker 8: Okay, and then you mentioned in your prepare remarks about how you've worked hard to get into the power device market.
You mentioned in your prepared remarks about you know how you've worked hard to get into the power device markets.
And.
Speaker 8: And I was wondering if you could just help us understand how far as total revenue goes, how big is your exposure to the power markets or...
And I was wondering if you could just help us understand how as far as total revenue goes how big is your exposure to to the power markets or Hum and specifically maybe the silicon.
Speaker 8: and specifically maybe the silicon carbide market. And then which product lines are...
Silicon carbide markup, and then which product lines are.
Speaker 8: biggest drivers of your revenue and exposure to that sector. Thank you.
The biggest drivers of your revenue and exposure to that sector. Thank you.
So for power as far as exposure goes I think we are pretty broad.
Speaker 3: So for power as far as exposure goes, I think we have pretty broad exposure in the into the customers manufacturing You know, Gantt, Silicon, Carbide, etc. They're obviously much smaller than our other customers, but with pretty high projections for growth
Exposure in the into the customer's manufacturing Gan silicon carbide et cetera, they're obviously much smaller than our other customers, but with pretty high.
Projections for growth.
Speaker 3: Our product lines that are in the serving those power customers, the two primary ones would be our Dragonfly inspection, as well as our IVS or IVG and overlay metrology system.
Our product lines that are in the serving those power customers are the two primary ones would be our dragonfly inspection as well as our I V S or I vision overlay metrology systems, and then we bring together the software.
Speaker 3: And then we bring together the software which several power customers have also adopted.
Which several power customers have also adopted.
Speaker 3: So overall from a company standpoint, power market is a little bit smaller, and it's in the specialty devices in AP, but it is projected to be pretty decent growth on a percentage basis this year, 2022, and we do have a compelling combination of technologies we think will give us an...
So overall from a company standpoint power market as you know a little bit smaller and you know it's in the specialty devices and a pea, but it is projected to be pretty decent growth on a percentage basis. This year 2022.
And you know we do have a compelling combination of technologies, we think will give us in.
Speaker 3: A strong opportunity of game share in that mark.
Yep, a strong opportunity.
<unk> gained share in that market.
Speaker 8: Okay, great. Final one for me is, you know, I think you mentioned
Okay. Great final one for me is I think he mentioned.
Speaker 8: You know, you thought the overall WFE market would grow double digits, and that I think you also mentioned that you would outperform that. So the suggestion is, is that whatever WFE is, that your revenue should grow a bit faster. I guess I'm trying to figure out, you know, above 10% is kind of a big range. I'm wondering what do you think the WFE market will grow in 2022?
You thought the overall Wi Fi market would grow double digits and that I think you also mentioned that you would outperformed that so the suggestion is that whatever wip is that your revenue should grow a bit faster I guess I'm trying to figure out you know above 10% is kind of a big range I'm wondering what you think the Wi Fi market will go.
ROE in 2022.
Well.
Speaker 3: We've seen estimates very, very a lot, and we've seen estimates change since the last call till now. So at that point, it was eight to 12% range. Now we've seen estimates 15%, even as high as 17, 18%.
[laughter], we've seen the estimates vary a very a lot and we've seen estimates change since you know the last call till now so at that point to is 8% to 12% range now we've seen estimates you know, 15% even as high as 17, 18% so yeah.
Speaker 3: So, you know, somewhere in that range is where if somebody's going to be right in their estimates and, you know, we still feel confident we would outperform in that range.
We're in that range is where if somebody's gonna be right in their estimates and you know we still felt confident we would outperform in that range.
Okay. So just to kind of I don't want to say pin you down but just to understand what you. Just said we've increased the range of wf equal so, let's say roughly 15% and you think you can outperform that rate if that's what the market growth.
Speaker 8: Okay, just to kind of, I don't want to say pin you down, but just to understand what you just said, we've increased the range of WFE growth to let say roughly 15%, and you think you can outperform that rate if that's what the market growth.
Correct.
Thank you so much.
Speaker 3: Thank you so much. Thank you so much. Thank you. You're welcome.
You're welcome.
Right.
Speaker 1: As a reminder, star one for questions or comments, please star one.
As a reminder, star one for questions or comments please star one.
Speaker 1: We'll take our next question from Hans Chung with DA Davidson. Please go ahead. Hi, thank you for taking my...
Take our next question from Hans Chung with D. A Davidson. Please go ahead.
Hi, Thank you for taking my question congratulation on a strong dollar and outlook.
Speaker 9: I have a couple of questions first. I want to follow up on the least aware of the related topics. So the 100 median.
I have a couple of questions for you.
I'll follow up on that Lisa wildly related topic. So.
Hum.
I haven't got the backlog.
I think the.
First customer right and then.
Obviously you have.
Hi, Eric.
So.
I guess my question is how.
Speaker 9: I guess my question is how what kind of real opportunity?
Now, how what kind of revenue opportunity.
They can that they're a customer.
Going forward what would that be.
Thank you Mark.
Type of revenue opportunity going forward.
That's a good question so within that hundred million there are several customers actually so it's.
Speaker 3: That's a good question. So within that 100 million are several customers actually. So it's not all one customer. And we're really being constrained by our ability to ramp production and to ramp production capacity in a timely manner to meet the needs of the market. So we have, I'd say, three to four customers.
It's not all one customer and we're really being constrained by our ability to ramp production and to ramp production capacity in a timely manner to meet the needs of the of the market. So we have a I'd say.
Yeah, three to four customers in that.
Yeah, maybe maybe up to five customers in that in that bucket and that hundred million and they all have varying levels of.
Yeah.
Systems assigned to them.
Okay. So basically total.
Okay.
Run rate.
Kind of going forward.
It depends a we've seen pretty pretty aggressive forecast going out several years from now that are you know.
Speaker 3: It depends. We've seen pretty, pretty aggressive forecast going out several years from now that, you know...
Speaker 3: depending on how well the X500 does and what share we get of the overall business could be could be above that.
Depending on how well the X 500 does and what share we get of the overall business could be could be above that.
I would probably be disappointed if it was a few million run rate.
Speaker 3: I would probably be disappointed if it was a female in run race. I think we're going to end.
Got it got it.
And so.
Next question.
Can you provide some color about the backlog.
2021.
<unk> elite.
Now versus a quarter ago.
Speaker 3: specific to the to the lithography or in general
Specific to the to the lithography or in general in general overall.
Speaker 3: So from a lead time perspective, it varies by product line, of course. And we have a wide range of product lines and with supply chains and demand the way it is where obviously lead times are pushing out. So we've been trying to get customers to
So from a lead time perspective, it varies by product line of course, and we have a wide range of product lines and with supply chains and demand. The way. It is we're obviously lead times are pushing out. So so we've been trying to get cut.
<unk> two.
Yep.
Speaker 3: issue purchase orders early enough that we can actually ensure we have the inventory in the build in the slots on hand to meet their demand uh... so uh... from uh... rough range i'd say uh... for the four to six months and for litho it's up over well at this point it
Issue purchase orders early enough that we can actually ensure that we have the inventory and the builds in the slots on hand to meet their demand so from a rough range I'd say they have.
For the four to six months and for Litho, It's it's up over.
Well at this point, it's it's a almost two years, where we're now booking for 2024.
Speaker 3: almost two years. We're now booking for 2024.
Got it thank you.
At this time Theres no further questions in the queue I would like to turn the conference back to Mike Shaffer for any additional or closing remarks.
Speaker 1: At this time, there's no further questions in the queue. I would like to turn the conference back to Mike Schafer for an additional closing remarks.
Great. Thank you everyone for joining us today, we know it's a busy time for earnings and we really appreciate your time today I'm sure we'll be catching up with some of you at the Morgan Stanley Conference on March nine and we'll be looking forward to catching up to many others throughout the quarter with that I'll turn the call back over to Keith to wrap it up.
Speaker 2: Great. Thank you everyone for joining us today. We know it's a busy time for earnings and we really appreciate your time today. I'm sure we'll be catching up with some of you with a Morgan Stanley conference on March 9th and we'll be looking forward to catching up to many others throughout the quarter. With that, I'll turn the call back over to Keith to wrap.
Speaker 1: Thank you. Ladies and gentlemen, this desk concludes today's conference. We appreciate your participation. You may now just...
Thank you ladies and gentlemen, this does conclude today's conference. We appreciate your participation you may now disconnect.
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