Q3 2024 Axcelis Technologies Inc Earnings Call
It's Karen and I will be your coordinator for today I would now like to turn the presentation over to your host for today's call David Ryzik Senior Vice President of Investor Relations and corporate strategy. Please go ahead.
David Ryzik: Thank you operator this is David <unk> Senior Vice President of Investor Relations and corporate strategy and with me today is Russell low President and CEO, and Jamie Coogan Executive Vice President and CFO.
If you have not seen a copy of our press release issued yesterday. It is available on our website and.
In addition, we have prepared slides accompanying today's call and you can find those on our website as well.
David Ryzik: Please note that included in our slide presentation is a table summarizing a correction to our historical backlog numbers, which Jamie will discuss in his prepared remarks.
David Ryzik: Playback service will also be available on our website as described in our press release.
Thank you operator this is David Ritchie Senior Vice President of Investor Relations and corporate strategy and with me today is Russell low President and CEO, and Jamie Coogan Executive Vice President and CFO.
Please note that comments made today about our expectations for future revenues.
David Ryzik: <unk> and other results are forward looking statements under the SEC Safe Harbor provision.
David Ryzik: These forward looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review.
David Ryzik: Our actual results may differ materially from our current expectations, we do not assume any obligation to update these forward looking statements.
Speaker Change: Now I'll turn the call over to President and CEO Russell low.
Russell Low: Good morning, and thank you for joining us for our third quarter 2024 earnings call.
Speaker Change: Beginning on slide three we executed well in the third quarter delivering revenue of $257 million and earnings per diluted share of $1 49.
Speaker Change: Overall revenue was largely in line with our expectations as a strong sequential increase in revenue from our image sensor market offset a sequential decline in our power and general mature markets.
David Ryzik: Bookings in the quarter was softer than we expected as we see some customers digest the investments made into global mature node capacity over the past few years I'll provide more color on this later in our prepared remarks.
David Ryzik: Turning to slide four we show the breakdown of ship systems revenue by segment, which is almost entirely comprised of mature nodes in the quarter with power being the largest components.
David Ryzik: Now, let me review ship system revenue by end market and will begin with the mature notes on slide five.
David Ryzik: Revenue from our power markets approximately 57% of total was down sequentially from 63% in Q2 2020 for shipments to silicon carbide applications moderated in the third quarter. However on a year to date basis for 2020 for Silicon carbide has been strong growing year over year, reflecting the continued build out of capacity.
David Ryzik: We expect fourth quarter revenue for silicon carbide to remain relatively consistent on a sequential basis.
David Ryzik: The long term opportunities silicon carbide remains an important growth driver for <unk>.
David Ryzik: <unk> estimates the silicon carbide market will grow from $2 7 billion in 2023 to $9 9 billion in 2029, or 24% <unk> and Unimplanted mission is one of the most critical manufacturing steps to make our silicon carbide device, we are well positioned as the market leader and employer for silicon carbide.
David Ryzik: Given the breadth of that portfolio of focused investments. We've made in this market for several years, we are deeply embedded in our customers' technology roadmaps are widely engaged with customers to help them transition from a 150 millimeters to 200 millimeter wafer capacity.
David Ryzik: In addition, we are seeing interest in our solutions to enable customers transitions to trench MOSFET and the <unk>.
David Ryzik: Transition to trends architecture is a tailwind for <unk>, given the need for deeper implants, which require a high energy tools, where we are the technology and market leader.
David Ryzik: From an end market perspective, we are keeping a close on the transition from 400 volts 800 volts electric vehicles overtime, which is enabled by second comp I'd give them better efficiency compared to traditional silicon.
David Ryzik: As many of you know 800 volt Evs can deliver faster charging times are better battery efficiency as such as can be an important catalyst for silicon carbide penetration into evs, which ultimately translates to more on implementation required.
Transition to trends architecture is a tailwind for <unk>, given the need for DPM plants, which require a high energy tools, where we are the technology and market leader.
David Ryzik: In silicon like GPT revenue third quarter was up sequentially, but remained generally muted as we expected given the slow rate of recovery in the auto industry and we anticipate demand to remain muted in the near term based on recent order trends. However, im pleased to say that we've received our first Po from a customer for our optimized <unk>.
And Marty market perspective, we are keeping a close on the transition to 400 volts 800 volts electric vehicles over time, which is enabled by second comp I'd give them better efficiency compared to traditional silicon as many of you know 800 volt E waste and deliver faster charging times are better factory efficiency.
David Ryzik: <unk> influenza use the critical silicon IGT power device backside proton implant application recall from our Investor day in July we talked about the benefits of this implant, reducing switching time and high voltage operation of the Silicon <unk> power devices for our customers adoption of this optimized implants.
This can be an important catalyst for silicon carbide penetration into evs, which ultimately translates to more unimplanted required.
In silicon like GPT revenues third quarter was up sequentially, but remained generally muted as we expected given the slow rate of recovery in the ultra industry and we anticipate demand to remain muted in the near term based on recent order trends.
David Ryzik: Based on that production proven Purion EXE platform. So shiny example of the innovation engine in <unk>, we identified a key application and customer needs design, a specific technology to address it worked closely with the customer and qualifying that scope and now intend to commercialize this to drive incremental revenue.
However, I am pleased to say that we've received a first from a customer for our optimized <unk> implants use the critical silicon <unk> powered by <unk> site total implant applications recall from our Investor Day in July we talked about the benefits of this impact reducing switching side and high bulk operation of the Silicon <unk>.
David Ryzik: In general material revenue moderated in the third quarter also consistent with expectations. We continue to monitor key end markets, namely auto industrial and consumer which are drivers of our general mature segment, which have yet to show signs of recovery in the near term.
Power devices for our customers the adoption of this optimized implants based on that production proven pure DXP platform is a shining example of the innovation engine in <unk>, we identified a key application and customer needs design, a specific technology to address it worked closely with the customer and qualifying that Scott.
David Ryzik: That said upon a macroeconomic rebound in the end markets. We serve we would expect to benefit from the breadth of our customer base.
David Ryzik: Image sensors revenue was strong driven by demand out of China, particularly for smartphone applications shipments to the image sensor market can be lumpy and we expect revenue in the fourth quarter to normalize back to prior trends.
And now intend to commercialize this to drive incremental revenue.
In general revenue moderated in the third quarter also consistent with expectations. We continue to monitor key end markets, namely also industrial and consumer which are drivers of our general mature segment, which have yet to show signs of recovery in the near term.
David Ryzik: Turning to slide six in advanced logic, we did not have any revenue in the quarter, but we continued to make progress with our evaluation systems, including <unk> and an advanced research institution Europe, having meaningful conversations that customers can be bumps logic space.
That said upon a macroeconomic rebound in the end markets. We serve we would expect to benefit from the breadth of our customer base.
David Ryzik: As a reminder, this is a multi year development effort and we are encouraged by the market acceptance and customer interest to date.
Image sensors revenue was strong driven by demand out of China, particularly for smartphone applications shipments to the image sensor market can be lumpy and we expect revenue in the fourth quarter to normalize back to prior trends.
David Ryzik: Moving to memory, we are seeing some early signs of activity from memory customer from memory customers as they look to start adding some DRAM capacity, while we only sold one system in the third quarter. We expect additional revenue in the fourth quarter and are monitoring the scope and pace of market recovery as we look to 2025.
Turning to slide six in advanced logic, we did not have any revenue in the quarter, but we continue to make progress with our evaluation systems, including our direct control.
David Ryzik: Generally we see DRAM investments outpacing that of men, primarily due to strong adoption of high bandwidth memory for AI applications, which is absorbing some DRAM capacity.
Thus research institution, Europe, having meaningful conversations with our customers and advanced logic space.
David Ryzik: As we noted last quarter memory customers typically place pushed or shortly before shipment as a result, we have prebuilt some inventory for employers the memory market and stand ready to respond as demand grows.
As a reminder, this is a multi year development effort and we are encouraged by the market acceptance and customer interest to date.
Moving to memory, we are seeing some early signs of activity from memory customer from memory customers as they look to start adding some DRAM capacity, while we only sold one system in the third quarter. We expect additional revenue in the fourth quarter and are monitoring the scope and pace of market recovery as we look to 2025.
David Ryzik: Turning to slide seven to summarize our team executed well in the third quarter as we focus on what we can control.
David Ryzik: As referenced earlier, we've seen continued softness in customer bookings below our prior expectations and moderation in growth expectations for our key markets. In 2025. This is primarily tied to digestion of capacity and our parent general mature market and particularly in China.
Generally we see DRAM investments outpace minimum then primarily due to strong adoption of high bandwidth memory for AI applications, which is absorbing some DRAM capacity.
As we noted last quarter memory customer typically place touched or shortly before shipment as a result, we have.
David Ryzik: As a result, our preliminary expectations for revenue in the first half of 'twenty five to be lower in the second half of 'twenty four.
Pre built some inventory in the memory market and stand ready to respond as demand grows.
David Ryzik: Near term dynamics or sell it we remain very excited about the following long term growth opportunities that lie ahead for <unk>.
Turning to slide seven to summarize our team executed well in the third quarter as we focus on what we can control.
David Ryzik: First continued growth and adoption of Silicon carbide is a key enabler of electrification power efficiency and decarbonization electric vehicles of the poster child of Silicon carbide can do we expect greater penetration into the market, but we also see silicon carbide proliferating SKU a wide array of applications.
As referenced earlier, we've seen continued softness in customer bookings below our prior expectations and moderation in growth expectations for our key markets. In 2025. This is primarily tied to digestion of capacity and our parent general mature market and particularly in China.
David Ryzik: Such as industrial and renewable energy to name just two with the cost of Silicon carbide wafers declining and device makers generating better economies of scale from growing EV adoption of silicon carbide, we believe the lower cost profile overall silicon carbide devices will lead to more widespread adoption across a variety of applications.
As a result, our preliminary expectations for revenue in the first half of 'twenty five to be lower in the second half of 2004 near term dynamics of satellite we remain very excited about the following long term growth opportunities that lie ahead for <unk>.
First continued growth and adoption of Silicon carbide is a key enabler of electrification power efficiency Decarbonization electric vehicles, the poster child of what Silicon carbide and do we expect greater penetration into the market, but we also see silicon carbide proliferating SKU a wide array of applications.
David Ryzik: Patients and this in turn drives the need for more Unimplanted mission, which is which is foundational to silicon carbide.
David Ryzik: Second a cyclical recovery in memory in general mature markets, one spending on consumer electronics auto and industrial rebounds.
David Ryzik: Third share gains in the advanced logic market, where we're exploring new applications for Unimplanted just in the middle of the line.
David Ryzik: And back end of line and we are actively engaged with customers and driving interest with our evaluation units. We finally penetrates the Japan market will be aimed to extend the success. We've made in power to other markets within Japan.
Speaker Change: Summing it all up we are well positioned to drive attractive long term growth and profitability through the cycles. Finally, I want to thank our employees customers shareholders and partners that continued support and trust in <unk> with that let me turn the call over to Jamie for a closer look at our results and outlook Jamie.
Jamie Coogan: Thank you Russell and good morning, everyone I'll start with some additional detail on our third quarter results before turning to our outlook for Q4.
Jamie Coogan: Starting on slide eight third quarter revenue was $256 $6 million with systems revenues at $201 $1 million and see F&I at $55 $5 million. This was largely.
Speaker Change: In line with our outlook of $255 million.
David Ryzik: As a reminder, <unk> is driven by our installed base and represents consumables spares services and upgrades as we grow our installed base, we anticipate <unk> to deliver a steady and growing base of revenue and profitability in the coming years.
David Ryzik: From a geographic perspective, China remained our strongest region at 71% of total shipped system sales with the uptick quarter over quarter, primarily due to higher sales to the image sensor market for smartphone production we.
David Ryzik: We expect our revenue from China to decline sequentially in the fourth quarter and in the first half of 2025 compared to the second half of 2024 as customers Digest the build out of mature node capacity that had been built up over the past few years over the long term, we anticipate China to remain an important market for us, albeit at a lower growth rate.
David Ryzik: Non China revenue now.
David Ryzik: Now, let me turn to our bookings and backlog in the quarter.
David Ryzik: As we noted in our earnings press release during our preparation of third quarter financial statements, our internal financial team identified an error in the past calculation of our quarterly backlog dating from 2019 through the second quarter of 2024. This relates to the manner in which we treated prepayments on some of our systems orders.
David Ryzik: That led to a double counting of these amounts which has now been corrected specifically for the second quarter of 2024, we previously reported backlog of $994 million, which following this review is correct it to $879 million it's.
David Ryzik: It's important to note with the exception of the backlog figures. This change did not result in any corrections to any other previously reported financial information.
David Ryzik: We have provided the corrected backlog figures for 2019 through the second quarter of 2024 on slide 13 of our earnings presentation as.
David Ryzik: As a reminder, our backlog may not include bookings received from memory customers given the short lead times following receipt of order and also do not include expected revenues associated with our <unk> business.
David Ryzik: Turning to the third quarter, our bookings were $84 million and we ended the quarter with a backlog of $758 million.
David Ryzik: Turning to slide 10 for additional detail on the third quarter gross margin was 42, 9%, which came in slightly below our target of 43, 5%, primarily a result of systems mix as well as slightly lower <unk> revenue, which carries gross margin above our consolidated average.
David Ryzik: Operating expenses totaled $63 $1 million or 24, 6% of revenue during the period, we recorded a bad debt expense associated with a receivable from a small gallium nitride device manufacturer in Europe that filed for bankruptcy.
David Ryzik: This caused our total operating expenses to exceed exceed our target of $60 million in the quarter.
David Ryzik: The net charge associated with this totaled approximately $3 4 million and resulted in an <unk> <unk> impact to diluted earnings per share exclude.
David Ryzik: Excluding this charge operating expenses were $59 $6 million or 23, 2% of sales, which was in line with our expected performance for the period.
David Ryzik: As a result operating profit was $46 9 million, reflecting an 18, 3% operating margin.
David Ryzik: We estimate the negative impact of the onetime charge to be approximately 130 basis points to operating margin.
David Ryzik: We generated approximately $8 $5 million in other income primarily a result of interest income and the benefit from foreign currency or tax rate in Q3 was 12% slightly more favorable than our outlook.
David Ryzik: Our weighted average diluted share count in the quarter was 32 7 million shares and this reflects continued execution on our share repurchase program, where we exit the third quarter with $145 million remaining in share repurchase authorization.
David Ryzik: This all translates into a diluted earnings per share of $1 49.
David Ryzik: Each exceeded our outlook of $1 43.
David Ryzik: Higher than expected EPS stemmed from the slightly higher revenue FX gains and a favorable tax rate, partially offset by the onetime charge I discussed earlier as well as the slightly lower gross margins.
David Ryzik: Moving to our cash flow and balance sheet, we generated $42 million of free cash flow in the quarter in fact through the first nine months of 2024, despite revenues declining 7% on a year over year basis, our free cash flow grew by 49%, reflecting our focus on working capital management.
David Ryzik: As a result, we ended the third quarter with $579 million in cash cash equivalents and short term investments on hand.
David Ryzik: Moving to our fourth quarter outlook on slide 11, we expect revenue in the fourth quarter of approximately $245 million, we expect fourth quarter gross margins to be approximately 42, 5% with operating expenses estimated at approximately $60 million, we expect our tax rate to be approximately 15.
David Ryzik: <unk>, leading to an estimated diluted earnings per share of approximately $1 25.
David Ryzik: In summary, we are pleased with the performance delivered by our team thus far in 2024, our cash generation remains strong we are engaging with customers across a number of key growth opportunities and we are investing in our product roadmaps, while maintaining discipline in our overall cost structure all of this when coupled with our strong Bal.
David Ryzik: <unk> sheet put us in position to capture the growth opportunities that lie ahead and drive long term value creation for shareholders with that operator may we have the first question. Please.
Speaker Change: Thank you at.
Speaker Change: At this time, we will conduct a question answer session.
Speaker Change: Ask a question you will need to press star one one on your telephone and wait for your name to be announced to withdraw your question. Please press star one again.
David Ryzik: That you only ask one question and one follow up please.
David Ryzik: While we compile the Q&A roster.
Speaker Change: Our first question comes from Craig Ellis of B Riley Securities. Your line is now open.
Craig Ellis: Yes, thanks for taking the question team.
David Ryzik: Wanted to start with.
David Ryzik: Inquiry on order activity and hoping you could put more context around some of the slides in the deck.
Speaker Change: So the question is can you just frame up what you've seen with orders on and use basis, and maybe a geographic basis.
Speaker Change: Starting with the momentum that exists in the business exiting <unk>, how things played out in <unk> and what you've seen fourth quarter to date.
Speaker Change: Yes, so Craig Thanks for the question and good morning.
Speaker Change: Look at it and as we said in our commentary.
Speaker Change: In the prepared remarks.
Speaker Change: Softness that we're seeing in the general mature and power space is driving the lower order activity and as a result, that's really informing our view our preliminary view on the first half of 2025 would that being lower than the second half of 2024.
Speaker Change: As we.
Speaker Change: Entered the quarter, we did have an expectations for bookings to be higher but we continue to see that order activity. Although there's a lot of discussions we see the placement of those purchase orders continue to push out.
Speaker Change: Got it and then just following up on the point you made Jamie about the first half of 'twenty five can you talk about within the view. The company now has what are some of the positives tapan happened one.
Speaker Change: We have 25, what are some of the headwinds and how does that stack comp both on a geographic basis.
David Ryzik: On an end to your spaces.
David Ryzik: Okay, sorry, so what I was saying was that it took we do see the first half of 'twenty as being lower than the second half of 'twenty four we do see like a digestion period for general mature and power, particularly in China. So, let's say the brewing sports could be memory, so while we only.
David Ryzik: Revenue one machine for memory in Q3, we are seeing more activity in Q4, we expect some of that to continue into the first half.
David Ryzik: Thinking through some of the headwinds and challenges right the softness in that digestion.
David Ryzik: <unk> for a long time now we've been sort of outrunning some of the cyclical downturns that other peers in our space have experienced.
David Ryzik: And as we think through 2025.
David Ryzik: Barring a meaningful recovery 2025 could be down year over year relative to 2024, but this is a time for us to continue to invest in our roadmap and our technologies and work with our customers Craig. So we see this as in the strength of our balance sheet and our cash generation put us in a position to be able to strengthen the company during the period.
David Ryzik: To exit accelerate.
David Ryzik: Exit out of the cycle as it occurs yes, I think that's a really good point. It's like this is a great opportunity ticket bandwidth from our customers and to work really closely with them on new products. So that when the recovery comes.
David Ryzik: To go with new products that we can gain market that way.
Speaker Change: But just to be clear.
David Ryzik: The visibility into 25 is not great naturally come at Q4 earnings call, we'll give you a little more granularity, but this is kind of what we're seeing right now.
Speaker Change: Got it guys I'll hop back in the queue. Thanks for the help.
Speaker Change: Thanks, Greg.
Speaker Change: Thanks.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Jack <unk> of Charter equity Research. Your line is now open.
Speaker Change: Hey, guys. Thanks for taking my questions. So a few days ago. There was a report that some other capital equipment companies are directing their suppliers to kind of eliminate the use of Chinese components.
Speaker Change: Sure to what degree <unk> uses Chinese suppliers for components, but have you taken any similar actions or do you plan on taking any similar actions.
Speaker Change: Yes, I mean I think the.
Speaker Change: Jack.
Speaker Change: These other reports from the other providers.
David Ryzik: Any means but what I can say is that our supply chain on a fairly consistent regular basis is reviewing our supply base. We are looking to find to improve localization where we can.
David Ryzik: To limit cross border shipping as much as we possibly can to reduce tariffs and duties and freight costs associated with the supply chain base.
David Ryzik: We have a very strong supply base here in the United States.
David Ryzik: And in other parts of the world outside of China, We have done a very meaningful job of second sourcing into low cost regions in low cost countries where appropriate.
David Ryzik: <unk>.
David Ryzik: All I can really say on this as we actively manage the supply chain on a ton of basically daily basis here relatively consistently and we've developed some fairly robust plans, which are outlined in our margin expectations to continue to grow the margins of the business through it through better and more efficient utilization of the supply chain.
Speaker Change: Got it okay.
Speaker Change: And then I guess this was kind of more last quarter, but you mentioned is that the rebound in general mature kind of needed to see a better consumer spending to return to strength.
Speaker Change: And I wasn't sure if there's really a way to quantify this but to what degree is general mature leverage to the three end markets. You mentioned, so automotive industrial and consumer as consumer always the biggest driver of that segment or is it just kind of particularly important right now because of some of the weakness in those other end markets.
Speaker Change: Good question. Thank you. So I don't know what the ratios are all between consumer industrial and automotive.
Speaker Change: Regarding mature, but what we do know is that.
Speaker Change: Each one of those drives demand very much I mean, when you think about a call. It basically a computer oil wells with the with all of the infotainment and all of the automation of the electric ones have complete powertrain.
Speaker Change: Industrial has been weak and obviously you know consumers been weak as well I mean, you can see that through phones and laptops.
Speaker Change: So we do think that once those markets don't recover and 2023 was a great year for those once those markets recover we could see a rebound in that business, but I Couldnt tell you.
Speaker Change: Which which end market has the biggest opportunity.
Speaker Change: Got it okay. Thank you.
Speaker Change: Thanks, Thanks Jack.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: One moment for our next question.
Speaker Change: Our next question comes from Ross Cole of Needham <unk> Co LLC. Your line is now open.
Speaker Change: Hi, and thank you for taking my question I wanted to dive a little bit deeper into your Gan opportunity given that you mentioned the European customer a little bit of a negative outcome, there and led to the increased opex.
Speaker Change: How do you see this changing going forward. Thank you.
Speaker Change: Okay.
Speaker Change: Thanks for the question Ross So again, so if I look at wide band gap semiconductor, obviously, that's kind of like the two exciting areas of silicon carbide and Gan. They have very different spaces Gan is typically higher frequency lower power than say silicon carbide.
Speaker Change: So we're expecting both to have their.
Speaker Change: They are applications gallium nitride is significantly smaller right now as an opportunity compared to silicon carbide.
Speaker Change: One thing I would say is with silicon carbide, it's really intense owner and implementation steps and doping, while we do dope gallium nitride devices, it's not.
Speaker Change: The same intensity so for us.
Speaker Change: One moment for our next question.
Speaker Change: Silicon carbide and silicon like GPT is a very interesting because they drive a lot of influence that gallium nitride. It does drive implant steps is currently what I would consider a niche.
Speaker Change: Our next question comes from Ross Cole of Needham <unk> Co LLC. Your line is now open.
Speaker Change: And thank you for taking my question I wanted to dive a little bit deeper into your Gan opportunity given that you mentioned a European customer.
Speaker Change: Vacation.
Speaker Change: This was a very as you would imagine Ross. This is a very customer specific issue and I don't think it foretells.
Speaker Change: The negative outcome, there and led to the increased opex.
Speaker Change: We think broadly about Gan or power device segment broadly, yes. It was a small customer in Europe. It wasn't one of the big guys that have talked about gallium nitride.
Speaker Change: How do you see this changing going forward. Thank you.
Okay.
Thanks for the question Ross. So again, so if I look at wide band gap semiconductor is obviously, that's kind of like the two exciting areas, our silicon carbide and Gan makes sense very different spaces Gan is typically higher frequency lower power than say silicon carbide.
Speaker Change: Great. Thank you that was really helpful color I appreciate it.
Speaker Change: Thanks, Rob.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Tom Mccaffrey of da Davidson <unk> Co. Your line is now open.
Speaker Change: So we're expecting both to have.
Speaker Change: Their applications gallium nitride is significantly smaller right now as an opportunity compared to silicon carbide.
Speaker Change: Yes, good morning, I appreciate the chance to ask a question here.
Speaker Change: Just wanted to focus on the transition of Silicon carbide from 150 to 200 for some of your customers and I'm curious what is the opportunity for you for a fact, that's transitioning versus new Greenfield fab.
One thing I would say as we sit controllable Ed it's really intense owner and implementation steps and doping, while we do dope gallium nitride devices, it's not nearly the same intensity so for us.
Speaker Change: Hey, Tom Thanks for the question so.
Silicon carbide and so can elect gpt's are very interesting because they drive a lot of implants that gallium nitride. It does drive implant steps is currently what I would consider a niche applications and.
Speaker Change: Actually interesting 150 to 200 transition seem to actually be picking up speed. We are working with many many customers on the 200 and a lot of them have actually taken delivery of 200 millimeter capabilities.
This was a very as you imagine Ralph this is a very customer specific issue and I don't think it foretells anything broadly about Gan or power device segment broadly yes.
Speaker Change: So this.
Speaker Change: This is the thesis we have and this is kind of what we're seeing is that most people are going to bring up their 150 optimize their processes optimize the yields and then as the availability of 200 millimeter wafers becomes available and the quality continues to improve and the preferences to drop they will bring up at 200 millimeter.
Speaker Change: It was a small customer in Europe. It wasn't one of the big guys that have talked about gallium nitride.
Okay.
Speaker Change: Great. Thank you that was really helpful color I appreciate it.
Speaker Change: The owned brand new machines, they have not been a trends transfer Australia way. So the 150 millimeter running and then that bring up the 200.
Speaker Change: Thanks, Ross. Thank you. Thank you.
Speaker Change: Our next question comes from Tom Jeffrey of D. A Davidson <unk> co. Your line is now open.
Speaker Change: One is the 200 and stable and more cost effective I think you would expect to see the 150 to potentially get retrofit assuming the rest of the equipment. The fab is hey, let's be retrofit because remember a lot of these fabs pizza supportive with were old fabs they re utilizing so.
Tom Jeffrey: Yes, good morning, I appreciate the chance to ask a question here.
Speaker Change: Just wanted to focus on the transition of Silicon carbide from 150 to 200 for some of your customers and I'm curious what is the opportunity for you for a fact, that's transitioning versus new Greenfield fab.
Speaker Change: There will be some times it will upgrade and so on that we will not be able to.
Tom: Hey, Tom Thanks for the question so.
Speaker Change: Okay.
Speaker Change: It's actually interesting 150 to 200 transitioned seems to actually be picking up speed. We are working with many many customers on the 200 and a lot of them have actually taken delivery of 200 millimeter capabilities.
Speaker Change: Yes, just to clarify though your tools are 150, 200 capable with a bit of a kit.
Speaker Change: Is that right, yes, yes. They are so all of the tools of field Upgradable. So if you think about that as an upgrade opportunity. Then we have a large installed base and that would be a great opportunity for our after market business in the future, but we still are expecting to sell a lot of new tools into greenfield as well.
Speaker Change: So yes.
Speaker Change: This is the thesis we have and this is kind of what we're seeing is that most people are going to bring up their 150 optimize their processes optimize the yields and then as the availability of 200 millimeter wafers becomes available and the quality continues to improve and the preferences to drop they will bring up the 200 millimeter Kapoor.
Speaker Change: Okay, Great that helps clarify and then as a follow up question on the margin side. When you look at the margins down about 150 basis points year over year is that simply overhead absorption is it product mix could you.
Speaker Change: The owned brand new machines, they have not been a trends transfer a straight away so that though the 150 millimeter running and then that bring up the 200.
Speaker Change: I'll provide a little more color there.
Speaker Change: So the answer is yes, yes, and yes, so we had.
Speaker Change: One is the 200 up and stable and more cost effective I think you would expect to see the 150 as potentially get retrofit assuming the rest of the equipment. The fat is able to be retrofit because remember a lot of these fabs that people started with were old fabs. They re utilizing so there will be some types.
Speaker Change: It's a little bit of overhead absorption a little bit of systems mix.
Speaker Change: Slightly lower CSMA volume period over period, so its systems CSI and a little bit of overhead absorption just given the lower volumes in the period of time.
Speaker Change: Okay, but there hasnt been any kind of unusual pricing pressure.
Speaker Change: It will upgrade and some of them will not be able to.
Speaker Change: Nothing that we've seen that materially, but I think we always get challenged on price from customers to do better and find opportunities, but this really does come down to systems mix C&I mix of between systems and <unk> and then ultimately the overhead absorption just given the lower volume great. Thank you very much.
Okay.
Speaker Change: Yes, just to clarify though your tools are $1 5200 capable with a bit of a kit is is that right.
Speaker Change: Yes. They are so all of the tools of field Upgradable. So if you think about that as an upgrade opportunity and we have a large installed base and that would be a great opportunity for our after market business in the future, but we still are expecting to sell a lot of.
Speaker Change: Yes.
Speaker Change: Thanks, Tom.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: Our next question comes from Christian Schwab.
Speaker Change: New tools into Greenfield as well.
Speaker Change: Craig Hallum Capital Group. Your line is now open.
Speaker Change: Okay, great and that helps clarify.
Speaker Change: Great. Thanks for taking my question.
Speaker Change: Just a follow up question on the margin side. When you look at the margins down about 150 basis points year over year is that simply overhead absorption is it product mix could you.
Speaker Change: I guess as far as memory is concerned you guys seem to have.
Speaker Change: Increased enthusiasm about the recovery in DRAM spending while other memory guys have been more excited about an increase in NAND spending.
Speaker Change: Probably a little more color there.
Speaker Change: So the answer to that is yes, yes, and yes, so we had.
Speaker Change: It's a little bit of overhead absorption a little bit of systems mix.
Speaker Change: On the movement.
Speaker Change: 300 later this year. So I'm just wondering if you can give us further clarity on your enthusiasm.
Speaker Change: Slightly lower C&I volume period over period, so its systems CSI and a little bit of overhead absorption just given the lower volumes in the period of time.
Speaker Change: For for DRAM.
Okay.
Speaker Change: <unk> been any kind of unusual pricing pressure.
Russell Low: Hey, Christine its Russell.
Speaker Change: I think that the beat the big thing is that we sell.
Speaker Change: Nothing that we've seen that material labor I think we always get challenged on price from customers to do better and find opportunities, but this really does come down to systems mix <unk> mix of <unk>.
Speaker Change: Implant is placed on wafers out, whereas when you go to like 200 300 more layers that actually increases the kind of the density if you like.
Speaker Change: Between systems and <unk> and then ultimately the overhead absorption just given the lower volume.
Speaker Change: Many tools, so definite wins big when they add more layers for us it doesn't make a significant difference. So we're all about more capacity coming online. So the reason we're excited about DRAM is that.
Speaker Change: Thank you very much.
Speaker Change: Thanks, Tom.
Okay.
Thank you.
Our next question comes from Christian Schwab of.
Speaker Change: HBM has taken up a lot of DRAM capacity that has been pushed up the utilization. So what we're seeing from some of our customers is now.
Speaker Change: Craig Hallum Capital Group. Your line is now open.
Speaker Change: Great. Thanks for taking my question.
Speaker Change: Yes as far as memory is concerned you guys seem to have.
Speaker Change: At an investment in DRAM.
Speaker Change: Listing fabs that kind of being slightly optimally is you're getting a few tools to optimize the existing fast, but really the big opportunity for us is going to come when they actually have the new fabs come online so.
Speaker Change: Increased enthusiasm about the recovery in DRAM spending while other memory guys have been more excited about an increase in NAND spending.
Speaker Change: On the movement.
Speaker Change: 300 later this year. So I'm just wondering if you can give us further clarity on your enthusiasm.
Speaker Change: I think you've probably been reading in the news.
Speaker Change: Some of these have been pulled in and Theyre going to be used for DRAM. So we're excited about the DRAM utilization going up and driving additional demand.
Speaker Change: For for DRAM.
Russell Low: Hey, Christine its Russell.
Speaker Change: I think that the <unk>. The big thing is that we sell implant is placed on wafers out, whereas when you go to like 200 300 more layers that actually increases the density if you like of many tools a definite wins big when they add more layers for us it doesn't.
Speaker Change: <unk> is still client for us.
Speaker Change: Again that is wonderful for the Dep and etch guys.
Speaker Change: For us it's the same implant intensity whichever noted is.
Speaker Change: Does that help Christian.
Speaker Change: So when would you.
Speaker Change: You are building capacity, so would we assume that increase DDR five wafer starts in essence for DRAM I think thats, what youre talking about.
Speaker Change: Make a significant difference. So we are all about more capacity coming online. So the reason we're excited about DRAM is that H.
Speaker Change: <unk> has taken up a lot of DRAM capacity that has been pushed up the utilization. So what we're seeing from some of our customers is now.
Speaker Change: You know you would anticipate that maybe in the summer going into.
Speaker Change: Hopefully a better smartphone and PC sales cycle in the second half of 'twenty five is like putting.
Yes.
Speaker Change: And investment in DRAM, the existing fabs that kind of being slightly optimized youre getting a few tools to optimize the existing.
Speaker Change: Putting the pieces of the puzzle together correctly there.
Speaker Change: <unk>.
Speaker Change: The existing fast, but really the big opportunity for us is going to come when they actually have the new fabs come online so I.
Speaker Change: So just kind of take a step back.
Speaker Change: As you know we are strong in Korea. So yes, DDR format have been advanced nodes are where we're going to be focused the owner knows that <unk>, probably going to be manufactured in China.
Speaker Change: I think you've probably been reading in the news that some of these have been pulled in and theyre going to be used for DRAM. So we're excited about the DRAM utilization going up and driving additional demand.
Speaker Change: What we said before we're really not participating in that so we're very focused on the advanced stuff.
Speaker Change: <unk> is still client for us.
Speaker Change: The transition from.
Speaker Change: It will be different nodes hasnt really changed the implant intensity. So again, it's the number of wafers outlet is important.
Speaker Change: <unk> is a wonderful fit to the <unk> guys.
Speaker Change: For us is the same implant intensity.
Speaker Change: And we can expect that there'll be new capacity coming on in 2025 as you mentioned I think some of that big customers have mentioned the pull in of Fabs or the reuse of Fabs. So we are expecting to see DRAM orders.
Speaker Change: Whichever notice.
That help Christian.
Hey, Doug.
So when would you.
You are building capacity so.
Speaker Change: Would we assume that increase DDR five wafer starts in essence for DRAM I think thats, what youre talking about.
Speaker Change: Just just to kind of give you a data point, so we talked about theres any one machine in Q3.
Speaker Change: You would anticipate that maybe in the summer going into <unk>.
Speaker Change: We are expecting more activity in Q4 with that activity, what I would consider optimizing existing capacity just to get the most out of the four walls really the big Capex is going to come from the Greenfield switch.
Speaker Change: Hopefully a better smartphone and PC sales cycle in the second half of 'twenty five.
Speaker Change: Putting the pieces of the puzzle together correctly there.
Speaker Change: That's been publicly noted.
Yes.
Chris I'll, just add that the kind of the scope and scale of that recovery is difficult to predict exactly when that's going to occur, but we will have more that we should as we get greater visibility into 2025, we'll have more information on our views on memory as part of our fourth quarter earnings call.
Speaker Change: So, yes, just kind of take a step back.
Speaker Change: As you know we are strong in Korea. So, yes, DDR will enable advanced nodes are where we're going to be focused the owner knows that <unk>, probably going to be manufactured and Schneider.
Speaker Change: Said before we're really not participating in that so we're very focused on the advanced stuff.
Speaker Change: Great no other questions. Thank you.
Speaker Change: Thanks Rajiv.
Speaker Change: Thank you.
Speaker Change: The transition from.
Speaker Change: Our next question comes from Dan <unk> of William Jed Dorsch Meyer of William Blair. Your line is now open.
Speaker Change: Yes, it will be different nodes hasnt really changed the implant intensity. So again, it's the number of wafers out this important and we can expect that there'll be new capacity coming on in 2025. As you mentioned I think some of that big customers have mentioned the pull in of Fabs.
Okay.
Speaker Change: Thank you guys you have a mark shooter here on for Jack This morning.
Just touching on the way that you are seeing in power in China.
Speaker Change: There are no you've seen if you take the last bastion of EV growth.
Speaker Change: The reuse of Fabs. So we are expecting to see DRAM orders.
Speaker Change: Could you provide us some color on the capacity digestion in that region that youre seeing.
Speaker Change: Just just to kind of give you a data point, so we talked about theres any one machine in Q3, we.
Speaker Change: We are expecting more activity in Q4 with that activity, what I would consider optimizing existing capacity just to get the most out of the four walls really the big Capex is going to come from the Greenfield switch.
Speaker Change: Needs to occur.
Russell Low: Hey, Mark its Russell so.
Speaker Change: Yes, so I would say go separate the easy mobile market, which they are.
Speaker Change: Very big on versus the actual domestic supply of silicon carbide chips. So we've mentioned before with like 20 different customers the tier ones have a little bit more capacity to the lowest from a tier two companies.
Speaker Change: That's been publicly noted.
Speaker Change: Chris I'll, just add that the kind of the scope and scale of that recovery is difficult to predict exactly when that's going to occur, but we will have more that we should as we get greater visibility into 2025, we'll have more information on our views on memory as part of our fourth quarter earnings call.
Speaker Change: Don't have a lot of capacity one of the things we're seeing is that as companies a bull in many lines.
Speaker Change: Great no other questions. Thank you.
Speaker Change: The ramping those many lines.
Speaker Change: Thanks Keith.
Speaker Change: Take a while to get the total bed down of course, the whole fab improve that productivity the yields and the reliability. So I think it may not be so much a pause because they've got too much capacity because I'm not sure that mark is completely supply demand driven.
Thank you.
Speaker Change: Our next question comes from Dan Dorsch Meyer of William Jed <unk> of William Blair. Your line is now open.
Okay.
Speaker Change: Thank you guys you have mark sooner here on for Jack This morning.
Speaker Change: Their aspirations are to supply domestically silicon carbide to their own silicon carbide Evs.
Speaker Change: Just touching on the market you are seeing in power in China.
Speaker Change: There are and they seem to be like the last bastion of EV growth.
I think more of it is a taking a time to mature the process in a ring out the processes.
Speaker Change: Could you provide some color on the capacity digestion in that region that youre seeing what needs to occur.
Speaker Change: Okay that makes sense I appreciate the color Russell Thank you.
Russell Low: Hey, Mark its Russell so.
Speaker Change: Yes, so I would say go separate the easy mobile market, which stay out.
Speaker Change: Can you touch on as a follow up how much of your backlog is China.
Speaker Change: Have you seen any changes in the patterns.
Speaker Change: Big on versus the actual domestic supply of silicon carbide shifts. So we've mentioned before that about 20 different customers the tier ones have a little bit more capacity at a lesser about tier two companies.
Speaker Change: Push outs or cancellations there.
The things you are talking about.
Speaker Change: Yes, so we don't give specific breakdown on the backlog by segment or region.
Speaker Change: Don't have a lot of capacity one of the things we're seeing is that.
Speaker Change: But I think what we've noted in the commentary and what we said in our prepared remarks is that the softness in general mature power and particularly in China.
Speaker Change: Comp is a bull in many lines.
Speaker Change: That ramping as many lines.
Speaker Change: In the third quarter here is what was driving the lower bookings rate.
Speaker Change: Take a while to get the toaster bed down of course, the whole fab improve that productivity the yields and the reliability. So I think it may not be so much a pause because they've got too much capacity because I'm not sure that mark is completely supply demand driven.
Speaker Change: So yes in that that is going to feed into our expectations for the first half our preliminary view, we have on the first half of 2025.
Speaker Change: Relative to the second half of 2024, and when we think about that it wouldn't be unreasonable to assume that Q1 could be lower than Q4, obviously I think it's obvious statement, but.
Speaker Change: Their aspirations are to supply domestically silicon carbide to their own silicon carbide Evs.
Speaker Change: Q1 could be lower than Q4, as a result of that.
Speaker Change: I think more of it is a taking a time to mature the process in a ring out the processes.
Speaker Change: So broadly speaking 2025.
Speaker Change: Need that recovery in the general mature empower space.
Speaker Change: See growth again.
Speaker Change: Okay that makes sense I appreciate the color Russell Thank you.
Speaker Change: Unless there's some meaningful recovery there we could be down year over year, but we'll have more more full year commentary as we got prepay our results get greater visibility into 2000 22025.
Speaker Change: Can you touch on as a follow up how much of your backlog is China.
Speaker Change: Have you seen any changes in the patterns.
And have our earnings call in the fourth quarter.
Speaker Change: Push outs or cancellations there.
Speaker Change: With things Youre talking about.
Speaker Change: Got it thank you Jeremy.
Speaker Change: Yes, so we don't give specific breakdown on the backlog by segment or region.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: But I think what.
Speaker Change: Our next question comes from David Duley of Steelhead Securities. Your line is now open.
Speaker Change: What we've noted in the commentary and what we said in our prepared remarks is that the softness in general mature power and particularly in China.
Speaker Change: Thank you good morning, I was wondering hey, David I think I.
Speaker Change: In the third quarter here is what was driving the lower bookings rate.
Speaker Change: Sad that the China revenue I think was 71% of revenue in the third quarter could you give us an idea of what you think the percentage will be in Q4 and in the first half of next year I'm assuming.
Speaker Change: So yes in that that is going to feed into our expectations for the first half our preliminary view, we have on the first half of 2025 realm.
Speaker Change: Relative to the second half of 2024, and when we think about that it wouldn't be unreasonable to assume that Q1 could be lower than Q4, obviously I think it's obvious statement, but Q.
Speaker Change: The Chinese revenue is what is going to be down in the first half of next year, but maybe I'm wrong.
Speaker Change: Q1 could be lower than Q4, as a result of that.
Speaker Change: Yes, So I think David Great question at the elevated levels here in the third quarter were largely attributable to the image sensor business.
Speaker Change: Broadly speaking 2025, we need that recovery in the general mature empower space.
Speaker Change: Kind of see growth again, unless there's some meaningful recovery there we could be down year over year, but we'll have more more full year commentary as we prepare our results get greater visibility into 2000 22025.
Speaker Change: Within the region as we supported one of our customers there who is building out some incremental capacity for smartphone I think if you were to kind of normalize that we had said coming into the year that we'd be somewhere in that sort of 40% to 60% range by quarter.
Speaker Change: And have our earnings call in the fourth quarter.
Speaker Change: So in going into Q4, we would expect that to come down.
Speaker Change: Got it thank you Jeremy.
The China exposure to come down back into those relative levels, obviously mix by region is going to be a primary driver of that once we get there.
Okay.
Thank you.
Speaker Change: Our next question comes from David Duley of Steelhead Securities. Your line is now open.
Speaker Change: Going into 2025, Youre right and as we said in the prepared remarks.
Speaker Change: Thank you good morning, I was wondering hey, David I think hi.
Speaker Change: I would say we are seeing softness in general mature and power broadly and then, particularly we're seeing some softness in China as we look to the first half so we would expect that it.
Speaker Change: That the China revenue I think was 71% of revenue in the third quarter could you give us an idea of what you think the percentage will be in Q4 and in the first half of next year I'm assuming.
Speaker Change: It may as a percentage of sales rate, we have to see where the ultimate mix is to determine what that would be as a percentage of total sales, but we are seeing I think an preliminarily, we're seeing the actual dollar values come down.
Speaker Change: The Chinese revenue is what is going to be down in the first half of next year, but maybe I'm wrong.
Speaker Change: Okay, and then as far as Silicon carbide in China within the first half of next year would you expect that to be down versus the second half of 2024 or.
Speaker Change: Yes, So I think David Great question at the elevated levels here in the third quarter were largely attributable to the image sensor business.
Speaker Change: Within the region as we supported one of our customers there who is building out some incremental capacity for smartphone I think if you were to kind of normalize that we had said coming into the year that we'd be somewhere in that sort of 40% to 60% range by quarter.
Speaker Change: Silicon carbide still strong in China in the first half of next year.
Speaker Change: So I think we're expecting silicon carbide insurance was down in the first of next year compared to the second half of this year.
Speaker Change: So in going into Q4, we would expect that to come down.
Speaker Change: We are attributing that to a digestion phase. So we've still got a large backlog we have seen a number of customers pushed out that backlog.
Speaker Change: The China exposure to come down back into those relative levels, obviously mix by region is going to be a primary driver of that once we get there.
Speaker Change: Going into 2025, Youre right and as we said in the prepared remarks.
Speaker Change: Pushing out the delivery dates, which probably is weighing a little bit on a book to bill right.
Speaker Change: I would say we are seeing softness in general mature and power broadly and then, particularly we're seeing some softness in China as we look to the first half. So we would expect that it may as a percentage of sales rate, we have to see where the ultimate mix is to determine what that would be as a percentage of total sales, but we are seeing.
Speaker Change: White places on the payer when you still got outstanding theatres that you're waiting for but.
Speaker Change: <unk> is a digestion period that I think is a period of time, where you.
Speaker Change: You're going to see the mature Asian of the processes occurred the yield improves the reliability improves and.
Speaker Change: I think in preliminarily, we're seeing the actual dollar values come down.
Speaker Change: And then once that Scott more mature state that I think you're going to see some of these companies expanding cylinder literally pilot lines many lights.
Speaker Change: Okay, and then as far as Silicon carbide in China within the first half of next year would you expect that to be down versus the second half of 2024 or.
Speaker Change: Little bit tier twos on actually in high volume. So they wanted to make sure. They got their act together before they drive meaningful capacity. So that customers are focused on reliability at this point so that they can more meaningfully provide into the domestic <unk> production market and drive the cost down to be able to support that self sufficiency goal and we are partnering with our customers.
Speaker Change: Silicon carbide still strong in China in the first half of next year.
Speaker Change: So I think we.
Speaker Change: We're expecting silicon carbide insurance gain in the first half of next year compared to the second half of this year and I think we are attributing that to a digestion phase. So we've still got a large backlog we have seen a number of customers.
That region to help them do that and so.
At this time of digestion, where you actually are going to continue to make investments in that portion of the business work with their customers and their roadmaps.
Jamie Coogan: And again like we said a little bit earlier to continue to position us to accelerate on the sort of return to growth inside of the markets I think that's a great point Jamie so.
Speaker Change: Push out that backlog.
Speaker Change: Pushing out the delivery dates, which probably is weighing a little bit on a book to bill right.
Speaker Change: We've kind of said that the DS.
Speaker Change: Quite places on the payer when you still got outstanding.
Speaker Change: Silicon carbide customers in China are underweight relative to the opportunities for Evs and naturally that their goal is to become a world provider of silicon carbide. So they've got a long way to go very much in the early innings. So we still see this as a cycle on what is under.
Speaker Change: Waiting for but.
Speaker Change: Do you think is a digestion period.
Speaker Change: I think he is a period of time, where.
Speaker Change: You guys see the mature Asian op.
Speaker Change: The processes occurred the yield improves the reliability improves and.
Yes.
Speaker Change: And then once that Scott more mature state that I think you're going to see some of these companies expanding cylinder literally.
Speaker Change: <unk>, a strong secular growth opportunity for us.
Speaker Change: And that lines many lights.
Speaker Change: Okay, a couple of follow ons.
Speaker Change: There's a lot of the tier twos on actually at high volume. So they wanted to make sure. They got their act together before they drive meaningful capacity. So that customers are focused on reliability at this point so that they can more meaningfully provide into the domestic E&P production market and drive the cost down to be able to support that self sufficiency goal and we're partnering with our customer.
Speaker Change: Maybe you could help us with the utilization rates of your equipment.
Speaker Change: You can hear on the U S and European FSIC conference calls of your customers.
Speaker Change: Business is not really growing or at this point or.
We're in digestion mode or or.
Speaker Change: Trying to figure out lowering their capex and whatnot. So I'm just kind of curious what the utilization rates are in the U S and Europe and then are they much different in China than they are in those geographic regions.
Speaker Change: In that region to help them do that and so.
Speaker Change: During this time of digestion, where you actually are going to continue to make investments in that portion of the business work with their customers and their roadmaps.
Are you talking to.
Speaker Change: And again like we said a little bit earlier to continue to position us to accelerate on the sort of return to growth inside of the markets I think that's a great point Jamie so.
Speaker Change: Any given market type memory or certain combo, which.
Speaker Change: So can you talk about <unk>.
Speaker Change: Just in general the utilization rates of your tools in the marketplace, if you'd like to care.
Speaker Change: We've kind of said that the DS.
Speaker Change: The silicon carbide customers in China are underweight relative to the opportunities for Evs and naturally that their goal is to become a world provider of silicon carbide. So they've got a long way to go very much in the early innings. So we still see this as a cycle on what is other.
Speaker Change: Lower.
Speaker Change: Adjusted I'm more interested in silicon carbide than anything else, but however, you'd like to answer the question would be great.
Speaker Change: Just wanted to understand I think broadly what we're seeing is that the continued softness in obviously with memory being where it is right now.
Speaker Change: Are probably seeing a little bit of a spike in some utilization of those tools are being used to help drive HBM, but that is limiting the sales of new new new tools until they start adding capacity as Russell noted I think as we look at general mature expectations for power you are going to see utilizations, given our CSI numbers are down period.
Speaker Change: <unk>, a strong secular growth opportunity for us.
Speaker Change: Okay, a couple of follow ons.
Speaker Change: Maybe you could help us with the utilization rates of your equipment.
Speaker Change: You can hear on the U S and European FSIC conference calls of your customers.
Speaker Change: Business is not really growing or at this point or.
Speaker Change: Over a period that will probably give you some indication of the utilization rates.
Speaker Change: We're in digestion mode or or.
Speaker Change: Yes.
Speaker Change: Trying to figure out lowering their capex and whatnot. So I'm just kind of curious what the utilization rates are in the U S and Europe and then are they much different in China than they are in those geographic regions.
Speaker Change: Going to be an indicator of overall utilization is the spares consumables.
Speaker Change: Opportunities, we have inside of that mix. So again, although we don't comment on specific customers regions, where markets I think generally we're comfortable saying that utilizations are down.
Speaker Change: Are you talking to.
Speaker Change: Any given market type memory or certain combo.
Speaker Change: Okay. Thank you.
Speaker Change: So can you talk about.
Speaker Change: Yes.
Speaker Change: Just in general the utilization rates of your tools in the marketplace, if you'd like to care.
Speaker Change: Thank you.
Yes.
Speaker Change: Alrighty interested I'm more interested in silicon carbide than anything else, but however, you'd like to answer the question would be great.
Speaker Change: This concludes the question and answer session I would now like to turn it back to David <unk> for closing remarks.
Speaker Change: Just wanted to understand I think broadly what we're seeing is that the continued softness in obviously with memory being where it is right now.
Thank you I want to thank everybody for joining us on this call operator, you can close the call.
Speaker Change: Thank you so much for your participation in today's conference. This does conclude the program you may now disconnect.
Speaker Change: <unk>, probably seen a little bit of a spike in some utilization as those tools are being used to help drive HBM, but that is limiting the sales of new new new tools until they start adding capacity as Russell noted I think as we look at general mature.