David Lu

David Lu of Mizuho asked about the expected mix between Quantum Compute as a Service (QCaaS) and hardware sales going forward, and for further details on the operating expense (OpEx) outlook for the year.

Answer

CFO John Markovich reiterated the OpEx guidance of a 15% sequential quarter-over-quarter growth for consolidated OpEx throughout the fiscal year. He explained that the mix between QCaaS and hardware sales will be entirely dependent on the composition and magnitude of bookings, which are expected to be 'relatively lumpy.' He also noted that each deal may have unique revenue recognition elements, such as percentage-of-completion for system installations.

David Lu inquired about the anticipated mix between QCaaS and hardware sales going forward, and how this mix relates to the OpEx numbers for the year.

Answer

CFO John Markovich reiterated the expectation of 15% sequential OpEx growth quarter-over-quarter for the fiscal year. He explained that the mix of QCaaS and hardware sales will be 'lumpy,' depending on the composition and magnitude of bookings, with each deal potentially having unique revenue recognition elements.

David Lu, asking for Vijay at Mizuho, inquired about the second-half weighted strength and acceleration in WFE, specifically if semiconductor revenue could reach a '55 handle' (likely $550 million) starting in September/December. He also asked a longer-term question about the industry's move to panel for advanced packaging, MKS's involvement, and the outlook or timeline for benefits.

Answer

President and CEO John Lee acknowledged customer projections of 15-20% WFE growth, which would require MKS to ship ahead. He mentioned MKS hitting a 'five handle' ($500 million) in the last ramp, which was supply chain constrained, and believes MKS is better at managing the supply chain now, so a 'five handle' would not be surprising to meet 20% WFE. On advanced packaging, he confirmed that the shift from wafer to panel for redistribution layers is a tailwind for MKS, given its strength in panels, but noted it's a relatively smaller market growth compared to the faster growth in MLB, HDI, and packaged substrate layers.

David Lu asked about the second-half weighted strength in WFE and whether MKS's semiconductor revenue could reach a '55 handle' (implying $550 million) starting in September/December. He also posed a longer-term question regarding the industry's shift to panel for advanced packaging, MKS's involvement, and the potential benefits and timeline for the company.

Answer

John Lee, President and Chief Executive Officer, acknowledged WFE growth expectations of 15-20% and MKS's need to ship ahead. He stated that MKS has hit a 'five handle' in past ramps, with supply chain being the primary constraint, not factory capacity. Lee confirmed that the move to panel for redistribution layers is a tailwind for MKS, given its strength in panels, but emphasized that the larger growth opportunity lies in the increasing number of layers for MLB, HDI, and packaged substrates.