Edward Yang

Edward Yang asked about KLA's outlook for foundry-related revenue opportunities outside the dominant Taiwanese customer, specifically if engagement is changing with other major foundries that historically underinvested in yield improvement tools. He also asked if the semiconductor industry is positioned to serve the scale of demand implied by recent half-trillion-dollar AI accelerator backlogs, or if projections are being discounted as aspirational.

Answer

CEO Rick Wallace confirmed encouraging broadening investment at the leading edge, with collaborative discussions with other advanced logic customers seeking KLA's advice on process control needs for new nodes and faster ramps. Regarding AI demand, he believes the semiconductor industry is being prudent in adding capacity, suggesting that not enough wafers will be available to meet objectives, which means it's unlikely to overheat, and that supply chain ramp-up takes longer than public announcements.

Edward Yang of Oppenheimer & Co. Inc. inquired about the Semi Lab acquisition, asking why the asset was available, its expected growth rate, and the rationale for the cash-heavy deal structure. He also asked if the 3DI metrology wins involved displacing incumbents.

Answer

CEO Michael Plisinski explained that Onto Innovation preferred a more cash-heavy structure for the Semi Lab deal as its stock price adjusted, and Semi Lab agreed while retaining some equity for upside. He projected the acquired business would have "above average growth" for Onto. Plisinski confirmed that the 3DI wins in memory, logic, OSATs, and co-packaged optics were competitive displacements of incumbents, while a key 2.5D logic win was a unique solution where other technologies had failed.

Edward Yang asked whether the 2.5D packaging issue was due to equipment underperformance or changing customer specifications, and inquired about the competitive risks and opportunities related to this new platform.

Answer

CEO Michael Plisinski explained that customer requirements evolved faster than the existing platform's capabilities, even after performance was doubled. He acknowledged a competitor was selected for this specific application in the short term. However, he highlighted the long-term positive, stating the new, more capable platform will command higher ASPs and open up the front-end inspection market, a significant new opportunity for Onto.

Edward Yang asked if the 180% growth in AI packaging revenue for 2023 exceeded targets and requested an estimate of the revenue pickup from HBM demand expected in the second half of 2025.

Answer

CEO Michael Plisinski confirmed the growth likely exceeded his earlier 'over 160%' comment. Regarding the future HBM revenue, he stated the exact amount is still being determined but will be concentrated in the second half of the year, with potential upside as customers finalize their inspection and metrology needs for new ramps.

Edward Yang sought more detail on the 2025 growth outlook, the relevance of a foundry's packaging deal with an OSAT, whether facility space is still a bottleneck for customers, and if Q3 operating expenses represent a good run rate.

Answer

CEO Michael Plisinski anticipates growth in 2025 driven by an acceleration in advanced nodes (GAA and DRAM) and sustained strength in power semis, though not necessarily accelerating beyond 2024's ~20% growth rate. He noted that capacity bottlenecks are loosening. CFO Mark Slicer added that the goal is to hold total OpEx flat or better than Q3's level, aiming to offset the costs of recent tuck-in acquisitions.

Edward Yang asked if the previously mentioned high shipping costs had moderated and requested quantification of the Q2 impact. He also inquired about potential Q4 seasonality and the rationale behind the Street's relatively conservative 7% growth model for 2026.

Answer

CFO Moshe Eisenberg confirmed that the exceptionally high shipping costs related to regional conflict have returned to normal levels, and the impact in Q2 was over half a million dollars. COO Ramy Langer reiterated positive momentum for the second half but stated it was too early to provide specific Q4 guidance or comment on 2026 growth percentages, though he maintained that 2026 should be another growth year in a positive market.

Edward Yang asked for more detail on the comment that advanced packaging demand had 'plateaued,' questioning if it was market-driven or a share shift. He also asked about the competitive dynamic as a peer pursues a similar vertical integration strategy.

Answer

CEO Jeffrey Andreson clarified the plateau is market-driven, as capacity for the plating and cleaning tools they support is now coming online after two years of high growth, and it is not a share shift. Regarding competition, he noted that Ichor and its competitor already have a customer-supplier relationship for certain components and acknowledged that the competitor's strategy is aligning more with Ichor's branded product approach, which he sees as a market trend.

Edward Yang from Oppenheimer & Co. Inc. questioned the confidence in the stable deposition and etch outlook amid geopolitical uncertainty. He also asked if tariff and logistics issues are making customers more open to outsourcing components and subassemblies.

Answer

Executive Jeffrey Andreson attributed market caution to uncertainty around final tariff and export control decisions, but reiterated that they see no demand erosion beyond specific pockets like silicon carbide and still expect a strong 2026. Regarding outsourcing, he noted that while Ichor's global footprint offers flexibility, the core issue for customers is deeper in the supply chain, such as the sourcing of raw materials like steel into the U.S.

Edward Yang asked for an update on new product progress, specifically regarding the 50+ next-generation gas panels delivered in 2024, and inquired about any incremental impact from export controls or potential tariffs.

Answer

Executive Jeffrey Andreson confirmed that delivering over 50 next-gen gas panels was in line with expectations and that shipments for end-customer evaluation are treated as commercial. He stated that impacts from China export controls are already factored into their outlook. Regarding tariffs, he noted the rules are ambiguous but any potential costs related to their Mexico operations would likely be passed through to customers in their cost-plus business model.

Edward Yang inquired about the progress of proprietary product qualifications, whether customers were increasing outsourcing, and how the current recovery cycle compares to past cycles for Ichor.

Answer

Executive Jeffrey Andreson confirmed that qualification progress is on track and that while overall outsourcing strategies are stable, there are pockets of incremental demand. He distinguished this recovery from the post-2019 cycle, which included a large, non-recurring outsourcing gain. He stated the current goal is to outgrow WFE by about 5 percentage points, resulting in a different growth profile.

Edward Yang of Oppenheimer & Co. Inc. asked about the reasons for Lam's consistent outperformance versus guidance and inquired about the potential impact of a handset refresh cycle on Lam's business.

Answer

EVP and CFO Doug Bittinger attributed the quarterly beat to better-than-expected revenue, gross margin, and a lower tax rate. CEO Timothy Archer added that strong AI demand is driving outperformance in etch and deposition. Regarding mobile, CFO Bittinger noted that while unit growth is modest, the key driver for Lam is the increasing content of DRAM, NAND, and larger logic chips in new devices, which benefits their foundry, DRAM, and NAND customers.

Edward Yang asked about the factors driving Lam's consecutive quarters of strong results and guidance, and also inquired about the potential impact of a consumer handset refresh cycle on Lam's various business segments.

Answer

EVP and CFO Douglas Bittinger cited better-than-expected revenue, gross margin, and a lower tax rate for the strong results. President and CEO Timothy Archer added that strong AI demand is fueling outperformance. On mobile, Bittinger explained that the primary driver for Lam is not unit sales but the increasing semiconductor content per device, including more DRAM, NAND, and larger processors.

Edward Yang of Oppenheimer & Co. Inc. asked for a ranked order of the factors driving optimism for Q4, sought clarification on the tariff reimbursement delays, and inquired about the reason for the goodwill impairment charge.

Answer

Chairman & Interim CEO Clarence Granger identified the new business win as the most tangible positive factor, followed by confidence in the China situation. He expressed the most frustration with tariff reimbursements, noting customers are slow to pay despite verbal commitments. CFO Sheri Savage explained the goodwill impairment was a non-cash charge triggered by a decline in the company's market capitalization, which fell below the carrying value of the goodwill on the books.

Edward Yang asked for an updated view on Wafer Fab Equipment (WFE) growth for 2025, inquired if the company had seen any demand pull-ins related to tariffs, and requested an update on the ongoing CEO search.

Answer

VP of Marketing Cheryl Knepfler addressed the WFE outlook, stating that the 2025 forecast is unlikely to increase and faces more downside risk than upside potential. Interim CEO Clarence Granger stated that the company has not seen any significant demand pull-ins due to tariffs. Regarding the CEO search, Granger reported that a search firm has been hired and the process is expected to conclude in another three to four months, aligning with the original six-month timeline.

Edward Yang of Oppenheimer & Co. Inc. requested details on management's "balance sheet alternatives" comment, the sustainability of the China revenue run rate into the first half of 2025, and the company's updated outlook for WFE growth and its own outperformance.

Answer

CFO Sheri Brumm clarified that "balance sheet alternatives" involves reviewing the capital structure for flexibility, potential M&A, and improved cash flow. She projected the China revenue run rate would be slightly lower than Q4's level through the first half of 2025. She also stated UCT sees 2025 WFE growth around 5% and maintains its goal of outperforming the market by 5-10%, contingent on product mix.

Edward Yang asked for the reasons behind UCT growing faster than its customers, questioning if it was due to outsourcing, win rates, or technology exposure, and also inquired about the slight sequential dip in China revenue.

Answer

CEO James Scholhamer attributed the outperformance to a historical pattern of increased customer outsourcing during market upturns, market share gains in lithography, and customers utilizing UCT's low-cost Malaysia facility. Regarding China, he explained the slight sequential revenue dip was due to customer-specific lumpiness and not indicative of a negative long-term trend.