Melissa Weathers

Melissa Weathers asked for a high-level overview of innovation in the ICS business, particularly in packaging and thermal management, including expected content increases, and sought more color on demand trends and utilization improvements in mainstream nodes.

Answer

CEO Jon Kemp highlighted advanced packaging (solder/copper interconnect chemistry), advanced interconnects (high layer count/HDI circuit boards), and thermal management (thermal pads, gap fillers, phase change materials) as core ICS drivers, all growing over 20% in 2025. He noted encouragement from ongoing recovery in mature logic, expecting modest, steady utilization improvements from mid-70s to high-70s in 2026, driven by data centers and broader industrial markets.

Melissa Weathers asked for a high-level overview of the Interconnect Solutions (ICS) business, focusing on innovation in packaging and thermal management over the next two years, particularly the less understood thermal side. She sought details on expected content increases per device. Additionally, Ms. Weathers inquired about Qnity's outlook for mainstream nodes in foundry logic, given mixed signals from analog/power semiconductor companies, and requested more color on demand trends across end markets.

Answer

CEO Jon Kemp highlighted advanced packaging (new solder/copper interconnect chemistry for signal integrity), advanced interconnect (upgrading to high layer count/HDI circuit boards for finer lines), and thermal management (new thermal pads, gap fillers, phase change materials) as the three core ICS growth drivers, all growing over 20% in 2025. He noted rapid adoption of thermal solutions by cloud service providers and OEMs. For mainstream nodes, Mr. Kemp expressed encouragement by ongoing recovery in mature logic, healthy inventories, and small sequential utilization improvements. He expects a modest recovery pace in 2026, similar to 2025, with utilization rates potentially reaching the high 70s, driven by data centers and broader industrial markets like communication infrastructure and automotive.

Melissa Weathers asked for MKS's opinion on WFE growth magnitude for the year and how it is expected to flow through to semiconductor system sales. She also inquired about quantifying the revenue opportunity with 2026 or 2027 AI boards, given increasing complexity and layer counts, and how much this could offset any weakness in consumer electronics.

Answer

President and CEO John Lee noted that some customers and peers are projecting 15-20% year-over-year WFE growth, and MKS historically outperforms during upturns due to designed-in products and inventory build. He confirmed MKS is preparing for this ramp, with the Malaysia plant providing future flexibility. For AI boards, he contrasted smartphone PCB layers (10-12) with AI HDI boards (15-20) and multilayer boards (30-40+), stating AI chemistry revenue grew from 5% of electronics and packaging chemistry revenue in 2024 to 10% in 2025, expecting continued growth to more than offset a potentially muted PC and smartphone market.

Melissa Weathers asked for MKS's perspective on WFE growth for the current year, including the magnitude of equipment spending and its flow-through to semiconductor system sales. She also sought to quantify the revenue opportunity from AI boards, considering increased complexity and layer counts, and how this could offset any slowness in consumer electronics.

Answer

John Lee, President and Chief Executive Officer, cited customer outlooks ranging from mid-teens to 20% WFE growth, expecting a multi-year cycle where MKS typically outperforms. He highlighted that AI boards, with 15-20 layers for HDI and 30-40 for multilayer, represent a significant increase over smartphone PCBs (10-12 layers). Lee noted that chemistry revenue from AI grew from 5% in 2024 to 10% in 2025, expecting continued growth to more than offset a potentially muted PC and smartphone market.

Melissa Weathers from Deutsche Bank questioned if the NAND business lumpiness involves inventory replenishment or just-in-time demand, and asked why Q3 gross margins are not seeing more uplift from the higher-margin chemistry mix.

Answer

President and CEO John Lee clarified that customers are buying to need, not building inventory, due to normalized lead times. EVP and CFO Ramakumar Mayampurath explained that the gross margin benefit from a seasonal chemistry pickup is being offset by higher sales of lower-margin equipment and slightly lower overall volume compared to Q2.

Melissa Weathers of Deutsche Bank asked for more detail on the trends within the specialty industrial business, particularly the softness in automotive. She also inquired about the long-term growth rate drivers for the E&P chemistry business beyond typical seasonality, such as AI and content growth.

Answer

CEO John Lee described the automotive market as 'quite muted' and noted that the tariff environment has added 'a tremendous amount of more uncertainty,' making it volatile. For the chemistry business, Lee reiterated a long-term model of GDP plus 300 basis points, broken down by segment. He added that AI is providing an incremental growth tailwind to all PCB segments (package substrate, HDI, and MLB), similar to its effect on the chip industry.

Melissa Weathers from Deutsche Bank questioned MKS's content opportunity in NAND upgrades versus greenfield projects and the business impact from the ramp of leading-edge logic nodes like gate-all-around.

Answer

CEO John Lee clarified that while greenfield NAND fabs utilize a broad range of MKS tools, technology upgrades primarily benefit the company's RF power products as customers increase layer counts. For advanced logic, he confirmed MKS has significant content, specifically calling out its advanced ozone solutions as a key enabler for the gate-all-around technology transition.

Melissa Weathers requested more color on a back-end design win related to High-Bandwidth Memory (HBM), its potential size, and whether similar wins are expected. She also asked how MKS is positioned if the advanced logic market consolidates further.

Answer

President and CEO John Lee specified the HBM win was for lasers used in precise die cutting, a critical application for yield with multiple customers. Regarding potential consolidation in the logic market, Lee expressed confidence, citing MKS's long history of navigating such shifts. He emphasized that the value of their broad technology portfolio, reflected in their strong gross margins, ensures their position with key customers.

Melissa Weathers asked about Applied Materials' opportunity in node upgrade scenarios versus greenfield capacity additions, particularly in memory, and if this is primarily an AGS story. She also inquired about any updates to days inventory or working capital changes following the $500 million inventory build.

Answer

CFO Brice Hill indicated that most DRAM investments are greenfield, while NAND is primarily conversion and upgrades. CEO Gary Dickerson emphasized that HBM DRAM drives 3x-4x more wafer starts and increasing chip stacking, which are powerful drivers for the DRAM business. Brice also stated that days inventory are approximately 153 and are not expected to go up significantly, as the inventory build was in preparation for forecasted revenue growth.

Melissa Weathers asked about Applied Materials' opportunity in memory node upgrade scenarios versus greenfield capacity additions in the coming quarters, inquiring if this is primarily an AGS story. She followed up on the $500 million inventory build-up, asking for an update on comfortable days inventory and any working capital changes.

Answer

CFO Brice Hill noted that most DRAM investments are greenfield, while NAND involves more conversions and upgrades. CEO Gary Dickerson highlighted that HBM DRAM requires 3-4 times more wafers and increasing die stacks, driving significant demand. Brice Hill stated that days inventory are approximately 153 and are not expected to increase significantly, as the inventory build prepares for forecasted revenue growth.

Melissa Weathers asked about the spending outlook for second-tier leading-edge players and what assumptions about their CapEx are factored into Applied's planning.

Answer

CFO Brice Hill avoided customer-specific comments but confirmed that Applied is up-to-date with all customer forecasts, which are updated multiple times per quarter. He reiterated that their leading-edge demand has become more concentrated with fewer customers than in the past.

Melissa Weathers asked about the DRAM business, seeking to understand the balance between the cyclical dynamics of the broader DRAM market and the strong secular growth driven by High-Bandwidth Memory (HBM).

Answer

CFO Brice Hill clarified that strong HBM demand, growing at 40%, has kept the overall DRAM business at near-record levels, not a cyclical low. CEO Gary Dickerson added that Applied has gained 10 points of DRAM market share over a decade and is strongly positioned for DDR5, HBM, and the next major architecture inflection, 4F-squared.

Melissa Weathers inquired about the DRAM business, asking for insight on how to balance the cyclical dynamics of traditional DRAM against the significant growth upside being driven by High-Bandwidth Memory (HBM).

Answer

CFO Brice Hill clarified that the DRAM market is operating at very high levels, not a cyclical low, propelled by strong AI-related demand. He highlighted that HBM is a key growth driver, expected to reach 16% of DRAM wafer starts this year. CEO Gary Dickerson added that Applied has gained 10 points of market share in DRAM over the last decade and is strongly positioned for future technology inflections like 4F-squared.

Melissa Weathers asked for more clarity on the 2026 revenue outlook, specifically which segments (communications and computing vs. industrial) are expected to grow faster, and the potential total revenue growth, referencing previous guidance. She also sought to understand the size and scope of the Physical AI opportunity, requesting a TAM or units framework.

Answer

CEO Ford Tamer stated that conviction in demand has increased across both segments, with strong bookings for comms and compute into 2027 and industrial/automotive channel inventory normalizing. For Physical AI, he highlighted vast expansion potential in new markets like aerospace defense, industrial robotics, humanoids, and robotaxis, driven by FPGA's superior latency, determinism, and accuracy.

Melissa Weathers inquired about the 2026 revenue outlook, specifically seeking more color on segment growth rates for communications and computing, and industrial, given the strong start to the year. She also asked for a framework to size the Physical AI opportunity.

Answer

Ford Tamer (CEO, Lattice Semiconductor) stated increased conviction in demand across both comms and compute and industrial markets, with strong bookings for comms and compute into 2027 and normalized channel inventory for industrial/automotive. He highlighted significant design wins in aerospace defense, industrial robotics (humanoids, AMRs), and robotaxis, driven by the superior latency, determinism, and accuracy of FPGA hardware solutions in Physical AI.

Melissa Weathers of Deutsche Bank asked new CFO Lorenzo Flores for his perspective on the business model and future opportunities. She also questioned if the company's 15-20% revenue growth target for 2026 remains viable.

Answer

CFO Lorenzo Flores expressed high confidence in the business, highlighting its durable revenue, strong gross margins, and disciplined operational focus on profitability. CEO Ford Tamer reaffirmed that the 15-20% revenue growth target for 2026 is 'absolutely' viable, citing the expected recovery in the industrial segment and growth in new applications like robotics.

Melissa Weathers asked for an update on the full-year 2025 revenue outlook and questioned the slight sequential decline in the Communications and Computing segment.

Answer

CEO Fouad Tamer stated that the full-year 2025 outlook remains unchanged, supported by improving demand, a higher backlog, and a book-to-bill ratio above one, though he noted caution around potential tariffs. He explained the Communications and Computing segment's decline was driven by older client platforms, while the Server and Communications sub-segments both grew sequentially.

Melissa Weathers asked for an update on the full-year 2025 revenue outlook, which was previously guided to low single-digit growth, in light of new macro caution. She also inquired about the sequential decline in the Communications and Computing segment and its growth prospects.

Answer

CEO Fouad Tamer stated that the full-year 2025 outlook remains unchanged, supported by improving demand signals like customer consumption and a book-to-bill ratio above one, though he acknowledged caution due to potential tariffs. He clarified that the Communications and Computing segment's decline was driven by older client platforms, while the Server and Communication businesses both grew sequentially.

Melissa Weathers inquired about the drivers behind the recent improvements in backlog and book-to-bill ratio, asking which end markets are performing best and whether the strength is Lattice-specific or related to channel inventory normalization. She also asked for details on the differing trends within the Communications and Computing subsegments.

Answer

CEO Ford Tamer attributed the improvement to three factors: progress in reducing channel inventory, market share gains driven by design wins for Nexus and Avant, and recovery across the industrial, automotive, and communications sectors. He noted that automotive showed a nice recovery in the quarter and that communications was slightly stronger than in Q3, with all segments expected to grow into Q1.

Melissa Weathers of Deutsche Bank inquired about the dynamics of the forecasted 'U-shaped recovery,' asking if Q4 represents the cycle's bottom and whether the company is now shipping to end demand. She also asked if pricing or competitive pressures are impacting the 2025 outlook.

Answer

CEO Ford Tamer explained that the U-shaped recovery is consistent with the broader market, driven by inventory correction in the Industrial and Automotive segment, which he expects to normalize by mid-2025. He stated the outlook is primarily due to market-wide dynamics, not competitive or pricing pressures, highlighting the stability of Lattice's gross margin as proof of its disciplined strategy.

Melissa Weathers inquired about the timing of when capacity shutdowns, specifically those in Q4 2025 and planned for H1 2026, are expected to impact gross margins.

Answer

Dave Reeder (CEO, Entegris) explained that gross margin stabilized at 43-44% in H2 2025 and Q1 2026. He stated that incremental volume growth will drive gross margin improvement. The Q4 2025 facility rationalization will provide modest utilization benefit, and the planned H1 2026 rationalization will yield minor benefits through the remainder of 2026, contributing to the positive trajectory.

Melissa Weathers asked about the potential impact of memory shortages and pricing on the electronics market and any decreased production, specifically what was embedded in Entegris's mid-single-digit growth outlook. She also inquired about the timing of gross margin impact from capacity shutdowns completed in Q4 2025 and planned for H1 2026.

Answer

CEO Dave Reeder clarified that no impact from memory shortages was factored into the Q1 or Q2 guide, flagging it as a potential watch for the second half of 2026, as mainstream logic relies on memory. Regarding gross margin, Dave reiterated a Q3 trough (43.6%), Q4 at 44%, and a Q1 guide of 44% on a normalized basis. He stated that incremental volume growth would drive gross margin improvement. Modest benefit from the Q4 2025 facility rationalization is expected, with minor additional benefit from the H1 2026 rationalization through the remainder of 2026, alongside continued ramp of Taiwan facilities and qualification of Rockrimmon.

Melissa Weathers asked about CEO Dave Reeder's 'wait and see' approach for 2026, particularly concerning the NAND business, and the linearity of orders in Q3. She also questioned the flattish sequential Q4 revenue guidance despite gate-all-around and 2nm node ramps, and the expected content uplift from these advanced nodes.

Answer

CEO Dave Reeder explained the 'wait and see' approach for 2026 due to mixed mainstream logic demand, strong AI/HBM, and renewed optimism in 3D NAND, while preparing for various scenarios. He clarified Q4 guidance reflects slow wafer start improvement (AI is 5% of volume) and a drag from CapEx-driven business. He noted content uplift from node transitions (e.g., CMP slurries at N2 vs N5, HBM CMP solutions) but emphasized advanced nodes are a small portion of total wafer starts.

Melissa Weathers from Deutsche Bank asked about the current mixed semiconductor industry conditions, particularly weaker utilization in NAND and mainstream logic, and its implications for second-half growth. She also inquired about the China business, including order resumption and the trajectory for the rest of the year.

Answer

CEO Bertrand Loy confirmed the mixed environment, noting strong AI-related demand is a small portion of wafer starts (<5%), while mainstream logic and NAND remain subdued. He anticipates modest wafer start growth for the full year with utilization in the mid-80s. Regarding China, Loy stated that after a slow start to Q2, business accelerated in May, leading to 8% sequential growth. He expects a stronger second half in China, contingent on stable trade policies.

Melissa Weathers asked for clarification on the Q2 outlook, seeking to understand the specific impact of China tariffs versus other cyclical factors and whether the business ex-China is performing as expected. She also inquired if macro uncertainty has altered the adoption timeline for Molybdenum (moly) by memory customers.

Answer

CEO Bertrand Loy explained that the Q2 guidance weakness is entirely due to new China tariffs, which could impact revenue by up to $50 million as customers pause U.S. shipments. He affirmed the ex-China business remains solid and is expected to grow sequentially. Loy also stated that major node transitions, including the moly ramp in 3D NAND, remain on track for the second half of the year despite the uncertain environment.

Melissa Weathers asked for details on the Q1 guidance, noting it seemed below historical seasonality, and inquired about momentum in the advanced packaging business, including key trends and growth potential.

Answer

CEO Bertrand Loy explained that the Q1 guidance aligns with normal seasonal declines in wafer starts and CapEx but represents 7% year-over-year growth. He highlighted that advanced packaging is a significant growth area, approaching $100 million in 2024 revenue and expected to grow substantially in 2025, driven by opportunities in both the Advanced Purity Solutions and Materials Solutions divisions.

Melissa Weathers asked to reconcile market weakness with strength in leading-edge AI, inquired about customer purchasing patterns during node ramps, and asked about normal seasonality post-divestitures.

Answer

CEO Bertrand Loy confirmed strong growth from advanced foundry, citing 15% year-to-date growth in Taiwan as a proxy for AI demand. He detailed that node ramps begin with filter orders for line flushing, followed by chemistries, which then normalize. Regarding seasonality, Loy noted that while recent years have been atypical, a normal year would see a slower Q1 followed by acceleration in Q2 and Q3.

Melissa Weathers asked about any acceleration in engagements for new products like Vantex CX+ and Halo MOLE ALD, introduced at the start of the year. She also inquired if anything has changed regarding the timing or magnitude of expected backside power contributions in the coming quarters or years.

Answer

Tim Archer, President and CEO, confirmed acceleration in engagements for new products like Aqara and Halo, noting their suitability for inflections in foundry, logic, DRAM, and NAND, and expressed satisfaction with the progress since February. Regarding backside power, he stated that the increasing power requirements of compute-intensive devices reinforce the need for such solutions, which are etch-depth intensive and important for Lam.

Melissa Weathers inquired about any acceleration in engagements for Lam Research's new products, Akara and ALTUS Halo, introduced at the analyst day, given the recent WFE momentum. She also asked if there were any changes in the timing or magnitude of expected contributions from backside power nodes, which are anticipated to ramp in volume soon.

Answer

President and CEO Tim Archer confirmed an acceleration in engagements for Akara and Halo, noting Akara's suitability for conductor etch in gate-all-around and DRAM, and Halo's progress in 3D NAND word line applications. He expressed confidence in the product progress since February. Regarding backside power, Tim Archer stated that the increasing power requirements in compute-intensive devices reinforce the need for such solutions, which are etch-depth intensive, and Lam Research expects to perform well as these nodes ramp.

Melissa Weathers asked about the trend of KLA's business shifting more into high-volume manufacturing (HVM) and sought to contextualize the size of this opportunity at current and future nodes.

Answer

CFO Bren Higgins explained that unlike in the past, process control intensity is now remaining high or even increasing in HVM. This is due to the complex mix of designs at leading-edge nodes, which requires more robust yield management. He noted that customers are even adding more advanced inspection to older nodes as they run more complex HPC products, expanding the HVM opportunity for KLA.