Michael Mani

Michael Mani, Equity Research Associate at Bank of America, asked about the contribution of the chiplet business to Camtek's AI-related growth last year and the company's share position with its lead chiplet customer, particularly regarding potential share gains in 2D applications and its impact on second-half strength. He also sought an update on Camtek's production capacity, questioning if the previously stated $650 million capacity is sufficient for future demand and the lead time for adding new capacity.

Answer

COO Ramy Langer stated that Camtek does not segment chiplets from HBM, referring to them as high-performance computing (50% of business). He confirmed Camtek's significant vendor status with TSMC for chiplets, participating in multiple steps, and expressed optimism about gaining market share in this area. Regarding capacity, Langer updated that internal efficiencies have increased current capacity to over $700 million, with no immediate limitations. He also mentioned plans for additional capacity in Europe, expected to be operational by late 2026.

Michael Mani (Bank of America) asked about the contribution of chiplet business to AI growth in the past year, Camtek's share position with its lead chiplet customer, and whether current capacity is sufficient for future demand, including potential expansion timelines.

Answer

Ramy Langer (COO, Camtek) stated that Camtek refers to the business as high-performance computing (50% of business) and does not break down chiplets vs. HBM. He confirmed Camtek is a significant vendor to lead chiplet customers, expecting to gain market share across multiple steps. He also clarified that current capacity is well over $700 million, with additional capacity in Europe expected late 2026, and no foreseeable limitations.

Michael Mani, on for Vivek Arya, asked about the potential impact from a major chiplet customer's revised CapEx outlook. He also inquired about the sales weighting of new products in the second half and whether they are driving incremental growth or replacing older systems.

Answer

COO Ramy Langer stated that while customer forecasts can shift, Camtek has not seen any significant changes to its shipment plans. He clarified that the Eagle G5 ramped earlier in the year, while the Hawk ramp is more weighted to the second half and beyond. Mr. Langer positioned the new tools as being more competitive, enabling market share gains and opening new applications, rather than simply replacing older systems.

Michael Mani, on for Vivek Arya, asked for an update on clean room capacity constraints, how advanced CoWoS variations impact Camtek's opportunity, and the outlook for the company's business in China.

Answer

Executive Ramy Langer stated he does not believe customer-side capacity constraints are currently an issue. He views new CoWoS variations as a positive opportunity with additional steps and confirmed that shipments to OSATs for these technologies are already happening. Regarding China, Langer and CEO Rafi Amit both affirmed that the business there remains historically strong and looks healthy for the coming quarters, with no weakness currently visible.

Michael Mani, on for Vivek Arya, asked about the potential impact on Camtek's 2025 growth if a key customer fails HBM qualification. He also inquired about the factors influencing gross margins next year, especially with the new product launch.

Answer

Executive Ramy Langer suggested that if one customer's HBM plans were to change, demand would likely shift to other players, and he did not anticipate a major impact on 2025. CFO Moshe Eisenberg added that gross margins are primarily driven by product mix and are expected to be in the 50.5%-52% range. The new product may be slightly margin-accretive but its overall impact will be limited.

Michael Mani inquired about the revenue capacity of the new Malaysia facility once fully ramped, the overall expansion of MKS's footprint, and any other anticipated capacity investment needs or supply constraints. He also asked about the sustainability of electronics and packaging growth in 2026, particularly the contribution from chemistry revenue, and the sensitivities around the $100 million equipment to $20-$40 million chemistry sales attach rate, especially with increasing layer counts.

Answer

John Lee, President and Chief Executive Officer, explained that the Malaysia facility was built for business continuity and future capacity, not immediate ramp needs, as MKS already has sufficient capacity for a $125 billion WFE plus 30% surge. He noted that supply chain issues are the typical constraints during ramps, but MKS is confident in its execution. Ram Mayampurath, Executive Vice President and Chief Financial Officer, confirmed the $20-$40 million chemistry sales per $100 million equipment model remains consistent, primarily a function of utilization. Lee clarified that current chemistry revenue growth stems from equipment shipped 18-24 months prior, with current equipment shipments building future chemistry capacity.

Michael Mani asked about the Malaysia facility's potential revenue support and the expansion of MKS's footprint over the last couple of years. He also questioned if there are other areas requiring capacity investment, such as the Thailand facility for chemistry, or if any supply constraints are anticipated. Additionally, he asked about the electronics and packaging growth in the coming year, specifically if it will largely come from chemistry revenue due to prior equipment orders, and the sensitivities around the $100 million equipment to $20-$40 million chemistry sales model.

Answer

President and CEO John Lee explained that the Malaysia facility was built as a business continuity plan and for future capacity needs, not for the current ramp, as existing factories are ready for a $125 billion WFE run rate plus 30% surge capacity. He identified supply chain as the typical constraint during ramps but expressed confidence in MKS's execution. He confirmed the $20-$40 million per $100 million equipment sales model remains valid, primarily a function of utilization. He clarified that current chemistry revenue growth stems from equipment shipped 2-3 years ago, and current equipment shipments will drive future chemistry revenue in 18-24 months.

Michael Mani, on for Vivek Arya at Bank of America Securities, asked for specifics on tariff pain points, including product areas and the role of the China manufacturing footprint. He also inquired about the medium-term path for the semiconductor business to return to its 2022 peak levels, considering the mix between NAND, logic, and foundry.

Answer

CEO John Lee explained that tariff impacts are primarily on the vacuum side of the business, as some factories in China ship worldwide, whereas the chemistry business is largely localized ('China for China'). For the semi recovery, Lee acknowledged the headwind from shipping restrictions to China but highlighted growth opportunities in lithography, metrology, gate-all-around, backside power, and advanced packaging that can help MKS grow and return to peak levels over time.

Representing BofA Securities, Michael Mani asked about the puts and takes for gross margin throughout the year and the status of the design win pipeline stemming from synergies with recent acquisitions.

Answer

CFO Ramakumar Mayampurath and CEO John Lee explained that the Q1 gross margin dip to a guided 46.5% is due to a higher equipment mix and seasonal weakness in chemistry sales from the Lunar New Year. They expect ongoing operational excellence programs and a rebound in chemistry's revenue share to be tailwinds for margin. Lee confirmed the cross-divisional design win pipeline remains strong, with revenue conversion typically taking one to three years.

Michael Mani asked for clarification on which segments, DRAM or Foundry/Logic, Nova expects to grow faster in 2026, the anticipated degree of outperformance against WFE compared to previous years, and the outlook for China sales, including potential drivers for any lack of growth.

Answer

Gaby Waisman, President and CEO, indicated significant growth from advanced logic, DRAM, and advanced packaging, with advanced packaging seeing double-digit growth. She noted that while Nova aims to outperform WFE, it's too early to provide a specific number for 2026. Regarding China, she stated it normalized to 33% of sales in 2025 from 39% in 2024, and is expected to remain around 30% in 2026, with steady investments despite shorter lead times.

Michael Mani sought clarification on Nova's growth expectations for DRAM versus Foundry and Logic in the current year, and whether the anticipated degree of outperformance against WFE would be stronger than in previous years. He also asked for the outlook on China sales for 2026, following its 33% contribution in 2025, and the factors influencing its growth.

Answer

President and CEO Gaby Waisman indicated significant growth vectors from advanced logic, DRAM, and advanced packaging, with advanced packaging expected to maintain double-digit growth. She noted that while Nova aims to outperform WFE, it's too early to provide a specific number for the degree of outperformance. For China, she stated it normalized to 33% in 2025 and is expected to remain around 30% of sales, with steady investments despite shorter lead times and a focus on mature nodes.

Michael Mani, on behalf of Vivek Arya, asked about the business momentum and revenue contribution from the Sintronics acquisition, the potential impact of a major customer's CapEx cut on the $500M Gate-All-Around revenue target, and the progress of the 'lab-to-fab' strategy for materials metrology.

Answer

President & CEO Gabriel Waisman expressed a bullish outlook on Sintronics, noting encouraging customer adoption. He conveyed confidence in achieving the Gate-All-Around revenue goal due to broad positioning across all four key customers. Regarding the 'lab-to-fab' strategy, he highlighted progress with the XPS platform's new features for 3D NAND and strategic evaluations for the METRION and Ellipson tools at advanced node customers.

Michael Mani asked about the gross margin leverage driven by the 6-inch Indium Phosphide ramp, both currently and over the next few quarters as supply doubles. He also inquired about the biggest contributors to achieving the long-term gross margin target of 42%, and the mix shift between EML and Silicon Photonics for 1.6T, as well as the impact of CPO on CW laser capacity needs.

Answer

CEO Jim Anderson explained that 6-inch Indium Phosphide production, which started in the September quarter, is beginning to show benefits this quarter, with the cost advantage (half the cost of 3-inch) building as half of internal capacity runs on 6-inch by year-end. CFO Sherry Luther identified cost reductions (product input costs, yield improvements) and pricing optimization as the biggest contributors to the >42% gross margin target, noting a 470 basis point improvement from FY2024. Mr. Anderson stated that the EML vs. Silicon Photonics mix for 1.6T depends on customer application, with no significant financial difference for Coherent. He confirmed ramping Indium Phosphide capacity for both transceiver demand and high-power CW laser demand for CPO.

Michael Mani asked about the gross margin leverage driven by the six-inch Indium Phosphide ramp, its expected improvement over the next couple of quarters, and the biggest contributors to the >42% long-term gross margin target. He followed up on the 1.6T mix between EML and silicon photonics, and how the CPO opportunity impacts CW laser capacity needs.

Answer

CEO Jim Anderson explained that six-inch Indium Phosphide benefits start this quarter and will build, with half of internal capacity on six-inch by year-end, roughly halving costs for that portion. CFO Sherri Luther listed cost reductions (product input, yield) and pricing optimization as key drivers for the >42% gross margin target, also benefiting from volume. Jim Anderson stated the EML vs. silicon photonics mix for 1.6T depends on customer application with no significant financial difference for Coherent. He confirmed ramping Indium Phosphide capacity for both transceiver demand and high-power CW laser demand for CPO.

Michael Mani, on behalf of Bank of America, asked about the evolving market landscape for VCSELs, EMLs, and silicon photonics as the 1.6T ramp approaches, and questioned the key drivers and remaining opportunities for gross margin improvement.

Answer

CEO James Anderson stated that Coherent's strategy is to invest across a broad portfolio of ingredient technologies and work with customers to deploy the optimal solution, using a mix of internal manufacturing and external sourcing. CFO Sherri Luther added that the Q2 gross margin improvement was driven by higher volume, cost reductions, and manufacturing yield improvements. She noted that the company remains focused on its long-term goal of over 40% gross margin and will provide more details at the Investor Day.

Michael Mani, on for Vivek Arya, asked about areas of strength or weakness in the backlog and the potential impact on reaching a $250 million quarterly run rate. He also inquired about the timeline and P&L impact of the Lowell and North Carolina fab initiatives.

Answer

President and CEO Stephen Daly highlighted that the company's backlog is at a record level after three consecutive quarters with a book-to-bill of 1.1, expressing confidence in strong growth. Regarding the fab investments, he described them as a long-term (5+ year) program with no near-term P&L impact. The Lowell modernization is expected to eventually improve margins through better yields and throughput, while the North Carolina expansion is focused on future capacity growth, all contingent on CHIPS Act funding.

Michael Mani of Bank of America inquired about the growth outlook for the process control market in 2025, questioning if KLA's mid-single-digit WFE forecast was conservative given strong lithography spending. He also asked about the expected revenue linearity for the year.

Answer

CFO Bren Higgins affirmed the WFE growth outlook, highlighting that KLA's market share is expected to increase due to strong investment in leading-edge logic (N2), high-bandwidth memory (HBM), and accelerating advanced packaging demand. For linearity, he indicated the business is expected to maintain relative stability around the $3 billion quarterly revenue level for the first half of the year.

Michael Mani, on behalf of Vivek Arya, asked for an update on which broad markets segments have seen incremental changes in the last 90 days and where Skyworks is still undershipping demand. He also inquired about the key drivers for gross margin expansion back to 50%.

Answer

CFO Kris Sennesael detailed that Edge IoT has seen improvements but is still being undershipped. Networking, infrastructure, automotive, and industrial remain soft with significant undershipping due to excess inventory. For gross margins, he cited factory utilization, cost reductions, and product mix as primary drivers. However, he noted the slower-than-expected broad markets recovery is a headwind, leading to a forecast of flattish gross margins for fiscal 2025, with improvement expected late in the year.