Ross Cole

Ross Cole of Needham & Company asked for a breakdown of the Q3 2025 guidance, specifically requesting what the forecast would look like without the revenue contributions from the PPC and TechX acquisitions.

Answer

CEO Babak Taheri explained that the guidance for Q3 and the full year already includes contributions from PPC and TechX. He broke down the remaining expected revenue for the year from these acquisitions, estimating another $2 million from PPC and $1 million from TechX, with roughly a third of that total expected in Q3.

Ross Cole from Needham & Company inquired about the potential for market share loss in indium phosphide due to export permit delays and asked for an update on the gallium arsenide yield issues previously mentioned in Q1.

Answer

Tim Bettles, VP of Business Development, and Dr. Morris Young, CEO, addressed the questions. They explained that the indium phosphide market is growing too rapidly for existing players to fully service, especially with the increasing demand for high-quality, low EPD material for AI applications. They highlighted AXT's significant market position, supplying roughly 40% of the world's indium phosphide. Dr. Young confirmed that the gallium arsenide yield issue has been resolved, but the company is taking a conservative approach to resuming that business to ensure margin improvement continues.

Ross Cole from Needham & Company asked about the potential for customer share loss due to delays in indium phosphide export permits and inquired about the status of a previously mentioned yield issue with gallium arsenide for a wireless customer.

Answer

Tim Bettles, VP of Business Development, and Dr. Morris Young, CEO, addressed the questions. They stated that while near-term permit delays exist, the indium phosphide market is growing too rapidly for competitors to fully service, especially with the increasing need for high-quality material for AI applications, where AXT holds a strong position. Dr. Young confirmed the gallium arsenide yield issue has been resolved, and the company is cautiously resuming business with the customer to ensure margin improvements continue.

Ross Cole, on behalf of Charles Shi, asked for a deeper explanation of the yield issues affecting semi-insulating gallium arsenide, the expected timeline for resolution, and any resulting changes to the market opportunity.

Answer

CEO Dr. Morris Young explained that the yield problem resulted from scaling production too aggressively for a large wireless HPT market opportunity. Dr. Young stated the issue's source is identified and projected a swift gross margin recovery from -6% in Q1 to approximately 10% in Q2. He assured that the company will take a more measured approach, but the market opportunity remains fully intact.

Ross Cole from Needham & Company asked if Amkor received any signals from NVIDIA to resume H20 production after the U.S. lifted restrictions, and for an update on TSMC's Arizona plans and Amkor's role.

Answer

CEO Giel Rutten declined to comment on specific customer programs but stated that the easing of trade restrictions creates more opportunities for the entire compute ecosystem. Regarding Arizona, he confirmed Amkor is in constant communication with TSMC, whom they consider a key partner, and reiterated their strategy is to be complementary to TSMC's foundry operations, not to compete with them, building on their previously announced MOU for technology sharing.

Ross Cole requested more quantitative detail on the planned 2.5D capacity investment for 2025 and asked for an update on the previously mentioned HBM shortage, specifically if it had normalized as expected.

Answer

CFO Megan Faust stated that while Amkor is not quantifying the 2025 2.5D capacity expansion, it will be a sizable increase, 'somewhere in the vicinity' of the expansion seen in 2024 which enabled a quadrupling of revenue. CEO Giel Rutten clarified that the full-flow 2.5D ramp was not impacted by HBM constraints. However, the on-substrate part of the business did see some supply constraints in Q3 related to the transition from HBM3 to HBM3E, which had a minor impact on the Q3 ramp.

Ross Cole sought to clarify the 2025 outlook for the semiconductor segment, confirming the expectation that strength in GAA and Advanced Packaging would offset China headwinds for flat-to-up growth. He also asked about potential indirect tariff impacts, such as on the compound semiconductor business or from suppliers.

Answer

CFO John Kiernan confirmed the 2025 semiconductor outlook, stating that strength in HBM, GAA, and Advanced Packaging provides an opportunity to offset or more than offset headwinds in China, allowing for flattish to potential growth. He also detailed indirect tariff impacts, noting Veeco is experiencing higher costs on materials imported from overseas and from domestic suppliers passing on their own tariff-related cost increases. The company is working to mitigate these impacts through logistics and other strategies.

Ross Cole requested directional guidance and qualitative commentary for Veeco's different business segments for the first quarter and full year of 2025.

Answer

CFO John Kiernan provided a 2025 outlook, forecasting growth in the semiconductor business driven by AI-related revenue increasing from ~10% to over 20% of the total. He noted a recovery in AP lithography but also a significant headwind in data storage, with an expected revenue reduction of $60 million to $70 million. For compound semiconductors, he sees potential growth in the second half of 2025.

Ross Cole requested a breakdown of segment revenues for 2024, a ranked outlook for those segments in 2025, and confirmation on the revenue recognition timing for new HBM and die level burn-in tools.

Answer

Executive Jeffrey Jones provided the full-year 2024 systems revenue mix: Automotive 9%, Industrial 6%, Mobile 11%, Consumer 4%, Compute 3%, and IoT 2%. While declining to give a specific 2025 forecast, he suggested an automotive and industrial recovery would begin in the second half, followed by mobile. Jones confirmed the first HBM tool's revenue will be recognized in Q1 2025, with the die level burn-in tool revenue expected in the second half of the year.

Ross Cole of Needham & Company asked for updated directional commentary on Cohu's various business segments heading into 2025, noting the recent strength in the mobile segment.

Answer

President and CEO Luis Müller provided color based on booking trends, stating that all segments saw sequential order growth. He highlighted that the mobile, automotive, and industrial segments were the strongest in terms of both quarter-over-quarter and year-over-year booking improvements, indicating a positive demand pattern leading into the early part of 2025.

Ross Cole asked for an update on the Gallium Nitride (GaN) opportunity, particularly in light of the bad debt expense related to a European GaN customer that impacted operating expenses.

Answer

CEO Russell Low described GaN as a much smaller opportunity than silicon carbide, as it is less intensive in ion implantation steps and remains a niche application. CFO James Coogan added that the bad debt was a customer-specific issue with a small manufacturer and is not indicative of any broader weakness in the GaN or power device market.

Ross Cole asked if the incremental share gains from the new second-generation gas panel would alter the existing business overlap with competitors at Ichor's two largest customers.

Answer

Executive Jeffrey Andreson clarified that these share gains are indeed new for Ichor. The applications were previously served by smaller manufacturers or handled internally by the customer, meaning the new business will change the competitive dynamic on those specific applications without necessarily displacing a primary competitor on existing work.