ACLS Q2 2024: Silicon Carbide Demand Fuels 2025 $1.3B Revenue Goal
- Resilient Silicon Carbide Demand: Executives highlighted that silicon carbide remains a key growth driver with strong global demand, especially in China, which underpins a robust power segment and supports long‐term revenue growth.
- Robust Evaluation-to-Order Pipeline: The Q&A emphasized successful conversion of evaluation units into firm orders and multiple ongoing evaluation programs, which signal a healthy future order pipeline and recurring revenue opportunities.
- Healthy Backlog and Near-Term Upside: Discussions on a solid systems backlog with pull‐in activity and anticipated memory recovery in Q4 indicate potential for revenue step‐up in the near term, reinforcing a bullish outlook for 2025.
- Memory Segment Weakness: The company recorded no memory systems revenue in Q2 and relies on a recover in DRAM and NAND, which remains uncertain given the current soft demand and reliance on future customer spending trends.
- General Mature Slowdown: There are concerns over moderating spending in the General Mature segment due to macroeconomic headwinds and subdued consumer and industrial demand, which could weigh on revenue growth.
- Dependence on One-Time Pull-In and Evaluation Conversions: Q2 results were boosted by pull-in activity and successful evaluation conversions; however, reliance on such one-time events raises the risk that recurring revenue may not sustain the current performance level.
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Revenue Guidance
Q: Any changes since Capital Markets Day?
A: Management maintains that full‐year revenue expectations remain in line with previous guidance. They noted some pull‐in activity in Q2 and stressed that reaching $1.3B in 2025 depends on a recovery in memory and general mature markets. -
Segment Trends
Q: How are power segments performing?
A: Leadership underscored robust Silicon Carbide performance while highlighting softness in Silicon IGBT. They pointed out that general mature outcomes will adjust with broader macro trends. -
Backlog Dynamics
Q: Any notable backlog cancellations?
A: Management explained that the decline in backlog resulted from the revenue load versus new bookings, with overall orders remaining healthy at around $1B. -
Q4 Revenue Drivers
Q: Does flat Q3 guidance hide weaknesses?
A: Executives expect a modest Q4 revenue uptick driven by resumed memory and image sensor orders, which should offset softness observed in non-China mature markets. -
Evaluation Pipeline
Q: Impact and timing of evaluation unit pull-ins?
A: Management noted strong conversion of evaluation units into firm orders and expects several sign-offs before year-end, reinforcing future demand. -
IGBT Dynamics
Q: What drives IGBT softness?
A: The team attributed IGBT softness to shifting market demand toward Silicon Carbide and competitive capacity expansions, though a modest recovery is anticipated over time. -
China Demand
Q: How is regional performance, especially in China?
A: Management highlighted that China remains the strongest region, contributing 55% of system sales, with consistently high silicon carbide demand bolstering growth. -
Japan Market Outlook
Q: Is auto recovery needed for Japan progress?
A: Executives indicated that progress in Japan, particularly in power and memory segments, is being driven by a comprehensive product portfolio and isn’t strictly tied to automotive recovery.
Research analysts covering AXCELIS TECHNOLOGIES.