Ultra Clean - Earnings Call - Q1 2025
April 28, 2025
Executive Summary
- Q1 2025 revenue was $518.6M, down 7.9% q/q from $563.3M and up 8.6% y/y from $477.7M; non-GAAP EPS was $0.28 vs. $0.51 in Q4, reflecting late-quarter demand softening and customer shipment delays.
- Results came in below S&P Global consensus: revenue $526.1M* (-1.4% miss) and EPS $0.3125* (-10% miss); management highlighted two customer technical issues (~$12M impact) and broader uncertainty from tariffs.
- Q2 2025 guidance: revenue $475–$525M; GAAP diluted loss per share $(0.06)–$(0.26); non-GAAP diluted EPS $0.17–$0.37; management expects to “bounce around” ~$500M per quarter near-term while executing cost actions.
- Stock-relevant narrative: tariff mitigation via “China-for-China” localization and pass-through of customer-specified component tariffs, cost reductions/footprint optimization, and AI/leading-edge exposure (lithography portfolio growth, subfab services, Arizona fab ramp).
Values retrieved from S&P Global.*
What Went Well and What Went Wrong
What Went Well
- Services revenue increased sequentially to $61.6M (from $59.8M), with services non-GAAP operating margin at 10.2% (vs. 9.7% in Q4), aided by two top customers and the Arizona fab ramp “scaling up twice as staffed as originally planned”.
- Non-GAAP gross margin held at 16.7% (vs. 16.8% in Q4) despite volume/mix headwinds, showing resilience in margin structure quarter-to-quarter.
- Strategic positioning and share gains: “tripled our portfolio in lithography” and expanding subfab engagement including on-site engineering support, reinforcing AI/leading-edge alignment.
What Went Wrong
- Products revenue fell to $457.0M (from $503.5M), with non-GAAP operating margin compressing to 4.6% (from 6.6%) as late-quarter demand softened and two customers faced technical issues delaying shipments (~$12M impact).
- GAAP swung to a net loss of $(5.0)M (diluted $(0.11)) from Q4 GAAP net income $16.3M (diluted $0.36), with GAAP operating margin down to 2.5% (from 4.6%) amid lower volumes and higher OpEx typical in Q1.
- China demand and inventory digestion persisted; management expects slight Q2 improvement but noted ongoing uncertainty (China “less than a 10% customer overall”) and macro/tariff-related extended recovery.
Transcript
Operator (participant)
Good afternoon, ladies and gentlemen, and welcome to the UCT Reports Q1 2025 Financial Results Conference Call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question-and-answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, April 28, 2025. I would now like to turn the conference over to Rhonda Bennetto, Investor Relations. Please go ahead.
Rhonda Bennetto (Head of Investor Relations)
Thank you, Operator. Good afternoon, everyone, and thank you for joining us. With me today are Clarence Granger, Interim CEO; Sheri Savage, Chief Financial Officer; and Cheryl Knepfler, our VP of Marketing. Clarence will begin with some prepared remarks about the business, and Sheri will follow that with the financial review. We will open up the call for questions. Today's call contains forward-looking statements that are subject to risks and uncertainties. For more information, please refer to the risk factors section in our SEC filings. All forward-looking statements are based on estimates, projections, and assumptions as of today, and we assume no obligation to update them after this call. Discussion of our financial results will be presented on a non-GAAP basis. A reconciliation of GAAP to non-GAAP can be found in today's press release posted on our website. With that, I'd like to turn the call over to Clarence.
Clarence?
Clarence Granger (Interim CEO)
Thank you, Rhonda. Good afternoon, everyone. We appreciate you joining our first quarter 2025 conference call. I'll start with a brief review of our financial and operating results, followed by some commentary on the near and longer-term semi-market landscape. I'll also highlight some opportunities we are pursuing, and then I'll turn the call over to Sheri for a more detailed financial discussion. First of all, due to some push-outs in demand from our customers and some shipment delays due to technical challenges that our customers had with their customers, we missed the midpoint of our revenue guidance range by about $12 million. While we are disappointed by this miss, it was not caused by any performance issues or customer issues on UCT's part. Going forward, as you all know, the global reciprocal tariff war has disrupted nearly every industry and supply chain in every market around the world.
Companies in all industries are having to assess where their existing inventory is, what U.S.-bound inventory they may want to ship or hold, and what alternative markets may be available for their products. On the upside, chipmakers are likely to continue positioning for future demand by adding critical capacity and completing ongoing node transitions at key fabs. This supports our belief that $1 trillion in chip revenue by 2030 remains likely. However, the timing of the broader capital expenditure required to reach that goal is uncertain. Just like our customers and their customers, we are actively monitoring the geopolitical landscape and will make the necessary adjustments to our business to maximize efficiency. We can't predict how long this period of uncertainty will last. What we are presuming is that the already slower semiconductor market recovery that became apparent earlier this year will be extended.
As you saw from our Q2 guidance, we are factoring in a modest decline in demand for the June quarter, and based on what we know today, we anticipate bouncing around these revenue levels for the remainder of this year. With this in mind, we are focusing internally on how we can improve our business performance. Over the last several years, we have made multiple acquisitions that have added to UCT's capabilities. While these operations have performed well, we have not had the time to fully optimize them. We will now focus on doing that. Also, with our history of growing faster than the semiconductor equipment industry as a whole, we had anticipated being well on our way to a $4 billion run rate by this time. However, given the length of the current industry downturn, we are presently at a $2 billion run rate.
We are now going to look at all of our business systems and cost structures and scale them to our current volumes. This will include facilities, people, equipment, and discretionary expenses. At the same time, we will continue to work closely with our customers' engineering teams to qualify new products and new vertically integrated components. UCT is in a relatively strong position given all the geopolitical uncertainties. To mitigate future supply chain disruptions post-COVID, we initiated a localized supply chain strategy. We reconfigured our procurement and qualification processes to ensure faster market responsiveness and enhanced resilience by securing reliable local supply sources for our global sites. These initiatives included sourcing key components within the Asia-Pacific region to continue to support our local Chinese OEM customers. At the same time, we strategically invested in capacity and operational efficiencies at other global sites to maximize profitability as utilization increases with demand.
Despite all the tariff distractions, our teams remain focused on what really matters to us: seamless collaboration with our customers by identifying opportunities and designing solutions for their most challenging technology roadmaps. We continue to advance several opportunities in products and services that will create significant value over the long term. For instance, we have tripled our portfolio in lithography and continue to see incremental share gain at our third-largest customer. Another exciting area where we hold a unique competitive advantage over the long term is in the sub-fab space, where our engagement with our customers has expanded to include on-site engineering support. One other encouraging development is the accelerated ramp of the Arizona fab owned by the world's largest chipmaker that is scaling up twice as fast as originally planned. This benefits our services business.
We expect all these initiatives will gain momentum once economies of scale kick in commensurate with a market recovery, enhancing our leadership position as the manufacturer of choice for our customers. In summary, before I turn the call over to Sheri, we expect greater clarity to emerge in the coming months and will closely continue to monitor potential impacts for us and our customers. Meanwhile, we will focus on managing our business in a very disciplined manner. We remain focused on the core strengths of our business, including technology leadership, manufacturing excellence, and customer trust, as we work to further reinforce our competitive position. It's important to keep in mind that despite ongoing uncertainty from tariffs and the cyclical nature of the semiconductor industry, the industry has consistently outperformed other markets over the long term.
The industry outlook remains highly promising, with semiconductors serving as essential enablers of numerous transformative megatrends. We believe that UCT will again outpace the market and drive increased earnings as top-line growth recovers. With that, I'll now turn the call over to Sheri.
Sheri Savage (CFO)
Thanks, Clarence, and good afternoon, everyone. Thanks for joining us. In today's discussion, I will be referring to non-GAAP numbers only. As Clarence has noted, we saw a softening of demand for our product business unit late in the quarter. We are focusing internally on positioning ourselves from a cost perspective for the environment we are in. That means we are reviewing our headcount, our organizational structure, and our footprint, and we are further optimizing our acquisitions that we've made over the last several years. This will allow us to adjust our cost structure accordingly to protect profitability as we move through 2025 and beyond. For the first quarter, total revenue came in at $518.6 million compared to $563.3 million in the prior quarter. Revenue from products was $457 million compared to $503.5 million last quarter due to weakening demand late in the quarter.
Our services business had a good quarter with revenues increasing from $59.8 million in Q4 to $61.6 million in Q1, primarily from two of their top customers. Total gross margin for the first quarter was 16.7% compared to 16.8% last quarter. Products gross margin was 14.9% compared to 15.2% in Q4, and services remained flat at 29.8%. Margins continue to be influenced by fluctuations in volume, mix, and manufacturing region, as well as material and transportation costs, so there will be variances quarter-to-quarter. Given the uncertainties surrounding tariffs, we remain focused on execution, and we are ready to react quickly to any new trade regulations. Operating expense for the quarter was $59.4 million compared to $55.3 million in Q4. As a percentage of revenue, operating expenses were 11.5% versus 9.8% in Q4 due to lower volumes and increased expenses.
Q1 operating expenses are typically higher due to an increase in year-end activities such as audit-related costs. As I noted earlier in my comments, we have instituted cost-saving measures that we expect will reduce our operating expense run rate as we move through the year. Total operating margin for the quarter came in at 5.2% compared to 7.7% last quarter. Margin from our products division was 4.6% compared to 6.6%, and services margin was 10.2% compared to 9.7% in the prior quarter. The overall margin decrease for products was primarily driven by lower volumes. Our tax rate was 20% for this quarter compared to 14.5% last quarter. Our mix of earnings between higher and lower tax jurisdictions can cause our rate to fluctuate throughout the year. For 2025, we expect our tax rate to be in the low to mid-20s.
Based on 45.4 million shares outstanding, earnings per share for the quarter were $0.28 on net income of $12.7 million compared to $0.51 on net income of $22.9 million in the prior quarter, primarily due to lower revenue and higher operating expenses. Turning to the balance sheet, our cash and cash equivalents were $317.6 million compared to $313.9 million at the end of last quarter. Cash flow from operations was $28.2 million compared to $17.1 million in last quarter, mostly due to working capital efficiency and tight inventory control. Subsequent to quarter end, we repurchased 182,000 shares at a cost of $3.4 million as part of our repurchase program. The tariff situation remains very fluid. We are actively monitoring the geopolitical landscape and will make the necessary adjustments to our business to maximize efficiency and protect profitability.
Given the heightened uncertainty within the semiconductor market at this time, we project total revenue for the second quarter of 2025 to be between $475 million and $525 million. We expect EPS in the range of $0.17-$0.37. With that, I'd like to turn the call over to the operator for questions.
Operator (participant)
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press the star followed by the number one on your touch-tone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press the star followed by the number two. If you are using a speakerphone, please lift the handset before pressing any keys. One moment, please, for your first question. Your first question comes from Charles Shi of Needham. Please go ahead.
Charles Shi (Analyst)
Hi, Clarence, Sheri, good afternoon. I want to start with a first question. I want to learn a little bit more about what exactly happened, what exactly you were seeing when you said the softening demand late into the quarter. I want to provide a couple of numbers I saw from the press release or the PowerPoint. It looks to me that the revenue actually coming from your largest customer was flat quarter-on-quarter, and the second largest customer may be down a little bit, but not to the same degree as what we saw on the top line. I wonder what exactly the weakness you are seeing, and maybe this is maybe related. What's the China revenue number or percentage for the March quarter? Thank you.
Clarence Granger (Interim CEO)
Boy, that's a lot of questions. First of all, let me talk about the softening demand that we saw in Q1. What we really, obviously, we had already guided down based on what we thought was going to happen in the quarter. Some of it was related to our Asian customers, some of our other customers, but we actually missed the midpoint of the guidance by about $12 million. But literally, that was related to two customers. One of those customers was an Asian customer, and the other customer was a European customer. The situation with those two customers was they had a technical issue with their customers, which caused us not to be able to ship, and so, that is how we ended up missing our Q1 guidance by roughly $12 million. In terms of the China overall, obviously, that's a complicated situation, and it's evolving constantly.
What I would say is that at this point in time, we are anticipating actually a slight revenue increase in Q2, and we anticipate further revenue increases in the second half of the year. We are starting to feel like our China situation is solidifying. Definitely, our China for China strategy is working very well, so we are very happy with that. I am trying to remember, what was your other question, Charles?
Charles Shi (Analyst)
Yeah, Clarence, I think the way you answered the question, you actually covered most of the part of my question. Okay. Maybe a quick follow-up. In March quarter, what's the China revenue percentage or China revenue on a dollar basis? Is that something you can provide on this call?
Clarence Granger (Interim CEO)
My CFO is waving at me furiously that I'm not supposed to say a number.
Charles Shi (Analyst)
Okay. Okay. We'll wait for that. Thank you.
Clarence Granger (Interim CEO)
What can we say, Sheri?
Sheri Savage (CFO)
Yeah. We don't have a specific percentage for you, Charles. It's going up slightly quarter-over-quarter, and we see it continuing to grow in the second half. We'll provide further guidance when we have that.
Clarence Granger (Interim CEO)
We certainly don't provide guidance out any further than one quarter.
Charles Shi (Analyst)
Okay. Absolutely. Maybe a second question I do want to ask is this: you mentioned this softening customer demand late in the quarter, but you also guided on June. Beyond June, you actually said you think you're going to be bouncing around the June quarter level. It feels like some of the stuff, some of the weakness you are seeing, you consider that as going to have a longer-term impact, not just a one-quarter phenomenon. I want to ask you, are any customer behavior change that makes you think it's going to be a multi-quarter impact, or is there anything else that leads you to make this call that we should not be expecting a stronger second half, for example, for your business, or any recovery from the current level in the near term? Hopefully, that question is clear. Yeah.
Clarence Granger (Interim CEO)
Sure. Yeah. I think it's fairly clear, Charles. From my perspective, obviously, there's a lot of uncertainty going on in the market right now. We're pretty comfortable that there isn't going to be any dramatic downturn from this point, but there might be a minor downturn is at least what we're seeing right now. That's kind of why we've said it's going to be bouncing around the $500 million per quarter range. There's clearly a lot of uncertainty in the market right now. I'm going to let Cheryl address that. Cheryl, if you want to talk about that a little bit, I'd appreciate it.
Cheryl Knepfler (VP of Marketing)
Yeah. I mean, a number of the customers and other folks have already talked about the fact that they are seeing a little bit of softness in the second half prior to anything related to tariffs or anything else. What we're seeing and saying is a reflection of that. Obviously, the level to which and things that we're forecasting, we just do not have the visibility beyond what is being said and what's being communicated to us to do that. We had indicated that we expected some level of decline for a period, and it's just looking to extend a bit.
Charles Shi (Analyst)
Got it. Maybe a last question from me. There's this 90-day pause for tariffs, but we're basically looking at maybe by early July, some of the tariffs going to go up. Have you guys done any scenario analysis to see how that's going to impact the business one way or the other? If there's any conclusion or any view on that, can you share with us? We do want to know what kind of impact that can be from the tariffs, at least from the profitability standpoint.
Clarence Granger (Interim CEO)
Yeah, Charles. Obviously, that's a very good question. Equally obviously, we have been very focused on this in the last month heavily. We have a dedicated team working on what this potential impact could be, how it will affect us, how it will affect our customers. We're obviously working very closely with our customers already and trying to understand what the impact is, and of course, the variability from day to day makes it harder to figure out, but I can tell you a few things. First of all, one of the things that from a positive standpoint, we've been talking about China for China for over a year now. Really, what's going to happen for us relative to China for China, by the middle to the end of the third quarter, all of the products that we are manufacturing in China will be for China.
We will not be manufacturing any products in China and sending them to the United States, nor vice versa. As a consequence of that, we have been fortunate that we have been working on this China for China strategy for a long time. There should be almost no impact to us from the China counter tariff wars. On the other products, again, we have a pretty good handle on what the potential impact would be. We have a dollar number, but we are not comfortable really sharing that dollar number. What I would say is that obviously, there are multiple situations here where we are using products, components in the United States that are coming from outside of the United States that will be sold to our customers that will have a tariff effect on them and products going outside the United States.
We have different areas where we can be hit by tariffs. What we've identified of the total tariffs that could potentially impact us, more than half, much more than half, are associated with components that have been specified by our customers. If our customers aren't comfortable changing those components that we're using from outside of the U.S., we will pass those charges on to the customers, and they're aware of that. There's also fairly significant situations where we might be able to use alternative suppliers. We're pretty confident in our customer. We're working with our customers on things like free trade zones and how we can work with that to mitigate any potential tariffs.
In any sense, we're pretty comfortable that whatever tariff that we end up being hit with in the long range is going to be fairly minimal and certainly won't be a material effect on our business. I guess the biggest challenge for us is going to be data collection and controls, record keeping, because obviously, we'll have to keep track of all the tariffs, how much is specified by the customer, charging that back to the customer, finding other ways to mitigate the tariffs. In any case, for the long term, as complicated and difficult as these may be, we don't anticipate this to be hugely adversely effective, impacting our financial results.
Charles Shi (Analyst)
Thank you. I'll be back on the queue.
Clarence Granger (Interim CEO)
Okay. Next question.
Operator (participant)
Your next question comes from Krish Sankar of TD Cowen. Please go ahead.
Hello. This is Robert Mertens on for Krish Sankar. Thank you for taking my questions. I think previously had mentioned some headwinds in your domestic China semiconductor business arising in the December quarter of last year and initially expected to sort of decline this quarter and maybe a bit softer in Q2. Could you provide any more color into the outlook through the year? I know the largest contributor was customer-specific. Is that still the case, or is there any way to sort of quantify how your view is for the overall demand in the region or sort of the potentially inventory overhang in that area, how that could affect the second half of this year? I have one more follow-up.
Clarence Granger (Interim CEO)
Sure. Let me try and do my best I can on the China. First of all, we said that the situation was slowing down in China in Q1. We already anticipated that and shared that with you. In addition to that, I said that of the $12 million shortfall, roughly half of that was associated with a customer in China who was unable to ship because of a technical issue that they had with one of their customers. In addition to that, what we're trying to say is that our Q2 numbers, without giving a specific number, are going to be up a little bit from our Q1 numbers, and we're feeling pretty confident now that, I mean, Q3 and Q4 should be some slight recovery in China going forward. Does that answer?
Got it. Yeah. That's helpful. Just in terms of the China for China business, could you provide any color in terms of maybe what their customers' technical delays may have been related to, or if you have any idea of.
Yeah. No.
Those memory or foundry or anything like that would be helpful.
Yeah. We really do not want to talk about technical issues that our customers had. In terms of what products that we serve in Asia, can you answer anything there?
Cheryl Knepfler (VP of Marketing)
When we look at the overall, obviously, there are a number of both NAND, DRAM, and foundry, all of which are looking at replacements of other technologies because of limitations. We expect it to be distributed across that as they go forward. Exactly which would be there as the current challenge, we are not certain. We do expect it to be at their largest opportunities are going to be at the three largest vendors in China. We expect when things are cleared up and going forward that once they have cleared any issues they have, the level of demand should be substantial and would look at addressing the inventory that was built because that would be why they built that level of inventory to meet an expected large demand.
Clarence Granger (Interim CEO)
We do want to be a little—yeah. One of the things though, I do want to be a little careful on overstating—I mean, obviously, everybody's very concerned about China and what the implications are. China is less than a 10% customer to us overall, or roughly a 10% customer to us overall. Anyhow, I do want to keep things in perspective, although we're very comfortable with our situation in China.
Okay. And then just one last one, if I can squeeze in. For that business, you're expecting it to improve a little bit this next quarter and hopefully incrementally improve through the second half of this year. Do you have any sense of what impact potential export controls could have on that business? I know it's locally sourced, but if you have any way to view what may happen if export controls tightened, even company-specific for those domestic suppliers? Thank you.
Yeah. Boy, that's hard to predict. From our perspective, it's likely to have no impact because our Chinese customers that we're shipping to in China is 100% for China. Obviously, there are some U.S. customers that may be impacted by restrictions on what they can and can't ship into China, but that isn't what we're talking about here. What we're talking about is our China customers in China and making those products in China for them.
Got it. All right. Thank you for letting me ask those questions.
Sure.
Operator (participant)
Your next question comes from Christian Schwab of Craig-Hallum. Please go ahead.
Christian Schwab (Research Analyst)
Sheri, can you elaborate on the cost reduction plans, headcount, and people in the commentary earlier in the prepared comments about positioning the size of the company to a $2 billion run rate? Should we assume OPEX in the second half of the year gets on a yearly run rate of, say, $190 million to $200 million? Is that roughly the right math, or how should we be thinking about that?
Sheri Savage (CFO)
Yeah. Christian, we're looking at just about everything. I mean, headcount is obviously a headcount and footprint are probably your two largest expenses in the company. Those are the two things that we're absolutely looking at, along with just our overall org structure. We're looking both in COGS and OPEX, but really concentrating on the OPEX side as well. I don't want to give you a specific number at this point because it's kind of an ongoing analysis right now. We've already went underway on some headcount reductions, and we'll continue to look at that as we move through the year. Really, the footprint, I mean, obviously, we had a certain level of footprint that allowed us to be at potentially a $4 billion run rate.
We are really looking at optimizing that to bring it to the point that we get as much efficiency out of that footprint as possible, assuming that things will grow eventually, but it is going to take a little bit longer than we expected. We are really looking at discretionary spending as well. We are kind of looking everywhere. You will see those plans kind of fall out as we move through the next quarter or two. It has already kind of started, and we are really underway, and you will start to see those benefits. As you can tell from our guidance, we are down on revenue, and the EPS is only slightly down, and that is because we have already started some of those cost initiatives.
Christian Schwab (Research Analyst)
Okay. And then on the OPEX, if you guys get to a level, I mean, is that an announceable event, like an X% of workforce reduction, or is this going to kind of be dripped out over multiple quarters?
Sheri Savage (CFO)
We are not at a point where it's announceable, luckily, but we will continue to look at that and see if there's anything. Obviously, if it's necessary to be announceable, we will make that so. We are not at that point.
Christian Schwab (Research Analyst)
Okay. I think I wrote it down, but any tariff costs your customers are already prepared that you'll pass that on to them? Did I hear that correctly?
Clarence Granger (Interim CEO)
Yeah. Christian, this is Clarence. Nobody's prepared to accept additional costs. We're all going to figure out what we can do to resolve it, but yeah, from our perspective, all of the costs—not all of the costs, but a significant portion of the costs related to the tariffs—are subcomponents that have been specified by our customers. In that particular case, they understand that they're obligated for the cost associated with that. We will immediately pass those on as they occur. The next would be stuff that we might have some control over, but we will work very closely with our customers on that already to see if we can change sources of supply or if we can work with them. One of our customers, one of our larger customers, is talking about potentially utilizing some free trade zones.
There is a lot of stuff being discussed about what would be the long-term situation. Our expectation is that any cost to us is likely to be relatively small, and we feel very manageable. Yeah, we are pretty comfortable with that.
Christian Schwab (Research Analyst)
Great. My last question. In the prepared comments, we talked about push-outs and technology challenges. It seems that in answering the questions, it was really technology challenges by two customers and customers that caused the delay in fulfilling orders or pushing them out. You did not see push-outs above and beyond the technology challenges of the two customers, or did you?
Clarence Granger (Interim CEO)
No, you are correct. We really did not see any significant push-outs towards the end of the quarter for the customers. Obviously, we are very leery, and we have guided down a little bit this quarter because of all the uncertainty. The tariffs did not occur until the beginning of this quarter. Obviously, there is just a lot of general confusion about what is going on in the marketplace. We think that there is likely to be some slowdown just because of the nervousness. Cheryl, do you want to add on to that, or?
Cheryl Knepfler (VP of Marketing)
Yeah. Obviously, all of our customers—all of the end customers—will position for the long-term demand. How that needs to play out will, because everyone is looking at the long-term requirements needed to support a trillion dollars by 2030 and shipped by the 2030 timeframe. We do think that that is the overall driver for the industry. We are just going to be cautious on looking at that with the understanding that everyone is putting forward the comments based on what we know at this time. At this point, based on what we know at this time, we think that we need to be a little bit more cautious in terms of our outlook. That's what we're indicating since we are further down on the chain. We've indicated that our customers may have some inventory.
There's a number of things happening that are outside of our control that we just do not have as much visibility on. We are looking and sizing and working towards a little bit more cautiousness.
Christian Schwab (Research Analyst)
Great. Got it. Thank you. No other questions.
Clarence Granger (Interim CEO)
You're welcome.
Operator (participant)
Your last question comes from Edward Yang of Oppenheimer. Please go ahead.
Edward Yang (Analyst)
Okay. Thank you. Clarence, I mean, just a lot of puts and takes going on. Would you be able to just give us an updated view on WFE growth for 2025?
Clarence Granger (Interim CEO)
I'm not going to touch that. I'll let Cheryl deal with that.
Cheryl Knepfler (VP of Marketing)
As we look at 2025, as a starting point, I think 2024 came in a little bit higher than what had been forecasted before the third parties made their announcements around that. At this point, I do not think anyone is in a position they are going to increase the forecast for 2025. Even with that, we were looking at about a 2-3% year-over-year increase. I think with the uncertainty in the market, it is unlikely that is going to grow. In fact, Intel announced that they were looking at about a $2 billion reduction in their CapEx. Obviously, part of that was going into buildings, but not necessarily equipment. I do think that everyone is going to be looking at that, and there is more downside risk than upside opportunity. That is what we are looking at sizing for.
I think everyone would be relatively thrilled if it ends up at the $100 billion that Lam indicated. We certainly see that as an opportunity, but we do not know if that is where things will end up.
Edward Yang (Analyst)
Got it. In your business, have you seen any pull-ins or front-loading of demand related to tariffs? I only bring this up because you hear about retailers that stocked up on inventory, consumers panic-buying iPhones ahead of tariffs. Have you seen any direct front-loading on your end, or do you think there have been some secondary impacts from that that could potentially affect future push-outs or shipment delays outside of the technical and qualification issues that you mentioned earlier?
Clarence Granger (Interim CEO)
Yeah. Ed, this is Clarence. I don't really think so. I don't feel if there are any pull-ins or anything associated with timing on all the tariffs, they feel relatively small to us at this point in time. I don't think that's a—obviously, if you were buying some clothing from Asia, you'd probably be really concerned about that. We're not in that kind of a situation, and I don't see anything that might be similar to that.
Edward Yang (Analyst)
Okay. Finally, just an update on the CEO search.
Clarence Granger (Interim CEO)
Yeah. I was wondering if anybody was going to ask that. I'm sneaking up on two months now. What we said is it should take about six months. We have hired a search firm, and they told us it's likely to be three or four more months in the process. I think my original six-month timing sounds pretty good. I'm going to stick with that. That's another three months.
Edward Yang (Analyst)
All right. Thank you.
Clarence Granger (Interim CEO)
Yep. Thank you guys.
Operator (participant)
There are no further questions at this time. That concludes our question-and-answer session. I'd like to turn the conference back to Mr. Granger for closing remarks.
Clarence Granger (Interim CEO)
Thank you, operator. Thank you, everybody, for joining us on this call. We look forward to speaking to you again at our next quarterly call. Thank you.
Operator (participant)
Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect.