Nova (NVMI) Citi's 2024 Global TMT Conference summary

Business overview and market position

• Operates three divisions: dimensional, material, and chemical metrology, with unique integrated and standalone solutions for process control in semiconductor manufacturing.

• Holds second place in optical metrology market share, with 70% share in integrated metrology and sole-source positions in material metrology.

• Balanced exposure to leading and trailing edge nodes, with 25% of sales in memory and 75% in logic; advanced packaging exposure is growing from 10%-15%.

Technology trends and product innovation

• Gate-All-Around technology is driving a 30% increase in metrology process steps, with $500 million in cumulative revenue expected by 2026.

• Advanced packaging and high bandwidth memory markets are key growth areas, with integrated and chemical metrology tools gaining traction.

• Hybrid bonding presents significant opportunity, with strong positioning in dimensional and chemical metrology for this inflection.

• Material metrology market (inline SIMS, Raman) expected to grow from $200M in 2023 to $300M by 2027, leveraging lab-to-fab strategies.

Financial outlook and growth strategy

• Service business is growing at 10% YoY, supported by a 5,900-tool installed base and value-added upgrades.

• Strategic goal to reach $1B revenue by 2027, with 15%-20% from inorganic growth; M&A remains a core approach, targeting process control in semiconductors.

• Gross margin expected to normalize at 59% for 2023, with long-term range of 57%-59%; potential to exceed this with new technologies.

• R&D investment is about 16% of revenue, supporting outperformance and revenue doubling every five years.