Veeco Instruments (VECO) Morgan Stanley Technology, Media & Telecom Conference summary

Business overview and market focus

• Operates in four markets: semiconductor, compound semiconductor, data storage, and scientific, with semiconductors comprising about two-thirds of revenue.

• Laser annealing is the largest product line, widely adopted at leading foundries and expanding into DRAM memory.

• Ion Beam technology is critical for EUV mask blanks and is being evaluated for new front-end semiconductor applications.

• Advanced packaging exposure includes wet processing and lithography, with significant qualifications at major foundries and OSATs.

• Compound semiconductor market served mainly with MOCVD and MBE equipment, with ongoing investments.

Growth drivers and market dynamics

• Outperformance of WFE growth attributed to share gains from legacy technologies, especially in laser annealing.

• Laser annealing adoption is expanding from logic to memory as line widths shrink, offering continued growth potential.

• China business expected to decline in 2025 due to fewer new fabs and reduced funding, despite previous growth from mature node investments.

• Tailwinds include Gate All-Around (GAA) and advanced packaging, both expected to double revenue in 2025.

• AI-related revenue projected to rise from 10% in 2024 to over 20% in 2025, driven by exposure to logic, HBM, and packaging steps.

Competitive landscape and technology positioning

• Principal competitor in laser annealing is a large U.S.-based equipment company; little local competition in China for this technology.

• Sole provider of Ion Beam equipment for EUV mask blanks, with no exposure to DUV mask blank deposition.

• Ion Beam technology positioned as a potential fourth deposition method in front-end fabs, competing with PVD.