ACLS
#Thanks, <UNK>.
Yes, so we tighten that range up based on the final numbers coming in, and us coming in at 18.3%, and then Dataquest's number of $900 million sort of at the top, and our view is still the market is probably going to be in the $825 million to $875 million range, so that hasn't changed.
The variables that, first of all, <UNK> we provided that range, since we don't give guidance for the second half, we try to provide enough data points that you guys can do some different modeling, and so, what would drive that is if it was more activity in DRAM, obviously that's something that would move us more towards the top.
Additional recipe gains, say in the NAND market, extra activity from the non-leading edge related to automotive, or any IoT kind of thing, would certainly help.
And in that particular market, we have far less visibility, so those are the things that would put us towards the top.
If you do the math on the 20%, the lower number, with the different market shares, you can see where that number comes in, and we feel very comfortable with that, that essentially it looks like a relatively flat year.
And so that's kind of the way we would look at it.
<UNK>.
<UNK>, this is <UNK>.
The one thing I want to add, because, people will ask how do you get then from, even if you're on the top end of the range from 25% market share.
into your 35% to 40% market share, and the answer to that is that we expect memory spending to pick up in 2017 and 2018, and there's been a lot of modeling done, and <UNK> has talked extensively about this, but if you take a 100,000 wafer start fab, and you look at the implant opportunity that is in that fab, it ranges between $120 million and $190 million, and we've also talked about how customers expect that Axcelis will win, let's say, 40% to 50% of the market share, the implant market share in a given fab.
So if you do the math on that, and you take a look at the TAM, the implant TAM, that's when I mentioned that there could be a potential step function increase when we get into 2017 and 2018, and we start to see some of these multiple fabs become a reality, and we know who the usual suspects are.
There are things going on in Korea.
There are a number of fabs in <UNK>a.
<UNK> mentioned non-leading edge, and there are even new fabs going on in that area, along with some significant expansions.
So when you take what <UNK> talked about, in terms of 2016, and then you start to think about what our expectations are for 2017 and 2018, that provides really the road map in terms of getting to that target business model, 35% to 40%.
Yes, I think the way to look at the margin improvement, one piece of it certainly is around the volume, but we have a lot of other initiatives in play, if you look at value engineering projects, they are taking material costs up, if you look at the Kaizen events that we have in the factory for productivity and efficiency, and then if you even look at things like warranty and install, where we're making additional gains as the tools become more mature, there's a good portion of the margin improvement, I guess I'm trying to say that comes from things other than volume.
So although volume is important to our road maps and improvement, we can still get there.
I still feel very comfortable this year that 36% to 38% is very achievable even if the volume drops off a little bit.
Yes, we're still not doing business in Japan.
We're working on it, but we're not there yet.
Yes.
Correct.
Yes.
Absolutely.
So those customers are using all three Purion products, and we are actively working with them this year, even though there's not a lot of significant investment going on at one of those customers in particular, to expand the types of recipes that we are using our tool sets on, and moving across from DRAM to NAND, and both logic, those are activities that are well underway.
Well, we expect, we have talked about how the piece that you missed, Dave, we talked about how we expect our mix in terms of systems to shift from about 75% memory in the first quarter, to a more flat, evenly balanced 50/50 mix between memory and non-leading edge, as we move forward Q2 and then out through the remainder of the year.
So there will still be some ongoing memory spending and then, <UNK> had picked up on a question and said that the non-leading edge driven by the Internet of Things is actually seeing an increase, and we've had some very strong, positive results in our GSS business from that segment of the market, and that's beginning to translate now into additional strength on the system side of the business as well.
Yes I would say we expect to continue to see NAND business.
There will somebody DRAM as well.
The foundry, <UNK> just brought up an interesting point, is one, we talk about the non-leading edge as kind of the whack a mole market, and don't have as much visibility, but one leading indicator is actually activity in our GSS business within that group, as their utilizations go up, then they start looking at new tools and used tools to augment their factories.
So that's another reason we feel that the second half we will see it pick up on that side of the business.
Thanks, Dave.
I think what we're seeing with DRAM is pretty consistent with what most of our peers and competitors have reported.
I don't think there's a lot of additional color that we can add to that.
But as we mentioned, we have a number of activities underway with those customers, even though the spending is not very heavy right now, and we expect that when the spending comes back, we will have basically expanded our available market with those customers.
<UNK>, I think some of the memory customers themselves on their earnings calls talked about a little bit of strengthening in the second half of their DRAM business.
I think the uncertainty for the equipment segment right now is exactly when that translates into buying.
Well, we're still very bullish as far as memory over the next several years as a whole, and these days you really have to look at all three types, where you have got NAND flash, ultimately over probably a ten-year period replacing a good portion of spinning drives.
And then you've got the new memory which right now the only one on the market is 3D cross-point, which kind of fits in between DRAM in terms of speeds closer to DRAM but capacity similar to NAND.
And then of course you've got DRAM itself.
All three play a critical role in all of the data analytics, and that's a big growing market, as well as while the PC market might be declining, there's still a fair amount of DRAM when you add the other stuff on.
So I think we look at the memory market as a whole and feel pretty strong.
The exact mix will probably depend a lot on the success factors with the new memory, the new non-volatile memory and see how that does on the data analytics side.
All right, thanks, <UNK>.
Thanks, <UNK>.
Yes, I think everyone remains on track.
I mean, that's one of the major things that we've been saying, despite the fact that there's some uncertainty in DRAM right now.
None of our objectives have changed and we feel like in the first quarter we've made significant progress against those milestones.
We mentioned the evaluation unit at the leading edge foundry, and there are a number of engagements ongoing, and we still expect to place an evaluation unit there.
We talked about how on the memory side in particular on 3D NAND, that we are in fact engaged with all of the major customers except the large customer in Japan, and as you know, that's an initiative that's been ongoing for us, but we haven't made significant progress there that we can report at this point in time.
The non-leading edge, we are continuing to make significant progress.
We had several press releases in the first quarter on both high energy and high current that are signposts that you can use to show that we've made that progress.
So I think in terms of what we said, we are doing what we said we're going to do.
Unfortunately the DRAM market is a little bit softer than we would have liked and that we had originally anticipated, but that has not stopped us or set us off track in terms of what we need to accomplish for the year.
And we still expect to gain market share this year, and be well-positioned for additional market share gains next year, both at these non-leading edge customers and in the memory space.
Sure.
We ended the year at 18.3% total implant market share, and that's up from 12.4%.
And we doubled our high current market share, up from around 6% up to 12.4%.
And so that was driven, both of those were really driven by Purion H, the high current tool.
This year we've tightened our range to 20% to 25% for the year for total implant, and at this point we still feel that the TAM for 2016 for implant is going to be in the $825 million to $875 million range.
Gartner is a little bit higher, just north of $900 million.
At this point we feel that DRAM is a little more intensive on implants, and so we think Gartner hasn't completely factored that in at this point.
So that's where things stand.
And then moving forward, we still feel good about getting in that 35% to 40% range as we go into 2017 and 2018, and <UNK> talked about that a couple of times, but it's really driven by the fact there's multiple, large projects planned for 2017 and 2018, and each one of those can give us a step function gain in share very similar to the large DRAM factory that was built last year.
Yes.
That's how we see it.
The Gartner, last year we felt it was going to be $950 million to $975 million.
Gartner's numbers came in just a little north of $1 billion, and as we analyzed it, we have less visibility in Japan, and actually there was some image sensor business that had a little bit higher ASP tools that drove that up a little bit.
So we just feel this year that because of the mix, where it's probably a little more NAND and logic-based, implant will be down a little bit.
Visibility.
When we started talking about 20% to 30% in Q4 of last year, now that we know that we ended up at 18.3% and we know that the TAM looks to be somewhere in the $800 millions for this year, we just feel more comfortable in that 20% to 25% range.
Some DRAM activity.
I think it's been I wouldn't call it stagnant but I'd call it steady.
We talked about how our customers really value the fact that now that Axcelis has a competitive tool set with Purion, that it's driving innovation, and we call it a horse race sometimes, we'll come out with some improvements to a tool, and then they'll come out and they'll make some improvements to their tool, and it goes back and forth.
And we've referenced several times, for example, a recipe that one of our large customers who we sold a lot of tools to in 2015, actually doubled the wafers per hour throughput of this particular recipe, because of the competition between Axcelis and our competitors' tools.
So those are the kinds of things that are going on.
We do an analysis every quarter on pricing, and we haven't really seen any significant changes in that area.
So I would say the battle is really more on the technology front, and we feel very good about the Purion platform, and the way that it's performed, and we said a number of times that the Purion platform was really designed for the future, whereas our competitors' platform has actually been out there since the late 1990s.
So we think we have a lot of runway, in terms of the ability that the tool has from a performance standpoint.
No.
Their tool is still a ribbon beam based tool, and ours is spot beam.
I think what <UNK> is highlighting is that as the customer asked each of us to work on a recipe, in particular then the customer gets benefit, by having two suppliers working on it.
And competing to try to get better yields, better throughputs, whatever the key metric is.
And that's probably the number one reason why customers want to have two equally strong suppliers in their house.
All right, thanks <UNK>.
I want to thank you all for your continued support, and hope to see you while we are on the road during the upcoming months.
We will be presenting at the B.
Riley Conference on May 25th in Los Angeles, the <UNK>-Hallum Conference in Minneapolis on June 1st, the Stifel Conference in San Francisco on June 7th, and the Credit Suisse 8th Annual Semiconductor Supply Chain Conference in Boston on June 14th.
We will also be participating in the CEO Summit on July 13 in San Francisco, and we'll be available that week at SEMICON West for one-on-one meetings.
Thank you all very much.
