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Technical Insight

Magazine Feature
This article was originally featured in the edition:
Volume 30 Issue 4

Silicon’s positive influence


While most players in the CS industry are suffering from significant falls in their share prices over the last 12 months, a few companies have risen in valuation, in one case due to opportunities within the silicon industry.


When glancing at this year’s compound semiconductor share price leaderboard, please heed the following advice: Don’t judge a book by its cover. By taking note of this English idiom you can avoid making an incorrect assumption as to why Veeco is at the top of the table, with a share price that has soared by more than 80 percent over the last 12 months.

I give this warning because it is tempting to think that Veeco, a well-known and significant supplier of epitaxial growth equipment, has grabbed top spot by increasing its market share in MOCVD tools, MBE tools, or possibly both. However, this part of its business, which not long ago provided a very considerable proportion of its sales, has actually suffered a small fall in revenue. The reason for the rocketing valuation of Veeco is ramping sales of equipment to the silicon industry, which accounts for the lion’s share of its revenue.

Commenting on this success in an earnings call on 14 February, 2024, to discuss results for the most recent fiscal year, Veeco’s CEO, Bill Miller, remarked: “Revenue from our semiconductor business reached a record in 2023, outperforming wafer fab equipment growth for the third consecutive year. Our strong results included multiple laser-annealing systems for advanced DRAM devices, despite industry-wide ‘capex’ reductions, as well as our first high-volume manufacturing laser-annealing systems to our third leading Logic customer.”

Over the last 12 months many companies in the compound semiconductor industry have seen a fall in their share price.

Veeco’s sales to the silicon industry are dominating its revenue, and brought in $413 million in fiscal 2023, which ending on 31 December last year. Sales from this part of the business have climbed 12 percent year-over-year to now account for 62 percent of total revenue. On these sales, totalling $666 million and up 3 percent year-over-year, Veeco had a gross margin of 43.5 percent, and realised a profit of $98 million.

Meanwhile, compound semiconductor revenue for fiscal 2023 declined to $87 million, contributing just 13 percent of total revenue. According to company CFO, John Kiernan, this decline is due to a fall in wet processing systems for 5G RF devices, resulting from softness in the handset market.

Veeco also generates revenue in other markets. Data storage contributed $88 million in fiscal 2023, over which time the company generated $78 million from what is described as scientific and other revenue.

During the February earnings call, Miller championed two strategic milestones. “First, we launched our next-generation nanosecond annealing solution. And second, we launched our ion-beam deposition system for low-resistance metals.” Both technologies are claimed to support the production of devices with a higher performance and a lower power consumption.

“Our nanosecond annealing technology offers a substantial opportunity to expand our served available market to a broad range of new advanced node applications,” remarked Miller. “Due to our unique laser and architecture, our system can achieve a lower thermal budget and a shorter dwell time versus today’s most advanced annealing solutions.”

This tool produces a shallow anneal, impacting just tens to hundreds of nanometres into the wafer. It is argued that this attribute could be ideal for backside power delivery, and contact anneal for advanced nodes and three-dimensional devices.

“Our system has the capability to change the structure and properties of the device, enabling steps like void removal, re-crystallization, and grain growth,” informed Miller, who pointed out that Veeco shipped its first two nanosecond annealing evaluation systems to two leading logic customers at the end of last year. The company is anticipating initial high-volume manufacturing orders in 2025.