News Article

Strong Market For MOCVD Drives Veeco Gains

The past few quarters have witnessed a dramatic increase in orders for epitaxy equipment at Veeco Instruments, mostly driven by demand from customers in the Asia-Pacific region for the latest MOCVD kit.

Orders for MBE and MOCVD equipment at Veeco Instruments have doubled over the past year, indicating a strong upturn in the high-brightness LED market.

Ed Braun, the Woodbury, NY, equipment vendor s CEO, said that the consolidation among Taiwanese LED manufacturers was one of the key reasons behind the improving picture.

As a result, many LED manufacturers in the Asia-Pacific region are now in a much more stable financial position than they were two years ago, when Veeco was hit by a sudden slump in orders.

At a conference call to discuss the financial quarter that ended on September 30, Braun detailed the rapid increase in orders for MOCVD reactors.

Two years ago, Veeco s orders for this type of equipment were typically between $4 million and $9 million per quarter (see related story).

That figure has shot up to an average of around $20 million per quarter over the past year, and $23 million in the most recent three months.

The bottom-line financial picture is also looking much healthier, with an increase in the average selling price of MOCVD systems and an improved cost structure making the company s epitaxy division much more profitable than of late.

193 percent rise in epitaxy equipment sales
Combined sales of MBE and MOCVD machines reached $28 million in the latest period, a staggering 193 per cent rise compared with one year ago. "[Veeco s] MOCVD business returned to profitability this quarter," added Braun.

The CEO is expecting total orders for epitaxy equipment for the whole of 2006 to reach more than $100 million, some $25-$30 million of which will be attributable to sales of MBE systems for RFIC production.

Braun was in bullish mood about the future prospects of the market for LED manufacturing equipment, too. He believes that while second-tier LED manufacturers, largely in Taiwan, Korea, and China, have been responsible for the current swell in orders, tier-one manufacturers in the US, Europe and Japan will start to invest in new equipment during 2007.

Expecting demand for high-quality products required for automotive headlamps and larger-scale LCD backlights to kick in next year, Braun says that the LED industry will be characterized by waves of strong growth over the next three to four years.

Veeco s total sales for the latest quarter were $112.4 million, up 12 per cent on the equivalent period last year. Net profit near-tripled to $4.5 million.

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