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Veeco Profits As New Tools Gain Fab Acceptance

With its latest systems for high-throughput wafer production finding their feet in high-brightness LED wafer fabs, Veeco's III-V equipment division records steep growth.

Sales of MBE and MOCVD production equipment near-doubled as Veeco Instruments reported much-improved financial results for the opening quarter of 2008.

What the Plainview, New York, company now describes as its "LEDs and solar" division delivered $42.1 million in sales for the three months up to March 31 - equivalent to 41 per cent of Veeco s total revenue of $102 million.

Those sales represented a 90 per cent increase on the epitaxy equipment division's performance in the opening quarter of 2007 (sales of $22.4 million), due largely to growing demand for tools from high-brightness LED manufacturers, and acceptance of the company's latest production equipment.

Veeco CEO John Peeler highlighted customer field acceptance of the high-throughput K-465 GaN MOCVD system as an important milestone. He said that with a production capacity of more than 200 LED wafers per day, the tool delivers superior throughput compared with similar epitaxy equipment from key competitor Aixtron.

Aixtron stole a march on Veeco with its earlier introduction of high-throughput MOCVD systems, but Peeler believes that with its K-Series tools now finding acceptance Veeco will be able to close the gap by recapturing some market share from its German rival.

"It s been a good quarter - our new K-465 system saw acceptance from all of its early customers," said the CEO. "We are battling for every order."

As well as seeing its E-475 MOCVD system move into III-V multi-junction solar cell production, Veeco is witnessing some early demand for its thermal MBE sources, which it is targeting at manufacturers of copper indium gallium selenide (CIGS) solar cells.

Although Veeco won t yet reveal the precise split between sales of equipment destined for solar and LED applications, it is clear that the LED market remains the key driver.

And Peeler expects bookings from LED manufacturers to continue tracking up in the short term, seeing no sign of slackening demand just yet. "We have a strong funnel," he said. "We have seen strong bookings for around two years now, and there is no sign of a slowdown."

"[Eventually,] we expect to see a demand cycle emerge, but that hasn t happened yet."

Sales of epitaxy tools are now delivering a healthy profit for the US company. In the latest quarter, earnings from the LED and solar unit, before interest, taxes and amortization costs, were $8.6 million, compared with only $1.8 million a year ago.

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