Mattson Technology (MTSN)
Q2 2013 Earnings Call
July 24, 2013 5:30 pm ET
J. Michael Dodson - Chief Financial Officer, Chief Operating Officer, Executive Vice President and Secretary
Fusen Ernie Chen - Chief Executive Officer, President and Director
Edwin Mok - Needham & Company, LLC, Research Division
Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division
Previous Statements by MTSN
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J. Michael Dodson
Thanks, John. Good afternoon, and thank you for joining us today to discuss Mattson Technology's Financial Results for the Second Quarter of 2013. Fusen will give you an overview of the business, then I will provide the detailed financial results. And last, Fusen will close with our business outlook and guidance for the third quarter of 2013. Before going into the specifics of the call, I'd like to remind everyone that information provided in today's conference call contains forward-looking statements regarding the company's future prospects, including but not limited to, anticipated market position, compliance with line of credit covenants, cash balances, revenue, margins, operating expenses, earnings per share, tax provisions and fully diluted shares outstanding for future periods.
Forward-looking statements address matters that are subject to a number of risks and uncertainties that can cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those described in today's news release and in the company's Forms 10-K, 10-Q and other filings with the SEC. The company assumes no obligation to update the information provided in this conference call. And now, I would like to turn the call over to Fusen Chen. Fusen?
Fusen Ernie Chen
Thank you, Mike, and welcome to Mattson Technology's Second Quarter 2013 Earnings Call. Over my past 5 months with Mattson, I have been able to look closely at our operations and continue to support improvements to control all operating expenses. While we are driving to reduce our cost and achieve profitability, we are also mindful of maintaining our ability to properly serve our customers. As Mattson approaches its optimal level of operational efficiency, we continue necessary investments in R&D and a direct customer support. Already, an important example is Mattson's expansion of our operation in China to support a greenfield wafer fab, where our customer has selected our products. With this focus, we should achieve sustainable revenue growth and a profitability in the future.
Now I would like to discuss our view of the overall industry and the technology trend that drive the semiconductor equipment business. Mobile electronics are well established to drive consumer electronics growth going forward. The compound annual growth rate based on production unit of smartphones and tablets will be in the range of 20% to 30% over the next 4 years.
We also see Ultrabook growing in the range of 40% to 50% over the same periods, at the low unit volume but with higher IC-content per unit. This growth is being realized today, as for the first time, we see smartphones accounting for over half of all mobile phones shipped this year, and that unit shipments of tablets expected to exceed unit shipment of laptops. What this means for the short term is that the recovery, once you start it early this year will continue through the end of the year and into 2014. The main driver for the second half of 2013 will be memory companies purchasing capital equipment in order to ramp their inventory of sub 30-nanometer technology or DRAM and the 3D NAND IC unit next year.
The overall semiconductor IC market is expected to grow approximately 5% in 2013, with the memory segment, both DRAM and the NAND, growing about 9%. While overall CapEx all remained flat for 2012, the ratio of spending shifted toward greater equipment spending. The industry has already realized higher equipment spending from foundries in the first half of the year. In the second half, we will be supporting the ramping requirement of our memory customers.
Looking forward, mobile electronics will continue to drive at advanced foundry and the memory capacity. This technology inflections will require more efficient and effective wafer fab equipment. Mattson has developed technology with higher productivity that meets and that exceeds our customers' requirement to fabricate the advanced semiconductor devices.
Now let me provide updates on each of our products and how they are meeting the challenges of this technology inflection point.
In Etch, the enhanced performance capability of our new proprietary plasma cells for our paradigmE. have been recognized by our customers. Our Etch system are being used for development of 2x nanometer DRAM and the 3D NAND processes and the initial production line. In the foundry segment, we continue to develop process solution follow requirement of 3D NAND, 3D FinFET transistors. Working closely with our customers, we are developing Etch applications to enable the complex masking scenarios along the FinFET structures for 2x nanometer and the smaller technology nodes.
In[indiscernible] anneal, our expansion in the 2x nanometer foundry segment will continue through the end of the year, with our Helios XP that is providing a high-volume manufacturing solution at the major foundries. The Helios XP is a [indiscernible]wafer heating with a differential thermal energy control, provides optimal reduced CMOS stress and the pattern-loading effect performance. The millisecond anneal, the middle hard and important law in the startup of a major 2x nanometer logic production line, having long intensive production testing in-house. We have now shipped an additional system for volume production, and that we expect incremental revenue contribution beginning in the first quarter of 2013.