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Good day, ladies and gentlemen and welcome to the Axcelis Technologies Call to discuss the company’s results for the Third Quarter. My name is Corey, and I’ll be your coordinator today. [Operator Instructions] Please be advised that today’s conference call is being recorded. I would now like to hand the conference call over to your host for today’s call, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy.

Thank you, operator. This is Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. And with me today is Russell Low, President and CEO; and Jamie Coogan, Executive Vice President and CFO. If you have not seen a copy of our press release issued yesterday, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC’s Safe Harbor provision. These forward-looking statements are based on management’s current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Now I will turn the call over to President and CEO, Russell Low.

Good morning. Thank you for joining us for our third quarter 2023 earnings call. Axcelis continued to execute at a high level in the third quarter, driven by strength in the power market. Third quarter revenue and EPS exceeded guidance of $292.3 million with earnings per share of $1.99. We are guiding fourth quarter revenue at approximately $295 million with gross margin of approximately 45%, operating profit approximately $73 million and earnings per share of approximately $2.00. 2023 annual revenue is expected to be greater than $1.1 billion, representing year-over-year revenue growth of around 20% in a year in which overall WFE is expected to decrease by 20% to 30%. Backlog remains strong at $1.2 billion, with quarterly systems bookings increasing slightly to $198 million. The book-to-bill ratio was 0.83, primarily due to increased shipments in the quarter. The power market continues to be an area of strength for Axcelis, representing more than 60% of our system shipments for the third consecutive quarter. The overall mature process technology market generated 99% of the quarter system shipments with just 1% going to memory customers composed entirely of DRAM. The geographic mix of our system shipments in the third quarter was much more balanced with the combined U.S. and Europe representing 38%, China at 35%, Korea at 12%, Taiwan 4%, Japan 3%, and the rest of the world at 8%. The power device segment and in particular, silicon carbide has driven our growth during this downturn. We continue to win business from new customers and expand our product footprint with existing customers. We expect greater than 60% of our shipped system revenue in 2023 to come from power with around 35% of total system revenue coming from silicon carbide applications. The full Purion Power Series product portfolio is important to our customers, and we continue to see increased adoption of Purion H200 silicon carbide and Purion XE silicon carbide systems. In Q3, we shipped a 200-millimeter Purion EXE silicon carbide system to a leading Japanese power device manufacturer. We also have 3 Purion H200 silicon carbide system evaluations underway with customers in multiple geographies. Two of these systems are 150 millimeters and 1 of the 200-millimeter system. These evaluation use give our customers a head start qualifying productivity limiting recipes as they ramp to higher volumes. It – it also enables the customer to conduct optimization work on their devices, utilizing the higher energy and dose capabilities of the Purion H200 silicon carbide system. The importance of the three implant types in silicon carbide is highlighted by the relatively even revenue split across the full Purion Power Series product family in 2023. Axcelis is the only ion implantation company that can deliver complete recipe coverage for all power device applications. We are considered a technology leader and the supplier of choice, providing the best product family and manufacturing capabilities. This means that using Axcelis tools provides the lowest risk path to high-volume manufacturing required to support aggressive fab implants. Axcelis places significant value on enabling our customers to succeed in this exciting market by providing differential product performance and a high level of customer satisfaction. Axcelis has a large number of customers in the power market, which is currently expected to remain healthy in 2024. This will provide good support for Axcelis even as the industry downturn continues and now includes increased softness in the general mature markets. While our customers are managing through this downturn, Axcelis remains close to supporting their in-store base and working with them on the future technology and manufacturing needs. Recently, we shipped a Purion Dragon to a leading research institute focused on advanced logic process development. This tool and the associated collaboration will be critical to our advanced logic customers’ development for next-generation technology. Additionally, we have multiple evaluation systems and many customer engagements designed to increase our footprint across all segments. As the industry exits this downturn, Axcelis will return to healthy growth in these markets. This combined with continued strength in the power segment will drive Axcelis to a $1.3 billion model and beyond. Now I’d like to turn it over to Jamie.

Thank you, Russell, and good morning, everyone. Before turning to the results for the quarter, I want to say that I’m excited to be joining the Axcelis team. Over the past few years, this team has worked diligently developing cutting-edge ion implant products, establishing a strong product position in the power device market and creating a rare opportunity to grow revenue and profitability during a significant industry downturn through strong execution. I look forward to adding my experience to this team and meeting many of you at our future investor events. Now turning to the quarter. We are pleased with our financial results for the period. And as we look to the full year, we are reiterating our full year revenue expectations of greater than $1.1 billion, which represents year-over-year growth of approximately 20%. Looking at our third quarter, revenue and earnings per share finished well above guidance due to solid execution and continued strong demand for Purion, especially in the silicon carbide power market. Q3 revenue was $292.3 million, with system revenue at $231.5 million and CS&I revenue at $60.9 million. Q3 earnings per share of $1.99 was well above guidance due to higher-than-expected revenues and gross margin as well as lower overall operating expenses. Despite some of the softness in the general mature market, bookings and quoting activity for systems in the power segment remains solid and continue to support our expectation that greater than 60% of shipped systems revenue will come from this market in 2023. CS&I revenue will fluctuate quarter-to-quarter, which should be modeled at approximately $245 million for 2023 and $300 million for our $1.3 billion revenue model. Q3 gross margin finished at 44.4%, above guidance, driven by lower costs and deferrals and benefiting from a slightly improved mix. We expect Q4 margin to come in higher at approximately 45%. Full year 2023 gross margin will be approximately 43.6%. We remain laser focused on margin improvement and have a number of initiatives underway to lower cost of goods sold and drive higher sales of Purion product expansions. Execution on these initiatives allows us to model gross margin at approximately 45% in our $1.3 billion revenue model. Turning to operating expenses. The third quarter ended at 19.8% of revenue, better than our guidance. We expect OpEx in the fourth quarter to remain flat as we continue to tightly manage spending. Investments will continue to be an area of focus for us to ensure we are supporting business growth, solidifying our technology advantage in the specialty markets and increasing our footprint in the memory and advanced logic markets. Most importantly, we will continue to invest in our employees and infrastructure to ensure we have the necessary skills and equipment required to achieve our financial models. We recently completed one of our more significant infrastructure investments, our new state-of-the-art logistics center in Beverly, Mass. The new logistics center located just a short walk from our headquarters will be fully functional during the fourth quarter. This facility will provide significant efficiency, improving our material handling and flow to our operations. The fourth quarter also marks the 2-year anniversary of the opening of the Axcelis Asia Operations Center in South Korea. This facility has been critical to our revenue growth and is expected to have shipped over $300 million of systems by year-end. We plan to further ramp both our Beverly and Korean operations as capacity needs grow and are comfortable that we have initiatives in place that support our $1.3 billion revenue model. Moving to our balance sheet and cash flow. We end Q3 with $461 million of cash, cash equivalents and short-term investments, and we generated $24 million of cash from operations in the period. We saw a higher volume of shipments later in the quarter, which increased our outstanding receivables. We continue to execute against our previously announced share repurchase program, buying back $12.5 million of stock in the quarter. In total, we’ve returned over $170 million of cash to shareholders since 2019 through our share repurchase programs. In my first few weeks with Axcelis, I’ve been impressed with the team and their dedication to innovation and their drive for improving efficiency and operational performance. These qualities were essential in allowing Axcelis to reach the level of performance we see today. Once again, I would like to reiterate my excitement in joining Axcelis and look forward to helping the team take the company to new heights in the future. I will now turn the call back to Russell for his closing comments.

Thank you, Jamie. Axcelis expects to achieve revenue of greater than $1.1 billion in 2023 and is targeting revenue of $1.3 billion in 2025. This growth is achievable due to the following factors. First, the implant TAM has more than doubled in the last few years and is expected to continue to grow with mature market segments representing greater than 60% of the total TAM. Second, power devices, especially silicon carbide devices are highly implant intensive and the general mature nodes have increasing implant intensity peaking at 28 nanometers. Third, high-value Purion product extensions were designed to optimize power and image sensor device manufacturing, making Axcelis the only company, the product line capable of covering all implant recipes in these key markets. This uniquely positions Axcelis to benefit from high growth in the mature process technology markets. And finally, Axcelis has strong long-term customer relationships and a fundamental cultural desire to win by making our customers successful. I want to thank our employees, suppliers, customers and investors for your continued support. With that, I’d like to open it up for questions.

Thank you. [Operator Instructions] Our first question comes from Charles Shi of Needham & Company. Charles, your line is open.

Hi, good morning, Russell and nice to meet you, Jamie, welcome aboard.

Thank you.

Just for – thanks. Really want to start my first question around backlog. Well, I mean, the backlog is only good if you can ship that, but how confident is management at this point to ship those backlog on time? And how much risk do you see there in terms of push – potential push-outs given the fact that one of the leading silicon carbide player facing the – in the West seems to suggest that their CapEx or maybe capital intensity is trending lower than they previously expected into 2024? Thanks.

Hey, Charles. Thanks for the question. This is Doug. Let me start at sort of on the back end of your question relative to the silicon carbide question. Our business in silicon carbide is global with a very large and diverse customer base. And so we see – we continue to see good bookings and solid quote activity in that area globally. And so I think looking at just one customer within that is not the right way to look at Axcelis’ backlog within silicon carbide or in general. As far as backlog goes, it’s – it continues to be strong. I’ll let Russell comment on the front end of your question.

Yes, Charles. So the backlog, I think currently sits at $1.2 billion. As we’ve kind of noted, there are some weaknesses in the business in and around memory and image sensors, and we’ve talked a little bit about softening of general mature. But as Doug mentioned, when it comes to kind of – when it comes to backlog, bookings and quotes – requests for quotes, the power market is still strong for us, which is kind of why we’ve been able to say, reiterate greater than $1.1 billion revenue for 2023. And we expect this – the strength in power to continue into 2024. And so – and a lot of the backlog is in power.

Thanks for the color. Maybe the second question about the China exposure. It seems like at least from a shipment standpoint, your China exposure in Q3 seems to be down sequentially from Q2 level. It seems to be the reverse trend of several of your semi-cap peers that – who also actually saw a big massive pickup of the China revenue into Q3 and potentially into Q4. Just really wonder is the relative – I mean, lower exposure of China you saw in Q3, is that temporary or you see this is probably going to be more dominated by the rest of the world in terms of your shipment for the next few quarters? Thanks.

Right. So I think we’ve typically said it’s between 30% to 50% in any given quarter. And as you note, it’s kind of in the 30s for this quarter. I think China is still always going to be a growing area for us. But I think we’ve benefited also from other areas coming online. So like Doug said, power is definitely a global phenomenon. And we saw a good progress in Europe and U.S. and we’ve also seen it in other regions around the world. So I’d say that we continue to see strength in China. We will continue to find that as a very good opportunity for us given our focus on mature markets, but we are also seeing a lot of strength globally, particularly in power.

Thanks.

Thank you. [Operator Instructions] Our next question comes from David Duley of Steelhead Securities. David, your line is open.

Yes. Thanks for taking my question. Russell, you mentioned that you’ve seen some weakness in the second-tier foundry and logic business. Could you just talk about which geographic regions that’s coming from or applications?

So I guess with my second-tier foundry logic, you’re kind of talking about the mature foundry, the kind of typically the non-FinFET stuff, right?

Yes.

So I think there is – so the foundries that are more related to consumer spending have been soft for a little while. We’re now seeing a little bit of softening in industry. And I think you probably saw the note by one foundry this morning about softening in power. That actually doesn’t – we don’t seem to see the softening in power across the board, but I think industrial has started to soften along with consumer, which was already there.

Okay. And then a follow-up on gross margins. I think your gross margin target for Q4 is essentially your target for the $1.3 billion model. So maybe help us understand how gross margins might progress next year if revenue grows or how we should be thinking about gross margins going forward?

Yes. So as we think about margin, obviously, mix is going to be an important part in that process as the mix between systems and CS&I revenue on a forward basis. And as you know, utilization – fab utilization is going to be the primary driver of the CS&I revenue on a forward-looking basis. The teams are right now in the process of working through our 2024 model specifically, but we do expect to maintain strong gross margins going into next year.

Okay. Final one for me is you clearly outperformed this year, as you mentioned, WFE being down 20%. You guys are up 20%. If the market is flat to up next year, do you think you continue to outperform?

Yes, Dave, this is Doug. At this point, we’re not providing any guidance for 2024. We see the $1.3 billion model coming in for 2025. We continue to see good bookings and good quote activity. And so we’re optimistic on 2024, but we’re not ready to give any specific guidance.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Craig Ellis of B. Riley Securities. Craig, your line is open.

Yes, thanks for taking the question. And congratulations on the third quarter. Jamie, welcome aboard. I look forward to working with you.

Yes, thank you.

The first – yes, thanks. The first thing I wanted to do is follow-up on one of Charles inquiries. I was hoping that as you provided some color on just quoting activity broadly and orders, if you could just focus on what you’ve seen fourth quarter to date and clarify if fourth quarter to date, so over the last month, things have been broadly steady, broadly strong with limited signs of weakness?

Yes, Craig. We don’t break out the quote activity or the bookings for a given quarter. But I think we’re seeing continued good strength in power and silicon carbide. Like everyone else in the industry, there is – we’re seeing some of the softening, as Russell mentioned, in some of the mature markets, moving a little bit beyond just consumer. So I think our quote activity and our bookings reflect the general market behavior.

Got it. And then, Doug, just to follow-up with the team on some of the longer-term issues. Nice to get the finer point on calendar ‘25’s potential with the target model. I know you’re not providing guidance for calendar ‘24. But I was hoping you could frame up some of the gives and takes that you see as you look at calendar ‘24, specifically, for example, would you expect that DRAM could get materially better, same with CIS? And what are some of the gives and takes within mature foundry broadly outside of CIS?

Yes. So I think the mature foundry market, which, as we all know, has never suffered a downturn because it didn’t exist until a few years ago. So everyone is starting to try to figure out exactly how it cycles. And it appears probably tied very much to more economic factors and so forth. So I think as we go into 2024, a lot is going to depend on what the economy is doing and so forth relative to that, which will drive consumer spending, drive the industrial back and drive general automotive, not just the power piece. And so that’s how we think the market is going to behave. As far as the specific segments, image sensors are very much driven by phones. And so we will see how this cycle of phones look for Axcelis and for ion implant. The other factor that drives it is the next generation of technology, which drives our products like our VXE and our Purion XE Max. And then the other factor relative to memory or the rest of your question, I mean, at this point, we haven’t really changed our position. We see the second half of next year, the beginning of DRAM coming back in 2025 to be a strong DRAM year. NAND probably is still slow until 2025. And the drivers on DRAM near-term, there is some China activity and then there is the HBM and some other technology things. Those are going to – those are going to use up capacity and improve utilization in fabs, that ultimately will lead to CapEx focus on implant.

That’s helpful. Thanks, Doug. Thanks, guys.

Thank you. [Operator Instructions] Our next call comes from Mark Miller of The Benchmark Company. Mark, your line is open.

Congratulations on another strong quarter. I was just wondering, certainly, EV has been a major driver, but do you see any momentum related to AI?

Yes. I think AI is going to drive a bunch of things, Mark. AI, first and foremost, is driving advanced logic, right? And that was really highlighted by what AMD said the other day and what NVIDIA has been saying. Second thing is that it’s driving the advanced packaging for the HBM technology. Ultimately, AI will drive a big piece of the market, right? It’s dependent on data, which it gets from IoT devices as well as every other feed that it can get, it will drive big amounts of DRAM even beyond HBM in the servers and then lots and lots of storage in the form of NAND. So it is a very important long-term driver over the next many years.

You mentioned DRAM possibly coming back before for NAND. I just was wondering, I think the estimates are that for an AI server, there is 6x more DRAM. Is that one of the drivers or is that one of the factors and your thoughts about DRAM coming back somewhat sooner?

Yes. I think that is definitely one. HBM, which is an advanced packaging use of DRAM, where it’s packaged directly on the GPU. That will help. And then in general, the general server DRAM. The other thing that will drive DRAM back will be consumer coming back, PC refresh cycles, if there is a good phone cycle. All of those things will help drive the DRAM market back.

Thank you.

Thank you. [Operator Instructions] Our next question comes from Jed Dorsheimer of William Blair. Jed, your line is open.

Hey, thanks. And congratulations, and Jamie, look forward to working with you too.

Yes. Thank you, Jed.

I guess, first question on silicon carbide. What percentage of the quoting activity is on 200-millimeter versus 150-millimeter? I’m assuming most is on 150-millimeter, but just curious on how that picked up on 200-millimeter?

Yes, Jed, so we don’t break out the specifics our customers found on us giving those kind of details. But in general, the market is pushing sort of production level at 150-millimeter with many lines, pilot lines at 200-millimeter with a plan to ramp those as the materials are available. And on recent calls of material suppliers, things are looking positive that materials will start to become more available, and that will drive our customers towards 200-millimeter for their next fabs or expanding their many fabs. So we’re definitely seeing plenty of 200-millimeter activity, but still the bulk of production is probably on 150-millimeter.

Got it. The third of my question is, is there anything within your tool design that would cause your uptime on 200-millimeter to be lower than that of 150-millimeter? And I’m asking is – has recently come up with about uptime issues. And I’m just curious what the difference may be and whether or not that’s a competitive advantage as we look at your tools versus some of your competitors?

Hey, Jed, it’s Russell. So I would say, I don’t think there is a significant difference between 150-millimeter and 200-millimeter or 200-millimeter and 300-millimeter. We do have significant competitive advantages in our product from the ion source technology to the wafer handling. As you know, these are brittle wafers, they are transparent, they bode very easily. But I don’t think there is any fundamental reason why a 150-millimeter and 200-millimeter tool would be different in reliability, and that’s not what we see with our tool set.

Got it. Thanks. That’s helpful. One last question, Jamie, just – last quarter, the commentary, I think around book-to-bill being under 1 was that it’s an anomaly, but we have two quarters with a book-to-bill under 1. So, I am just – is there expectation that this bounces back above 1 as we look into next quarter or do you think we are kind of at this level for a little bit? How should we be thinking about the book-to-bill?

Yes. Jed, I think that’s a good question. I know in the third quarter here, we did have some shipments in the September timeframe here that sort of helped to drive that book-to-bill a little bit below 1 from what we were otherwise expecting as we did over-perform relative to expectations for the third quarter. Given that I am still coming on Board, I might pass the rest of the question off to Doug here to respond.

Yes. So Jed, I think that’s one of the big reasons is that extra shipments at the end as was mentioned earlier, CSI is off a little bit as a result of fab utilization. So, that combination allowed us to keep the revenues where they are and – but it did affect the book-to-bill. I think the other thing to be thinking about is the fact the industry is still in a pretty big downturn. And we have had some book-to-bills that were unrealistically high probably in terms of a couple – a few quarters. So, I think it’s kind of a balance. We are working off a pretty big backlog as well, and that’s continued to stay relatively flat, so.

Great. I will jump back in the queue. Thanks guys.

[Operator Instructions] And the next question comes from Tom Diffely of D.A. Davidson & Company. Tom, your line is open.

Yes. Good morning. Thank you for taking the question here. I would like to follow-up a bit on just question about the 150-millimeter, 200-millimeter. For you, is it the same tool, same tools, same margin structure kind of when you look at the two different wafer sizes?

So for us, so we can either ship is a 150-millimeter or 200-millimeter. We also have an upgrade kit that you can ship to the field and you can do this upgrade in the field. It doesn’t take very long to do that trend – that change.

That ends up being a good thing, Tom, for us. With sort of following on to one of the questions that Jed asked relative to 150-millimeter versus 200-millimeter fab adoption, companies are – our customers are ramping their 150-millimeter as they begin to put 200-millimeter capacity online. At some point, they will go back and they will upgrade their 150-millimeter tools to 200-millimeter, and that will generate significant CS&I upgrade revenue for us.

Okay. But how do you look at this as far as the upgrades add a lot of capacity to the industry and obviously take away some of the new system demand as well, but in general, would you consider that a net positive or a net negative?

Well, it will end up – I think it will end up being a positive actually. The upgrades are a good margin for Axcelis. They are a great benefit for the customer. Allows them to get their 200-millimeter fab up and running and then go back and be able to take down their 150-millimeter fabs and retrofit with tools that they have by whatever else is needed to support the technology that might go into the 200-millimeter version of that fab. And so in general, it will be a positive for Axcelis.

Okay. And maybe just a couple of more quick questions on the silicon carbide stuff. So, where is the industry right now as far as the transition from silicon to silicon carbide power for EVs?

Well, that’s probably a better question for some of the automakers. But the way we are seeing it in terms of tool buying behavior, it’s a mix. We see this year 60% of our revenue – around 60% of our systems revenue is coming from power as a whole, and 35% of our total systems revenue is coming from silicon carbide. So, silicon carbide is outstripping silicon in terms of implant tools by quite a bit. But there is a place for both technologies. And I think we will see the automakers settle in on where silicon carbide makes the most sense, where silicon makes the most sense. And it’s going to come down in a lot of cases to a cost and performance decision that they will be making on their cars. As the cost of silicon carbide materials come down, the cost of processing come down, the yields and so forth come up, then there is more incentive to move to silicon carbide and get that performance even on lower cost cars. But today, probably some of the lower cost cars and plug-in hybrids and so forth are more likely to be using silicon for its cost reasons.

Okay. And then just taking it one step further, when do you think we will start to see the second generation and third generation silicon carbide chips that are a little bit more ion implant intensive?

Well, I think we are probably starting to see some of them. And I think that’s – I think that there is actually a pretty important tie between your two questions. Even if people perceive EV slowing a little bit based on some of the latest news and so forth, our customers are continuing to work on getting the cost down, the performance up, moving to that next generation that allows the automakers to be able to make the cars at a lower cost or higher performance, longer time between charges and so forth. And so I think we will continue to see the technology growth relative to that same thing with the 200-millimeter migration. That’s an important element to getting the cost down.

Yes. Tom, just to kind of add to that, so as we talked about, there is a transition from 150-millimeter to 200-millimeter, there is also a transition going from, say, planar to trench. And you will see that this year, as people have gone from kind of like pilot lines I think to high volume, we are seeing that all of the Purion Power product portfolio is being ordered in pretty much equal revenue. So, we have got the Purion M, the Purion XE, the Purion H200, and they are basically equal this year. So, you are – and then clearly, the Purion XE is very much needed for the trench applications, which are the kind of more advanced devices.

Great. Thank you for your time this morning.

Thanks Tom.

Thank you very much. [Operator Instructions] Our next question comes from Duksan Jang of Bank of America Securities. Your line is open.

Hi. Good morning. Thank you for taking the question. So, I want to go back to the silicon carbide business. I understand it’s well diversified. It’s kind of a global customer base. You have strong backlogs, but EV weaknesses have been pretty well known. So, I am wondering if you are seeing any signs of stabilizing demand here? And how do we know if these backlogs were not part of a potential double ordering? Thank you.

Okay. So, I think if we look at our demand relative to silicon carbide and silicon in the power side, as I have said before, it continues to grow. Our customer base needs to continue to innovate to enable the automakers to be able to do the EV programs they want to do. While there has been some delays, especially in the U.S., it’s well publicized. That’s not all – that’s not necessarily the case globally. And so we see still quite a bit of activity in China, even though some of the percentage growth rate may have slowed, it’s still very high. And the car companies there are continuing to innovate even with new battery technology. So, we expect, Duksan, to see continued growth relative to that device market as customers continue to innovate and get the cost down. So anyway, that’s how we see it.

Got it. And then a follow-up to an earlier DRAM question. A lot of your WFE peers have had incremental shipments to China this quarter. They have also seen kind of broader strength in DRAM overall. So, I just want to understand why there is a difference between their business and Axcelis? Do you not have any exposure to these customers at all?

Yes. So, in the case of this quarter, that’s very much tied to a specific customer that we do have less exposure to. We do see future opportunities for DRAM in China, and we see growth in the more traditional DRAM base as we get into next year. So, that is the difference between some of our peers. They have less exposure to silicon carbide. And that’s pushed our exposure or our China business up to 35%. The mature markets where we are all – we all participate, those have been down a little bit for the general mature, and that’s brought our – this quarter’s exposure down from a high last year – last quarter of 50% down to 35%.

Thank you.

Thank you. [Operator Instructions] Next question comes from David Duley of Steelhead Securities. David, your line is open.

Yes, just a couple of follow-ups for me. Could you update us on your progress in the Japanese market and the advanced foundry logic business? And then also just could you just talk a little bit about – I think you have mentioned how the cost curve in silicon carbide is coming down. That should drive adoption in other markets. Could you just perhaps give some commentary about what other markets might be starting to adopt silicon carbide?

Yes. Hi Dave, it’s Russell. So, regarding Japan, we are actually quite pleased with the progress we are making in Japan. So, really for us, it’s about the power market in Japan and also the image sensor market in Japan, which we have very specialized tools that have huge value that it’s a natural place for us to want to go. And we are getting some traction. So, we have just recently shipped an EXE silicon carbide tool into Japan. We have got multiple other power series products going into Japan, and we are seeing a lot of demand for those particular power tools, as I have said, because they are highly differentiated, and we are definitely seen as a leader of silicon carbide power.

And as far as the advanced logic market goes, Dave, that – I guess we would describe that as similar to Japan. We are patiently working on penetration. In the case of advanced logic, the path is through R&D. And so we have a Purion Dragon in evaluation, and then as an evaluation system that’s at an advanced logic customer. That same customer has Purion Hs in production in advanced logic. And then recently, we announced shipment of a Purion Dragon revenue tool to an advanced research center that’s focused on advanced logic transistor definition and process technology that feeds all of the customers in this area. So, the path into advanced logic is one of patience and penetration through R&D. As far as your silicon carbide question in other markets beyond automotive, there is lots of opportunity. Silicon carbide represents some significant performance advantages over silicon in terms of switching speeds, cleanliness, switching heat dissipation, all of those kinds of things, weight. And so automotive is a volume application, and that volume application will bring down the overall cost of materials and ultimately, the cost of the components. Beyond that market, there are several industrial markets, the data center market, which ties directly to AI could be a big beneficiary over time. The clean energy and smart grid, there is a lot of applications there, as well as in some communications applications. So, the key is getting the cost down. And I think that’s something that’s really important to understand is that we have kind of – we are kind of over a little bit of a hill in terms of people now have the capacity in place to make the substrates, get the yields up, get the cost down, and that will open up the other markets.

Thank you.

Thank you. This concludes the question-and-answer session. I would now like to turn it back to Doug Lawson, who will make a few closing remarks.

Thank you for joining us today. We have a very busy investor calendar in the coming months. We will be at the D.A. Davidson Tech Summit on November 16th in New York City, the 7th Annual Wells Fargo TMT Summit on November 28th in Los Angeles, the New York City Summit on December 12th and the 7th Annual Needham TMT Summit on January 17th in New York City. We hope to see you at one of these events and for you to have the opportunity to meet Jamie in person. Thank you.