Thank you and good afternoon everyone. Joining me on the call today are Bill Miller, Veeco's Chief Executive Officer; and John Kiernan, our Chief Financial Officer. Today's earnings release is available on the Veeco website. Please note that we have prepared a slide presentation to accompany today's webcast.

We encourage you to follow along with the slides on veeco.com. This call is being recorded by Veeco Instruments and is copyrighted material. It cannot be recorded or rebroadcast without Veeco's express permission. Your participation implies consent to our recording.

To the extent that this call discusses expectations about market conditions, market acceptance, and future sales of the company's products, future disclosures, future earnings expectations, or otherwise make statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made including as a result of the COVID-19 pandemic.

These factors are discussed in the business description management's Discussion and Analysis and Risk Factors sections of the company's report on Form 10-K and annual report to shareholders and in our subsequent quarterly reports on Form 10-Q current reports on Form 8-K and press releases.

Veeco does not undertake any obligation to update any forward-looking statements including those made on this call to reflect future events or circumstances after the date of such statements. During this call, management may address non-GAAP financial measures.

Information regarding such non-GAAP financial measures including reconciliation to GAAP measures of performance is available on our website. With that, I will turn the call over to Bill Miller..

Thanks Anthony. Good afternoon and thank you for joining the call. I hope everyone is doing well. Veeco delivered strong first quarter results which is a testament to our team's resilience, dedication, and hard work. We're excited about the prospects of returning to more normal operations as more people are vaccinated.

However, we're entering this phase cautiously and with the health and safety of our employees in mind. Before we get started, I'd like to express my confidence in 2021 by letting you know we'll be increasing our full year guidance for revenue and earnings as a result of our backlog position. John will have more detail on this in just a few minutes.

I'll begin by discussing our Q1 highlights, a review of our markets, and then turn it over to John for a financial update and guidance. Q1 marked another quarter of solid execution with results above the midpoint of our guidance. Revenue of $134 million was driven by semiconductor and data storage sales.

Our gross margin came in above 41% and we achieved non-GAAP operating income of $16 million leading to diluted non-GAAP EPS of $0.25. In addition we generated $10 million in cash flow from operations and increased our cash and short-term investments by $8 million. We're seeing strong order momentum broadly across our semiconductor products.

This is consistent with a healthy macro environment in the semiconductor equipment space. Several analysts are forecasting this improvement. For example Goldman Sachs recently revised our 2021 wafer fab equipment forecast up for the third time. It's now forecasted to grow more than 20% in 2021 and another 10% in 2022.

A survey of the large semiconductor companies in the US, Korea, and Taiwan clearly demonstrates the commitment to investing in additional logic, memory, and advanced packaging capacity.

And when we look further at the sources of demand for this capacity we find the continued proliferation of mobile devices with 5G wireless, high-performance computing for graphics, AI, and datacenter applications, and applications such as automotive and cloud storage.

These market drivers and capacity investments made by our customers align well with our near-term growth initiatives in laser annealing, 5G RF, and data storage, and our long-term growth initiatives in semiconductor and compound semiconductor markets.

In addition to healthy market dynamics, we made more progress during the quarter engaging with our customers and shipping evaluation systems. I'll explain how this positions Veeco for longer term growth. Now, let's turn to our specific market opportunities.

Beginning with our semiconductor market, we serve this market with three major product lines; our laser annealing products for advanced logic, our ion beam deposition systems for EUV mask blank production, and our lithography products for advanced packaging. Our laser annealing products enable high-performance computing.

They're used by leading edge device manufacturers at the most advanced logic nodes and a memory customer is evaluating our laser annealing system for their manufacturing processes as well.

For logic applications, we're currently production tool of record at multiple leading edge customers for their most advanced nodes, including a recent third application win at one of these customers. And recently, we shipped multiple evaluation systems to both an existing customer and a new leading-edge logic customer at their next nodes.

As these evaluations close over the course of the next year, we hope to receive multiple tool orders. So in summary, current product demand coupled with ongoing evaluations for future nodes make laser annealing an important part of our 2021 and longer-term growth plan.

And in support of the semiconductor growth plan, I'm pleased to report construction is well underway at our new San Jose manufacturing facility. EUV lithography is also an enabler for high-performance computing as it allows manufacturers to further shrink their device geometries.

Veeco's ion beam deposition systems are used to make mass blanks for EUV lithography. Leading edge fabs are accelerating their adoption of EUV lithography at their advanced nodes which is driving mass consumption and this is forecasted to continue. We're experiencing this trend with continued customer engagement.

And in fact, I'm excited to announce that during the quarter, we received an order for two Ion Beam Deposition chambers for EUV mask blank production. Moving on to Advanced Packaging.

In order for electronic device performance to continue to improve, our customers have incorporated advanced packaging techniques such as fan-out wafer-level packaging in addition to shrinking nodes along Moore's law. High-performance computing such as CPUs and graphics processors are driving advanced packaging demand.

Veeco's lithography products are recognized by our customers for flexibility, superior process control and high productivity. In fact, we're seeing promising signs of improved demand.

During the quarter, we received a multi tool order from a large OSAT for our lithography products and we continue to see advanced packaging as a healthy and steady business for the company.

We serve the compound semiconductor market primarily with two product lines -- our wet processing equipment for RF filters and power amplifiers and MOCVD equipment for power RF and Photonics applications. Our wet processing equipment offers excellent process performance for our customers in the RF market.

The frequency and power demands of 5G RF drives more content per mobile device. Accordingly, we continue to see strong demand as customers add filter and power amplifier capacity. We are encouraged by customer feedback and demo results from our gallium nitride and arsenide phosphide MOCVD platforms.

These products enable fast charging and other power management solutions 5G RF devices and microLEDs. Recent early stage wins and an evaluation shipment position Veeco to grow with these emerging markets as they gain traction. Our third major end market is data storage.

This market has been growing for multiple years consistent with cloud and datacenter demand. Our customers who make thin film magnetic heads require additional capacity to keep up with increasing head demand driven by larger drives.

After multiple years of customers accelerating their capacity additions including in 2021, our visibility into 2022 is limited at this time. However, with data proliferation showing no signs of slowing, we feel confident about the long-term prospects of our data storage business.

And lastly, we're beginning to see signs of a potential recovery in our scientific and other market. This market is largely driven by sales to universities and research institutes. Now for an update on our 2021 priorities. First, we strive to maintain resiliency across all aspects of our operations.

Overall, I've seen remarkable teamwork and dedication throughout the organization. It's our people that put Veeco in a position to succeed and meet our short- and long-term growth objectives. Second, we'll continue to focus on profitability and we're off to a great start with our Q1 results.

Third, we expect to deliver near-term growth with our laser annealing, 5G RF and data storage solutions. And fourth, we continue to make investments in evaluation systems and our service infrastructure. Our goal is to win additional application steps, leading to multi-tool orders that will position Veeco for long-term growth.

And with these four priorities the Veeco team is committed to making a material difference and building a stronger Veeco. Now I'll hand it over to John..

Thanks Bill and good afternoon everyone. I'll be discussing non-GAAP financial results and encourage you to refer to the reconciliation to GAAP results in our press release or at the end of the earnings presentation. Turning to Slide 8.

As Bill highlighted, our revenue for the quarter came in at $134 million which was at the top end of our guidance range. All markets exhibited year-on-year revenue growth underpinning our full year revenue growth projections which I'll update in a minute.

Semiconductor revenue was $52 million which represented 39% of the total, driven by our laser annealing and lithography products. Compound semiconductor revenue was $25 million and made up 18% of total revenue, driven by wet processing Systems sold for RF applications. Data storage revenue was $41 million and made up 31% of our total revenue.

And scientific and other revenue was $16 million and made up 12% of total revenue with systems sold for a variety of applications. Looking at our quarterly revenue by region; our Asia Pacific region excluding China made up 41% of total revenue. The United States was 34%. China made up 15%. EMEA was 10%.

And finally Rest of World made up less than 1% of revenue for the quarter. Now turning to our non-GAAP quarterly results. Gross margin came in at 41.5% which was toward the top end of our guidance. Operating expenses for the quarter were $39.3 million or 29% of revenue.

Tax expense for the quarter was approximately $400,000 with net income coming in at $12.6 million and EPS was $0.25 on a diluted share count of 51 million shares. Now moving to the balance sheet and cash flow highlights. We ended the quarter with cash and short-term investments of $328 million, a sequential increase of $8 million.

From a working capital perspective, our accounts receivable increased to $87 million. This drove DSOs to 59 days. Accounts payable increased to $43 million with DPOs increasing to 49 days.

Inventory increased approximately $10 million to $156 million to support a planned increase in volume in the second half of the year and investments in evaluation systems. Days of inventory came in at 173. Long-term debt on the balance sheet was recorded at $325 million representing the carrying value of $389 million in convertible notes.

Our CapEx during the quarter was $2 million and does not yet reflect any significant spending on our San Jose expansion project. Now turning to our guidance. For Q2, revenue is expected to be between $125 million and $145 million with non-GAAP gross margin between 40% and 42%.

As a reminder gross margins are influenced by a number of factors and we do expect quarter-to-quarter variations. We expect Q2 non-GAAP OpEx to be between $38 million and $40 million. GAAP EPS for Q2 is expected to be between a loss of $0.06 and earnings of $0.11 per diluted share.

Non-GAAP EPS is expected to be between $0.17 and $0.35 per diluted share. Diluted non-GAAP EPS is based upon 51 million share count. For reference, we've included a table in the backup section of the earnings presentation to provide detail on the effect of the convertible notes on diluted share count. Now for an update beyond Q2.

With growth expected in the second half of the year we're increasing our view of full year 2021 revenue to a range of between $540 million and $560 million. At the midpoint, this corresponds to 21% revenue growth year-on-year up from our previous guidance of 17%.

As a result we expect non-GAAP EPS for the year to be between $1.10 and $1.30 per diluted share, which is a 40% increase year-on-year up from our previous guidance of 28%. And with that Bill and I will be happy to take your questions..

Thank you. [Operator Instructions] And we will go first to Rick Schafer of Oppenheimer..

Hi. This is Wei Mok speaking on behalf of Rick Schafer. Thanks for letting me ask question. So congratulations on the quarter and guide. So with the semiconductor supply chain constrained it seems like there's been an increased sense of urgency if you ramp capacity. There's been a lot of announcements recently on higher spending in the foundry area.

So I was wondering if you guys can talk about the landscape.

Are you seeing any demand pull-ins any shift in order velocity?.

Yes. Thanks for the question, Wei. We are seeing an uptick kind of aligned with the macro trends that you've seen from all the market makers. And we're really seeing pull-in in our laser annealing opportunities. Historically, we've been a process tool of record with one application with two customers.

Last quarter, we announced that we won a second application step with one of those customers. And now we just announced winning a third step. And so that's really quite positive and gives us the confidence to take up our 2021 numbers. But also it's important to note that we recently shipped an evaluation system to a third logic customer.

And we have an ongoing evaluation with a DRAM memory customer. So clearly, we're seeing a lot of engagement in the semiconductor space. There's more announcements that EUV is going to be more broadly adopted, which is positive for our EUV mask blank deposition systems. You can see ASML increasing their capacities for scanners out into 2022 and beyond.

So we do see that as a solid business for us. Between two to four systems per year. And I guess as ASML continues to increase their output there's about 10 to 15 scanners per one of our systems. So that kind of puts us in the two to four range, but maybe that would tick-up a little bit higher.

And then finally in advanced packaging, we serve that market with litho and wet processing equipment. We are seeing continued pull in demand there. This has been a steady business. But we're seeing -- starting to see some modest growth. We shipped a number of systems to a large OSAT this quarter and we are seeing demand pick up.

So generally in the three areas where we participate in the semiconductor space, laser annealing, EUV mask blanks and advanced packaging lithography we are seeing those macro trends..

Great. Appreciate it. Thanks for the color.

So as for my follow-up, I know you provided us a little bit update on the EUV -- on your eval tools, but can you give us a little bit of a summary of how many tools have been delivered so far to your customers? And when can we expect -- what is the expected time frame for when a tool gets placed to a customer to a design win?.

Yes. That's a really timely question. We have -- we are planning to have 10 evaluation systems in the field throughout 2021. Today, we have six in the field and four are planned to ship the rest of this year. And really here, we are investing to win. We're making large investments in 24x7-service support. So we're really over supporting these.

And of those 10 tools, five are laser annealing; two are MOCVD particularly in 8-inch power and microLED, two in advanced packaging. And one is a core technology, a Veeco core technology in semi we're not really ready to discuss. Most of these evals are lasting one year post-installation.

So there may be a few that will be signed off late this year, but I would expect that not to be overly significant. I would think mostly we'll be seeing those in the first half of 2022..

Great. Thank you..

Thank you, Wei..

We'll move to our next question from Patrick Ho of Stifel..

Thank you very much and congrats on a nice quarter and outlook. Bill probably first for you in terms of the strength you're seeing in the advanced packaging market. You mentioned that the large OSAT took orders this quarter.

As you look for the next couple of quarters, do you see that demand being a little more broad-based between both chipmakers and OSATs? Or is this still going to be heavily concentrated towards the OSATs?.

That's a solid question Patrick. What we are seeing is the customer base the interest expanding to foundries and IDMs as well as OSATs. We do see the opportunity broadening..

Great. That's helpful. And maybe as a follow-up question for John. In terms of just the OpEx management and even capacity management that you guys are undergoing. Obviously, as you become more and more of a bigger semi player, I think, Bill you mentioned 24-7 support. It's a lot different from your other businesses previously.

If you could provide a little bit of color in terms of how much more quote, investments you to make on the support side especially on the semiconductor end to keep pace with the demand that's out there..

Sure Patrick. And thanks for the question. So we are upping our OpEx guide here a bit. We did see OpEx for Q1 come in at just over $39 million, or 29% of revenue for quarter one. And we're giving a similar guide for quarter two in that same range.

So we do expect to increase OpEx as revenue increases and we support these opportunities, but we expect that as a percentage of revenue that OpEx will continue to come down. And that's our current forecast.

And to your point also Patrick, we're also investing in the area of spending in service infrastructure to support the growth in business as well as to support the evals and those investment costs go into our COGS expenses and get included in our gross margin results. So we're investing in there at the same time as well.

So, we're currently guiding from a gross margin perspective, gross margins in the same range for Q2 as we experienced in Q1 and expect a little bit of gross margin growth in the second half of the year..

Great. Thank you very much..

Okay. Thank you..

Thank you, Patrick..

And we'll go to our next question from Brian Lee, Goldman Sachs..

Hi. [indiscernible] here on for Brian Lee. I've just got a quick one for you guys around supply chain.

So with respect to the semi supply chain at large, can you update us in general on your exposure to any tightness there whether for raw materials or subcomponents? And what your mitigation process there looks like?.

Yes. I would say at the beginning of the pandemic, we did have to resource a few hundred fabricated metal components out of Asia back to the US for continuity of supply chain. But that was completed a couple or three quarters ago. I would say right now our supply chain is holding up pretty well. And it's not really a constraint right now.

We are obviously on top of it very aggressively, but we are able to manage through the supply chain issues..

Okay. Great. Thanks.

And with respect to, if you do have to qualify new suppliers or build out inventory what does that time line look like?.

For the specific machine parts I was speaking of, those are built to print parts. And so the process is really a first article process. It doesn't take a long time to change. For a larger controlled OEM component that would be a longer process of becoming qualified with a customer. It was a particular critical semi application.

But we have not experienced that yet..

Got it. Okay. Thank you very much for the color..

Thank you..

And we'll move on to our next question from Tom O'Malley of Barclays..

Good evening, guys. Thanks for taking my questions and congratulations on a really nice results. My question really centers around the data storage business. You guys had guided to some strength in the middle of this year, but it looks like a lot of that came-in in the March time frame.

With that lead-time around nine months can you talk about what happened? Why you saw March come in a bit better? And then maybe talk about -- in your prepared remarks talked about the visibility there, but just anything more around the visibility for the rest of the year after that strong March?.

I'll take a shot at that, Tom. Maybe John can fill in..

Yeah. I would say just in terms of the -- in the March revenue that number was within our expectations, right? So we shipped in Q1, what we were expecting to ship. We were expecting an increase based upon our backlog position compared to the Q4.

And as some of the ASPs of these systems are in excess of $5 million, or more just moving around one or two shipments, could impact the quarterly trend. But Q1 is within our expectations. And then maybe Bill, do you want to talk about the market just a little bit in more detail..

Yeah. Well, obviously when we gave guidance for the year of 2021 that was based on our strong backlog position and that -- nothing has changed there. So we expect to have a strong data storage year here in 2021..

Great. That's helpful. A two-part question here. One, can you describe what kind of led revenue you got in the March quarter? Do you have any plan for the June quarter? And could you walk through what your expectations are for the four different segments headed into June just to get us to that midpoint of guidance? Thanks a lot guys..

Sure. So in -- let me cover it, cover it by market here. I'll start with that, by market we see a fairly flat quarter at the midpoint of our guide from Q2 and compared to Q1. And what we see is an increase in data storage as our expectation in our Q2 guide, and flat to down in the other markets.

Then more specifically, on your question in our compounds semi where we would include the data storage, we don't see any significant LED sales in our Q2 numbers for compound semiconductor..

Thanks again, guys. Nice results..

Thank you..

Thanks, Tom..

And we'll go on to our next question from Gus Richard of Northland..

Yes. Thanks for taking the questions. Just real quick on the data storage side. Can you talk about the number of passes or the intensity of your Ion Beam Etch and Depth tools when you go from perpendicular according to advance to HAMR.

Each generation, how much more equipment does your customers need?.

We've seen -- our customers have seen the amount of data store continuing to grow at 35% annually. And we're benefiting from two factors. First, the size the form factor of the drives is increasing significantly. And the number of overall heads being produced or required to be produced is increasing.

And so the industry is looking at that as an 8% to 10% growth in heads. And then as you just alluded to, as they move from particular recording to energy-assisted magnetic recording, the complexity of the head increases significantly. And that is expected to likewise increase by about 8% to 10% per year.

And so what I mean is the number of passes that head needs to go through because equipment is forecast to grow at about 8% to 10%. So if you take those 8% to 10%, their support of the market..

Got it. So what you're saying is all things being equal 16% to 20% growth going forward for the intensity -- assuming heads per drive continues and drives are effectively flat and you just have more bits on a drive.

Is that the way to think about it?.

Yes that is. I mean I'll just add that the customers buying patterns for capital equipment don't work 8% to 10% or -- excuse me, 16% to 20% per year. And so that could move around a little bit. But generally, over a longer period of time, over many years that's a good calculus, 16% to 20%..

Yes, got it. Got it. That makes complete sense. Obviously, it's cyclical. And then on the compound semi side, there's a lot of emerging markets there. Micromini-LED, displays, LIDAR, health monitors, GaN Power, GaN RF.

Could you just walk through which ones of those applications sort of the opportunity first? And which ones do you see coming later on?.

Yes. So and generally in compound semi, we have two product lines. One is wet processing, where we are seeing significant demand from customers for RF filters and RF power amplifiers, really driven by 5G adoption in handsets. So that's clearly happening now. And in the MOCVD space, our business is at low levels, after exiting the commodity LED business.

We've obviously restructured that business and the like. And we go-to-market with two products. One is gallium nitride. We have a single-wafer reactor. And that is really tuned for the power electronics, RF and innovative silicon-based microLED applications. What we're seeing now is growth in GaN power applications, particularly at 8-inchs.

So customers are moving from 6-inch to 8-inch format. And those customers that are doing that are choosing Veeco. So that's a driver of growth this year into next year.

And then if I were to think about longer-term opportunities like microLED that you mentioned, I would say that is still farther out on the horizon like in the two plus three, three-plus years out but could be a nice opportunity for us..

Okay.

And what is the interest in arsenide phosphide 3-5?.

I think. Yes. So we go-to-market with Illumina batch tools. And that's tuned for applications in Photonics, such as indium phosphide lasers, VCSELs, as well as red micro LED. We just recently shipped an evaluation system for microLED with this product. But it's still further out, but that's certainly an opportunity for the company..

Got it. Got it. And then on the eval tools -- I'm sorry, for the housekeeping question.

Could you just list off the -- how many of each type of tool are in the eval right now?.

Sure. So we have a total of 10 that we're planning, six are already in the field under evaluation or various stages of installation; four are planned to ship the rest of this year. And so of those 10, half of those are laser annealing for logic and memory.

The third logic customer, the other two customers but their next most advanced nodes and as well as DRAM memory applications. We also have two evaluation systems. One as I mentioned in power, 8-inch power we're planning as well as microLED. So that's 7. We have two in advanced packaging. That's a subset of semi.

And one is a core Veeco technology that we're developing for the semi-market and planning to ship later this year..

Got it, got it. Yeah, no it’s real helpful. And then spares and service in the quarter and I'll leave you guys along..

Okay. Spares and service in the quarter give me a second here..

I believe it was $38 million..

Yes, $38 million..

Great. Thanks so much..

Thanks Gus..

And we'll go to our next question from Mark Miller, Benchmark Company..

Congrats on the quarter. The disk drive industry is just starting to transition to HAMR and EMR heads. And I'm just wondering you supplied both deposition and etch tools for thin film heads.

How does the transition to the HAMR and EMR type heads? Does that require more of your tools less of your tools? I'm just wondering as we transition over the next couple of years, what that means for Veeco in terms of their data storage equipment?.

Yeah, Mark, that's a very timely question. I would say that it's a positive, overall very positive for Veeco that technology transition to HAMR or MAMR because as the heads become more complex, requires more passes through Veeco's equipment and that's about 8% to 10% due to the technology transition. That's what we're figuring it to be right now.

And it's overall positive..

More an opportunity for etch or for depth?.

It's probably more depth, but I'd have to probably go back and check that, but it obviously more towards that..

I mean, in terms of projecting your growth opportunities over the next 12 to 18 months. In terms of the mix of the tools you'll be selling, is it a higher mix or similar to -- you did guide to somewhat higher margins I believe in the second half of the year.

Are you seeing a mix up, or do you expect mix to improve as this year goes on into 2022? Or will it be similar?.

So Mark our expectations for growth in the second half of the year, Bill mentioned earlier and taking up our guide for the second half of the year is coming from the semi side and particularly laser annealing. And we are seeing a pickup in advanced packaging as well.

Now we also expect -- and what was included in our previous guide was increased revenue coming from data storage in the second half of the year as well that we see growth coming in Q2 and in the second half of the year..

How would you rank in terms of your tool margins? It used to be advanced packaging and litho tools were the highest followed by ion beam tools and then laser anneal, is that correct? Or are they all similar in terms of margin contribution?.

Yeah. I would say that without going into too much detail about the products here we could really get bogged down. I think if we look at by these -- the market components I would say that the gross margins are within a couple of percentage points up and down from the company average..

Yes. I'm sorry for the additional question. Taxes for next year, I think, we were told you're running around $2 million for this year.

What will taxes look like for next year? How much will they increase?.

Yes. I don't think we've given that outlook for next year. And for taxes, I would say, we still have the NOLs. So from a cash perspective, we, at this point, don't see a substantive change to our cash taxes, as we still are shielded with NOLs..

Thank you..

Thanks, Mark..

[Operator Instructions] We'll hear next from David Duley of Steelhead..

Yes, I'm sorry, my phone dropped off for a couple of moments there. So I apologize, if I'm asking a question you already answered. But you mentioned that you had a strong backlog entering the second quarter.

Could you help us understand what the size of the backlog is, or give us a reference point how much it grew? Or any sort of color there, so we can understand why you're so confident about your backlog?.

Sure. So, thanks, Dave. We did report backlog at the end of the year last year. We've gone away from providing quarterly bookings and backlog. I would just say that the trend has been positive and that, as Bill mentioned and we talked about, we saw -- or we entered the year with strength in data storage in our backlog.

We're executing against that backlog. And we entered the year with the biggest contributor to the backlog was data storage and followed by semiconductor. And I would say that, that trend is still in place..

And could you just remind us what the backlog was, I guess, you're not going to tell us what it was?.

Sure. We -- so we entered the -- yes, so we entered the year with backlog of $366 million, which was a $100 million increase in 2020 over where we ended 2019 in backlog..

And I'm just assuming, based on your commentary that the backlog was up sequentially in Q1..

You can read into that..

Okay. Thanks. And just, as far as the LSA business goes, thank you for the update on all the advanced nodes. I think, a big chunk of that business is the trailing edge nodes. Could you talk about what you're seeing in trailing edge nodes throughout Asia, because that's mostly where that business is? In fact most of the business is in China, I think..

Is this a laser-annealing question?.

Yes..

Yes, laser-annealing or --.

Yes..

Yes, I would say 75% to 80% of the business right now is actually at the leading edge logic customers. And I would say, 20% or plus or minus, is in the trailing edge node. And that it's staying at about that ratio.

I don't know if you can add any more color to that John?.

No, I think that's right, Bill. I think that's what we've seen over the last trailing quarters, number of trailing quarters. And we don't currently see a change in that trend..

I would say that the growth that we've seen is really by the leading edge nodes, winning application steps at the leading edge nodes..

Okay. And as far as, just a related topic somewhat is, are you having any restrictions on shipping product to China? A lot of people have been waiting for licenses and have a backlog of unshipped tools.

What are you seeing in this area?.

Sure. So, we're subject to those same export compliance rules. What I would say Dave is that, we've seen our revenue as a percentage of business coming from China has stabilized, exiting the LED business at the end of 2018. We were in a period of time where we saw our business in China as an overall percentage declining.

And now, it's about 15% or so of total revenue. And that for us is pretty broad in terms of both the products that we're selling into China and the customer base. And some of that requires export licenses, some doesn't. Some customer base requires export license and others don't. So, for us, we see this business in this current range.

And to the extent that export licenses are required and we don't have those export licenses. We don't include that in our backlog or put that in our guidance expectations..

Have you -- I'll just kind of continue to elaborate on this particular topic.

I'm just kind of curious, if you've seen -- if you have not been able to make shipments to China because of export restrictions? And if that's the case, I'm kind of wondering, what the size of what's been held back is because eventually that might flow through and that could be a positive..

Right. So, as an example, if you're specifically talking about a customer like SMIC as an example, we've not obtained any export licenses to ship to a company like SMIC, if that's what you're referring to. And if we were able to get export licenses to a company like SMIC, we could see an increase in the business in China..

It's probably also worth noting that, since those kind of requirements came from the government, we have not booked POs subsequent to that into our backlog. So, there's not a risk of much backlog of operation either..

Okay. Thanks..

Thanks, Dave..

And there are no further questions in the queue at this time. I'd now like to turn the conference back to the presenters for any additional or closing remarks..

Thank you, operator and thanks for joining our call today. We are excited about 2021 and I want to thank our customers', shareholders along with the entire Veeco team for their continued support, as we execute our growth strategy. I do look forward to updating everyone at upcoming conferences. Have a great evening..

And again, that does conclude the call. We'd like to thank everyone for your participation. You may now disconnect..