All right, let's get started. Good afternoon, everyone. Welcome to the 27th Annual Needham Growth Conference. My name is Charles Shi. I'm the semi-cap analyst here. Joining me here from Axcelis Technologies, thrilled to have on stage Mr. Russell Low, President and CEO, Jamie Coogan, CFO, and David Ryzhik, SVP, IR and Corporate Strategy. Russell, Jamie, David, thank you for joining us today.
Thanks for inviting us.
Yeah. Before we start, I believe David wanted to make some Safe Harbor statement before we dive into the Q&A. Please.
Thanks, Charles. So because we're in our quiet period, our comments will focus on the long-term growth and opportunities for Axcelis, and will not address results for Q4 of 2024. In addition, any forward-looking statements that we may make today are subject to our risk factors in our SEC filings.
Back to you, Charles.
Nicely done.
Thank you, David. All right, so let's start by discussing the December 2024 U.S. export controls, and I believe you guys last week did put out a press release and quantified that based on your current assessment, this round of export controls will have a $20-$50 million revenue impact, well, it depends on where the consensus for this year's revenue is at, right? I say roughly 2%-5% of the total revenue, but can you kind of walk us through how you arrived at this assessment and any additional color, what kind of customers, what kind of products do you expect to be impacted?
Great. Yeah, maybe I'll address the assessment and then let Russell speak through the sort of technology implications. So new regulations came out, added approximately 120 some odd customers to the Entity List. Given just our exposure in the region, we went through that list to assess whether or not any of our customers had been added. And we did see a small number of customers that were included on that Entity List, which would prevent us from supporting those customers on a go-forward basis. So at the low end of our range, sort of the $20 million range really represents sort of aftermarket revenue opportunities that would not repeat relative to what we saw in the sort of 2024 timeframe.
On the high end of the range, it adds into that about $30 million worth of potential systems that are now, again, continue to be subject to export license restrictions, as well as potential new process requirements that we have to go through before we can ship to our customers. Our historical experience has been that we've been successful in navigating both those export requirements, given that our technology that we're sending to these customers is not necessarily prohibited from going to them. But out of an abundance of caution and just relative to the potential timing risk associated with being able to get licenses and approvals to ship, we felt it was prudent to include that on the high end of the range. So that's how we get to the $20-$50 million.
Yeah, thank you, and I think unless something you guys want to add.
No, I guess I would say that we weren't necessarily surprised by the additions. It's anybody who has been involved in advanced devices is basically going to go on that Entity List. And they also added a new ECCN number around ion implantation. So it's very specific about is it advanced devices, is it 300 mm high current? That really is the focus of this. So it wasn't a huge surprise to us. And a bunch of years ago, I think back in 2022, we kind of got a little bit burnt by the memory and Advanced Logic in China. So at that point, two years ago, we decided to pull out. So this is why it hasn't had a significant impact to us.
Okay. So I do want to ask from another perspective regarding the export control. Two of your competitors, two Chinese companies who are working on providing ion implant tools, were also added to that BIS Entity List. And of course, that means some of the foundational technology is going to be restricted from going to China. What's your view on that? Is there any, I mean, that's probably secondary, right? Primary, the first order, you already announced a $20-$50 million impact. But is there any secondary impact or even benefits with your competitors being added to the Entity List?
Sure. So it's not surprising that there are domestic suppliers in China. I think they've been around for about 20 years. A recent report showed they're about 2%, sorry, 3% penetrated into the local domestic market. There's almost zero outside of China. And they're really mostly at the locations where we're not able to sell to anyway. And I've always kind of said to you, we have a lot more in common with lithography in the sense that the technology is really difficult. We like to say it's like it's not rocket science, but it is nuclear physics. So there's a lot going on inside these machines, and it's really difficult to replicate that technology. So we think there's a big barrier and a moat around our technology. For our competitors to also get put on the Entity List, it just doesn't help.
There's a bunch of places you can imagine. Our biggest competitor is about 10 mi up the road. And the reason for that is because there's an ecosystem, there's a talent pool. You need all of those things to be successful. And we do have vendors that are single source or sole source. And if you can't get access to those, it's going to take a long time to find replacements. I mean, hell, we've tried, but sometimes that little special source is what takes to make those parts work. And that's what we've built as our ecosystem in and around the New England area.
Okay. So let's discuss, I mean, zooming out a little bit to the broader power semi or specifically Silicon Carbide market dynamics. Can you kind of recap what you have been discussing with investors since the last quarter's earnings call? We know you expect to see digestion in first half 2025. But are you able to provide us with any incremental insights or additional color on the long-term view there in conjunction with what you're going to remind us about what's the near-term dynamics? And maybe one, let me ask you, are you seeing any green shoots? I know we all know things are probably lots of headwind, but we want to see if anything.
So a couple of comments, Charles. So I think semiconductor is a great place to be in general. I think we've all talked about it's going to get $1 trillion worth of devices by 2030. It's going to continue to grow. You guys are going to continue to have more and more laptops and phones and things with chips in them. Our cars are basically just computers on wheels. So the industry is going to carry on growing. So secular growth is still there, particularly electrification. And right now, AI, those are the big trends. There's still going to be cycles. So when I look at the trends, I mean, clearly electrification is generating energy efficiently, transferring it, transporting it efficiently, and using less of it. I do think that wide band gap materials have a special place in that.
The killer app Silicon Carbide has been electric vehicles. It's pushed the volume up really, really high. Now the price is coming down really quite dramatically. That's allowing it to open up a whole host of new applications. I would say we're absolutely in the first innings. Regarding Silicon Carbide, the interesting thing is there's 22% of Silicon Carbide. 22% of electric vehicles Silicon Carbide in them. If you take out Tesla, it goes down to 6%. You say Silicon Carbide is actually underrepresented in cars. As that price comes down, you're going to see more and Silicon Carbide in there because it allows you to have more efficiency, bigger range. It really is the technology of choice. As that price comes plummeting down, you also see it move out into other areas.
So we've heard our customers talk about data centers, not just the battery backup, but also actually in the racks managing the power. We've talked about it in HVAC. Somebody said that half of the energy in the U.S. is used for heating or cooling. So you think about all those compressors or big current motors, you can save a 5%-10% just by using Silicon Carbide devices. So I think the applications are going to continue to grow as the price comes down because I think it was always the right solution. It just wasn't cost-effective. So I think we're in the first innings.
When I do talk to some customers, some of the really big customers are looking to get Silicon Carbide and saying, "Yeah, we'll have our first product in 2028." They're like, "Aren't you concerned that you're kind of a bit late?" They're like, "Nope, we're just starting." So I do honestly believe that you're going to see this stuff become ubiquitous, not unlike when you first bought an LED light bulb from Home Depot for $20 and thought, "Holy moly, why the hell would I ever do this given an incandescent's $1?" Now you see the prices collapse. You see them in kids' toys. You see them in kids' trainers. LEDs are everywhere. I do Silicon Carbide is going to be a similar technology that it just makes sense for using less power.
Yeah. And one of the, I think, early signs we're seeing, and Russell can certainly add to this, is on bringing the cost down. The largest part of the cost was the substrate itself, right? Both in the cost of building up the substrate, but then also the quality of the substrate. And recently, there's been significant progress made in lowering the cost of building out the substrate, but also in the improvement in the quality, which is allowing for more yield and more devices per wafer. And we're hearing the commentary very clearly that that is now moving from 6-inch to 8-inch, right?
So, you're going to be able to produce more devices on higher quality wafers utilizing the implant technology that ultimately does bring that cost down and then allows for that proliferation across not only the auto applications, but into those industrial applications, then ultimately consumer goods, as Russell's talked about.
Definitely. So back a couple of years ago, you looked at the cost of a Silicon Carbide device. Half of it was the substrate, maybe a third of it was the epi, and then the front-end processing was actually a very small piece of it. You were seeing like 20%-30% per year reduction in the cost of the Silicon Carbide. And that's in 6-inch and 8-inch. And we've spoken to a number of customers, and they're sampling 6-inch and 8-inch. They're sampling from the West and from China. And they're basically saying the stuff coming out of China is as good, if not better than stuff they can get anywhere else. And that is incredible. But I guess it's not surprising given what's happened in the past. I don't know if you remember what happened on silicon wafers for semi or solar cells.
This is really big quality. So the cost of the wafer is coming down. I think you're going to see EPI getting integrated into the wafer by a supplier. So you're just going to buy an EPI wafer. And I think all of the value is going to move up to the devices. And that's somewhere where the Chinese really haven't quite grasped fully all the device stuff. That's kind of quite complex, but I think they will. So they're going to be doing like 6-inch planar, while kind of the West will carry on doing 8-inch trench or they're moving up. But all of these things are bringing down the price of the devices. And that's just good for everybody as these devices will become ubiquitous.
Oh, good, then I think there's one area obviously getting a lot of attention is AI, right, but I think you've talked about the potential of adopting Silicon Carbide for data center type of applications, but there seems to be an alternative technology out there, right? It's GaN, gallium nitride, and Russell, I think you've been bullish on Silicon Carbide potential use by data center, but in this Silicon Carbide versus gallium nitride debate, any additional thoughts, and over the course of the, let's say, last six months since you talked about this opportunity at your Investor Day at the SEMI Congress, anything incremental you want to add?
So full disclosure. I'm relatively agnostic to Silicon Carbide or silicon IGBTs. They both have high densities of implant steps. Gallium nitride has less, so I'm not as excited about it. So full disclosure. I would say that gallium nitride had its day with LEDs. I was actually working for a company back then when that all occurred. And we were looking to see gallium nitride get into those really high-frequency applications with moderate high-voltage standoff. I mean, it really does, if you look at the map, have its own little area where it excels. So naturally, we thought that as data centers take off in the actual racks, that's going to be a great opportunity for gallium nitride.
So that's kind of why I'm surprised that a couple of our customers came out with these kind of press releases saying, "We've got Silicon Carbide devices focused on this specific application." Because previously, when they talked about data centers, I thought they were talking about the battery backup. It's like, "No, we're actually talking about in the rack." So then kind of when we pushed them a little harder and said, "Okay, so we understand that. Why?" They said, "It's just the reliability." Silicon Carbide, because it's been used for automotives, has the track record of the reliability. GaN does not. It's used for consumer products where you throw them away after a few years, whereas the products for cars, they have to be bulletproof. You can't have a recall of a car and change out its brain. So that seems to be the biggest reason.
So it's not necessarily cost. It's reliability. So we'll see how that plays out. I mean, we obviously can't tell what our customers are using our tools for. We sell a tool, and if they decide to put it into data centers or cars, we don't obviously know what they're doing.
Yeah. And we also see a number of other opportunities relative to AI, maybe not directly beneficial with HBM or sort of the compute power, but really it's the second-order impact of memory, DRAM, right? So NAND, DRAM, communication devices, storage devices, all of the things that, right? So AI wants.
SSDs.
Yeah. AI wants all of your data, right? They want to collect as much as they possibly can. They want to then compute the compute power associated with trying to figure out what it means and interpolate what that means to then process out a result for you. The second-order impact on sort of the foundational technologies, the mature technology devices, as well as the memory devices, is going to be fairly significant, right? Sizing that is really difficult, and the timing of the growth in that space is going to be hard to really quantify exactly when that's going to occur. But if AI really is sort of genuinely the next-generation killer application here that is going to sort of sweep the globe, right, and make all of our lives a lot easier, it's going to need more storage than we have today.
It's going to need more DRAM than we have today. And the sensor technology, imaging technology, and other technology is going to expand fairly significantly in order to satisfy those requirements. So we see AI really, again, not a direct benefit to the current growth, but in the long run, the end-use applications.
While we know it may not be big in advanced technology, which is actually an area we're working on, HBM, that actually does benefit us quite significantly. So we're big in memory in Korea, and it's used up an awful lot of the kind of like the low-utilized tools, and it's pushed up the utilization. And it's also kind of caused people to start adding more machines and reconfiguring factories. So we have seen a small uptick in memory. But I'd say HBM is good for everybody because some companies are making hay, and they're making all their money on it, and they're cannibalizing DRAM in order to make the HBM. Other companies that may not be quite so good at HBM are rolling back and doing the DRAM because that's where they can make their money. So the need for DRAM, and quite honestly, HBM is DRAM.
It's just a bit bigger. It's good for the business.
Yep. Yep. I'm glad you guys already covered the memory question. Can you kind of remind folks, I mean, here or on a webcast, relative to advanced logic, it does appear that implant intensity in DRAM and NAND is higher. Maybe not as high as power devices, semiconductors, but kind of want to make that clear. And it's an important market for Axcelis.
So at our investor day, we did have this chart. And we kind of had per 100,000 wafer starts, how many machines you need of medium current, high energy, high current for, say, NAND, DRAM. We then did the same thing for logic, knowing that a logic fab is probably going to add 30,000 wafer starts. But we normalized it to 100 just to get the idea of the density. We did the same thing for Silicon Carbide. Silicon Carbide really is very dense. Actually, it shows IGBT silicon devices very intense on implantation. Mature technologies, the old planar devices for logic, like a 28-nanometer device, that also was the most intense implant node for us. So basically, we try to kind of lay that out and show that the areas that we have really excelled are also the areas that have a really high implant intensity.
And as you know, since that 28-nanometer logic node, for example, as people went to FinFETs and gate all around, the number of implant steps in the front end did reduce. Now you're starting to see a couple of implant steps turn up in the middle of the line and the end of line as people are looking to do backside metallization. And those are the opportunities, those inflection points that we're looking at to see if we can kind of get ourselves a bit more of a foothold in advanced logic. So we still think advanced logic is a great growth opportunity for us. And we're working with research institutes to learn and to be able to kind of solve valuable problems.
Yeah. Yeah. So switching gears a little bit, a few years back, right, the industry we're talking about, not just more and more, but also opportunities in more and more, More than Moore, right? More than Moore. And then I think the last couple of years, we did witness, right, the rise of Silicon Carbide, SiC IGBT. These were a part of that More than Moore, right? The other More than Moore area, right, I think you guys are participating, you kind of touched upon a little bit is image sensor, right? Image sensor looks like Japan is a very important market for that particular device. And can you tell us a little bit more about the size of this opportunity and in terms of getting more qualifications, getting more market positions? What are the timelines you're expecting?
Taking a kind of step back, so we've talked about growth opportunities for us. We did talk briefly about the advanced logic. It's about a $450 million-$400 million business. We're underrepresented. Japan's not dissimilar. It's about $400 million-$450 million, and we are somewhat underrepresented in that market. So when I think about Japan, and obviously it has power devices, silicon, Silicon Carbide, it has image sensors, it has memory, and it also now has advanced logic, that's what Japan is. I would say that the Japanese have always been very happy to buy from Japanese vendors. They have a very, very strong relationship, even if the technology wasn't the most cutting edge.
What we've found with our ability to break into the Japanese market, which we've broken into actually quite a number of different accounts, is because we had a highly differentiated product in terms of our Silicon Carbide machine. So the local vendors didn't actually move for the times, either with the silicon or the Silicon Carbide tools, and that got us our foothold. So now we're building the relationships. We're fanning out the technology. It's a great opportunity. So we started to grow in power. We also have opportunities in memory. We also actually shipped a tool to Advanced Logic, and there is definitely a holdout in image sensors. So again, you've got to solve a valuable problem. I think we've talked about in the past is our high-energy machine. We introduced this new technology called Boost technology.
We fundamentally have changed the game on the amount of contamination that gets implanted into the wafer along with the ion beam. It's one of those things that when you're running high charge state ions, you end up with a little contamination there, and it kills image sensors. You get dark currents, you get white pixels, all those things. We've managed to demonstrate with a customer and actually get device data that shows that we might be onto something here. It's kind of exciting data that shows that we could actually have less contamination in our ion beams compared to our competitors. Again, we're going to keep going back. We're going to keep banging on the door, keep throwing rocks through the windows, trying to get attention. We're trying to find real problems that we can solve with valuable solutions, and we won't give up.
Maybe a couple of financial questions. Could you talk about some of the drivers of your margins and free cash flow performance? I think this is an important question in the context that you actually did guide some of your key market demand. It seems we'll see a little bit of headwind, right, going into 2025, and how should we think about gross margins and free cash flow performance, especially through the period that's right in front of us?
Yeah, so just for context, we've had very strong growth in the business. That growth has been coupled with growth in our gross margins, so we've been able to gain market share while continuing to grow gross margins. That's done by two fronts. One is the differentiation of our products and the pricing that we go with customers to ensure that we're really sharing in the value that our tools are creating for those customers, and so we're finding good opportunities to be able to demonstrate that the differentiation in our tool supports the higher ASPs that we may be going for in the various segments as we go after that. Secondarily, and I think most importantly, is the self-help that we've done around our supply chain and operations teams. With the increased volume, we've gotten better pricing, right, across the board from suppliers just through volume discounts and rebates.
In addition to that, we've been working really hard on low-cost regions, finding low-cost regions to find second sources and in some instances primary sources for our parts and products. And there's still more work that we can do there, right? So as we think about our long-range gross margin targets of greater than 45%, we believe that that's achievable with a large portion of it being self-help associated with better and more efficient supply chain management. And the team works every day really at doing that. In addition to the self-help around supply chain, we do see opportunities to introduce incremental upgrades. So we continue to expand our CS&I business. And so our CS&I business is our aftermarket business today. That represents spares, consumables, upgrades, and services that we provide to our customers for our tools that are in the field.
Our tools require a high level of touch throughout the course of the year and really come with almost an annual entitlement associated with their operation within the field. So we deliver the product, get nice margin on that, and then afterwards we support our customers with that spares and consumables. So there's a couple of things we're doing there. One is we're introducing contracts into the space for our customers in order to support them in their uptime needs and requirements and the productivity of their tools. The goal of that, though, is to increase our share of wallet relative to their spare and consumable sales. So by guaranteeing some portion of performance, we're able to guarantee that we're going to get a higher allotment of their annual spend on spares and consumables. In addition, we've made investments in our R&D team to drive high-value upgrades.
And so these are productivity upgrades that continue to move our systems technology forward, right? So we continue to maintain a competitive advantage relative to alternative products in the space. And it allows us to extend the life of our tools well beyond sort of the initial, call it 10 to 15 years. So by continually making our tools field upgradable, it allows us to extend that relationship, increase the productivity for our customer, really lower their initial incremental investment costs for new tools. Those come with higher than average margins relative to the consolidated margin. So as we think about how we go after that greater than 45%, we've got a very clear roadmap on how to attack that higher margin. And we have a demonstrated track record of being able to drive higher margins in historical periods based on the work that we've done today.
So we feel really good about our ability to do that. As Charles noted, the near-term headwinds, right, as we see lower volumes, as with anything, right, fixed cost base relative to lower volumes can always be a challenge. But ultimately, we see in the long run that the steps that we've taken have made our margins a little bit more durable in the short term at the gross margin level.
The other, Russell, you have something to add?
No, no. Good answer. Thank you.
Okay. The second question, right? Can you discuss your capital allocation strategy? Specifically, I think one year ago when we had this conference, and then I think it was probably one of the first times that somebody asked you about M&A because for a long time, I think you guys were pretty focused on growing organically your own business. Is M&A something you're still looking at, and what kind of targets that you feel like are going to be the best fit?
Yeah. Let me just start by saying our first order of priority for cap allocation is the organic-based business. We've seen, again, like I mentioned earlier, phenomenal growth in the business primarily due to our focus on making sure that we have the right team, we made the right investments in the talent, right, around research, development, engineering, and maybe some administrative folks. I'll give ourselves some credit as well. But we've got the right folks, we believe, to continue to grow the business. We need to make sure that they have the capital necessary to be able to drive that. That includes investing in our own tools and equipment so that our research and development team have stuff to play with and figure out the challenges that our customers are seeing and try to recreate that.
It's making sure we got the facilities on hand to support the growth that we have. Over the last two years or so, we opened up an Asian operations center in Korea that supports manufacturing and assembly of a smaller portion of our annual system shipments to our customers and really puts those systems closer to our customers, lowering our tariff and logistics associated costs related to that. In addition, we put in place a brand new logistics center to support inventory management more efficiently and effectively in getting that inventory. We used to have six warehouses spread across the North Shore of Boston, and if anyone's been to the North Shore of Boston, the traffic is a nightmare.
And so having a logistics center now that's about half a mile away from our facility makes us way more efficient in making sure that that material is there on time to meet our assembly and manufacturing requirements. So first order priority, continue to invest in the business in the way that we have and support that long-term growth. As we look at sort of the remaining capital, we sit there and say, okay, one, we want to make sure we maintain sort of sufficient cash levels on hand to support the business through the cycles. We want to make sure that we don't sort of over-lever the business in any material way. We want to make sure that we're able to kind of support the growth through cycles. We want to make sure that we have sufficient and adequate shareholder return portion of our capital allocation.
And then ultimately, we are going to look and continue to look for inorganic opportunities. And so on the shareholder return, just for those that may not be aware, we do have an authorization in place today, $200 million share authorization that we are executing on a quarterly basis under a 10B5-1 program. So we're in the market underneath that 10b5-1 program, buying shares back as part of that initial authorization. Over the last five years, the numbers just happened to work out this way, but over the last five years, we've bought back more than $200 million of shares over the last five years under prior programs as well as the current program. On the M&A front, we really are keeping a wide aperture associated with that. Our implant technology is unique in nature. There really isn't sort of a one-for-one out in the marketplace.
What we're looking for are potentially complementary technologies, ways for us to expand our geographic presence to help us penetrate markets. We're keeping ultimately a very wide aperture associated with what we're looking at. Ultimately, our focus is on shareholder value creation. We want to make sure that when we undertake any type of capital allocation priorities that we get the return characteristics that we would like to see and the value creation opportunity for all shareholders.
All right. I think it's time for us to open up the questions from the audience. Just ask a question. I'm going to repeat for clarity for folks on the webcast.
Wonderful.
Yeah. Yes, please.
[audio distortion] It sounds like those went well. What's kind of the balance between having enough visibility in existing orders and when do customers start to come back in line and start starting?
Yeah. I think this is a question about bookings and backlog because you guys have still a pretty high backlog relative to the revenue run rate. And book-to-bill is a little bit below one for a while. So I want to get some thoughts on the trend where bookings and backlog could be going.
Yeah. I think we would expect what we saw during the build-out of silicon Carbide power as people were coming online. We saw very strong order intake rates from customers as they were demonstrating right at the end of the day to their customer, right, their end customer, that they would have the available capacity to meet the future requirements of those. So the best way to do that is put in place firm purchase orders in front of that customer and say, "I've already secured my spot in line. I'll have the technology when it's necessary." That drove book-to-bill ratios well above one, right, which is really abnormal to some extent. And so we anticipate and expect there to be this normalization of backlog right down. In order to kind of get there, you would need to see book-to-bill ratios come down.
We're seeing that today. We would expect, and again, rough order backlog to be sort of a handful of quarters' worth, maybe two to three quarters' worth of systems inside a backlog for us. We're not there yet. So there's likely some level incremental opportunities. And ultimately, right, customers today have their future systems still on order, right? And so they're not necessarily going to put new orders in yet as they're still waiting for the delivery and execution against their current order set. So that's how we're thinking about it in the near term on our bookings and our backlog.
Just to add to that. When we think about memory, we are looking for kind of an uptick in memory, and it'll be DRAM will be the leader, right? Still very, very quiet. That looks more like a turns business. We build to a forecast. We don't typically get the POs in backlog. What you'll see is you'll get the PO a couple of weeks before the tool goes out. You won't necessarily see that, but Jamie's right. I mean, if you look at our backlog over the last couple of years compared to historic, it really was quite incredible. I'd love to have that forever. We don't believe that's going to be the case. We think it's going to start to get back down to one or two or three quarters' worth.
As Jamie said, that means you're going to have to have a book-to-bill ratio less than one to get that to normalize out because it's the same customers. They're saying, "Well, there's no point putting in another order until the one we've got on order gets delivered." Yeah.
All right. Anything else? Yes.
Maybe talk about your target business goal. You mentioned earlier your gross margin target is 45%, and that strikes me as a little low as a target, and then I look on your financials here, and you've got only 10% on R&D, and you're great for the bottom line net worth in the 20%+ , then I'm also looking at your balance sheet here, [audio distortion]
Yeah. I mean, the goal is we said greater than 45%, right? So obviously, we want to drive that higher as well. We set sort of long-term goals and targets relative to kind of call it similar characteristic tools and systems in our space that have similar characteristics. We're not a heavily software-driven business, right? So we don't have a high software component. You're going to see periods where we will pop above. And we actually did this in Q1 of this past year. We'll pop above 45%. We want to think on a long-term average, right? We want to be sort of greater than that 45%. As it relates to the balance sheet position, that has to do with sort of really the strong working capital management that we put in place. We've been able to convert our profits into cash, right, which is a tough thing to do.
A lot of that has to come down to AR, AR collections, and then ultimately inventory management. Our goal here is to make sure that we're managing this inventory as cleanly as we can while at the same time presenting opportunities for us to take share on sort of quick kickback in the markets, right? So as the markets come back strongly, we want to be positioned with the right level of inventory to be able to meet customer requirements in the short term. As it relates to revenue goals and targets, we put a model out in the July timeframe. We're not going to kind of comment on that on a quarter-by-quarter basis. But underlying that are really a bunch of underlying growth themes that we believe are still very largely intact in the long run.
The strategy for us to grow the business to be able to take advantage of that are the same regardless of what that end number and result looks like, right? We've talked about geographic expansion in Japan, our ability to go after some modest share gain and advanced logic as we find new opportunities for our implanter to be a differentiated solution in that space. We're going to continue to invest in R&D as a percentage of sales. Sometimes giving R&D, our R&D friends might not like this, but sometimes giving them more money doesn't mean they're more efficient at spending it.
So ultimately, as we see revenue numbers grow, we're going to continue to make incremental investments in R&D in order to ensure that our technology is positioned in the general mature process technology or foundational technologies as well as the power space for where the market is going. And so we want to make sure. And so the cash on hand right at the end of the day is largely building up as we continue to assess capital allocation priorities, make sure that we have got a strong enough balance sheet to weather through cycles and make sure that we continue to make those investments, and then ultimately maybe position us at some point in the future for M&A activity.
Yeah. So there's one more question, probably. We've got probably two minutes. And yeah.
So as I understand it, the demand dynamics for you on the incremental side, that is to say, what could change, it seems to be the EV portion of demand that might change unexpectedly. And I understand at some point, cameras were a very important part of your business, but that's obviously [audio distortion]
When you think about our growth model, we are looking to continuously growth in Silicon Carbide. EVs are still growing 15%-20%. We're expecting to see growth in electric vehicles. We're looking to see recovery in memory to prior levels and recovery in general mature. General mature is basically saying we want to see consumer, industrial, and automotive recover. Then we want to take some share in advanced.
Correct.
Logic and in Japan. So that is the strategy. So regarding electric vehicles, they're still growing. It's still going to be a growth area for us, but we also see growth in Japan and advanced logic. And then the other ones are just a recovery would be just great.
Yeah. And image.
How much is this EV of your business?
EV particularly, we haven't broken out, but we do break out Silicon Carbide system sales in our quarterly presentations. Past couple of quarters, I think it's been in that 40% of system 30%-40% of system sales zip code.
And just to be clear, image sensor is going to continue to remain an important part because we have a differentiated tool and technology with our high energy that allows our tool to be really effective at putting the.
Doping.
Doping's deeper into the image sensors. The contribution relative to total sales is diminishing because our sales volumes have increased so much across general, mature, and power, but we still have a very differentiated product with our high energy tool there, and so that's going to continue to be important for us too.
You're right. The number one application for image sensors is mobile phones.
Mobile phones, yep.
Kind of a distant number two is automotive.
Yep.
So consumer goods are driving that.
Yep. Great.
All right. That's a wrap, everybody, and thanks.