All right. Good morning, and welcome to the second day of JPMorgan's forty sixth Annual Technology, Media and Communications Conference. My name is Harlan Sur. I'm the Semiconductor and Semiconductor Capital Equipment Analyst for the firm. And very pleased to have Bren Higgins, is the Chief Financial Officer of KLA TENCORE here with us today.
But before we get started, I just wanted to point out that we did publish two reports on KLA last week. One discusses the market share trends from the recent Gartner cap equipment market share from 2017. And let me just throw a few of the statistics out there as it relates to KLA. Obviously, there as most of you probably know, KLA is number one equipment supplier in the area of process control. They are four times larger than their second largest competitor in that space.
And in the core areas that they focus on things like pattern wafer inspection, KLA has got 80% market share, seven times greater than their second largest competitor, Bear Wafer Inspection, they've got 90% share, 10 times larger than their nearest competitor. And then in things like, I think we'll talk about mask inspection, they've got 60% market share and three times larger than their number two competitors. So clear scale, clear market leadership. I think the trends are working in their favor. We'll talk a lot about that today, and I'm sure Bren will talk about that.
What I've asked Bren to do is to start us off with some opening remarks, and then we'll go ahead and kick off the Q and A. So with that, Brendan, thank you for joining us this morning.
Thank you, Arlen. Thanks for having us here today. So before I begin, I just want to just say that from a safe harbor perspective, all our comments are forward looking statements and, are subject to risk. You can see our SEC filings for a list of those risk factors. It's interesting.
It's never really been a better time to be a semiconductor equipment supplier. We're at the third year now in a row of what looks like double digit growth in the industry. WFE levels this year probably somewhere in the neighborhood of $53,000,000,000 plus or minus $1,000,000,000 So, very healthy spending levels by our customers. 70% of that is memory. Memory investment this year has been very strong.
DRAM investment from a shipment perspective for KLA is pretty balanced across the year in terms of half on half, a little stronger flash in the first half of the year versus second half. And we see foundry logic shipments start to pick up in a pretty meaningful way, but off a relatively low base in the second half of the year. So DRAM, obviously, for the industry, up very strong for the year. Flash up also probably in the 10% to 15% range over last year. And then foundry logic down this year and would expect that given where the spending levels are and what we expect for next year, that next year will be a growth year for foundrylogic.
The order trends look pretty good in the second half of the year around those segments. For the company, we guided 10% or better growth year on year, so in the neighborhood of 4,200,000,000.0 to $4,300,000,000 so very strong revenue levels for the company. Gross margins between 6364%, biased to the upper end of that range. And operating margins in excess of 38.5%, consistent with our public model that we have out there for revenue levels between 3,900,000,000.0 and $4,200,000,000 So the business model humming along very strongly. The structural improvement that we've seen in gross margin looks to be pretty sustainable both in terms of product positioning, but also execution from the operations and service teams in the organization.
Harlan talked about market share, so won't get into that detail. We provided some context on that in the earnings call a few weeks ago. Certainly, there's some context around Pattern Inspection, one of our strong markets in the company, a bare wafer inspection and inflecting business, probably talk about that a little bit later. Reticle Inspection, driven by EUV development efforts, and so that's been a very good business for us as well. So market share is good.
We announced the Orbotech transaction in the quarter. March 19, we announced that. We're excited about the opportunities that are there, allows KLA to serve a broader SAM. There's no product overlap. The customer top 10 customer list is not completely different top 10 customer list for both companies.
So, it's an opportunity to serve what looks like a 2,000,000,000 to $3,000,000,000 incremental SAM for the company, market leading position, complex systems service business. So it looks a lot like KLA businesses that we think that we can deliver complementary capability over time, but also drive operational improvements and leverage in their business model and then additional cash flow stream that we can put to work the way we have historically have in terms of the dividend and cash returns. During the quarter, I also talked about 70% to 75% through cycle cash flow return to shareholders is our target. Obviously, with the structure of the transaction and the announcements we made around share repurchase, we will be doing a lot more than that over the next couple of years, but certainly, that's our long term plan. So, very good environment.
We're pretty pleased with where things are. And with that, I'll happy taking your questions.
Great. Thanks. Let me start off with the first few questions. So obviously, KLA has amongst its semi cap equipment peers sort of best in class gross and operating margins. I think this quarter, you're pushing close to that 65% gross margin level and 40% operating margin level.
And you guys just updated your financial targets. I think it was June. And so obviously, revenues are a function of the demand environment. You obviously don't have too much control about that except for maybe product cycles. But what has led to the just pretty good expansion in gross and operating margins, just even over the past few quarters?
Is it leverage because of the revenue scale? Is it the new products that are carrying higher margins? Help us understand why you're sitting here today on the cusp of sort of mid-60s gross margins, 40% op margins?
Well, certainly, scale is part of it. I mean, we look to drive in the company 60% to 70% incremental incremental gross margins on revenue growth. We look for drop through of about 1.5%, the revenue growth rate terms of drop through to operating margins. Now you have movement around those numbers depending on product development investment and so on. So we run the company given that expectation and that's what we try to drive.
Certainly, product positioning is a huge factor. Our products are fairly differentiated relative to We our have a product introduction cadence that's far ahead of our competitors. So we're always introducing new capability to the market. We have a pretty deep understanding about the returns that the tools give to our customers. We try to share that value with them.
And so that and that establishes sort of baseline pricing for platforms and products that continues in every generation that you introduce. And so it's very important for us to hold to that and be disciplined about how we think about that. Service has been a nice tailwind to the business and that one good thing about consolidation, some more maybe more than one good thing, but certainly one good thing about consolidation is that we are able to leverage in certain regions the infrastructure in the service business. So you've had leveraging infrastructure, but also inflections around opportunities in our service business that are driven by what is an expansion of in demand that is now driving utilization rates of legacy tools at a higher level. So we're seeing that, we're seeing more activity there and then we're able to leverage the infrastructure, that supports it all.
Our service business is 75% contract. So it's a unique service business relative to some of our peers, I think, just given the nature of the equipment and the tools. So we do have a lot of high penetration rate in terms of or attach rate of contracts to service. And so that's been good for the business. Product introduction has been pretty good new products coming out.
And I think the experience, the engineering discipline, design stability, all those things has been pretty positive relative to historical experiences. These are not simple tools. And so sometimes you have issues when you introduce them. And, on a comparative basis versus prior generations of tools, we've had a pretty good experience in terms of getting the tools ramped in manufacturing. I oversee manufacturing operations in the company, so I live this on a daily basis.
But getting the tools out, ramping them, getting them installed and meeting customer commitments has been positive too. So lots of little things grinding it out, over time. But I do as I said earlier, I think that there are opportunities for us to continue to work this. And I believe that these improvements in the operating model that we put forward about a little over a year ago, are sustainable. So I feel pretty good about the trajectory overall.
Yes, this quarter looks like it's in that range, potentially as high as 65%. I don't think that's necessarily where we're going to be, but operating at these revenue levels between 63% to 64% is a place I feel pretty comfortable just given the mix expectations of the business going forward.
Great. And then let's talk about you gave us a good overview of how you see the year, memory, NAND more first half weighted, DRAM sort of spread first half, second half. Think I you talked about Foundry and Logic, getting stronger in the second half of the year. I think you've talked about full year your shipments, in the second half kind of up mid single digits versus first half. Is that how you feel confidence level about around that?
Yes. It looks like we continue to see sustainability what we're seeing in that forecast of mid single digit half to half growth in shipments is how we see it.
So, one of the newer dynamics over the past few years has been the rise of the China domestic manufacturers, right, both in foundry and logic and also kind of the newer entrants into the memory markets. And we you have been talking about this. We wrote a report last year that we estimate that for every new greenfield opportunity that comes up in China, there's probably about one to two percentage points higher process control intensity, goodness for KLA. And so two questions there. So, how has the China business done for the team just overall in 2017 and here in 2018?
Are you seeing the higher process control intensity, which further augments potential growth in China? And how do you think about China as we move into 2019?
It's exciting times over there. This year, a number of new big projects on the memory side, increments of foundry capacity along the way and more foundry last year, but this year, certainly from a shipment perspective, memory weighted. You're right. I think given the nature of the immaturity of process and technology in China, there's an opportunity for us and maybe subscale fabs or smaller fabs for higher levels of intensity in that business in a sustainable way going forward. Today, it's much higher than that, just given the fact that they are ramping these fabs from basically from development into these pilot lines.
And so monitoring processes much more closely before they start to move more aggressively to add wafer starts, which will drive more of the process side of the world. But, so the intensity is stronger. The market share position is also good. I think it's one of those situations where you tend to move, you want to get something going quickly. You mentioned market share position earlier, the fact that we've got what across the waterfront of process control, different solutions for our customer, the abilities to connect the data and tie the tool performance together to get time to results up faster that we're doing very well from a market share perspective there as well.
So it's strong business for the company. Just from an order perspective, and I'm using orders because the shipments move around a little bit because a lot of these greenfield facilities are brand new. So there's infrastructure and other things that go into the timing of delivery. But from an order perspective, we booked about in excess of $700,000,000 of indigenous China business in calendar twenty seventeen. That number this year looks like it's $600 ish plus or minus.
That number was about $250,000,000 in 2016. So quite a ramp. And when we looked at it, we've talked about it publicly that over a multiyear four, five year period, we saw business levels of incremental 500,000,000 to $700,000,000 of business in China. And so that's the experience we're seeing and it's been pretty encouraging so far.
Great. Well, let's we'll talk about some of the new products that you guys have been talking about that we wrote about recently. But let's talk about the Orbotech acquisition. First question for you is what's been the feedback like from your customers and Orbotech's customers?
Well, the feedback from customers has been generally pretty positive. As I said earlier, there's no customer overlap. So I think on both sides, we have a conversation with the customer. They're happy that we spoke to them about it, but they want to make sure that we continue to support them about around whatever that we're doing or what Orbotech is doing with them. So, the feedback has been neutral to positive.
The other general feedback overall is that given the changing complexity and increasing complexity of the roadmaps in those businesses that more tech is good. And certainly that from an inspection perspective, some of the capabilities that KLA has, we believe over time is complementary and can augment some of what Orbotech is doing. So the feedback has been pretty positive. As I said earlier, I think it's an opportunity increasing complex roadmaps and opportunity for us to broaden the SAM to leverage some of our core competencies to drive operating leverage and then another cash flow pool for us to deploy, in a productive way. So I think it is a deal for us that, we're excited about.
We think the structure, makes a lot of sense in terms of how we did it. I think that the view of our currency was pretty strong. Ultimately, though, we want the accretion that comes from a cash deal. So we made the commitment to buy back the shares. And so we're pretty pleased with the structure and the integration plan.
So going forward, we haven't done a lot on that front. On the regulatory front, we've gotten approvals from The U. S, from Germany, from Austria. Israel, we've got an exemption for applying to Israel. And then we've got the usual other jurisdictions, Japan, Korea, Taiwan and China ultimately to close.
And I would expect China to be last. But we targeted the end of the year as a close time frame. And so, nothing new on that front in terms of our expectations. I think everything is still consistent with what we said a month ago. Great.
It relates to you brought up a good point, which is we used to we cover Orbotech. And so one of the things that came was very apparent to us when we picked up coverage on Orbotech was these guys look kind of very much like the KLA of flat panel in PCB in a sense that I think people that don't know Orbotech and know that these guys are big in flat panel and printed circuit board naturally think that, well, these guys make equipment for manufacturing flat panels and printed circuit board. And it's a smaller part of the overall business. But the core part of Orbotech's business is much the same things that you guys do, which is process control, measurement, inspection, process improvement and so on. And so, you're still in the midst of kind of getting this deal done.
But are there areas where you feel like that the Orbital Tech team or the KLA team can sort of leverage the core competencies in the area of process control to kind of drive some maybe either top line synergies or maybe quicker time to market for tools on a go forward basis?
I mean, we've been very impressed with what we've seen so far. And you're right, when you look at the tools, they look similar. Now one thing about what we do at KLA is very high end capability. And the semiconductor industry with hundreds of millions of units enables, the industry to afford that high end capability. Now there are derivatives of technology and capability that KLA has that would, I think, make sense and help augment some of their positions.
Could take time for that to happen. Certainly, product it's probably a few product cycles away, and we've got to prove that we can actually design for the market requirements, including cost. So look, when we've considered a transaction like this, to your point, it looks familiar, creates an opportunity for us to leverage what we do well. It is you don't do a deal if you don't think that you can do those kinds of things. And so we believe that in the long run, I think that there are opportunities.
We'll see how that plays out over time. The operating opportunities are nice and certainly part of the value equation. But really, you have to believe that you can drive better products and deliver better products to customers ultimately over time to pursue a transaction like this.
I think one of the things that was interesting to me, because I think maybe some of us in this room also, would tend to conclude that once you enter into a definitive agreement to acquire a company, you need to suspend all of your capital return programs. But based off of the last earnings call, you seem to outline a situation where that's actually not the case, right? So maybe you can walk us through because I think you guys have been in the market buying back your shares recently, but maybe you can help us understand what are the windows of opportunity as you work through the Orbotech deal where the team can still be in a position to buy back shares?
Well, first, I'm not a lawyer. So but yes, so just I'll back up a second and talk. So we announced the transaction. It was 60% cash, 40% stock. At the time, we also announced a $2,000,000,000 buyback, 1,000,000,000 commitment and then $1,000,000,000 contingent on closing of the deal.
So effectively $2,000,000,000 that we would execute over the next twelve to eighteen months or so. So yes, in a transaction, I mean, in the pendency, obviously, there's a you just have to suspend it when you're in a from a handshake to an announcement. We're in a quiet period timeframe there. And then prior to the filing of the S-four, there's a window of opportunity where you can buy back some stock, and it's a formulaic approach based on previous activity over the previous three months and so on. So there's a little bit of activity that's happening this quarter, has been happening.
But then once you actually get beyond the S-four filing and the shareholder vote, which we anticipate will be sometime in late July or August, then you're not restricted at that point. The shareholders have voted for the deal, and so you're not restricted in moving forward with your plan. So we would expect that when I talked in February about post tax return, how we were thinking about shareholder returns and share repurchases, I talked about a construct that was basically somewhere around $20,000,000,250,000,000 dollars a quarter, 1,000,000,000 over a twelve month time frame. So we're effectively executing that. And that's ex Orbitech, Yes.
That's ex the Orbitech thing. So the point is that when I thought about that, I thought about Orbitech, I also thought about the fact that independent of Orbitech, what kind of commitments could we make and I want to make sure it was consistent. So I would expect that we would subject to market conditions that we would begin post shareholder buyback, assuming we're out of a quiet period or post, I mean, shareholder vote, assuming we're out of a quiet period that we would begin to execute to the previous non Orbotech POR.
Got it. Before I move on to discussions of some of the end market dynamics, do we have any questions in the audience? If you do, please wait for the microphone. Why don't we, let's talk about some of your end markets. So in memory, three d NAND, spending has been quite strong.
And we've talked about it, you've talked about it that in general, the three d NAND with the very complex kind of deposition in that structure, is actually well suited for higher levels of process control intensity, especially around some of your metrology based products as well as your bare wafer inspection. I think we were assuming to the tune of given a normalized three d spending environment, an incremental kind of $100 $200,000,000 of revenue opportunity incremental revenue opportunity for KLA, as three d continues to kind of move up the stack. Given and I think a proof point to that is, for example, 70% of the memory spend this year for WFE is memory. And I think that's how you think your business from a profile perspective is going to kind of end up that way as well. But help us understand, I mean, with the onset of three d NAND, is the thesis playing out that it does have higher process control intensity?
You are seeing more tool traction there. And if so, what areas and that you guys are seeing some good momentum?
Yes. We have seen a step up in intensity for process control from planar to three d structures. And so and that's been reflected in the numbers that we have, we've been delivering over the last couple of years or so since we started down this road. And you're right, the unique challenges around metrology around the stack itself. And traditional metrology methods of using electron beam based approaches, you tend to get top and bottom type measurements, but you can't get sidewall angles and other things.
And so, that has been an inflection for us. You also have the film stacks and so film measurement of those stacks is also an metrology inflection. On the, bare wafer side, I mean, the defectivity control in a three d NAND process in a lot of cases has been used in a couple of ways. Number one is that they will use more bare wafer inspection and run monitor wafers before they actually start to process it, which means they're running, they're buying more tools and keeping tools really, really clean. So that's been positive for us.
Then you also have the, wafer flatness metrology, whereas you're building the stacks, you need there are new specifications in the market for wafer flatness to and you just think that as you're building a stack, taller and taller. If the wafer is not really, really flat, you can have it tip or not align correctly. So that's been a positive for us there. So all those things collectively have contributed to the two points. We've also had a pickup in the wafer segment, so the bare wafer segments, the wafer manufacturers.
And this is in some ways derivative three d NAND derivative memory, where they're adding capacity to support the incremental wafer starts, but also have to meet these new specifications for flatness and for cleanliness. So, doesn't show up in our memory percentages, but also exposed to memory are being driven principally by memory. Now we do think there's some opportunities going forward for us to improve on it. We've talked a lot about new platforms of tools, one in inspection, one in metrology to improve the intensity of process control, principally because the current methods are destructive and take a long time to get there, whether cross sectioning wafers with FIB tools and then looking at samples in a lab and obviously that takes time. You're destroying product wafer, not a production solution.
We have a new platform that we've got probe tools in the market, that does metrology on the channels, the channel holes as it drills down through the stack, also looking at the defect problem of buried defects. And that's a challenge too because it's not the traditional problem that KLA or inspection has solved where you're finding smaller defects. It's not necessarily about the size of the defect, but trying to locate it within the stack itself. And so it's a different problem. We've been working on that, too.
Again, we've got tools engaged with customers. We're working through whether we can solve the problem that solves sort of the broader market situation and that we can ramp and scale into a meaningful segment for us. So we're working on that one. I think the metrology is moving faster than the inspection. None of these products are in the numbers that I talked about earlier.
We hope to see the kind of contribution from the products that you mentioned, dollars 100,000,000 to $200,000,000 type opportunity for us moving forward as we move into 2019. So a lot of efforts here, a lot of investment and we're encouraged hopefully that we'll see something in terms of some new opportunity for us going forward.
Let's talk about the foundry logic business because, this is kind of the also the diversity of the business as well, right? Because you just mentioned three d NAND memory in general is maybe more metrology kind of heavy, right? Whereas your foundry logic business is definitely more heavy on things like pattern wafer inspection. And, I think you talked about, this year, I would say, overall for the industry, foundry and logic are sort of looking kind of flattish. And part of it is in foundry, there's definitely been some reuse from ten to seven.
It was interesting in your opening commentary that you expect, some of the second half pickup in shipments, to come from seems like foundry and logic. Can you help us understand what are the dynamics that are driving that in a year where it does feel like foundry and logic spending is flattish, but what are some of the inflections that you're seeing towards the back half of this year, in that segment?
So you see incremental seven nanometer capacity starting to ship in the second half of the year. There was a lot that was added in 2017. It's been even a digestion phase. We've been trying to migrate 10 nanometer to your point. And so we would expect that to pick up, in the logicfoundry space in the second half and continue into next year.
And still expect 10.7 wafer starts across the total combined segment to probably increase 35%, 40% in 2018 versus 2017. So still some investment there. Very little beyond that in terms of what we there could be some five nanometer investment we might start to see some orders on, from a development perspective in the second half of the year, but those will be shipments in 2019. You also have EUV activity that the development activity that's impacting our reticle inspection business, as customers are doing development work on EUV, but also buying our optical pattern, Gen five tool to do print check applications. And what print check is, is basically printing the wafers to validate reticle fidelity.
So that's been a nice use case for the Gen five tool. And so we're seeing some pickup there, related to the EUV work that's happening that's expected to get introduced at least at some limited number of layers and a couple of iterations of seven nanometer into 2019 and beyond. So I think the other things that we're doing in the business around there's a new platform in laser scattering. Multipatterning has driven unique overlay requirements. We have two technologies that support the overlay business.
We had a record year in overlay and from an order perspective in 2017, and so we're now shipping those into 2018. So that's been a nice driver for that business as well.
I wanted to ask you just maybe taking a step back higher level. You talked about the shipment profile first half, second half. Your lead times typically tend to be a bit longer than some of the other semi cap equipment peers. I mean, you're talking about five nanometer foundry maybe towards the back half of this year when Orders. Orders, right?
When companies like, and Applied or Lam, probably aren't going to see that for another six to nine months. But if we talk about order trajectory, order pattern, first half, second half, how do you see that dynamic?
Well, orders are up. So it gives me a little more confidence in terms of how we look at shipments, which translates into WFE, right? Right. Into 2019, in my view that I think that generally foundry and logic ought to be up in 2019 versus 2018. I mean 2018 is sort of historic low.
So we're operating at pretty low levels this year, and so we'd expect that to increase into next year. So yes, the lead time question, it varies across customers. Some customers are really good about lead time, others just expect us to deliver. And so every couple of weeks, we're always moving slots around to make sure we can accommodate our different customer needs. China tends to give more lead time.
In general, a lot of that's tied to the facility opening brand new sites. And so you have to be pretty aligned with them. But generally, yes, we do get more lead time and we're starting to see that and that does give me some confidence given the order profile, let's say, December more in the second half of the year that the shipment profile in the first half will be stronger for the foundry and logic segments.
In general, just given your visibility, you've got obviously very close partnerships with all of the major semiconductor semiconductor suppliers around the world. You combine that with better visibility, longer lead times. What's your sort of rough sense about how 2019 is going to shake out?
We're in May. I mean right now and I told our employees this at the last All Hands meeting. Look, I'm planning for things. I mean I know there's some questions in the market. I talked about foundry logic, my views, what happens on There the memory are a number of projects in vertical NAND that are lining up in the first part of the year from a number of customers.
So I believe that there's sustainability and investments that are happening there. DRAM, there are lot of questions in the market over the long run given how much they're spending this year after a period of lighter investment. So I am operating on the assumption that we're at these business levels that we're at now and telling the employees that there are no breaks coming. We have to continue to scale the company and be able to we're in this $1,000,000,000 to $1.1 type business level, and I think we're going to be there for a while. So that's generally how I'm looking at it right now.
I wouldn't say I have a lot more visibility than that given where we are in 2018.
Do we have any questions from the audience? Let's talk about the financials. I talked about the, sort of premium profitability profile. You guys put up a chart not that long ago. I think this is partly what's responsible.
For example, in a year where 70% of the of the spending mix is memory, which has not been sort of your ideal mix, right, but yet the team is still growing its top line 10%. A big part of it has got to be the product cycles and the new tools that you rolled out. You've talked about the Gen five wafer inspection platform and the most recent generation of Gen four. We'll talk about EUV reticle inspection in a second here. But you've got a lot more program new programs teed up 2018, 2019, which will hopefully continue to drive the revenue growth.
How do we think about how do you think about how do we think about the OpEx spend required to fund these R and D initiatives? And can the team still drive a track record of driving leverage on the OpEx as long as revenues are growing?
So I mean, it's something that is fundamental to how we run the company. I talked about our drop through expectations. We are driving a number of new programs. We have ramped OpEx as revenue is ramped, but we also see a number of opportunities out there. So the product pipeline is exciting.
There's certainly things like EUV that don't happen very often. And so there are a number of products you mentioned, reticle inspection, new platforms supporting this fundamental technology change for the industry that's having an impact on cost. I talked about some of the opportunities in vertical products. So we're investing in these things. But ultimately, we have this expectation about drop through that we have to manage, and that works both directions.
And it's fundamental to how we budget in the company. So I'm comfortable that the way we have provided this guidance and as people model the company, that's how they ought to assume our performance will move going forward. Gross margins move around based on mix. I mean, have products in the company that are very above the company average, have products that are below. So it always on a quarter to quarter basis can have some variability there.
And that's usually what leads to any variability you see in my performance or our model performance over the course of a year. But in terms of on a from a broader perspective, kind of guidance I gave, 3%, 64% shooting for incrementals of 60% to 70%, that's how we're going to run the business and try to drive 1.5% of revenue growth rate to the bottom line.
Let's talk really quickly about the new reticle, mask EUV reticle inspection platform. We wrote a report about that last week. You guys talked about it briefly on the last earnings call. But your reticle business doubled in 2017. I think a big part of that was EUV.
As we move to the five nanometer node, you guys are working on a new, e beam mask inspection tool. Can you give us an update on that? Maybe what are the key differentiators for the team? And when we're going to start to see this tool out in the market?
Yes. So it's e beam reticle, and, it's a platform to inspect reticles, and to leverage the dyed database franchise where you're inspecting against design database, for reticle qualification. One thing about reticles, you have to have 100% defect detection. So it's a very high end inspection application because otherwise you print those defects on every wafer. So supporting EUV, pre with EUV reticles, pre pellicle, their inspection steps where you need the resolution of an e beam tool.
Then post pellicle, there are other challenges as well. So we have a tool that we're it's always been it's frankly the founding business of the company, reticle inspection. There's a lot of history and legacy in this business and IP in this business. So, it's a new technology for reticle inspection, but, we're working on it with the idea that we'd be putting a tool into the marketplace sometime probably towards the end of next year. Obviously, it will be like anything else.
It will take some time before it ramps up into what volume production. But, it's critical to EUV deployment in a high volume production environment. And it's a market we've always served and supported. So, we're encouraged by the progress we're making and hope that by sometime in late twenty nineteen, we'll have a product in the market.
Great. Thank you very much, Bren. Appreciate having you here today.
Thank you for having me. Appreciate it.