Perfect. Well, let's go ahead and get started. Thanks for joining this morning for the first session for the Wells Fargo TMT Summit. I'm Joe Quatrochi, the independent cap equipment analyst, and excited to have the MKS team here, John Lee, CEO, as well as Chris.
Hi.
From IR, maybe let's get started. A little bit of news this week already, and kind of some updated China export restrictions. So let's just dive right in. Like, anyway, there's like 200 pages of reading. I'm sure you stayed up last night and read it all.
Memorized.
Yeah. Any initial kind of thoughts in terms of the restrictions?
Yeah, well, certainly, as a reminder, you know, most of the impact to MKS occurred in October 2022 when the first BIS rules came out, and so many of our revenue that went directly to Chinese equipment OEMs disappeared there. We had publicly said the impact of $200 to $250 million of that 2022 number revenue was going to disappear, so that has happened. We still ship a little bit and whatever we can, but you know, these new rules don't really impact that direct sales that we have to Chinese equipment OEMs. Of course, we ship to all the big OEMs outside of China that then ship to China, and so we're exposed to that, but as you probably heard from you know several press releases from certainly the four big U.S. OEMs, they all kind of reaffirm guidance. Like, it's early days, but they didn't see a big impact, and so, you know, that's pretty much the guidance we would give as well, and we'll see over the next several weeks, we'll dive into that and see if there's any other impacts, but right now, I think, very minimal impact to MKS.
Okay. And that reminds us of $200 million-$250 million. That was the indirect and direct impact?
No, that was just direct.
Just direct. Okay.
Just direct.
Okay.
And so, so that's gone. Most of it's gone.
Okay. That's perfect. Maybe let's kind of, before we dive into some of the, you know, parts of the business, maybe take a step back. A lot has happened in MKS story over the last couple of years. You know, talk us through, like, when you kind of approach the company and you think about the opportunities over the next few years, like, what do you think investors are missing or what's an underappreciated and, like, I guess, where should we spend some time maybe.
Yeah.
Doing some better understanding of MKS story?
Yeah. I would say, you know, MKS started as a critical subsystem supply in Semi CapEx, right? And so that's been our history. It's still one of our biggest markets. So people understood that story pretty clearly, but you know, four or five years ago, we started seeing that the continued shrink in semiconductor chips was no longer sufficient to kind of extend more than Moore's Law, and you needed to package multiple chips together. So we saw that four or five years ago, and we actually did something about it. We said, "Packaging is going to matter. We want to be foundational to this next large growth segment for more than Moore's Law, enabling more than Moore's Law." That's why we acquired Atotech, and that was new. That's a little more different, a little more complex story.
But I think what's underappreciated, by many investors, some, is that we are so foundational to that entire ecosystem. So when you look at just Semi CapEx, 85% of every piece of equipment in every fab in the world has multiple MKS subsystems in it, 85%. We can come up with that number very easily because we just add the market share of Applied, Lam, KLA, ASML, Tokyo Electron. Just those five is 85%. And we're on every one of their tools with multiple subsystems. When you shift over to this new leg of growth for enabling advanced electronics, and that's packaging. And when you look at, how complex these packages are, when you look at the cross-section of a NVIDIA server, you see the chips at the top.
You see HBM, you see memory or GPUs, CPUs, and you see a RDL layer, a copper layer. But if you actually look at a real picture at the scale, there's now 20 layers of advanced package substrates under that, 20. And under that, there might be 40 more layers of HDI or MLB package substrates, sorry, PCBs. And so when you look at the amount of content that there is underneath the chip, just the connecting the chips together in the package, we see that as a great driver for future growth and critical. So semiconductors are necessary. Advances in semiconductor processing technology is necessary but no longer sufficient. You need that packaging. And I think that's a little underappreciated. The story's getting out there with the help of, you know, people like you, Joe, telling the story. But that is the ecosystem we're in. We're in 70% of all the steps that make that package substrate. Think about that. When you have a NVIDIA server board, 85% of all the steps to make the chips we're in 70% of all the steps to make the package we're in. No one else can say that. That's how foundational we are and how integrated we are into that ecosystem. I think that's still underappreciated.
I think, like, you know, back when you guys acquired Atotech, one of the things you said was, you know, you think that PCBs and semis are basically there's like a decade difference in time. You think that, like, that time difference is shrinking, like, given what's kind of happening on the AI side and everything you're just kind of talked about in terms of packaging and the importance of packaging?
Yeah. I would say when I said that, it was probably two decades difference.
Yeah.
In terms of semi and packaging, but you can see that our thesis is accelerating, so that's even more true now. You can see that, so you've talked about some of these. MLB boards are 40 layers now with HDI on top, and the package substrate is going from, you know, 20 layers to 25 layers. The features on them are smaller. The number of layers is bigger. The size of the boards is bigger. This is just like semi, right? Remember semi? Wafers got bigger, more layers, and features got smaller. It's exactly the same story, and I agree that it is accelerating, so there, that is really catching up fast.
Maybe kind of shift gears a little bit, right? Like, more near-term, you know, cycles are still kind of cycling across both your end markets. Can you kind of talk about, you know, maybe each one and then we'll dive in a little bit more?
Yeah. Well, certainly, Semi CapEx has cycles for sure. And right now, NAND is kind of in the doldrums, if you will. You know, one of the other things that, going back to your first question, that I think is underappreciated about MKS is, you know, we do have a lot of position in NAND. And so when NAND has been dormant, we've seen a, you know, a larger degradation in our semi revenue. But NAND will come back. I think the investors have appreciated our running the company during muted market cycles and the downturn of semi and packaging. You know, we're at 47% gross margin, generating 16% free cash flow in Q3 and, you know, lowering our interest payments and paying down, prepaying the debt. And this is with NAND, a very low market demand for NAND. DRAM is coming back a little bit, and Logic has been, you know, what's held us up, so we really look forward to, you know, demonstrating the, you know, the financial performance during an upturn.
Yeah. And I think, like, you know, last quarter, you guys are, I guess, technically this quarter, you know, made the largest prepayment on your debt that you've done.
Yeah.
Since, you know, increasing your leverage quite a bit post the acquisition. Talk about, like, the confidence in recovery of, like, forward demand and free cash flow as we look into the first half of the calendar 2025, and like, I mean, it seems like you're pretty confident in that, making that such a large payment, and I guess, like, how do we think about the cadence of those payments going forward, given those, you know.
Yeah.
Kind of step up there?
Yeah, you know, the way we look at prepayments, we'll prepay any excess cash towards that debt. Just as a reminder, in 2024, you know, if we hit the guidance midpoint of the guidance of Q4, that's $3.5 billion in revenue, and we are prepaying over $400 million of the debt, and that's just a testimony to our ability to generate free cash flow during a relatively very low, you know, muted market cycle. You know, our OpEx and the control of gross margins are, you know, already close to what our five-year model target is, and I think, you know, quarter on quarter, there can be variations in how much we can prepay. I think Q1's always a little lower because you have variable comp and all that. We also have CapEx investments that historically have been 3%-5% of revenue in terms of our CapEx needs. Maybe a little higher in the next year or so because we're building a Malaysia factory, for BCP reasons, but you know, our CapEx needs are quite low. And so we'll always look at each quarter and see what we can do, but any excess free cash, the first priority, of course, is the debt prepayment.
Okay. Maybe jump into let's talk a little bit about the semi business or in-market. You know, can you talk to your visibility recovery? It seems like, at least from an investor standpoint, like, sentiment as we look into calendar 2025 is kind of continues to maybe deteriorate a little bit. You know, we kind of go back to the middle of the year, people kind of were thinking maybe we could get a WFE of 120 plus, and now we're probably kind of skirting, I don't know, low 100s maybe for next year. Like, kind of talk about your visibility and, you know, how we think about, like, order lead times, with your customers.
Yeah. You know, I think you're right. Beginning of 2024, everybody thought 2025 was going to be a lot higher and every quarter that 2025 estimate has gone down. You know, we worry about that, obviously. We care about that, but we also know that we can't really do too much about it. We can only control the things we can control, like profitability, gross margin, prepayments of loans. I would say this. Our lead times are back to normal. You know, lead times for a big portion of our portfolio can be six weeks to 12 weeks. That has been the reason why our visibility is a little lower now because our customers know they'll get the stuff, right, within six weeks to 12 weeks. And that's also been the reason for a couple of slight upside surprises the last three quarters, which is in-quarter turns, books and turns within the quarter because we can, so I think our visibility is, you know, we read the same stuff you guys read. I think we're prepared to run at this level with this profitability if 2025 reflects.
Yeah.
We have also demonstrated over time that, when that ramp occurs, it can often occur very quickly.
Yeah.
And we have our factories, you know. They're scaled to do that. We have enough capacity for the $125 billion WFE run rate.
Yeah.
And so, I think we're well positioned for that.
Okay. Like, the intra-quarter kind of demand that you talked about, I mean, what is driving that? Is that your customers that are just kind of trying to drive their working capital turns just a little bit harder, or is it that they're seeing maybe pull-ins or of equipment, you know, orders from their customers? Like, how do you kind of parse through that?
Yeah. I think it's a combination of both. I think, you know, it's hard to tell, right? You know, we know what our customers are shipping.
Yeah.
We know that in NAND, there's still our inventory in the supply chain, so we won't get too much help there until that burns off. But it seems like everything else has really kind of burned off. I would also say that our customers are holding probably a little more inventory than historic averages.
Yeah.
But I think that's by design, right, because of the.
Yeah.
The past supply chain constraints and so, you know, you know, these incremental in-quarter turns have been a good sign, but they're also not changing our revenue by, you know, 20% within the quarter. It's incremental relative to our guidance.
Yeah. Okay. You know, as you look at your customer kind of base, you said you think inventory is kind of largely normalized outside maybe still some NAND kind of pockets of inventory. But I guess as you think about, like, looking into 2025, like, your ability to outperform your peers or WFE, just given that you kind of had that digestion that's negatively impacted that?
Yeah.
Relative performance in 2024, is that a fair statement? We should think about that kind of return to what we normally expected as outperformance of WFE next year?
Yeah. I think it's probably two things, right? If WFE is flat, let's say, in 2025, then, you know, we'll probably run flat relative to.
Yeah.
WFE just because of the inventories have burned down. I think when we outperform is on the upturn.
Yeah.
On the downturn, obviously, we and many of our peers underperform because of the inventory digestion. But we always look at it long term. You know, how are we doing relative to WFE in the long term? And, you know, as we've said in the past, we've been able to demonstrate outperformance by 200 basis points over a decade. And I think some of the things that we're doing now will put us in that position. One is, you know, world-class optics. This is our effort to gain share in lithography, metrology, and inspection, customers and applications. Our power still remains one of the areas where we think continued growth will occur as things get more vertical.
Yeah.
So things aren't getting more less vertical, that's for sure.
Right.
Things are becoming more vertical, and that requires more high-aspect ratio etching, more RF power, and so, you know, these are the kinds of things that allow us to outgrow WFEs because we have the broadest portfolio, and no one can predict which subsystem is going to be really critical for that next inflection. No one would have predicted V-NAND and how RF power would grow. Very few people would predict EUV, you know.
Yeah.
That was going to take off, and so having that broad portfolio allows us to move the R&D to wherever the highest growth opportunities are.
Okay. And maybe kind of sticking with NAND a little bit and just talking about that vertical kind of increase. And, you know, I think your main customers talked a lot about 2025 being, you know, more driven by just upgrades of existing systems, your existing footprint, you know, not necessarily increasing that new wafer starts. How, like, how does MKS participate in that? And then how do I think about, like, you know, I think a piece of that is services maybe for them, but, like, how does it trickle down to MKS?
Yeah. So, you know, the idea of cryo etch, right, is an upgrade.
Yeah.
To a NAND etcher today. So cryo is a way to cool the wafer, and you can use different chemistries so that you can etch more higher aspect ratio. And I think it really depends on how much of an upgrade the end user is going to want. If you want a slight incremental 10%-20%, maybe you don't need a new whole set of RF power supplies. But if you're going to increase the high aspect ratio etch from 100 layers to 150 layers to 175 layers, I don't see how you can get around that without a whole entire new RF power set. And the reason I say that is because we're on V9, generation nine of V-NAND, right? Started 32, 48, 64, 96, on and on.
Yeah.
We're in the ninth generation. Every generation, you've needed new RF power. Either all three are new or one is new this generation, and then the other two are new the next generation because you needed higher, higher aspect ratio etching and therefore more RF power. So I think it depends on how and what form these upgrades take, whether they're incremental, slightly incremental, in which case maybe not as beneficial to MKS, maybe slight, or if they're really big increments, then, of course, it would almost look like a greenfield in terms of RF power.
Okay. That's helpful. So, I mean, it's really about I mean, I think what Lam talked about is, you know, two-thirds, I think, of the wafer start capacity out there is still sub 200 layers. So, you know, moving above that threshold, I think probably drives a fair amount of RF power requirements.
Yeah. I would imagine so.
Yeah. You mentioned cryo etch. Like, can you just kind of maybe help us understand, like, the position there? You know, I think there's maybe a couple customers that are using cryo etch at least.
Yeah. I think.
Or shipping cryo etch, or trying to?
Yeah. Well, I think, you know, Lam is the one that's.
Yeah.
The market leader shipping cryo etch, but you know, cryo is about cooling the wafer and a different part of it. We don't necessarily play too much in that, but every cryo etcher is a high aspect ratio etcher that has three RF power supplies on top, right? And so, the more chambers of cryo etch or non-cryo etch, they both have RF power on top, so you know, I think you know, there is another customer who's talked about cryo etch.
Yeah.
You know, we are certainly a company that's known RF power and pulsed DC power company.
Yeah.
This is a new type of generating power that is being tested for high aspect ratio etching pulsed DC, and so we're engaged with, obviously, all the key players. People know who we are, obviously, leaders in the field, so you know, they'll always be asking us for what we have in terms of technology.
So pulsed DC power would be replacing RF power. Is that?
it could.
It could.
It will never replace all of it. So.
Okay.
In a cryo etch, in a high aspect ratio etcher, whether it's cryo or not, there's usually three RF power supplies in it, so three different power supplies, three different power levels, three different frequencies. That's been true for many generations. Pulse DC could replace one of them, perhaps.
Okay.
In certain applications, perhaps.
Okay. Interesting. And that's not shipping today for anyone. Like, everyone's still using RF power.
right. Production.
Yeah.
is all RF power.
Yeah. Okay. Okay. You know, you talked about optics. You know, I think that's been an area of focus for you guys. And last year, we were fortunate enough to tour the facility down the road.
Yeah.
Which was very impressive. Can you talk about, like, the size of that opportunity? You know, like, where do you see that going, over the next few years?
Yeah. Yeah. So, you know, we this is also another five-year, incremental not incremental bet that we made five years ago. We said, "Look, you know, we are underexposed in lithography, metrology, and inspection relative to our vacuum customers in semi. And we shouldn't be. We don't have to be." But it requires investments. It requires investments in CapEx. It requires investments in process engineers to develop new processes. And so we made those investments five years ago, and we continue those investments. And, you know, I would say if you were to look at our revenue for lithography, metrology, inspection five years ago, call it in the $100-$150 million a year range, you know, give or take, because there's cycles. Now it's over $300 million.
Yeah.
Okay. So double and that's all design wins, right? Now, that can oscillate back and forth as well, but that's still a relatively small percentage of the BOM.
Yeah.
For our lithography and metrology inspection customers versus our vacuum customers.
Yeah.
So there's a lot more opportunity there. I think maybe the other point, Joe, there is, lithography, metrology, inspection, tools are very complex, as you know. Lots of parts that go into it. You really need size and scale to support these big customers because they have a lot riding on every component there, and I think that's an advantage for companies like us who can demonstrate we're willing, you know, to put that investment in with them even during a downturn.
Yeah. No, that makes sense. And I, you know, I think as we look into next year, right, like, ASML kind of they've downsized a little bit on, like, their EUV expectations. So maybe to the extent you can talk about that and then, you know, outside of EUV, like, can you talk about the drivers of the optics revenue too?
Yeah. Well, so EUV, you know, it's a long-term play, though.
Yeah.
I think, you know, EUV is going to be a healthy market for a long time. I think, though, that in general, whether it's EUV or Deep UV or inspection using deep UV or inspection using EUV, these are really complex optical subsystems. You know, there are many drivers to it. One is how fast can you go, right? Every year, every one of those tools goes faster. In order to go faster, you are developing perhaps new metrology and new parts, right, new optics to be faster. This is a continuing evolution of these tools. They don't just design one in and just sits there because, you know, every year it's like, "Well, I've got the same tool. It does the same thing, but it's, you know, 50% faster," right? That doesn't just happen. That requires a lot of development of new optics, new optical subsystems, maybe integrating lasers with it, maybe integrating motion with it, so we see just a huge amount of opportunity in that whole space.
Okay. One of the things that was interesting from ASML's Analyst Day, this was last month, you know, they talked about basically the kind of roadmap for EUV is, like, removing some of the mirrors or trying to kind of reduce the optics. Is that something that you guys try to, like, that you can help with? Or how do we think about your position, like, for that?
Yeah. Those mirrors, we don't make.
Yeah.
Those are very yeah.
Right.
You know, I think if you can. Well, so the question is, how can they remove some mirrors?
Right.
Right? So what are the things that allow them to do that? And, you know, there are many areas that, you know, possibly we could help. And so if we can, they'll certainly be asking us to do that. You know, without going into details, I think there's lots of ways to make things more efficient.
Yeah.
You know, just going back to my earlier comment, that might require, you know, a high, you know, a more complex development somewhere else versus that, you know, EUV train that everybody talks about.
Maybe let's shift gears a little bit and talk about the photonics and material solutions. You know, I think, like, the recovery of the PCB market's still kind of in flux, right, as we look into next year, right? The iPhone cycle was a little bit weaker than everyone had hoped. I mean, how do you think about, like, recovery utilization rates looking into next year?
Yeah. Yeah. I would say this, you know, in our earnings calls in the last couple of quarters, we've had chemistry revenue for PCBs increase kind of 7% Q3 to Q3 from 2024 to 2023, 19% actually Q2 to Q2. So but it's gone down 15% year over year from 2022 to 2023. So we're still catching up to kind of pre the downturn. But 2024 was better, is better than 2023. And you know, that might not look that way from an absolute dollar standpoint, but when you take out FX and palladium, it's actually, you know, a double-digit growth year over year. And so that's a good sign. That means that, you know, things have stabilized. People are coming back a little bit. Still not back to an area where, you know, smartphones are really taking off.
Yeah.
PCs are really taking off. Non-AI servers are taking off. AI servers are certainly taking off, and that's helping, but still only 10% of the entire, you know, PCB market. I think the industry was hoping that this year would be a PC refresh.
Yeah.
And maybe driven by AI, maybe just driven by, you know, everybody bought PCs during, you know, the first year of COVID.
Yeah.
That didn't really happen, right?
Yeah.
I think there's still, you know, obviously, probably because of macro issues, people pushed that out. The longer you push it out, eventually it happens, right?
Yeah. I mean, I guess, like, one thing to think about, right, your chemistry revenue is still well below, like, where you were at previously, like, at the peak, right? And I think, you know, if you kind of think about some of the structural sizes of, like, the different end markets, I mean, is it fair to think about, like, some of those as basically kind of overbuilding capacity? And so therefore, like, it might take a lot longer to get back to that kind of utilization rate? Or how do you think about, like, that dynamic?
Yeah. Yeah. No, I think there could certainly be pockets where someone has maybe got, you know, more capacity.
Yeah.
But I think in general, many of our customers have reached, you know, utilization rates that make them think about, you know, adding CapEx.
Yeah.
And we actually saw that, right, in the last in this year in 2024. We saw some people adding CapEx or MLB, you know, the lowest tech part of the PCB industry as well as HDI, and certainly for package substrate. And a lot of that we said is tied to AI. But if they already had capacity for MLB, they wouldn't need to add capacity.
Right.
I think things are healthier, and you know, I think, you know, if next year becomes even healthier, then we'll see maybe more of these customers start ordering equipment, which is, of course, the first sign.
Okay. You know, you guys, one of the things you have talked about, right, is you talked about the strength for high-density multi-layer PCB applications. You know, some of that related to AI. Like, I guess, how big is that? And, like, how do you think about, like, the sustainability of demand and, like.
Yeah.
How much capacity is, like, the industry adding?
Yeah. Well, you know, we talked about multiple tools, you know, multiple customers ordering multiple tools, so that is not insignificant, but certainly not a, you know. We're not calling it a turnaround in the entire industry, and a lot of it is driven by customers who want to be in that AI food chain, who maybe are not yet, right?
Okay.
They're in the PCB market. They could do it. They're not in that. They want to get into that food chain, and so they need to show that they've got capacity, right, to the end user there, so that's been a little bit of why I think we've seen that capacity increase, the need for CapEx.
Okay. I guess, like, as you think about, you know, within that, right? You talked about advanced packaging as being, you know, a growth area. We talked about it a little bit earlier. But can you remind us, you know, how large is that business inside? I think you said maybe a third. But, like, how do we think about the size of the advanced packaging and then, like, the growth expectations of that business relative to maybe the overall, you know, packaging?
Yeah. Advanced packaging is about a third of our packaging or E&P business, sorry. But if you think about the PCB market in general, we divide it up into kind of three sections. One is MLB, multi-layer boards. That's, you know, historically been the easiest, you know, oldest technology, of which we have a lot of share. So think dishwashers and washing machines. But now, maybe for AI boards.
Yeah.
Because some of those MLB boards are now 40 layers. They used to be four for our washing machines. Probably still are four for our washing machines.
Yeah.
But they're going to 40 layers, 10 times more. That's a third of the market. That's growing traditionally at GDP plus, right? Maybe a little bit more with AI. The middle third is what we would call HDI, high-density interconnect boards. More difficult to make, smaller features. Think smartphones. So a lot of the smartphones have HDI, high-density interconnect PCB. That's kind of growing at mid-single-digit CAGR. And then the most difficult third of the PCB market is what we call package substrate. This is the stuff needed for PCs, you know, as servers, AI servers. And you know, even some phones are moving into that. That's a third of the market. It's growing at high single-digit CAGR. And so that's really the dynamics of the entire PCB industry. Atotech, our Atotech division, is market leader in every one of those segments and market leader in the industry in electronics, chemistry.
I guess, like, when I think about, like, breaking that down, right, like, for this year, how do you think about, like, the growth, I guess, of those different segments or the overall packaging business is what this year?
Yeah. I think, you know, 2022 to 2023 was a down 15%.
Yeah.
You know, 2023 to 2024 remains to be seen, but it kind of looks like, you know, high single-digit or low double-digit kind of recovery, if you will. It's hard to parse it out, you know, in terms of, package substrate, the most advanced part, because, while the AI portion is growing very rapidly, the non-AI portion, the non-AI servers and the PCs are not. And those are still big numbers, right? So the AI portion is single-digit % going to double-digit % of the package substrate portion of the PC market. Now, at some point, it might be 20%.
Yeah.
It'll eventually start driving a lot of the volume. PCs and non-AI servers are still the other 90%.
Yeah. Yeah. I mean, like, is maybe we can go back to something you said earlier. Like, you were talking about, you know, like, on some of these boards going from, like, four layers that's required for, like, a dishwasher or something like that to 40. How, like, what's the difference? And is it a 10X difference in terms of also, like, just the amount of, like, chemicals that are required or, like, the, the.
Yeah.
Removals?
Yeah. It's exactly 10X.
Yeah.
So we make one layer at a time.
Yeah.
Then you put them together. So, you know, there's also chemicals to put them together, you know, to bond those layers together. Can you imagine with four layers, you know, any kind of warpage, thermal, you know, cycling, not too big a deal.
Right.
To keep the four layers laminated together, think about 40, and the boards are even bigger, right?
Yeah.
While the technical challenge may not necessarily be in the smaller line spaces, there's a lot of technical challenges in keeping 40 big layer big area layers together.
So.
Thermal cycling.
So when you think about, like, that dynamic, right, like, you know, I'm going to make an analogy, right, of, like, think about the processing time and the complexity for, like, HBM DRAM, right? Like, it should be think about it as something like that and the fact that, like, it's more processing time, is the yield lower or, like.
Both.
Yeah.
Exactly.
You need more capacity. Is that?
Yeah.
Fair?
You need more capacity just because it's 10X more.
Yeah.
But of course, you've got to make, you know, it's harder to yield.
Right.
But I think, you know, it still remains to be seen what those numbers eventually will shake out to be because no one really knows. So I think those, but those are all great, you know, drivers, tailwinds for our business.
Yeah. Yeah. Okay. You know, one of the things when we, you know, you first acquired Atotech, you talked about, you know, a lot of basically cross-selling opportunities.
Yeah.
Is there anything you can kind of update us on that today? Like, where do we stand in terms of some of those deals turning into revenue?
Yeah. We've talked about, you know, kind of, a handful, maybe 5 to 10, kind of the design wins there. Some have turned into revenue, but many are really about getting designed in. Because you can imagine when we are talking to customers about, it's really talking about the next generation development. And so there is the opportunity where we can say, "Can we bring in the laser tool as well or the laser guys bring in the chemistry as well?" So just like in semiconductors, you get designed in, then they have to go make sure that they can get the business, and then they build a fab around it. So it's kind of a two to four years timeframe still.
Okay.
So I would say some of it has turned to a decent amount of revenue, but the design wins have not turned into those kind of, you know, production volumes yet. But we have had those design wins. And so it's the same as with RF Power. We kind of talked about RF Power. We talked about design wins instead of our counterpart.
Yeah.
For about three years, and you know, eventually the market should have changed, right?
Yeah.
Because it takes three to five years for those design wins to turn into real dollars that you as investors can see.
I guess it's fair, like, when we sit here again and come next year, right, as we look into 2026, we should start to be thinking about some of those really kind of materials.
Yeah. Yeah. That is, that's our expectation as well.
Okay, and maybe, like, can you help us, like, how many of those are MKS-led versus, like, Atotech-led? And how do you think about, like.
Yeah.
Some of those dynamics?
Without getting into certain particular percentages, mostly it's Atotech-led.
Okay.
Fundamentally, it's because Atotech has had a long history with many of these customers, number one. Number two, when a customer buys an Atotech solution, oftentimes they're buying the equipment and the chemistry. And as we've talked about, this piece of equipment is 100 meters long. It's a football field long, right? So you're building the factory around it. So when Atotech comes in, you know, they're talking to CEOs and COOs because.
Yeah.
Atotech's tool is the factory, a big part of the factory. The chemistry is a big part of the yield.
Right.
Big part of the cost, and so then Atotech brings in, you know, this new brother that makes lasers as well. There are some areas where Atotech is not in, where lasers are already in, and those have happened, but the majority is Atotech's relationships that are just more, at a higher level, if you will, just because they're more important to the yield of that entire factory versus the laser tool, which is, you know, an engineering division, you know, choosing the laser step, right, and the laser equipment.