Veeco Instruments Inc.

What they do

Veeco designs and manufactures semiconductor process equipment using technologies such as ion beam, laser annealing, MOCVD, CVD, advanced packaging lithography, single wafer wet processing, MBE, and ALD. Its systems are used in the production of logic, DRAM, photonics, power electronics, RF filters, and magnetic heads for hard disk drives. The company serves four end-markets: Semiconductor, Compound Semiconductor, Data Storage, and Scientific & Other, with sales and service operations across Asia-Pacific, Europe, and North America.

Revenue drivers

• Semiconductor — Largest end-market, comprising 68% of Q2 2026 revenue, driven by Laser Spike Annealing (LSA) and advanced packaging wet processing systems for foundry/logic and memory customers.
• Advanced Packaging — Part of the Semiconductor market; includes lithography and wet processing systems for AI-related demand, with orders from leading foundries for AI, automotive, aerospace, defense, and communications applications.
• Compound Semiconductor — Revenue from MOCVD systems such as Propel 300mm GaN-on-Silicon and Lumina+ for AI data centers and space-grade solar cells, with growth opportunities expected in 2026 second half.
• Data Storage — Revenue from ion beam and wet processing equipment for hard disk drives, driven by cloud and AI data center demand, with orders expected to convert to revenue in 2026 second half.

Recent performance

For Q2 2026, Veeco reported revenue of $193.5 million, up from $166.1 million in the same period last year. GAAP net income was $11.9 million, or $0.18 per diluted share, compared to $11.7 million, or $0.20 per diluted share, in Q2 2025. Non-GAAP net income was $21.8 million, or $0.33 per diluted share. For the first half of 2026, revenue reached $351.8 million (Q1 $158.3M, Q2 $193.5M). In fiscal year 2025, annual revenue was $664.3 million with net income of $35.4 million.

Strategy

Veeco's strategy centers on investing in advanced logic and memory technologies, including Laser Spike Annealing (LSA) and next-generation Nanosecond Annealing (NSA) for logic customers and Ion Beam Deposition (IBD300) for DRAM. The company aims to expand its serviceable available market (SAM) by capitalizing on AI-driven demand for high-performance computing and High-Bandwidth Memory. They are also executing a manufacturing expansion strategy to support growth and have engaged all three Tier 1 logic customers with NSA evaluation tools. The pending merger with Axcelis Technologies is a key strategic event, expected to close in the second half of 2026.

Risks

• Pending Merger with Axcelis — The merger is subject to regulatory approvals, including from China's State Administration for Market Regulation, and may not close as expected, causing uncertainty.
• Trade policy and export controls — Changes in U.S.-China trade policies, tariffs, and export licensing requirements could restrict sales and impact results.
• Cyclical industry — Customers' buying patterns are dependent on consumer electronics and semiconductor industry cycles, leading to fluctuating orders and revenue recognition.
• Rapid technological change — Failure to innovate in a fast-paced equipment market could erode competitive position and demand for products.

Outlook

For Q3 2026, management expects revenue between $200 million and $220 million, with GAAP diluted EPS of $0.20 to $0.34 and Non-GAAP diluted EPS of $0.35 to $0.49. For full-year 2026, revenue guidance has been revised to $780 million to $810 million, with GAAP diluted EPS of $0.78 to $1.02 and Non-GAAP diluted EPS of $1.36 to $1.61. The CEO cited growing visibility into 2027 and confidence in long-term growth due to AI-driven demand.