Amtech Systems Inc LD Micro 20th Annual Main Event Conference

Welcome. Well, thank you, everyone.

Looking around the room, I see some familiar faces. Some of you I may not have met. Hopefully, you know a little bit about Amtech. I am going to try to quickly run through key highlights, and in particular, I am going to talk about where we play in AI and where we want to play in AI. I think that is usually the area people want to focus on. I do want to leave quite a bit of time for Q&A. Please stay tuned. Quick rundown of, I call it Amtech 101. Our annualized revenue is about $90 million, with 80% of it in our Thermal Processing Solutions segment and about 20% in our Semiconductor Fabrication Solutions. The breakdown, think of the Thermal Processing Solutions as really, it is thermal processing. It is furnaces that are used for mostly electronics applications.

Where the big play for us there has been advanced packaging for AI infrastructure. I will give you a little bit more of a view of where we play in a minute here. It is this kind of equipment, and just to put things in perspective of the scale, maybe the width of this room is the length of one of these pieces of equipment. We manufacture this kind of equipment primarily in our Shanghai factory, but we also have a contractor in the Malaysia-Singapore area that serves the U.S. market because of tariffs. The other part of the business is really around its parts services, consumables that are servicing mostly tools in the CMP, chemical mechanical planarization area, for semiconductor production. The big growth area here that I will focus on is really what we are doing in the reflow area for AI.

This is an example of what we call our TrueFlat equipment, and I think it is helpful to understand what this equipment is actually doing by taking a look at, this is unfortunately a little bit small picture, but an NVIDIA GPU. So you have high bandwidth memory, you have the chipsets. Those get assembled typically on an interposer, silicon or in some cases glass interposer. Then you have a high-density printed circuit board they call the chip package that do the interconnects. Where our equipment is used, this high-temperature furnace here, again, big piece of equipment, is melting these ball grid arrays for assembling the packages. We own this space. The majority of GPUs, TPUs, use our equipment. The reason we own this space is it goes back to a little bit of ancient history when CPUs were a big thing, the Intels, the AMDs.

The problems they were running into is when you do the soldering process and you've got these plastic substrates, they tend to want to potato chip, bow and twist when you heat them up. There's stresses. What we developed and patented is called TrueFlat technology. The simplest way to think about that is it's a reverse air hockey table. Instead of blowing up air through a plenum for the hockey puck, we're pulling suction down. The vacuum holds down the substrates as they're going down this long tunnel furnace. We ended up being process of record for all what's in your laptops and what's in your home computers. Then AI shows up, and that's really the inflection point for this business.

Where if you go back about 18 months ago, not that long ago, we were producing about four of these systems per week in our Shanghai factory. Just to give you a perspective, we're semi-fabless, right? We have our own factory, but what we're doing in Shanghai is assemble, test, ship. We have a very robust supply chain. We were shipping about four of these a week. Lead time's six weeks, two weeks build, two weeks test, out the door. Fast-forward to last quarter, producing about 10-12 of these a week, so about threefold number of units. Lead times are still six weeks. We can still build in two, test in two, out the door. We've been able to scale very rapidly with the demands of our customers, and they are the who's who. It's the OSATs you all know.

It's the memory guys you all know. It's all the processor guys you know are using our equipment for this process. That's been a huge secular driver and, again, back to chip on wafer on substrate, we're the on-substrate assembly guys down here with this kind of equipment. A little bit about the history going back a little bit further. I moved to the executive chair role in August. I joined Amtech's board about five and a half years ago. Three years ago I took on the CEO role because the company was in trouble at the time. We owed a bunch of money to the banks. We were burning $3 million a quarter of cash, losing money. I stepped into that role and spent about two and a half years restructuring.

What we did is that's when we migrated to this, I call it semi-fabless, in some cases, fabless model, where we had seven factories building equipment and products. We went down to four facilities. We only have one out of the four that it still builds equipment. That really changed the cost structure for the business. We were able to pay off the debt. Operating cash got us to $26 million in cash. We now have $83 million in cash, no debt, with a raise we did. Basically got ourselves in position last quarter, 50% gross margins, 15% EBITDA margins. We got the company to be very healthy.

I like to tell people, I think it is true, if we and our team sat on our hands for the next couple of years, we would probably take this $90 million a year revenue company and probably just with the tailwinds in the industry, we could be $150. But we have ambitions to do much more, and we have a team and a balance sheet to do it, which is why I transitioned the CEO role to another gentleman in August. He comes, his history, 30 years in the semiconductor industry. His name is Guy Shechter. He worked for Veeco for 20-plus years, most recently with YES, which is a chip packaging company. Because our ambitions are really, there are eight different operations that go into making these packages. We participate in one right now. We need to get our TAM up.

If we want to be much, much bigger than $150 million, we need to participate in more process steps, and we have the right to win because we have been a very. We get kudos from all the customers about the ability we were able to scale. We never have had a quality issue, and we did not do anything offensive like double the price of our equipment because the demand was high. So we have been very good to our customers. They need to scale these other layers more cost effectively. Some of the equipment, most of the equipment being used in these other operations are batch tools, very low throughput, very expensive tools.

We are being asked, can we move up, do other things, and maybe we can get three, four times the price we are getting now, but it is not the 10 times they are paying to others for doing those operations. We can handle more volume. So I brought Guy on board because he is in. He knows the players at the key customers. He knows the supply chain. He is a capital equipment guy. I was an electronic materials guy, so it is like I was not the right person to take the next step here and drive future growth. So Guy stepped in, and those of you interested, he is actually traveling internationally, which is why he is not here. Anyway, I encourage you to talk to him. Again, I think we are very well positioned in the AI space. I am going to jump ahead.

This just shows what we have been able to do from an operation standpoint. Our free cash flow is pretty. Now that we are asset light, fabless for the most part, our free cash flow is pretty much our operating cash flow. So we are generating very solid profitability. I was pleased the last quarter, 15% EBITDA margins. We took a lot of cost out. I think this actually underestimates where we were at. Yeah, this is the most recent quarter. I will pause here because I think it is important. I would rather leave more time for questions you may have.