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1. Company Snapshot

1.a. Company Description

Veeco Instruments Inc., together with its subsidiaries, develops, manufactures, sells, and supports semiconductor and thin film process equipment primarily to make electronic devices worldwide.The company offers laser annealing, ion beam deposition and etch, metal organic chemical vapor deposition, single wafer wet processing and surface preparation, molecular beam epitaxy, and atomic layer deposition and other deposition systems, as well as packaging lithography equipment.Its process equipment systems are used in the production of a range of microelectronic components, including logic, dynamic random-access memory, photonics devices, power electronics, radio frequency filters and amplifiers, magnetic heads for hard disk drives, and other semiconductor devices.


In addition, the company markets and sells its products to integrated device manufacturers and foundries; outsourced semiconductor assembly and test, hard disk drive, and photonics manufacturers; and research centers and universities.Veeco Instruments Inc.was founded in 1945 and is headquartered in Plainview, New York.

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1.b. Last Insights on VECO

Veeco Instruments' recent performance was negatively impacted by the challenging Electronics - Manufacturing Machinery industry, as highlighted in the Zacks Industry Outlook. The industry's participants, including Veeco, are facing increased competition and capital spending pressures. Additionally, the company's reliance on a few major customers, such as Intel, makes it vulnerable to supply chain disruptions and fluctuations in demand. Furthermore, the recent announcement of Veeco's EPIC Supplier Award, while a positive recognition, may not necessarily translate to improved financial performance.

1.c. Company Highlights

2. Veeco's Q3 2025 Earnings: A Strong Beat on Revenue and EPS

Veeco's Q3 2025 revenue came in at $166 million, exceeding the midpoint of their prior guidance of $160 million. The company's non-GAAP operating income was $23 million, and non-GAAP diluted earnings per share was $0.36, beating estimates of $0.28. The semiconductor business reported $118 million in revenue, a 5% decline quarter-over-quarter. Gross margin was 42%, at the top end of their guidance, while operating expenses were $46 million.

Publication Date: Dec -02

📋 Highlights
  • Revenue Exceeds Guidance:: Q3 revenue of $166M surpassed the midpoint of $160M guidance, with non-GAAP operating income at $23M and diluted EPS of $0.36.
  • Semiconductor Segment Decline:: Semiconductor revenue fell to $118M (5% QoQ), while compound semiconductor revenue dropped to $11M.
  • Strong Scientific/Other Revenue:: Scientific and other revenue rose to $27M, and gross margin hit 42%, the top of guidance.
  • Positive Q4 Guidance:: Projects revenue of $155M–$175M, gross margin of 37–39%, and net income of $10M–$19M, with SAM growth in annealing ($1.3B by 2029) and advanced packaging ($650M).
  • Strategic Growth Drivers:: Orders for advanced packaging systems from a leading foundry, progress in ion beam deposition (IBD) for DRAM/logic, and pending merger with Axcelis to expand market reach and innovation.

Segment Performance

The company's compound semiconductor market revenue was $11 million, down from the prior quarter, while data storage revenue was $10 million. Scientific and other revenue increased to $27 million. Veeco's CEO, Bill Miller, noted that demand tied to AI and high-performance computing remains strong, driving growth in areas like gate-all-around, high-bandwidth memory, and advanced packaging.

Guidance and Outlook

Veeco expects Q4 revenue between $155 million and $175 million, with a gross margin between 37% and 39%, and net income between $10 million and $19 million. The company projects its served available market (SAM) to grow in key areas: $1.3 billion in annealing by 2029, $500 million in ion beam deposition, and $650 million in advanced packaging. The pending merger with Axcelis is expected to broaden the company's technology portfolio and create opportunities for revenue growth.

Valuation and Growth Prospects

With a P/E Ratio of 28.32 and an EV/EBITDA of 20.4, the market is pricing in significant growth expectations. Analysts estimate next year's revenue growth at 9.1%. The company's ROIC is 5.21%, and ROE is 7.61%, indicating a decent return on capital. The backlog provides good visibility, with orders coming in for data storage, particularly for IBD and wet processing from multiple customers.

Key Takeaways

Veeco's strong Q3 2025 earnings beat is a positive sign, driven by its robust semiconductor business and growing demand in AI and high-performance computing. The company's guidance and outlook are encouraging, with a growing SAM in key areas. The pending merger with Axcelis is expected to drive future growth. With a reasonable valuation and decent return on capital, Veeco is an attractive investment opportunity in the semiconductor space.

3. NewsRoom

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Veeco Instruments Inc. $VECO Shares Sold by Fisher Asset Management LLC

Dec -04

Source: defenseworld.net

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Veeco's Laser Spike Annealing (LSA) System Selected by Leading Semiconductor Memory Company for Advanced DRAM Evaluation

Dec -01

Source: globenewswire.com

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Veeco Instruments Inc. (VECO) Q3 2025 Earnings Call Transcript

Nov -06

Source: seekingalpha.com

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Veeco Instruments (VECO) Surpasses Q3 Earnings and Revenue Estimates

Nov -06

Source: zacks.com

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Veeco Reports Third Quarter 2025 Financial Results

Nov -05

Source: globenewswire.com

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Veeco Receives Propel®300 MOCVD System Order From Leading GaN-on-Si Power Semiconductor IDM

Nov -05

Source: globenewswire.com

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Veeco Instruments Inc. (NASDAQ:VECO) Receives Average Rating of “Hold” from Analysts

Nov -03

Source: defenseworld.net

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Veeco Announces Multiple Orders for Wet Processing and Lithography Systems to Support Advanced Packaging and Silicon Photonics at a Leading Semiconductor Foundry

Oct -28

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (7.52%)

6. Segments

Semiconductor

Expected Growth: 8%

Veeco Instruments Inc.'s Semiconductor segment growth is driven by increasing demand for advanced semiconductor devices, adoption of 5G and IoT technologies, and rising investments in artificial intelligence and machine learning. Additionally, the growing need for semiconductor manufacturing equipment and Veeco's leadership in MOCVD and EPI technologies contribute to its 8% growth.

Data Storage

Expected Growth: 6%

Veeco Instruments Inc.'s 6% growth in Data Storage is driven by increasing demand for high-capacity storage devices, advancements in semiconductor technology, and rising adoption of cloud storage. Additionally, the growing need for efficient data management and analytics, as well as the proliferation of IoT devices, contribute to this growth.

Compound Semiconductor

Expected Growth: 9%

Veeco Instruments' Compound Semiconductor segment growth is driven by increasing demand for 5G, IoT, and electric vehicles, which rely on high-performance semiconductors. Additionally, the adoption of advanced packaging technologies, such as flip chip and wafer-level packaging, fuels growth. Furthermore, Veeco's leadership in MOCVD and MBE technologies enables it to capitalize on the rising demand for high-brightness LEDs and laser diodes.

Scientific and Other

Expected Growth: 5%

Veeco Instruments Inc.'s Scientific and Other segment growth is driven by increasing demand for advanced materials and semiconductor technologies, government investments in scientific research, and growing adoption of 3D sensing and augmented reality applications. Additionally, the company's strategic acquisitions and partnerships have expanded its product offerings and enhanced its market position, contributing to the 5% growth rate.

7. Detailed Products

MOCVD Systems

Veeco's Metal Organic Chemical Vapor Deposition (MOCVD) systems are used to deposit thin films of semiconductor materials for LEDs, lasers, and other optoelectronic devices.

MBE Systems

Veeco's Molecular Beam Epitaxy (MBE) systems are used to grow high-quality epitaxial layers for advanced semiconductor devices, including transistors, sensors, and optoelectronic devices.

Ion Beam Etch and Deposition Systems

Veeco's Ion Beam Etch and Deposition Systems are used to etch and deposit thin films of materials for semiconductor, data storage, and other applications.

Atomic Layer Deposition (ALD) Systems

Veeco's ALD systems are used to deposit ultra-thin films of materials for semiconductor, display, and other applications.

Physical Vapor Deposition (PVD) Systems

Veeco's PVD systems are used to deposit thin films of materials for semiconductor, data storage, and other applications.

Laser Annealing Systems

Veeco's Laser Annealing Systems are used to activate dopants and improve semiconductor device performance.

8. Veeco Instruments Inc.'s Porter Forces

Forces Ranking

Threat Of Substitutes

Veeco Instruments Inc. faces moderate threat from substitutes, as there are limited alternatives to its semiconductor manufacturing equipment and metrology systems.

Bargaining Power Of Customers

Veeco Instruments Inc. has a diverse customer base, which reduces the bargaining power of individual customers, and the company's products are often customized, making it difficult for customers to switch suppliers.

Bargaining Power Of Suppliers

Veeco Instruments Inc. relies on a few key suppliers for critical components, which gives them some bargaining power, but the company's size and scale also give it some negotiating power.

Threat Of New Entrants

The semiconductor manufacturing equipment and metrology systems industry has high barriers to entry, including significant capital requirements and technical expertise, which limits the threat of new entrants.

Intensity Of Rivalry

Veeco Instruments Inc. operates in a highly competitive industry with several established players, and the company must continually innovate and invest in research and development to maintain its market position.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 29.32%
Debt Cost 3.95%
Equity Weight 70.68%
Equity Cost 9.79%
WACC 8.07%
Leverage 41.49%

11. Quality Control: Veeco Instruments Inc. passed 6 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Rambus

A-Score: 5.1/10

Value: 0.8

Growth: 8.0

Quality: 9.0

Yield: 0.0

Momentum: 10.0

Volatility: 2.7

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Amkor Technology

A-Score: 4.3/10

Value: 4.6

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Yield: 3.0

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Value: 1.2

Growth: 6.6

Quality: 8.6

Yield: 2.0

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Veeco Instruments

A-Score: 4.0/10

Value: 3.0

Growth: 5.9

Quality: 5.9

Yield: 0.0

Momentum: 5.0

Volatility: 4.3

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A-Score: 3.9/10

Value: 2.2

Growth: 6.7

Quality: 3.5

Yield: 0.0

Momentum: 6.0

Volatility: 5.0

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Vishay

A-Score: 3.8/10

Value: 7.5

Growth: 1.9

Quality: 2.7

Yield: 4.0

Momentum: 3.0

Volatility: 4.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

32.05$

Current Price

32.05$

Potential

-0.00%

Expected Cash-Flows