Good day, ladies and gentlemen, and welcome to Axcelis Technologies call to discuss the company's results for the fourth quarter and full year 2023. My name is Michelle, and I will be your coordinator for today. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. I would now like to turn the presentation over to your host for today's call, Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. Please proceed. Thank you, operator. This is Doug Lawson, Executive Vice President of Corporate Marketing and Strategy, and with me today is Russell Low, President and CEO, and Jamie Coogan, Executive Vice President and CFO. If you have not seen a copy of our press release issued yesterday, it is available on our website. Playback service will be also available on our website, as described in our press release. Please note that comments made today about our expectations for future revenues, profits, and other results are forward-looking statements under the SEC safe harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Now I'll turn the call over to President and CEO, Russell Low. Good morning, and thank you for joining us for our fourth quarter and year-end 2023 earnings call. Axcelis delivered record revenue for the fourth quarter of $310.3 million and $1.13 billion for the full year 2023. The implant-intensive power device segment enabled Axcelis to achieve 23% year-over-year revenue growth during a significant industry downturn. Fourth quarter earnings per share of $2.15 exceeded our revised guidance, while full year 2023 earnings per share came in at $7.43. Looking at geographic mix, China continued to provide strength, especially in the power device segment. In the fourth quarter, China represented 49% of our system revenue, with Korea at 18%, Europe 12%, the U.S. 11%, Japan 5%, and the rest of the world 5%. For the full year, China represented 46%, the U.S. 15%, Korea 14%, Europe 11%, Japan 3%, Taiwan 2%, and the rest of the world 9%. Looking at the market segment distribution for 2023, the overall mature segment represented 88% of the shipped system revenue. Memory was 10%, and advanced logic was 2%. Breaking down the mature segment in more detail, power continued to lead system shipments with 59% of total systems revenue. Silicon carbide made up 34% and silicon, 25% of total system revenue, respectively. The general mature segment was 26%, image sensors were 3%, and DRAM represented the entire 10% of memory systems revenue. In 2024, the systems revenue profile will be very similar to 2023, with power continuing to be an area of strength for Axcelis. Silicon Carbide and silicon IGBT combined are expected to represent approximately 60% of our system shipments for the second consecutive year. The general mature process technology market is expected to start out slower in the first half of 2024 and improve in the second half, dependent on economic conditions. Currently, DRAM is expected to pick up towards the end of the year and contribute less than 10% of total systems revenue in 2024. NAND is not expected to recover until 2025, when DRAM and NAND are forecast to have a strong year. Geographically, in 2024, we expect China to represent 40%-60% of our quarterly systems revenue, with the remaining revenue spread relatively evenly across the other geographies, dependent on specific customer projects. The power device segment, and in particular Silicon Carbide, has driven our growth in 2023. We have developed a large and diverse customer base in this market, and we continue to win business from new customers, as well as expanding our product footprint with existing customers. The full portfolio of Purion Power Series products is valued by these customers. New fab projects and customers often start up by establishing a core of Purion M silicon carbide tools and then adopt the use of the Purion H200 silicon carbide and Purion XC silicon carbide systems to improve productivity, cost of ownership, and device performance. As a result, we have seen a significant increase in the adoption and great success with the Purion H200 and Purion XC silicon carbide systems. Additionally, we continue to work with customers to further increase this opportunity, and currently, we have three Purion H200 silicon carbide system evaluations underway with customers in multiple geographies. Two of these systems are 150 millimeters, and one is 200 millimeters. Customers are using these evaluation units to qualify productivity limiting recipes as they prepare to ramp to higher volumes. Also, by utilizing the high energy and dose capabilities of the Purion H200 silicon carbide tool, customers can begin optimization work on their devices during the evaluation period. Axcelis is the only ion implantation company that can deliver complete recipe coverage for all power device applications. We are considered the technology leader and the supplier of choice, providing the best product family and manufacturing capabilities. This means that using the Axcelis tools provides the lowest risk path to high volume manufacturing required to support aggressive fab ramp plans. We expect the memory and mature markets will recover later this year, but during this slow period, Axcelis remains close to our customers, supporting their installed base and working with them on future technology and manufacturing needs. During industry slowdowns like this, customers have more time to collaborate with Axcelis on new technologies and product capabilities. We use this opportunity to focus our R&D efforts in key areas that will be critical to customers as they enter their next phase of growth. Ultimately, this results in shipping evaluation systems to customers and joint development engagements that help us grow our market share. Currently, we have an evaluation system with customers across nearly all market segments and multiple technical customer engagements designed to improve capabilities and increase our footprint across all segments. We have focused initiatives expected to grow share in the advanced logic segment and geographically in Japan. In 2023, we shipped a Purion Dragon, our most advanced high current implanter, to a leading research institute focused on advanced logic process development. We also have another Purion Dragon under evaluation with a leading advanced logic customer. These tools and the associated technical collaboration will be critical to the customer's development of next generation logic technology. In Japan, we have seen initial success in the power market due to the strength of the Purion Power series, and we are engaged with multiple Japanese customers in additional market segments. We expect these efforts to increase the Purion footprint in this important and growing geography. As the industry exits this downturn, Axcelis will return to healthy growth in the mature and memory markets. This, combined with continued strength in the power segment, is expected to drive Axcelis to our $1.3 billion revenue model in 2025. Additionally, investments being made in Advanced Logic and Japan will help drive our continued growth beyond 2025. Now, I'd like to turn it over to Jamie. Thank you, Russell, and good morning, everyone. We are pleased with our financial results for the fourth quarter and for the full year 2023, especially with the 23% year-over-year revenue growth during this industry downturn. As we enter 2024, the industry continues to deal with market weakness, but as Russell discussed, there are also clear signs of recovery and an expectation for a strong 2025. As a result of the current market conditions, we are guiding first quarter revenue of approximately $242 million, with gross margins of around 43.5%, operating income of approximately $45 million, and earnings per share of about $1.22. We expect full year 2024 revenue levels to be similar to 2023, with revenue weighted towards the second half of the year. Power is expected to remain solid throughout the year, with the mature markets and memory recovering in the second half. Our strong systems backlog and the expected recovery of these markets sets us up to achieve our $1.3 billion revenue target in 2025. Looking at our fourth quarter, revenue and earnings per share finished above our revised guidance due to solid execution and continued demand for Purion, especially in the silicon carbide power market. Q4 revenue was $310.3 million, with system revenue at $241.8 million, and CS&I at $68.5 million. Full year revenue was $1.13 billion, with systems revenue of $883.6 million, and CS&I at $247 million. Q4 earnings per share of $2.15 was driven by higher than expected revenues and gross margin, as well as lower overall operating expenses. This performance led to full year earnings per share of $7.43. Despite softness in the general mature and memory markets, bookings and quoting activity for systems in the power segment remained solid and continued to support our revenue expectations. Bookings in the quarter were $236 million, maintaining our backlog at $1.2 billion, a portion of which stretches into 2025. Given the increase in installed Purion systems, we expect CS&I revenue to increase in 2024 over 2023. Although revenue will fluctuate quarter to quarter, CS&I should be modeled at approximately $260 million for 2024, and approximately $300 million for our $1.3 billion revenue model. Q4 gross margin finished at 44.4% and at 43.5% for the full year. In 2024, we expect to see year-over-year improvement in gross margin. However, quarterly gross margins will fluctuate based on product mix. We remain laser focused on margin improvement and have a number of initiatives underway to lower the cost of goods sold and to drive higher sales of Purion product extensions. Execution on these initiatives will allow us to model gross margin at greater than 45% in our $1.3 billion revenue model. Turning to operating expenses, the fourth quarter ended at 19% of revenue, better than our guidance, and at 19.9% of revenue for the full year. We expect OpEx in the first quarter of 2024 to be approximately 25% of revenue. The increase as a percentage of revenue is a result of the lower sales volume in the first quarter and the incremental investments we've made to support the higher revenue loads we anticipate in the future. OpEx as a percentage of sales is expected to decline over the course of 2024, given the higher volumes expected in the second half of the year. Investments in R&D will increase in 2024 to approximately 9.5% of revenue, compared to the 8.6% of revenue we invested in 2023. The incremental funding of R&D will be focused on the continued development of our Purion product extensions and upgrades. As you would expect, we will continue to tightly manage spending while continuing to support the future growth of the business by solidifying our technology advantage in the specialty markets, increasing our footprint in the memory and advanced logic markets, and most importantly, continuing to invest in our employees and infrastructure to ensure we have the necessary skills, equipment, and facilities required to achieve our financial models. Moving to our balance sheet and cash flow. We ended Q4 with $506.1 million of available cash and generated $65.6 million of cash from operations in the period, and $156.9 million for the full year. We continue to execute against our share repurchase program, buying back $15 million of stock in the quarter. In total, we've returned over $185 million of cash to shareholders since 2019 through our share repurchase programs. Before turning the call over to Russell for final remarks, I wanted to remind you that we will be participating in a number of upcoming investor events, including Wolfe Research's Inaugural Semiconductor Conference in San Francisco on February fourteenth, and Susquehanna's Twelfth Annual Technology Conference virtually on March first. In addition, we intend to host a Capital Markets Day on July eleventh of this year in San Francisco, in the time slot we usually hold our technical symposium. At this event, we will provide our next long-range financial model, discuss our expectations for the market, review our new product innovations, and introduce the team members that will help drive Axcelis towards its next phase of growth. We will provide more details on this event in the coming months, and we look forward to seeing many of you there. With that, I will now turn the call back to Russell for his closing comments. Thank you, Jamie. Axcelis achieved record revenue of $1.13 billion in 2023, and is targeting revenue of $1.3 billion in 2025. This growth is achievable due to the same factors discussed last quarter. First, the implant TAM has more than doubled in the last few years and is expected to continue to grow, with mature market segments representing greater than 60% of the total TAM. Second, Power Devices, especially Silicon Carbide devices, are highly implant-intensive, and the general mature nodes have increasing implant intensity, peaking at 28 nanometers. Third, high-value Purion product extensions were designed to optimize Power Device and Image Sensor device manufacturing, making Axcelis the only company with a product line capable of covering all implant recipes in these key markets. This uniquely positions Axcelis to benefit from high growth in the mature process technology markets. Finally, Axcelis has strong long-term customer relationships and a fundamental cultural desire to win by making our customers successful. 2023 was a record year for Axcelis, but a turbulent year for the industry. I want to thank our employees, suppliers, customers, and investors for your continued support throughout 2023 and into 2024. With that, I'd like to open it up for questions. Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Please stand by while we compile the Q&A roster. The first question comes from Craig Ellis with B. Riley Securities. Your line is now open. Thanks for taking the question, and congratulations on the very strong exit to 2023, guys. I, I wanted to start off with a question that combines some near-term items with some intermediate-term items. So, Russell and Jamie, from your color, it sounds like as we look at the first quarter guidance, and then the way calendar 2024's linearity plays out with the inflection in the second half, that mix would be fairly even within systems across mature foundry and memory. Can you confirm that? And then on the latter part of that, what are the things that you see that give you conviction in the second half inflection as you look at your backlog and customer engagements, et cetera? Hey, Craig, this is Doug. I'll take the first half of that question. ... So, you know, mix wise, power continues to be strong. We expect for the year, power to continue to represent about 60% of our total revenue, and silicon carbide will be 50% of our total systems revenue. So we, so we do expect that to continue to be strong. As we get into the second half, we expect the mature markets to recover, really tied to, you know, the economy more than anything, as consumer, automotive, and industrial start to return. And then, we expect DRAM to recover ahead of NAND, with NAND being more of a 2025 thing. So if you look at the updated presentation, we're expecting close to 90% of our business to come from the overall mature markets and about 25% of it from the general mature. Regarding kind of our conviction about the second half, Craig, so yeah, we do have a strong backlog. We do have solid business in power, especially in China, and in speaking with our customers, they're looking to start ramping their businesses in the second half of the year. That's really helpful, guys. The second one is more for Jamie. So Jamie, it's real impressive to see how resilient first quarter gross margins are as volumes decline. And I'm hoping what you can do is provide some color on how mix and some of the other company-specific factors are playing out. And you indicated that calendar 2024 gross margins could rise year-on-year. Can you give us any color on the magnitude of the increase that we might see? Thank you. Yeah, that's a great question, Craig, and thank you. The team has done a fantastic job of putting in place some initiatives here to one, lower our cost of goods sold for the systems and try to drive, you know, some greater efficiency without necessarily having to raise prices, you know, for some of these products, given the competitive environment. In addition to that, we have identified some service and upgrade opportunities, which are providing incremental margin opportunities in our CS&I business. And given that we expect CS&I to continue to grow in light of the higher installed base that we continue to build out there of the Purion product platform, that's gonna, that part of the mix is gonna continue to contribute incremental margin opportunity over the course of the year. And then on top of that, it's also where the systems are coming from over the course of the year. And we are seeing some higher volume in 2024 of some of our higher margin products, you know, sort of shifting the mix a little bit towards that, you know, especially in light of lower memory volume year-over-year. As you guys know, memory market is a little bit more competitive there. Margins are not as strong on those products as they are in some of our other areas. And so with the lower memory volume, we're also seeing benefit from that. That's really helpful, guys. I'll hop back in the queue. Thank you. Great. Thanks, Craig. One moment for the next question. The next question comes from Tom Diffely with D.A. Davidson. Your line is open. Yeah, great. Thanks for taking my question. Probably for Doug, you know, when you look at the TAM for 2024 in your slides, you have it actually going up for the full year, but you're talking about your business being flattish. Just curious what the differences are there. Are there certain sectors that you're not as strong in that are doing well? Yeah, that's, that is exactly what's going on, Tom, is where we see the TAM for implant going up. Power, where we are strong, is where we're taking advantage of that. We're seeing, you know, early recovery in advanced logic, which, while less implant intensive, Axcelis has a much smaller position in, one that we expect to grow over the next years, but in 2024, it will continue to be smaller. As the mature markets grow in the second half, then we'll benefit from the increased TAM there as well. And as we get into 2025, as you can see, you know, the TAM continues to grow. We are expecting a good year across all markets in 2025. Okay. And then Russell, just kind of a general question about how the year is playing out. If you think back a quarter or two ago, were you expecting a dip in the first quarter or the first half of the year before second half strength? Or did the book of business look more continuous a couple quarters ago? I think, so I guess what I'd say is the power business has stayed solid. I think it's the general mature has softened significantly. I think you've heard that from a number of our customers. So really, you know, I'd say that it's an evolving picture and, we now, you know, we now have a little bit more visibility, in Q1 and the rest of the year that we wouldn't have had a few months ago. Yeah, and Tom, on that point, you know, we had very, as you noted in the call, very strong bookings in the fourth quarter of this year, you know, relative to our systems revenue. And, you know, our backlog, again, we maintain that backlog above $1.2 billion for the full year. And as we look where we are today, we don't really see a meaningful change in the amount of backlog that we're carrying. However, we have seen some shifting in the timing of deliveries. And as Russell noted, that's consistent with what our customer commentary has been on that. Okay, great. That's helpful. And then, Jamie, last question. When I look at the margins, you know, going back to 2022 to 2023, you had really nice revenue growth, very de minimis margin expansion, and yet you're projecting pretty healthy margin expansion over the next year. Maybe just take us back to what stopped margins from expanding in 2023 versus 2022, and you know, I guess why you're confident that it accelerates here going forward? ... Yeah, that's a good question. You know, a lot of that has to do with memory mix in the period and then the efforts that we are taking, right? The, so, you know, say, mix within the year relative to memory, and then our CS&I business related to service upgrades and other opportunity sets that we see for 2024. But on top of that, a number of the initiatives we put in place to drive incremental opportunities on cost savings, specifically on the cost of sales line item, really are multiyear benefit providers to us. So these are things like the investments that we've made in the automated logistics center, where we consolidated our footprint here in the Beverly area. And then, also, you know, the continued work of the R&D team to identify new opportunities, upgrades, and services on the CS&I front, which, you know, as you guys all are aware, you know, does provide some meaningful uplift on mix. Okay. Thank you for your time. One moment for the next question. The next question comes from Mark Miller with The Benchmark Company. Your line is open. Thank you for the question. You mentioned you had three evals underway for Purion H200 and also a Dragon eval, an Advanced Logic customer. Are there any other evals currently underway? Yeah, there's 8 evals underway, Mark. We've got 1 medium current tool that's at a DRAM customer, an XE MAX, Purion XE max, under eval for an image sensor company. The 3 H200 silicon carbide tools you mentioned for power device and also a Purion VXe in a power device application. And then general mature, we have a Purion H, and then the Purion Dragon in Advanced Logic. So many customers, many applications, and many different products across the board there. What was the medium current, I'm sorry, customer? Uh, DRAM. DRAM. Okay. Thank you. Thanks, Mark. I was just Wolfspeed indicated a few weeks ago that they saw very strong design-ins. They're a major silicon carbide, as you know, manufacturer. I'm just curious why, you know, why your first half will be weaker, given what Wolfspeed was indicating would appear to be very strong design-ins. I think 75% of them are from automotive. Yeah, I think, Mark, so we see strength in silicon carbide globally. Right now, there's more strength coming from the Chinese customers. The Chinese EV market, well, you know, getting lots of press in terms of it slowing its growth rate. When you look at the number of EV companies, the breadth of the product lines that they offer, they are very focused in China on silicon carbide, not only for internal to China, but to be a global low-cost provider. So we're seeing strong bookings and continued strong quote activity from China. Throughout the rest of the world, it slowed a little bit over the course of the last quarter. But as you comment, many of our customers are talking about that picking back up, you know, as the automakers start to settle on their exact product plans. Thank you. One moment for the next question. The next question comes from Jed Dorsheimer with William Blair. Your line is open. Hi, thanks for taking my question. I guess the first one, I just want to put a finer point. It sounds, Russell, it sounds like to a previous question, when you pre-announced positively 3 weeks ago, that you had insight that Q1 would be weaker. I just wanna make sure, is that the case that you knew that sort of the Q1 would be off by 15%? Or, or did you see any pushouts over the last 3 weeks? And then I have a follow-up. Yeah, you know, I'll take that on. We have seen, again, the shifting in those delivery requirements over the past couple of weeks, especially as our customers now are firming up their CapEx requirements and the timing of those requirements over the course of the year, Jed. You know, so the reality is, you know, as we thought through the guide for 2024, you know, our historical practice has been to make sure that we can provide, you know, the most meaningful guidance to the folks, you know, relative to that. And we historically have done that on this call. So, you know, it was the combination of factors there, you know, relative to the timing of that pre-announcement. Got it. That's helpful. Thank you. And I appreciate how fluid things and dynamic things can be. I guess, along those same lines, you know, I know I heard Doug talking, you know, speaking positively on China, the average utilization for fabs in China is below 50%. Most are around sort of 30%. So I'm just wondering, what gives you the confidence that, you know, those orders materialize? Typically, you would not see, you know, additional CapEx spend with such low utilization, unless the tools are being repurposed for something else. So I'm curious, you know, what gives you the confidence that, you know, in that bookings, that you don't see you know, additional pushouts in the power market in China? Thanks. ... Yeah, so I think, Chad, a lot of it is the fact that the, you know, the Chinese companies, I think the Chinese government has a long-term plan for silicon carbide and EVs. And so the utilization is probably a little less of a factor in determining their investment policy over the course of the next few years. And so we do, you know, we see a lot of new customers in addition to the larger silicon carbide customers in China. And so there's quite a bit of activity, you know, despite your comment on lower utilization. I think they're also preparing for the fact that, you know, there is still expected to be a significant growth in EVs over the course of the next ten years. Most of the automakers globally, you know, outside of China, we'll say, have changed their plans a little bit over the course of the last six months, especially. But none are really backing away from the fact that there'll be a significant number of electric vehicles. And a lot are moving to a combination of hybrid and, and electric, and hybrid, of course, utilize power devices and inverters as well. Got it. And last question for you guys, and I'm assuming it's probably in the software, but I just wanna ask it anyways. You know, most of the equipment companies that have sold into China have been re-engineered, and are now being supplied by local vendors, with one exception, which is in implant. So I'm just curious, you know, how do you gauge that with so much exposure to a market that government subsidies are literally tied to reengineering of, of the tooling, how do you have confidence that that won't happen with, with your solution? So, Jed, this is Russell. So there have been a couple of domestic suppliers, probably for 20-odd years. There's a couple of them. They've been working on knockoff medium current implanters. One thing I'd say that does insulate us a little bit is that these are highly complex technical products, and the software is a huge component of it. The operation of the machine, the recipe tuning, the setup is a huge part. So I would say that it's a very difficult technology to replicate. People have been trying without too much success to date. And, you know, I think, I think there's another couple of things that, that go on here as well, that, you know, we, we are an innovator, and we keep moving faster and faster, working with our customers to make sure they have the most up-to-date solutions that make them competitive. Whereas typically the domestic tool manufacturers get left behind. So once a technology starts to plateau, then that's when they get. That's when, you know, foreign vendors get run over. And, you know, I, I saw that happen in a couple of other areas. Got it. Thank you. I'll jump back in queue. One moment for the next question. The next question comes from David Duley with Steelhead Securities. Your line is open. Thank you. I was curious about the memory recovery you talked about in 2024. I think you mentioned that memory would be 10% of revenue this year, and I think historical peaks were around 20%, but that was split evenly between NAND and DRAM, and I think you're talking about 10%, it's mostly DRAM. Could you just elaborate a little bit about the breakout of revenue there? And, you know, if it is gonna be 10% DRAM, that's pretty close to historical peaks, I think. And just talk about what the drivers are behind that memory business. Yeah, Dave, so the number that we've got in the presentation is it'll be, it'll be under 10%. So, you know, there's that. You know, we're monitoring that very closely as the year goes on since it's a second-half situation. The drivers for it, you know, are basically getting back to a point where we start to see wafer start additions by the memory companies on both DRAM and NAND. We expect DRAM to happen ahead of NAND, and the drivers for utilizing capacity are HBM, which is currently seeing a lot of our customers shift capacity over. We see shrinks happening that will allow them to get more, more bits out before they add capacity or add wafer starts. And then they'll start to respond to demand, and we expect demand drivers like all the consumer and auto stuff as it comes back. AI PCs look like they could be a big driver of DRAM. Microsoft, they're requiring 16 GB, you know, per AI PC for Windows 12 and AI PCs. So, so there's a lot of good indicators that we'll start to see capacity additions as we get towards the second half and end of this year, driving into 2025, where we expect it to be a very good year for DRAM. NAND, we don't expect to really see a lot of activity until we get into the beginning of next year. And so that's gonna be driven by storage, both, you know, on device and in data centers. One moment for our next question. The next question comes from Charles Shi with Needham and Company. Your line is open. ... Hi, good morning. Maybe I want to start with some of the commentary around the expected recovery of the general mature in the second half of the year. So, can you kind of remind us what kind of customers, what kind of applications you've considered as general mature? And how do investors get comfortable with a second half recovery of that part of the market? Because the CapEx announcement from mature foundries or some of the larger analog mixed signal IDM, I assume the microcontroller part of their CapEx is considered as a general mature, isn't very positive. And how do people get comfortable with that outlook for 2024? Thanks. That's my first question. Okay. So the general mature recovery, you know, is likely to be very much tied to, you know, the economic recovery or, you know, the perception of economic recovery, I guess. And so it's consumer products, automotive, industrial type products. You know, in terms of device types, microcontrollers, analog, RF, you know, all the little widgets that go into, you know, all these devices that we buy. Another, you know, strong place for it will be on the Internet of Things. We do expect that, you know, as AI takes off, it does drive another wave of IoT devices. Since AI is, you know, a data hog, we expect that to happen. So, so we do, we do see activity, you know, and our customers talking about, second half, you know, adding capacity and, and building. So and I think if you listen, you know, you know, as we listen to our customers directly and, and their public announcements, you know, most are continuing with a reasonably healthy, capital, plan. Got it. So, the second question is about, China. I think I heard you talking about that China probably contributing 40%-60% of the revenue this year. The last year's number seems to be a little bit below that. So it almost feel like you're guiding to, China revenue to be up meaningfully this year. What's driving that? And, did some of the push out by the non-China customers, actually help you, like, backfill some of the slots, for the China customers whose orders may be parked a little bit further down the road, let's say 2025? So really just want to understand the dynamics here. Is that organic underlying China demand growth this year, or there's a little bit of, puts and takes in terms of the manufacturing slots going out? Thank you. Okay. So, no, there is continued, you know, strong demand, especially on the power, and especially Silicon Carbide, in the Chinese market. And so that's, that is where most of the activity is, especially through the first half of 2024. And then, you know, we would expect the general foundries, you know, general mature foundries, worldwide would then, you know, start to recover. And, you know, I think that's consistent with, you know, all of their, you know, public releases over the last couple of weeks. And so it's, it's less to do with, with movement, creating slots or whatever, for, for China and more the, the activity and the, the bookings level and backlog, you know, that we're seeing from the Chinese customers. Thanks. Lastly, definitely the first half numbers are expected to be a little bit lower compared with certainly the second half 2023. Is the mix in the first half 2024 you're expecting something still similar, like 60% power, within that 60% power, maybe, I don't know, maybe somewhere between 30%-50% of the total being Silicon Carbide? Any color would be great. Thanks. Yeah. So, Charles, for the year, 60% of our systems revenue will be power. 50% of our total revenue, or around 50%, will be silicon carbide. And, you know, the remainder is, you know, mixed between the general mature image sensors and DRAM, primarily. And so, you know, we do would expect that we would see higher percentage of power in the first half, and then we would start to see the other markets come in in the second half and contribute and change the percentages. Thanks. One moment for the next question. The next question comes from Christian Schwab with Craig-Hallum Capital. Your line is open. Great, thanks for taking my question. I'm just curious what you guys' thoughts are on the, you know, unintended consequences of the U.S. government limiting advanced chip production in China, which has led to extremely strong investment in mature nodes. But now they've said, now they're going to look into mature node legacy chip production, because as China's meaningfully increased production of mature chips, it's leading to a possible competitive situation for U.S.-based companies selling similar chips as China tries to attempt to gain market share with that. W hat is the risk that they come back at some point this year and start making some semblance of restrictions on legacy chip semi cap equipment, which would obviously, with 40%-60% of your revenue, could be a material risk. Yeah, Christian, I mean, we watch that very closely. You know, we don't expect that to happen on the mature nodes at this point, especially on the power side, which is, you know, where the strength is, especially in the first half. But it is something we watch very closely. So we can't predict the future on government actions there. So it's something we just have to monitor and react to. Great. And then on the big DRAM memory recovery in 2025, you know, we've seen that every leading memory manufacturer, you know, significantly reduce production capacity and utilization of the equipment on hand. And then in DRAM, taking that equipment and moving it from DDR4 to DDR5, which is now that the chips are available, the demand for that is greater. But, you know, the two people in Korea, you know, lost $15 billion making memory in 2023. It's gonna take quite some time to get all their money back. So, you know, we've seen an improvement in pricing because of those, you know, actions. I'm just trying to understand why you think there would be a substantial increase in DRAM memory when by that timeframe, you know, they may not have recovered all of those lost profits, which it's very difficult to make future investments if you're not making a substantial amount of money. What am I missing? Yeah. Well, you know, I think right now, you know, they have, as you said, they've been throttling capacity to improve pricing, which has improved. They've been converting their capacity to HBM, which is higher ASPs and higher margin for them, and also reduces the number of chips on a wafer due to the die size change. And they are converting to the next shrink, which gives them better performance, you know, and ultimately a lower cost point. So they're doing all the things that we normally see them do, you know, as they get to the bottom of the cycle and prepare for the next turnaround. You know, the next turnaround has demand drivers in AI that, you know, are very DRAM intensive, you know, for higher ASP type of parts. And then we'll drive, you know, consumer products and so forth that still need the, you know, we'll call it the lower cost, lower performance items. So we see it as, you know, no different than any other cycle, where they're investing in the next technology right now, and then they'll add capacity to meet the growing demand of those end markets, which will be AI, you know, consumer markets, automotive, industrial, and then, you know, moving out to IoT and the edge computing type of environment. So, I don't think it's any different, Christian, than any other cycle that we've seen from memory. Okay, great. No other questions. Thank you. One moment for the next question. The next question comes from Duksan Jang with Bank of America. Your line is open. Hi, good morning. Thank you for taking the question. I have a 2025 question. So you reiterated the $1.3 billion in sales model target, and that implies a 15% year-over-year growth for the systems side. You mentioned Advanced Logic in Japan as some of the opportunities, but what other types of visibility do you have in your core, power and general mature markets in order to drive that growth? Thank you. Well, I think we see it, you know, both in terms of market trends and then directly, you know, from customers as they discuss their plans with us. And then lastly, more on the area that you discussed, you know, expansion of our footprint. And so, you know, we do see opportunity, you know, in advanced logic, and we see opportunity in the Japanese market as two areas that Axcelis has a lower penetration rate right now. So we do expect to grow those. The 2025 number is probably more driven, though, by the overall market recovery in memory and general mature. We expect, as we've said, that to really start off in the second half of this year, and gain significant momentum as we go into 2025. You know, there's a lot of really good long-term trends for this industry right now, that make 2025 and into 2026 look like they could be very, very good years. So we have good confidence based on the market trends and based on our customers and what they're saying, and based on the Axcelis position and the Purion product family right now. Got it. Onto those growth markets that you talked about, so Advanced Logic. I mean, is there any way to quantify or estimate how much growth that would be? Because you're obviously not guiding, but it's been at a low single digit run rate for a couple of years. And you've talked about growth in this area for a while, so.... How do you assure us that you do have some wins coming and growth is expected there? Okay, but, good question. So, just a couple of things. So I was going to add to what Doug said about the 1.3. There's not a lot of Advanced Logic, or Japan baked into the $1.3 billion. And I think those of you who have known us long enough, that unless we can see a clear path, we are not going to actually go out and state, this, this model. And I think we've also said, as Doug indicated, there's multiple paths to get to this. Going after Advanced Logic, I think, it's a, when we, when we work with customers in Advanced Logic, it has to go through R&D. That is a time-consuming process, to get qualified as a design tool of record, to then get into the higher volume process tool of record. We have now managed to position our Dragon tool at two locations. One's an advanced institute where we think we're going to get significant learnings, and the second one is actually an Advanced Logic customer, where we've placed our Dragon in their R&D region. So we are making penetrations, and those penetrations are always going to be technically driven. It's not going to be a cost of ownership play; it has to be a differentiation play. So we're working with a lot of different partners to work out how we can differentiate our technology in their application. And obviously, the goal is to solve really valuable customer problems. Understood. And as a follow-up onto OpEx, so in Q1, I, I think the implied OpEx guide is roughly $60 million. And obviously it's a little bit of an increase sequentially, despite sales coming down. So how should we think about the run rate from here, for the calendar 2024, and onto 2025 as well? Because the 2025, at $1.3 billion, 19% of sales, that's about $245 million-ish, and, and I think you're kind of already at that level. Yeah. So as we think about OpEx going forward, you know, we've talked historically, and we mentioned it in the prepared remarks today, that, you know, we are going to continue to make investments in incremental R&D. And so you'll see that some of the increased period over period has to do with incremental investments in our research and development team here at. In addition to that, we're going to kind of continue to try to hold our SG&A expenses relatively flat. We believe we built a base here that can support the type of growth that we see coming in the future. And so, you know, we're going to tightly manage expenses around our SG&A over the course of the year to maintain, you know, those at the—we'll call it the exit rate, you know, of 2024, 2023. You know, absent, you know, normal salary appreciation and other types of, you know, cost changes that would flow through our process. Largely speaking, you know, you're going to see that number as a percentage of sales come down as, you know, as the volumes increase over the back half of the year. And as we move to 2025, we'll still be very judicious in terms of making sure that we've got the type of efficiency that we want out of our SG&A organization while continuing to make investments in research and development. Sounds great. Thanks. Yep. One moment for the next question. The next question comes from Mark Miller with The Benchmark Company. Your line is open. Mark, your line is now open. Thank you. Hi, just a housekeeping issue. What was capital spending? For the quarter? It was $10 million in the quarter and approximately $20 million for the full year. Okay. And your cash from operations was $65.6 million. Is that correct? Yeah, in the quarter. Yep. Thank you. One moment for the next question. The next question comes from David Dooley with Steelhead Securities. Your line is open. Thanks. Question on gross margins. You've talked about revenue being flat for the year with the second half recovery. Where should we think about gross margins kind of exiting 2024 or just the progression throughout the year? Just trying to kind of quantify when you talk about margins being up, how much? Yeah, again, we're not going to provide, you know, direct guidance on where the expectations are for margin over the course of the year. Right now, what we're forecasting, given the contribution of higher CS&I volumes over the period, as well as some system mixes, we do see it being up over 2023's gross margin overall. Okay. And what was the reason behind the, the strong bookings in the quarter? I think that they were $236 million. I think that was the number. Last quarter was, like, $198 million or something like that. What, what were the key end markets and applications that drove the increase in bookings? Yeah, it's Silicon Carbide in China. Yeah. That's the, that's the big driver. Okay, thanks. All right. One moment for the next question. The next question comes from Craig Ellis with B. Riley Securities. Your line is open. Thanks for taking the follow-up. Guys, I wanted to follow up on a messaging change that seems a little different than what we heard through last year, and it's regarding CS&I this year and next year. It seems like there's a more optimistic view about what upgrades and some other offerings that the company has developed can do for annual revenues in that area. Is that correct? And can you provide any color on what specifically you're doing that is driving the growth that you'd expect in 2024 and 2025? Thank you. So hey, Craig, it's Russell. So, you know, as you're aware, our installed base has grown really rapidly, particularly in terms of Purion, and that has a very strong platform. So as we look at our CS&I aftermarket business, we're looking to focus on contracts, and we're looking to focus on high-value upgrades. So we are actively developing upgrades that add significant value for our customers, so they can, so we could sell those. And at this point of the cycle, often what you see is, you know, the utilization starts to go back up, then you see customers buying upgrades that can support increased capacity, and then they start buying machines. This is a perfect time to be working with our customers, qualifying these upgrades, working with these upgrades, and, you know, building that part of our business out stronger. Got it. Thanks, Russell. This concludes today's question and answer session and presentation. Thank you for your participation in today's conference. You may now disconnect. Have a great day.