Slide 1: Analyst & Investor Day
June 2018 Analyst & Investor Day
Slide 2: Cautionary Statement Regarding Forward Looking Statements
Cautionary Statement Regarding Forward Looking Statements his presentation includes statements that constitute forward-looking to government programs we participate in; risks related to taxation; changes in statements within the meaning of safe harbor provisions of the Private customer demand for ou
Slide 3: Eitan Oppenhaim – President & CEO
Eitan Oppenhaim – President & CEO • President and Chief Executive Officer since 2013 • Joined Nova in 2010 as the Global Business Group Executive Vice President, responsible for the company’s customers facing groups, including Global Business and Sales, Marketing and Delivery • Served in several exe
Slide 4: The Team
The Team Performance, Sustained Market Review Disruptive Strategy & Profitable & Growth Innovation for Growth Plans Growth Trajectory Emerging Market Eitan Oppenhaim, Dror David, Zohar Gil, Dr. Shay Wolfling, CFO President and CEO Marketing & Business CTO Development Corp. VP 4
Slide 5: What We'll Cover Today
What We’ll Cover Today Markets are healthy & Nova is well positioned Operational efficiency fueled by multiple drivers to continue growing to support growth Emerging digital Growing demand for Efficient LT model revolutions metrology Execution track record Multiple high Differentiated portfolio with
Slide 6: Key Facts
DUAL-LISTED TECHNOLOGIES 2017 KEY Optical & X-Ray PROFITABLE NASDAQ / TASE GROWTH Revenues Facts EMPLOYEES METROLOGY 35% - 222M$ Leading 650 Dimensions & Materials Market cap Metrology 101% (YoY) Innovator for Advanced Process Control GLOBAL PRESENCE R&D SITES Cash Reserves 18 world wide offices USA
Slide 7: Success Tied to Customers' Partnership
$222 Success Tied to $149 $112 Revenue In Million $ 2013 2015 2017 Customers’ partnership $69 Diversified Portfolio $59 X-ray & Optical Development to Manufacturing $45 Dimensions & Materials Joint development programs Operating expenses In Million $ 2013 2015 2017 $63 Disruptive technologies Solid
Slide 8: Innovative Optical / X-Ray Portfolio
Innovative 300mm 10um 5nm 0.5Å Wafer Pad Pitch Precision Optical / X-Ray Semiconductor Dimensions / Materials Segment Properties 8
Slide 9: Unique Complementary Portfolio
Unique Complementary Software Dimensional Materials Services Physical & Integrated & Standalone Install Base Support Mathematical Models Standalone Materials Features UG & Big Fleet Data Critical Dimensions Properties Utilization Hybrid Ecosystem Film Thickness 9
Slide 10: Track Record and Q1 2018 Highlights
Track Record Q1 2018 Highlights Record Revenue 18% CAGR 5 Years $62.6M $222 35% Growth 2017 Q4 Record Profit $57 $15.4M $164 H1 Growth 10% YoY $149 Q3 $54 Elevated R&D Investment $121 $123 Q2 Diversification: $60 Q2 $56 Memory China Q1 Q1 $63 50% 40% $54 2017: 35% 2017: 20% 2014 2015 2016 2017 2018
Slide 11: Why Do We Continue Growing?
Why do we CONTINUE GROWING? Diversification Customers Mix nodes Segments Technology Geography 11 Growing Market Share in Growing TAM
Slide 12: From Nova200 to Nova300
Dimensional Services Materials M&A Metrology Metrology Inorganic Share > $50M Gains $300M From Nova200 to 40% SAM/TAM Expansion $200M 30% 300 Reaching revenues $100M Organic $300M Disruptive Innovation of $300M organically 30% Market Growth 2012 2017 Target $25M 12 New Technology
Slide 13: Sustained Profitable Growth
Sustained Profitable Growth Dror David, Chief Financial Officer © Nova confidential & proprietary information
Slide 14: Dror David – Chief Financial Officer
Dror David – Chief Financial Officer • Mr. Dror David was appointed as Nova’s Chief Financial Officer in 2005. Mr. David joined Nova in April 1998, as the Company’s Controller, and since then served in various financial and operational positions, including the position of Vice President of Operation
Slide 15: Executing on Profitable Growth
Executing on Profitable Growth
Slide 16: Executing on Our Profitable Growth Commitments
Executing on Our Profitable Growth Commitments Revenue [$M] Operating Profit [$M] Earnings Per Share [$] 222 63 1.94 164 149 121 30 1.1 22 19 0.69 0.71 2014 2015 2016 2017 2014 2015 2016 2017 2014 2015 2016 2017 * Non-GAAP Financials 16 © Nova confidential & proprietary information
Slide 17: Financial Outperformance Continues
Financial Outperformance Continues Year-Over-Year Growth Rate 2016 to 2017 109% 2017 • Achieved 2X the Peer Group Growth Rate • Grew Operating Income at 3X Revenue • Delivered >75% EPS Growth Year Over Year • Generated >$55M Free Cash Flow (25% of revenue) 35% 16% Peer Group Nova Revenue Nova Op Inc
Slide 18: Historical Outperformance Track Record
Historical Outperformance Track Record Compound Growth Rate 2012 to 2017 37% 2012 - 2017 • Achieved >3X Process Control CAGR • Grew operating income at >2X Revenue CAGR • Delivered 30% Non-GAAP EPS CAGR 18% • Generated >$120M in Operating Cash Flow 5% Process Control Nova Revenue Nova Op Inc * Non-G
Slide 19: Diversification
Diversification NOMA cz:
Slide 20: Diversification - Customer Exposure
Diversification - Customer Exposure Customer Mix Customer Mix • Foundry Leadership TSMC Others • Memory Growth Others TSMC 2014 2017 GF Samsung Hynix GF Foundry Exposure Memory Growth 2 major customers 4 major customers 20 © Nova confidential & proprietary information
Slide 21: Diversification - Regional Exposure
Diversification - Regional Exposure Regional Mix Regional Mix China Others Others 4% 5% • China & Korea Growth 14% USA 15% Korea • 3 Large Territories 30% USA 24% 2014 Taiwan 2017 47% China 21% Korea Taiwan 11% 29% Taiwan Exposure Diversified Territory Mix 21 © Nova confidential & proprietary inform
Slide 22: Diversification - Segments
Diversification - Segments 15% 35% 50% • Balanced Exposure 85% • Leading & Trailing Edge • Mitigating Seasonality 65% 50% 2014 2017 H1/2018 Foundry Memory 22 © Nova confidential & proprietary information
Slide 23: Diversification - Technology
Diversification - Technology R&D Investments and Acquisitions 2014-2017 Growth $150M 232% $70M 84% 2011-2013 2014-2016 Revenues Operating Income Expanded Technology Base Driving Growth * Non-GAAP Financials. 23 © Nova confidential & proprietary information
Slide 24: Target Financial Model
Target Financial Model NOMA cz:
Slide 25: Gross Margins - Products & Services
Gross Margins - Products & Services Products Gross Margins 2015 to 2017 64% Targets: • Products Gross Margins of 61%-64% • Services Gross Margins 35%-40% 61% 58% 2015 2016 2017 * Non-GAAP Financials. 25 © Nova confidential & proprietary information
Slide 26: Gross Margins - Blended
Gross Margins - Blended Revenues and Gross Margins 2012 to 2017 $250M 60% Revenues 59% 59% Gross Margin $200M 58% 57% $150M 56% 55% 55% 55% 53% $222M $100M 53% 54% 53% $164M $149M 53% $112M $121M $50M $96M 52% 51% $0M 50% 2012 2013 2014 2015 2016 2017 * Non-GAAP Financials. 26 © Nova confidential &
Slide 27: Gross and Operating Margins
Gross and Operating Margins Gross Margin [%] Operating Margin [%] 28% 59% 87% 7% 15% 55% 2015 2017 2015 2017 Nova300 Model 56%-59% Nova300 Model 26%-29% * Non-GAAP Financials. 27 © Nova confidential & proprietary information
Slide 28: Outperformance: Revenue Doubled Every 5 Years
Outperformance Revenue Growth [$M] • Unique differentiated offering $222 • Disruptive innovation • Inorganic growth >$50M revenues • New emerging metrology markets • Solid operational model $96 $58 Revenue Doubled $20 Every 5 Years 2002 2007 2012 2017 * Non-GAAP Financials. 28 © Nova confidential &
Slide 29: Market Review & Growth Potential
Market Review & Growth Potential Zohar Gil, Corporate VP Marketing & BD © Nova confidential & proprietary information
Slide 30: Zohar Gil – Corporate VP Marketing & BD
Zohar Gil – Corporate VP Marketing & BD • Joined Nova as head of marketing in 2011 • Led Nova Foundry business mgmt. in APAC during 2014-15 • Appointed Corp VP Marketing & BD in 2016 • Prior to Nova, was General Manager for the Carrier Line of Business and Vice President of Product Management at Alv
Slide 31: Market Review Outline
Market Review Outline Outlook for Electronics ➢ Driving growth in Semiconductor CAPEX and Semiconductor ➢ Increasing Metrology Intensity Technology Inflections ➢ Growth in Dimensional & Materials Metrology Market Share Gains ➢ Business Growth and Diversification New Innovative Solutions ➢ Increasing
Slide 32: Semiconductor Evolution Cycles
Semiconductor Evolution Cycles $600B Semi Market $500B $400B 350M $300B Wafer 250M Capacity $200B 200M 150M 75M Source: Gartner, IC Insights 2000 2010 2020 2025 Internet Mobile Internet Connected world Data Economy Connectivity Mobility Productivity Veracity 32 © Nova confidential & proprietary info
Slide 33: Multiple Catalysts for Semiconductor Demand
Multiple Catalysts for Semiconductor Demand Smart City Smart Sensors AI Cryptonomy 25% CAGR 30% CAGR 50% CAGR 30% CAGR Smart Industry Autonomous Vehicle AR / VR 1 PB per day 4 PB per day 70% CAGR Demand for Semiconductor will triple in 2025 33 © Nova confidential & proprietary information
Slide 34: Semiconductor Revenue
Semiconductor Revenue WW Semiconductor Revenue by Technology, $B CAGR +12% 14-19 +22% 502 6% 470 420 342 335 346 Logic/Foundry 4% DRAM 19% NAND Flash 16% Other 2014 2015 2016 2017 2018 2019 Source: Gartner KeyTakeaways Key Takeaways • All semiconductor major segments are growing significantly • Memo
Slide 35: Semiconductor Growth Drivers
Semiconductor Growth Drivers Semi Growth WW Electronics System Production Semiconductor % of Electronic Equipment $1,557B $1,504B X 29% 31% 31% $1,457B 25% 25% 25% 24% 23% 2016 2017 2018 2012 2013 2014 2015 2016 2017 2018F 2019F Source: IC Insights Key Takeaways • Semi growth effected by electronics
Slide 36: Capacity Demand Driving Investment
Capacity Demand Driving Investment Memory Demand Supply/Demand Sufficiency 102% 23,059 27,657 34,151 19,077 100% 359 250 99% 135 182 96% 2016 2017 2018 2019 2018 2019 NAND Petabytes DRAM 4Gb [M] NAND DRAM Source: Gartner Key Takeaways • NAND - Demand growth of over 35% per year driven by high end sm
Slide 37: Industry Inflection Points (Logic/DRAM/NAND)
Industry Inflection Points (Logic/DRAM/NAND) Industry Roadmap 2013 2014 2015 2016 2017 2018 2019 2020 202X Foundry / 22/20nm 14/16nm 10nm 7nm 5nm 3nm Logic Planar NAND 20nm 18nm 16nm 3DNAND 32L 48L 64L 96L 128L Memory DRAM 3X Mid 2X nm 1X nm 1Y nm 1Z nm Cross Point, ReRAM, MRAM, Embedded NVM, etc So
Slide 38: Semiconductor CAPEX
Semiconductor CAPEX WW Semiconductor CAPEX by Technology, $B CAGR 14-19 +13% +29% 5% 103 106 91 Logic/Foundry 1% 65 64 70 12% DRAM NAND Flash 11% Other 2014 2015 2016 2017 2018 2019 Source: Gartner, IC Insights Key Takeaways • CAPEX growing significantly in both 2018, and 2019 • DRAM and NAND overpe
Slide 39: Applications Growth Projection
Applications Growth Projection Increasing Complexity = Rising Metrology Intensity DRAM NAND Logic +100% +20% +50% 2X 1X/1Y Planar 3D-NAND 28nm FinFET Source: company data Optical Metrology [$M] +16% 883 811 617 492 518 2014 2015 2016 2017 2018E Sources: Gartner 39 © Nova confidential & proprietary i
Slide 40: China's IC Strategy of Massive Investment
China’s IC Strategy of Massive Investment China’s Semiconductor Industry Investment Funds Fund Amount Purpose National Level Support for IC Industry China Government Fund for National IC 120B RMP ($19.5B) 40% wafer manufacturing, 30% chip Industry Support design, 30% wafer packaging Local Government
Slide 41: Nova Business Performance in China
Nova Business Performance in China Nova Revenue China Region x10 ➢ Tool-of-Record position in major IC establishments ➢ Dimensional and Materials 2014 2017 metrology Source: Company data ➢ Memory and Foundry customers WFE Growth in China 130% 7.7 3.2 2014 2017 Source: Gartner Exceeding Industry Benc
Slide 42: Growth Drivers – Advanced Nodes
Growth Drivers – Advanced Nodes $M Nova Performance by Tech-Node Matching Foundry Spending ➢ 40% from trailing nodes ➢ 60% in advanced nodes Leading Edge Nodes ➢ Optical and Material Metrology solutions Trailing Edge Nodes 2014 2017 Source: Company data 42 © Nova confidential & proprietary informati
Slide 43: Nova Versus Industry Performance Benchmark
Nova Versus Industry Performance Benchmark CAGR 2014 – 2017 ➢ Multi-year growth exceeding Process 24% Control and Metrology ➢ Contributed by: 18% ➢ Leading position in IM market 15% 12% ➢ Growth in SA CD and material metrology 8% ➢ Business growth in China ➢ Growth in memory customers CAPEX WFE Proc
Slide 44: Growing TAM – Market Exposure
Growing TAM – Market Exposure Growing Addressable Market New TAM expansion: $1,200M ➢ Material-Dimensional Integration ➢ Lab to Fab Metrology $800M ➢ Machine Learning & Big Data ➢ Expand IM to new process steps $500M 2014 2017 2020 TAM New TAM Source: Company data, Gartner 44 © Nova confidential & p
Slide 45: Disruptive Innovation for Emerging Market
Disruptive Innovation for Emerging Market Shay Wolfling, PhD, Chief Technology Officer © Nova confidential & proprietary information
Slide 46: Shay Wolfling – Chief Technology Officer
Shay Wolfling – Chief Technology Officer • Joined Nova as CTO in 2011 • R&D manager at KLA-Tencor-Belgium, leading multidisciplinary metrology & inspection development projects • Founder and VP R&D of Nano-Or-Technologies, a start-up company with a proprietary technology for 3D optical measurements,
Slide 47: Outline
Outline Process Challenges – Metrology Opportunity Differentiated Technology Directions 47 © Nova confidential & proprietary information
Slide 48: Variety of Different Requirements
Variety of Different Requirements Memory Performance Drivers: 1000 • Increase bit density at lower cost • Additional storage (capacity) 10,000 • Energy efficient (low power) • Access speed DATA STORAGE (Gigabyte) 100 100 POWER (Watt) High Performance 1 1 Mobile 0,01 Logic Performance Drivers: • Powe
Slide 49: Logic Roadmap Enablers
Logic Roadmap Enablers Device Scaling Vertical Integration Novel Materials TiN TiAlC La TaN TiN HfO2 SiO2 Si • Shrink • 3D Transistors • HKMG stack control • Multi Patterning • Vertical architecture • Complex Epi process • EUV • FinFETs • BE: alternative metals • Alternative Litho: • Gate-All-Around
Slide 50: High Performance Logic Roadmap
High Performance Logic Roadmap FinFET EUV Nanowires introduction introduction Gate-All-Around 14nm 10nm 7nm 5nm Sub 5nm Sub 3nm Quadruple Alternative Vertical patterning metals in BEOL Nano-Wires 50 © Nova confidential & proprietary information
Slide 51: Various Types of Memory
Various Types of Memory CPU On-chip (embedded) Register Capacity Cache SRAM Cost/bit Speed DRAM Off-chip Storage Class Memory (stand-alone) NAND Flash HDD Storage Memory volume 51 © Nova confidential & proprietary information
Slide 52: Memory Roadmap Enablers
Memory Roadmap Enablers Scaling (DRAM) Vertical Integration Novel Materials • Scaling capacitors 3D NAND • 3DNAND: Complex • Multi-Layers > 128 stacks of new-materials • Multiple patterning (Quadruple & Octuple) • 1:60 Aspect Ratio • DRAM: Advanced • Underlayer Logic materials (High-K) • Multiple CD
Slide 53: Memory Roadmap
Memory 2018/9 3-5 years Roadmap Embedded STT MRAM STT MRAM (N5) Memory (N18-N14) SOT MRAM Pillar, FE, DRAM Pillar D16 STT MRAM <D10 Storage Cross-point Multi-Level Class Phase Change Cross-Point Memory Resistive RAM Memory 3D NAND 96-128 Tiers >512 Tiers 53 © Nova confidential & proprietary informat
Slide 54: Technology Inflection Points
Technology Inflection Points Device Scaling Optical Cost Vertical Integration Hybrid Economics Efficiency Novel Materials X-Ray Power Complex Inflection Points – Metrology Growth Driver 54 © Nova confidential & proprietary information
Slide 55: Logic – Key Metrology Challenges
Logic – Key Metrology Challenges FinFET Nano-Wires BEOL • Multiple parameters • Complex stack (Ge / Si) • Multi-patterning – SAQP and beyond • On-structure metrology • Multiple Nanowires – additional variability of • EUV – Roughness control • Material & Dimensional dimensions • Alternative metal pro
Slide 56: 3D NAND – Key Metrology Challenges
3D NAND – Key Metrology Challenges Deposition Hard Mask Channel Etch Post Channel Channel Etch • Tiers thickness • HAR • HAR • Oxide Recess • Non-periodic • Liner thickness • Dark & in-die • Multiple CDs • Pre & post CMP • Under-array CMOS • Bow & Tilt Multi-Tiers, High-Aspect-Ratio, Bottom Paramete
Slide 57: Metrology Intensity
Intensity Growth Beyond Planar FinFet Nano-Wires Demand Metrology Intensity Growing Complexity = Planar NAND VNAND Gen-1 VNAND Gen-x Growing Intensity DRAM Gen-1 DRAM Gen-X DRAM Gen-Y Complexity Complex transitions - Environment rich in opportunities 57 © Nova confidential & proprietary information
Slide 58: Differentiated Technology Directions
Differentiated Technology Directions
Slide 59: Nova's HW & SW
Nova’s HW & SW Fleet Management Performance control Interlaced Open to Hybrid Reference Solutions CMP Train and Validate Lithography Inline Monitor Deposition ETCH Retrain Physical Models – NOVA MARS Complementary Models - NOVAFit 59 © Nova confidential & proprietary information
Slide 60: Innovative Technological Directions
Innovative Compete with unique Coupled Divert from the crowded landscape – lead the Invest in Sustaining From single tool to Fleet Technological HW/SW solutions Emerging Metrology markets and Disruptive innovation approach - infrastructure Directions Material-Dimensional Integration Invest in Overal
Slide 61: Material-Dimensional Integration
Material-Dimensional Integration Conventional Perspective – Separate Metrology Material Metrology Dimensional Metrology Technology X-Ray (XPS, XRF) Optical (OCD) Modeling Direct measurement Physical modeling New Directions • Combine Material & Dimensional on-structure metrology Optical Technologies
Slide 62: Example - FinFET Epi Challenges
Example - FinFET Epi Challenges Dimensional Challenges Material Challenges • SiGe (1-3) • Ge composition • Poly-Si (4-5) • Stress & Strain • Spacer (6) • Doping (B & P) • High-K MG thickness • HKMG composition • Complete Fin morphology • Alternative Channels • Variability (device, wafer) (III-V mate
Slide 63: Metrology Eco-System – In-Line & Lab
Metrology Eco-System – In-Line & SA OCD TEM/X-SEM Reference Train Validate Retrain Monitor X-Ray E-test CD-SEM 63 © Nova confidential & proprietary information
Slide 64: Example: Hybrid Optics & X-Ray
Example: Hybrid Optics & X-Ray FEOL Gate use case: Two ultra thin layers on structure • Optics – cannot accurately resolve the layers • X-Ray – cannot resolve profile from IL Only XPS + Optical CD combination can resolve both layers on structure 64 © Nova confidential & proprietary information
Slide 65: Big Data & Machine Learning - Key Semi Drivers
Big Data & Machine Learning - Key Semi Drivers Increase in Process Complexity Huge amount of data (3D integration, complex materials) collected in the fab Machine Learning Increasing challenges to Only small part of the achieve Yield fast enough collected data is used 65 © Nova confidential & propri
Slide 66: Example: Machine Learning in Metrology
Example: Machine Learning in Metrology • “Train” complex connections between inline data & reference data • Combine with physical modeling knowhow Inline: Reference: Integrated / SA TEM / Electrical Test • In production: use the inline data to “predict” the reference Minutes Days / Weeks Outcome ➢ O
Slide 67: Lab To Fab Metrology
Lab To Fab Metrology Variety of Metrology Technologies HAXPES: High Energy XPS OCD CD-SAXs CD-SEM TEM XPS Self Focusing SIMS XRF Nano Raman Spectroscopy FAB XRD / XRR LAB Scanning Probe Microscopy AFM Kelvin Probe LEXES Rutherford Spectrometry 4pt probe Atom Probe Tomography Other Variety of Physica
Slide 68: Summary
Summary • Process challenges - metrology opportunity • Broad portfolio of differentiated solutions • Dimensional & Material • Integrated & Stand-alone • Optics & X-Ray • Hardware & Software • Innovative technology for increased TAM • Material-Dimension Synergy • Disruptive Technologies to control Va
Slide 69: What We Covered Today
What We Covered Today Growth Strategy Technology Innovation Profitable Growth Diversification as Key MS Growth in growing TAM Efficient financial model $300M Plan - Organically New Emerging Technologies Execution track record Built to grow Differentiated Direction Elevated investment to • Healthy de
Slide 70: Thank You
Thank You PROCESS INSIGHT