Veeco Instruments Inc. announced September 2013 that it has signed an agreement to acquire privately held Synos Technology, Inc. (“Synos”) and went through with the acquisition. At the time Synos was developing and manufacturing Fast Array Scanning™ Atomic Layer Deposition (FAST-ALD™) systems that are enabling the production of flexible organic light-emitting diode (OLED) displays for mobile devices.
Despite recent rumors that the display industry is adopting ALD OLED barrier technology Veeco has announced a cost savings program for ALD. Here are some insights to the Veeco ALD cost reduction program as reported during the Veeco Instruments Q3 2016 Results - Earnings Call (Seeking Alpha Transcript)
John R. Peeler - CEO, Veeco Instruments, Inc.
"More recently, we reduced investments in our atomic layer deposition technology development. We weighed the investments necessary to establish and grow a position in ALD with the potential and expected timing for returns and although we continue to make progress in our development efforts for advanced semiconductor applications, the timing for potential revenue realization was delayed. As a result, we decided to significantly reduce our ALD expenses. In total, we now expect to lower the company's cost structure by $30 million on an annual basis. These savings translate into an EBITDA break-even level at or below $75 million in quarterly revenue, starting in Q1 2017."
Shubham Maheshwari - CFO, Veeco Instruments, Inc. gave the following explanations:
- The competitive technologies solved their problems leaving no investment for now in ALD meaning that the near-term opportunity for ALD has been pushed out and that is the reason for the ALD cost reduction program.
- The ALD cost reduction is about $10 million of the total cost reduction program reported.
- The spending up until now for ALD has been somewhere around low teens on an annual basis
- Veeco will still be investing in ALD, but at a much lower amount.