Brooks Automation, Inc. (BRKS) BarCap 2012 Global TMT Conference May 22, 2012 4:15 p.m. ET Executives Martin Headley - EVP & CFO Analysts Olga Levinzon – Barclays Capital Presentation Olga Levinzon – Barclays Capital Good afternoon. I am Olga Levinzon, (inaudible) at Barclays. And it’s my pleasure to introduce Mr. Martin Headley, CFO of Brooks Automation. Martin Headley
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Just at semiconductor and adjacent market. When we look at that $1.5 billion, we serve about 30% of the market, we’re growing the market share. And if you look at growth that people would project for those markets, we’ll conservatively view that, that should grow at a compound annual growth rate of between 7% and 12% with some of the key growth drivers for us as well as for the markets in general being mobile telecommunications and mobile computing where our served market increases not just because of chip content but because of the MEMS devices that are included in those devices, LED, and OLED screens and the coatings that go on some of the mobile computing devices that utilize some of our mixed gas cryochillers.In terms of how we look at market share, we track that and we track our future growth in market share by design-in wins for our Books Product Solutions group, or BPS group. And if you look at the wins at OEMs in semi and adjacent over the course of the last six quarters, we talked about them averaging between 15 and 20 design-in wins a quarter. Actually we’ve only had one quarter where the number actually within that which was our last quarter, or a September fiscal year end. So our March quarter was the second quarter of fiscal ’13. And we had 17 design-in wins, nine of those were for semiconductor front-end and eight for wafer adjacent market. You can see from this graph that we are establishing a strong market position even though it’s relatively modest revenues at the moment in terms of the design-in wins in those adjacent markets but should, could rise to significant revenue growth in the future. Why the design-in wins matter and what is the cycle? Well, they matter because they’re relatively infrequent. They are also very expensive investments for OEMs. So they’re going to do relatively few design-ins of new platforms and given that cost of designing our components or our chip systems into a tool, they stick and they are generally designed in for the life of a product that is typically over five years.
I am frequently asked, well, how do I judge these design-in wins versus the revenue potential and that is tricky. But I will give you some sizing there. You will typically see very modest volume during the initial part of the design-in wins, a period of three to nine months where the initial design work is done, where you might make an initial shipment to engineering function for them doing the design. And then there might be more volume, but still not the full volume over the course of the next nine to 24 months, the OEMs ship beta and evaluation units. And it’s only then something of the order of two years after initial design-in wins where you can realistically expect volume.I just want to touch on one of our groups here, our robotics group which is the largest of our product groups and really talk about some of the new market developments and also not because of the market developments and product developments in our other groups, instrumentation, vacuum equipment and most important, (indiscernible) where Brooks serves our customers extremely well, where we address complexity, where we address flexibility and the need for higher payloads. And you can see some examples here where for instance, fabs and foundries because they are finding their AMH test systems are not getting the wafer counts exactly right to their initial tools. They are looking at building buffers that require high Z robots at the tool level. You see independent motion is supporting much higher throughput drop-through tool and with wafer back-end processing, we’re seeing a need for flipping of wafer. All of these components, we’ve worked hard at developing with new products recently. In our adjacent markets, you can see where we may need to, rather than handle the perfectly round, perfectly formed silicon wafers or near perfectly formed silicon wafers that you experience in the front end, you start dealing with bowed, thin, and translucent substrates in wafer back-end and LED and compounds semi. Where alignment of wafers into our automation is extremely important, some of our alignment tools are fit in that throughput. Read the rest of this transcript for free on seekingalpha.com