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Axcelis Technologies, Inc.
−Removed: (“Axcelis,”
−Removed: the “Company,”
−Removed: “we,”
−Removed: “us,”
−Removed: or “our”) designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips.
+Added: (“Axcelis,” the “Company,” “we,” “us,” or “our”) designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips.
We believe that our Purion family of products offers the most innovative implanters available on the market today.
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In addition to equipment, we provide extensive aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training.
−Removed: Axcelis’
−Removed: business commenced in 1978 and its current corporate entity was incorporated in Delaware in 1995.
+Added: Axcelis’ business commenced in 1978 and its current corporate entity was incorporated in Delaware in 1995.
We are headquartered in Beverly, Massachusetts and maintain an internet site at www.axcelis.com.
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Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-K.
−Removed: 2019 was a challenging year for the industry, with memory spending down double digits from 2018 levels.
−Removed: Revenue for 2019 was $343.0 million, a decrease of 22.5% from 2018 revenue of $442.6 million.
+Added: 2020 was an exceptional year for Axcelis despite the many difficult logistical challenges brought on by the geo-political environment and the pandemic.
+Added: As a result of the strength of the overall electronics market and the continued growth of the Purion product family in 2020, we delivered our highest annual revenue in the last 15 years.
+Added: Net income increased 193.4% on a 38.4% increase in revenue from the prior year.
+Added: Revenue for 2020 was $474.6 million, an increase of 38.4% from 2019 revenue of $343.0 million.
Systems revenue for 2020 was $293.6 million, compared to $202.6 million in 2019.
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This compares to 2019 net income of $17.0 million and earnings per diluted share of $0.50.
−Removed: Despite lower year over year financial results, other metrics show Axcelis’
−Removed: continuing improvement.
−Removed: 2019 marked the first time Axcelis has remained profitable through a full industry cycle.
−Removed: We have now achieved over 5 years of consecutive quarterly profits while making investments that put the Company in a stronger competitive position as we enter what should be a period of extended growth.
+Added: The Company is in a strong competitive position as we participate in a period of extended industry growth.
A focused strategy on ion implant, combined with the hard work and dedication of our employees and the encouragement and support of our customers and suppliers, enabled us to achieve numerous critical milestones in our drive to market leadership.
In 2020, we continued to expand the Purion installed base, growing our large and diverse group of customers.
−Removed: We also sharpened our focus on key market segments in the mature process technology areas, such as image sensors and power devices.
−Removed: We grew our family of Purion product extensions with the launch of four new Purion implanters specifically targeted at these segments.
−Removed: Through the introduction of new Purion product extensions and continuous cost out activity, we improved our gross margin year over year, making this the second consecutive year with gross margin greater than 40 percent.
−Removed: Additionally, we maintained a strong balance sheet free of debt and instituted a share repurchase program.
+Added: We continued our focus on the mature process technology segment in 2020, launching both the Purion H200™ high current implanter, targeted for the production of power devices, and the Purion XEmax™ for image sensors.
+Added: Through the introduction of new Purion product extensions and continuous cost reduction measures, we maintained our gross margin year over year, making this the third consecutive year with gross margin greater than 40 percent.
We continue to work diligently to ensure that manufacturing and operating expense levels remain well aligned to business conditions.
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Industry Overview
−Removed: Semiconductor chips, also known as integrated circuits, are used in a continuously evolving range of consumer and industrial products, including for example, personal computers, mobile devices, automobiles, sensors and controllers for the “internet of things,”
−Removed: and data storage servers.
−Removed: Types of semiconductor chips include dynamic random-access memory (“DRAM”) and “negative and”
−Removed: (“NAND”) Flash memory;
+Added: Semiconductor chips, also known as integrated circuits, are used in a continuously evolving range of consumer and industrial products, including for example, personal computers, mobile devices, automobiles, sensors and controllers for the “internet of things” and data storage servers.
+Added: Types of semiconductor chips include dynamic random-access memory (“DRAM”) and “Not AND” (“NAND”) Flash memory;
logic devices to process information;
−Removed: and “system on chip”
−Removed: devices (which have both logic and memory features).
−Removed: The increased number of devices providing information to and receiving information from the Internet, sometimes referred to as the “Connected World,”
−Removed: is increasing demand for
−Removed: These chips are used in data input, such as image sensors, which are often manufactured using mature processing technologies, as well as for memory chips to support the storage of data, internet streaming and “cloud computing”
−Removed: data analytics.
+Added: and “system on chip” devices (which have both logic and memory features).
+Added: The increased number of devices providing information to and receiving information from the Internet, sometimes referred to as the “Connected World,” is increasing demand for chips.
+Added: These chips are used in data input, such as image sensors, which are often manufactured using mature processing
+Added: technologies, as well as for memory to support the storage of data, internet streaming and “cloud computing” data analytics.
Most semiconductor chips are built on silicon wafers of either 200mm (8 inches) or 300mm (12 inches) in diameter.
−Removed: Each semiconductor chip is made up of millions of tiny transistors or “switches”
−Removed: to control the functions of the device.
+Added: Each semiconductor chip is made up of millions of tiny transistors or “switches” to control the functions of the device.
Transistors are created in the silicon wafer by introducing various precisely placed impurities into the silicon in specific patterns.
−Removed: Semiconductor chip manufacturers own or manage wafer fabrication facilities (often referred to as “fabs”), which utilize many different types of equipment in the making of integrated circuits.
+Added: Semiconductor chip manufacturers own or manage wafer fabrication facilities (often referred to as “fabs”), which utilize many different types of equipment in the making of integrated circuits.
Over 300 process steps utilizing over 50 different types of process tools are required to make a single device like a microprocessor.
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Capacity is added by increasing the amount of manufacturing equipment in existing fabrication facilities and by constructing new fabrication facilities.
−Removed: We have different types of customers, which impacts timing of purchases and technology requirements.
+Added: We have different types of customers, which impacts the timing of purchases and technology requirements.
Some customers are integrated electronics manufacturers, making semiconductor chips for their own devices.
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The semiconductor capital equipment industry is cyclical, as global chip production capacities successively exceed, then lag behind, global chip demand.
−Removed: When chip demand is high, and inventories low, chip manufacturers add capacity through capital equipment purchases.
+Added: When chip demand is high, and inventories are low, chip manufacturers add capacity through capital equipment purchases.
Given the difficulties of forecasting and calibrating chip demand and production capacity, the industry periodically experiences excess chip inventories and softening chip prices.
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A successful semiconductor capital equipment manufacturer must not only provide some of the most technically complex products manufactured in the world but also must manage its business to thrive during low points in the cycle.
−Removed: Axcelis’
−Removed: Axcelis’
−Removed: 2020 strategic directives are:
−Removed: Grow our Purion footprint within our existing customer base as well as at new accounts in targeted key market segments and geographies
−Removed: Develop and support world class Purion products and technologies that align with customer roadmaps
−Removed: Drive product differentiation resulting in productivity, cost of ownership and device performance and yield (DPY) advantages
−Removed: Drive Customer Support and Innovation (CS&I) revenues by delivering excellent customer support and innovative, high value products and services
−Removed: Meet our 2020 financial goals
−Removed: Drive revenue growth to set up achievement of our target business models
−Removed: Drive year over year gross margin improvement
−Removed: Execute a capital strategy that funds appropriate investments in the business and enables the return of cash to shareholders on terms approved by the Board of Directors
+Added: Axcelis’ Strategy
+Added: Axcelis’ 2021 strategic directives are:
+Added: ● Achieve $550M run rate in 2021, positioning us to achieve our $550M model in 2022 and our $650M model by 2024
+Added: o Grow the Purion footprint with our existing customer base as well as at new accounts in targeted market segments and geographies
+Added: o Capitalize on continued spending at mature process technology customers
+Added: o Capture memory business as customers begin to spend during the year
+Added: o Continue working to penetrate leading edge logic and foundry customers
+Added: o Drive Customer Satisfaction & Innovation (CS&I) revenues by delivering excellent customer satisfaction and innovative, high value products and services
+Added: o Continue to drive gross margin improvements
+Added: ● Execute a capital strategy that funds appropriate investments in the business and enables the potential for return of cash to shareholders [through a share repurchase program]
+Added: ● Prepare for a post-COVID business environment
We continue to invest in research and development to ensure our products meet the needs of our customers.
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Ion implantation is a principal step in the transistor formation cycle of the semiconductor chip manufacturing process.
−Removed: Ion implantation is also used to change the material characteristics of the silicon for reasons other than electrical doping, a process known as “material modification.”
−Removed: An ion implanter is a large, technically advanced system that injects dopants such as arsenic, boron or phosphorus into a wafer.
+Added: Ion implantation is also used to change the material characteristics of the silicon for reasons other than electrical doping, a process known as “material modification.” An ion implanter is a large, technically advanced system that injects dopants such as arsenic, boron or phosphorus into a wafer.
These dopants are ionized and therefore have an electrical charge state.
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Ion implanters use these fields to create a beam of ions with a precisely defined energy level (ranging between several hundred and eight million electron-volts) and with a precisely defined beam current level (ranging from microamps to milliamps).
−Removed: Certain areas of the silicon wafer are blocked off by a polymer material known as photoresist, which acts as a “stencil”
−Removed: to pattern devices so that the dopants will only enter the wafer where needed.
+Added: Certain areas of the silicon wafer are blocked off by a polymer material known as photoresist, which acts as a “stencil” to pattern devices so that the dopants will only enter the wafer where needed.
Typical process flows require twenty implant steps, with the most advanced processes requiring thirty or more steps.
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Our Purion flagship systems are all based on a common platform which enables a unique combination of implant purity, precision and productivity.
−Removed: Combining a state‑of‑the‑art single wafer end station, with advanced spot beam architectures (that ensures all points across the wafer see the same beam condition at the same beam angle), Purion products enable exceptional process control to optimize devise performance and yield, at high productivity.
+Added: Combining a state-of-the-art single wafer end station, with advanced spot beam architectures (that ensures all points across the wafer see the same beam condition at the same beam angle), Purion products enable exceptional process control to optimize device performance and yield, at high productivity.
● High Current Implant.
−Removed: Our Purion H spot beam, high current system covers all traditional high current requirements as well as those associated with emerging and future devices.
−Removed: Purion H capabilities extend beyond traditional high current energy and dose ranges, in order to cover new device fabrication requirements as well as to maximize capital utilization and flexibility.
−Removed: In addition, Purion H provides advantages for material modification applications, including those requiring hot and cold implant capabilities.
+Added: Our Purion H, Purion Dragon and Purion H200 spot beam, high current systems covers all traditional high current requirements as well as those associated with emerging and future devices.
+Added: Our Purion high current capabilities extend beyond traditional high current energy and dose ranges, in order to cover new device fabrication requirements as well as to maximize capital utilization and flexibility.
+Added: In addition, Axcelis’ Purion systems provide advantages for material modification applications, including those requiring hot and cold implant capabilities.
● High Energy Implant.
−Removed: Our Purion XE and other Purion high energy systems combine Axcelis’
−Removed: production‑proven RF Linac high energy, spot beam technology with the Purion platform wafer handling system.
−Removed: Axcelis is a market leader in high energy ion implanters for many years and Axcelis continues to offer legacy high energy systems, as well as a range of new Purion systems which have differentiated capabilities for specialty applications.
+Added: Our Purion XE and other Purion high energy systems combine Axcelis’ production-proven RF Linac high energy, spot beam technology with the Purion platform wafer handling system.
+Added: Axcelis has been a market leader in high energy ion implanters for many years and Axcelis continues to offer legacy high energy systems, as well as a range of new Purion systems which have differentiated capabilities for specialty applications.
● Medium Current Implant.
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Aftermarket Support and Services
−Removed: Through our Customer Support and Innovation (“CS&I”) business, we offer our customers extensive aftermarket service and support throughout the lifecycle of the equipment we manufacture.
+Added: Through our Customer Satisfaction and Innovation (“CS&I”) business, we offer our customers extensive aftermarket service and support throughout the lifecycle of the equipment we manufacture.
We believe that approximately 3,000 of our products are in use in 32 countries worldwide.
The service and support that we provide includes used tools, spare parts, equipment upgrades, and maintenance services.
−Removed: We offer varying levels of sales, service and application support out of our field offices to customers located in 31 countries.
+Added: We offer varying levels of sales, service and application support out of our field offices.
Revenue generated through our CS&I business represented 38.1%, 40.9% and 36.6% of revenue in 2020, 2019 and 2018, respectively.
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Most of our customers maintain spare parts inventories for our machines.
−Removed: In addition to our web‑based spare parts management and replenishment tracking program, we offer a number of Business‑to‑Business options to support our customers’
−Removed: parts management requirements.
+Added: In addition to our web-based spare parts management and replenishment tracking program, we offer a number of Business-to-Business options to support our customers’ parts management requirements.
Our Axcelis Managed Inventory service offering provides the customer with full spares support through a parts consignment arrangement in which Axcelis retains responsibility for the complete supply chain.
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We primarily sell our equipment and services through our direct sales force.
−Removed: We conduct sales and marketing activities from our sales offices located in the United States, Taiwan, South Korea, China, Germany, Singapore, Japan and Italy.
+Added: We conduct sales and marketing activities from our sales offices located in the United States, Taiwan, South Korea, China, Singapore, Japan, Germany and Italy.
International revenue, including export sales from our U.S.
manufacturing facilities to foreign customers and sales by foreign subsidiaries and branches, accounted for 89.3%, 89.4% and 87.7% of total revenue in 2020, 2019 and 2018, respectively.
−Removed: Substantially all of our sales are denominated in U.S.
+Added: In 2020, 74% of our sales were denominated in U.S.
See Note 17 to our Consolidated Financial Statements contained in Item 15 of this Form 10-K for a breakdown of our revenue and long-lived assets in the United States, Europe and Asia.
−Removed: See also Item 1A, “Risk Factors,”
−Removed: for information about risks attendant to our foreign operations.
−Removed: In 2019, according to Gartner Inc., the top 20 semiconductor chip manufacturers accounted for approximately 88.2% of total semiconductor capital equipment spending, down slightly from 88.8% in 2018.
+Added: See also Item 1A, “Risk Factors,” for information about risks attendant to our foreign operations.
+Added: In 2020, according to Gartner Inc., the top 20 semiconductor chip manufacturers accounted for approximately 90.4% of total semiconductor capital equipment spending, which increased from 88.2% in 2019.
These manufacturers are from the largest semiconductor chip manufacturing regions in the world:
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Information on net sales to unaffiliated customers is included in Note 2 of Notes to Consolidated Financial Statements.
−Removed: For the year ended December 31, 2019, revenues from each of Samsung Electronics Co, Ltd., SK Hynix Inc.
−Removed: and Taiwan Semiconductor Manufacturing Company represented 10 percent or more of consolidated revenues.
+Added: For the year ended December 31, 2020, revenues from each of Samsung Electronics Co, Ltd.
+Added: and Semiconductor Manufacturing International Corporation represented 10% or more of consolidated revenues.
The loss of these customers would have a material adverse effect on our business.
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Our industry continues to experience rapid technological change, requiring us to frequently introduce new products and enhancements.
−Removed: Our Beverly, Massachusetts Advanced Technology Center houses a process development laboratory with 12,500 sq.
−Removed: of class 10/100/1000 clean room for product demonstrations and process development and a 34,000 sq.
−Removed: customer training center.
−Removed: The Advanced Technology Center provides infrastructure and process capabilities that allow customers to test their unique process steps on our systems under conditions that substantially replicate the customers’
−Removed: production environments.
+Added: Our Beverly, Massachusetts Advanced Technology Center houses a process development laboratory with 12,500 square feet of class 10/100/1000 clean room for product demonstrations and process development and a 34,000 square feet customer training center.
+Added: The Advanced Technology Center provides infrastructure and process capabilities that allow customers to test their unique process steps on our systems under conditions that substantially replicate the customers’ production environments.
This facility also provides significant capability for our research and development efforts.
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Manufacturing
−Removed: We manufacture products at our 417,000 sq.
−Removed: ISO 9001:2015, ISO 14001:2015 certified plant in Beverly, Massachusetts.
+Added: We manufacture products at our 417,000 square feet ISO 9001:2015 and ISO 14001:2015 certified plant in Beverly, Massachusetts.
Our facility employs best in class manufacturing techniques, including lean manufacturing, six sigma controls and advanced inventory management, purchasing and quality systems.
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Our core competency in manufacturing and supply chain management is built around system assembly and testing, which remains an in-house capability due to the high degree of expertise and intellectual property associated with the process and design.
−Removed: Non‑core work is sourced to one of several global partners and includes items such as vacuum systems, wafer handling and commodity‑level components.
+Added: Non-core work is sourced to global partners and includes items such as vacuum systems, wafer handling and commodity-level components.
We continuously pursue outsourcing opportunities where the economics are justified, with a goal of enabling quality and margin improvement.
−Removed: Our supply chain team is globally
−Removed: focused and is located in Beverly and Singapore.
+Added: Our supply chain team is globally focused and is
+Added: located in Beverly and Singapore.
Customized and commercially available software solutions drive our planning, purchasing and inventory tracking process.
−Removed: Our products are designed to be assembled and tested in a modular fashion, which facilitates our industry‑recognized “ship‑from‑cell”
+Added: Our products are designed to be assembled and tested in a modular fashion, which facilitates our industry-recognized “ship-from-cell” process.
Specially developed test stands, software and tooling provide the framework for this accelerated delivery process.
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Axcelis and Applied Materials are the only ion implant manufacturers with a full range of implant products, as well as service and support infrastructures able to service our customers globally.
−Removed: Three other niche players we compete with from time to time include Advanced Ion Beam Technology, Inc., Nissin Ion Implantation Co., Ltd.
−Removed: and Sumitomo Heavy Industries Ion Technology Co., Ltd.
+Added: Other non-U.S.
+Added: players we compete with include Sumitomo Heavy Industries Ion Technology Co.
+Added: and Nissin Ion Equipment Co., Ltd in Japan, Advanced Ion Beam Technology, Inc.
+Added: in Taiwan, as well as CETC Electronics Equipment Group Co., Ltd.
+Added: in the Peoples Republic of China.
+Added: suppliers may have an advantage over U.S.
+Added: suppliers under recently established U.S.
+Added: export controls regulation for shipments to China.
Intellectual Property
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Bookings in the quarter ended December 31, 2020 were $131.5 million compared to $77.2 million in the quarter ended December 31, 2019.
+Added: Human Capital
As of December 31, 2020, we had 1,004 employees and 44 temporary staff worldwide, of which 727 work in North America, 262 in Asia and 59 in Europe.
−Removed: We consider our relationship with our employees to be good.
−Removed: Our employees are not represented by a labor union and are not subject to a collective bargaining agreement.
−Removed: One of our European locations has formed a work council, which has certain information and discussion rights under applicable law.
+Added: During 2020, our headcount increased by approximately 4% to support our increased business during the year.
+Added: While the majority of our headcount is based in the U.S.
+Added: at our main manufacturing facility in Beverly, MA, our business requires our presence where our customers are located around the world, resulting in Axcelis employees working in 32 different countries.
+Added: Our future success largely depends upon our continued ability to attract and retain highly skilled employees.
+Added: We provide competitive compensation and benefits programs.
+Added: In addition to salaries, these programs (which vary by country and region) include cash incentive programs and recognition bonuses, equity awards, an Employee Stock Purchase Plan, a 401(k) plan with a competitive employer match, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, and tuition assistance.
+Added: These programs all contribute to both attracting and retaining a highly skilled employee base, including those with critical leadership and industry skills and experience.
+Added: During 2020, our voluntary turnover rate was 6.5%, well below the worldwide technology industry (all reported) average of 13.1% reported in the Aon 2020 Salary Increase and Turnover Study — Second Edition, September 2020.
+Added: The success of our business is fundamentally connected to the well-being of our people.
+Added: Accordingly, we are committed to the health, safety and wellness of our employees.
+Added: We provide our employees and their families with access to health and wellness insurance and programs that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families.
+Added: In response to the COVID-19 pandemic, we implemented significant changes that we determined were in the best interest of our employees, as well as the communities in which we operate, and which comply with government regulations.
+Added: This includes having those employees that could productively work from home do so, while implementing additional safety measures for employees continuing critical on-site work.
+Added: Axcelis is dedicated to building a diverse workforce, fostering a culture built on the principle of inclusion, and maintaining a workplace free from discrimination.
+Added: We strongly believe that a diversity of experience, perspectives and backgrounds will lead to a better environment for our employees and better products for our customers.
+Added: Axcelis’ commitment to diversity covers our Board of Directors, our leadership team and all teams and functions across our global locations.
+Added: We encourage you to review the “Focus on Diversity” report (located in the “Investors” and “About Us” sections of our Axcelis.com website) for more detailed information regarding diversity and inclusion at Axcelis.
+Added: Nothing on our website, including our Focus on Diversity Report or sections thereof, shall be deemed incorporated by reference into this Annual Report.
Environmental
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Prior to that, Mr.
−Removed: Brewer held various management positions in operations and strategic planning in Raytheon Company’s Electronic Systems and Missile Systems groups.
+Added: Brewer held various management positions in operations and strategic planning in Raytheon Company’s Electronic Systems and Missile Systems groups.
+Added: , 50, became our Executive Vice President, Global Customer and Engineering Operations effective January 1, 2021, having served as Executive Vice President, Engineering since joining Axcelis in October 2016.
+Added: Prior to joining the Company, Dr.
+Added: Low held the position of Vice President of Engineering, MOCVD Business Unit at Veeco Instruments since 2013, prior to which he was Veeco’s Senior Director of Engineering, Molecular Beam Epitaxy Business Unit beginning in 2012.
+Added: From 2003 to 2012, Dr.
+Added: Low held a number of positions at Varian Semiconductor Equipment Associates, most recently as Director of Technology.
+Added: Prior to that, Dr.
+Added: Low held engineering positions in the thermal processing and ion implant divisions of Applied Materials, Inc.
+Added: from 1997 to 2003.
Aldeborgh, 64, has been our Executive Vice President, Customer Operations since February 2013, having joined Axcelis in January 2013 as our Senior Vice President, Customer Operations.
+Added: Aldeborgh submitted his resignation as an executive officer effective March 1, 2021, in connection with his retirement.
+Added: Aldeborgh will continue to serve as a senior advisor to Dr.
+Added: Low for some period following his retirement.
Prior to joining Axcelis, Mr.
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He has over 30 years of experience in the technology industry, and has held numerous executive and technical positions at BTU International, PRI Automation, Digital Equipment and Intel.
−Removed: , 49, is our Executive Vice President, Engineering, having joined Axcelis in October 2016.
−Removed: Prior to joining the Company, Dr.
−Removed: Low held the position of Vice President of Engineering, MOCVD Business Unit at Veeco Instruments since 2013, prior to which he was Veeco’s Senior Director of Engineering, Molecular Beam Epitaxy Business Unit beginning in 2012.
−Removed: From 2003 to 2012, Dr.
−Removed: Low held a number of positions at Varian Semiconductor Equipment Associates, most recently as Director of Technology.
−Removed: Prior to that, Dr.
−Removed: Low held engineering positions in the thermal processing and ion implant divisions of Applied Materials, Inc.
−Removed: from 1997 to 2003.
Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.