What changed in this filing

/stocks — the workspaceLOADING

Item 1. Business

2022-02-25 compared with 2021-02-26 · 45 added, 54 removed, 213 unchanged (32% of the section changed)

4 unchanged sentences

We sell to leading semiconductor chip manufacturers worldwide.

The ion implantation business represented 96.3% of our revenue in 2020, with the remaining 3.7% of revenue derived from other legacy processing systems.

The ion implantation business represented 97.4% of our revenue in 2021, with the remaining 2.6% of revenue derived from aftermarket sales associated with other legacy processing systems.

In addition to equipment, we provide extensive aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training.

3 unchanged sentences

Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Form 10-K.

2020 was an exceptional year for Axcelis despite the many difficult logistical challenges brought on by the geo-political environment and the pandemic.

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.

Net income increased 193.4% on a 38.4% increase in revenue from the prior year.

2021 was an exceptional year for Axcelis despite logistical challenges brought on by the geo-political environment and the COVID-19 pandemic.

As a result of the strength of the overall electronics market and the continued growth of the Purion product family in 2021, we delivered record full year revenue, operating profit and gross margin since becoming an independent public company in 2001.

Revenue for 2021 was $662.4 million, an increase of 39.6% from 2020 revenue of $474.6 million.

1 unchanged sentence

Operating profit was $127.3 million in 2021, compared to $58.0 million in 2020.

Net income for the year was $50.0 million with diluted earnings per share of $1.46.

This compares to 2019 net income of $17.0 million and earnings per diluted share of $0.50.

Gross margin for the year was 43.2% compared to 41.8% in 2020.

Net income for the year was $98.7 million, an increase of 97.4% following a 39.6% increase in revenue from the prior year.

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.

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.

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 were able to rapidly grow our manufacturing and supply chain capabilities through smart capacity planning and execution, including the opening of our new Axcelis Asia Operations Center in South Korea and the expansion of clean manufacturing in Beverly.

In 2021, we continued to expand the Purion installed base, growing our large and diverse group of customers, mainly in the mature process technology segment.

We continued our focus on the mature process technology segment in 2021, launching new Purion product extensions, including the Purion H200™ high current implanter, targeted for the production of power devices, and the Purion XEmax™ used to manufacture image sensors.

Through the introduction of these new products and continuous cost reduction measures, we increased our gross margin year over year, making this the fourth 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.

6 unchanged sentences

and “system on chip” devices (which have both logic and memory features).

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.

These chips are used in data input, such as image sensors, which are often manufactured using mature processing

technologies, as well as for memory to support the storage of data, internet streaming and “cloud computing” data analytics.

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.

These chips are used in data input, such as image sensors, which are often manufactured using mature processing 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.

13 unchanged sentences

Also, foundry customers will look for equipment that can deliver the broadest capabilities in order to be prepared to manufacture all chip types, while integrated electronics manufacturers may invest in processing equipment dedicated to a specific application they require for their products.

The semiconductor capital equipment industry is cyclical, as global chip production capacities successively exceed, then lag behind, global chip demand.

The semiconductor capital equipment industry has historically been cyclical as global chip production capacities successively exceed, then lag behind, global chip demand.

When chip demand is high, and inventories are low, chip manufacturers add capacity through capital equipment purchases.

4 unchanged sentences

Axcelis’ Strategy

Axcelis’ 2021 strategic directives are:

● Achieve $550M run rate in 2021, positioning us to achieve our $550M model in 2022 and our $650M model by 2024

o Grow the Purion footprint with our existing customer base as well as at new accounts in targeted market segments and geographies

o Capitalize on continued spending at mature process technology customers

o Capture memory business as customers begin to spend during the year

o Continue working to penetrate leading edge logic and foundry customers

Axcelis’ 2022 strategic goals are to:

● Achieve our $850M revenue model run rate in 2022, positioning us to achieve our $1 billion revenue model in future years

o Continue to grow the Purion footprint with our existing customer base as well as at new accounts in targeted market segments and geographies

◾ Capitalize on continued spending at mature process technology customers

◾ Capture memory business as customers increase spending during the year

◾ Continue working to penetrate leading edge logic and foundry customers

o Drive Customer Satisfaction & Innovation (CS&I) revenues by delivering excellent customer satisfaction and innovative, high value products and services

o Continue to drive gross margin improvements

● 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]

● Execute a capital strategy that funds appropriate investments in the business and enables the potential for return of cash to shareholders

● Prepare for a post-COVID-19 business environment

24 unchanged sentences

● High Current Implant.

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.

Our Purion H, Purion Dragon and Purion H200 spot beam, high current systems cover all traditional high current requirements as well as those associated with emerging and future devices.

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.

2 unchanged sentences

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.

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.

Axcelis has been a market leader in high energy ion implanters for many years and 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.

Our Purion M medium current system offers higher productivity and lower electrical energy consumption compared to competitive offerings, in addition to other advantages.

Our Purion M Si and SiC medium current system offers higher productivity and lower electrical energy consumption compared to competitive offerings, in addition to other advantages.

Our Purion M systems also offer differentiated capabilities for specialty applications.

1 unchanged sentence

Aftermarket Support and Services

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.

Through our CS&I business, we offer our customers extensive aftermarket service and support throughout the lifecycle of the equipment we manufacture.

We believe that approximately 2,900 of our products are in use in 28 countries worldwide.

11 unchanged sentences

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.

manufacturing facilities to foreign customers and sales by foreign subsidiaries and branches, accounted for 92.6%, 89.3% and 89.4% of total revenue in 2021, 2020 and 2019,

respectively.

In 2021, 78.4% of our sales were denominated in U.S.

5 unchanged sentences

Information on net sales to unaffiliated customers is included in Note 2 of Notes to Consolidated Financial Statements.

For the year ended December 31, 2020, revenues from each of Samsung Electronics Co, Ltd.

For the year ended December 31, 2021, revenues from Samsung Electronics Co, Ltd.

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.

The loss of either of these customers would have a material adverse effect on our business.

Research and Development

Our industry continues to experience rapid technological change, requiring us to frequently introduce new products and enhancements.

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.

Our Beverly, Massachusetts Advanced Technology Center houses a process development laboratory with a 12,500 square feet class 10/100/1000 clean room for product demonstrations and process development and a 34,000 square feet customer training center.

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.

6 unchanged sentences

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.

Our facilities employ best in class manufacturing techniques, including lean manufacturing, six sigma controls and advanced inventory management, purchasing and quality systems.

We expanded our manufacturing capabilities in November 2021, with the opening of our new Axcelis Asia Operations Center in South Korea.

This facility has 38,000 square feet and is designed to bring production closer to our Asia-based customers, driving customer satisfaction and operating efficiencies.

Our clean manufacturing process uses class 1,000/10,000 space to facilitate most of our manufacturing requirements.

2 unchanged sentences

We continuously pursue outsourcing opportunities where the economics are justified, with a goal of enabling quality and margin improvement.

Our supply chain team is globally focused and is

located in Beverly and Singapore.

Our supply chain team is globally focused and is located

in Beverly and Singapore.

Customized and commercially available software solutions drive our planning, purchasing and inventory tracking process.

1 unchanged sentence

Specially developed test stands, software and tooling provide the framework for this accelerated delivery process.

Customers that choose ship-from-cell substantially improve their delivery times while receiving the same high level of quality provided by more traditional longer cycle integration techniques.

Customers that choose the “ship-from-cell” process substantially improve their delivery times while receiving the same high level of quality provided by more traditional, longer cycle integration techniques.

Product margins and inventory turns also improve as a result of shorter factory cycle times and increased labor productivity.

1 unchanged sentence

The process includes assembling the equipment at our installation site, and after it has been connected, recalibrating it to factory specifications.

The semiconductor industry is highly competitive and is characterized by a small number of participants ranging in size.

The semiconductor equipment industry is highly competitive and is characterized by a small number of participants ranging in size.

Significant competitive factors in the semiconductor capital equipment market include price, cost of ownership, equipment performance, customer support, capabilities and breadth of product line.

5 unchanged sentences

in Taiwan, as well as CETC Electronics Equipment Group Co., Ltd.

in the Peoples Republic of China.

in the People’s Republic of China.

suppliers may have an advantage over U.S.

suppliers under recently established U.S.

suppliers established U.S.

export controls regulation for shipments to China.

12 unchanged sentences

Deferred systems revenue represents revenue that will be recognized in future periods based on prior shipments or customer prepayments.

Our policy is to include in backlog only those system orders for which we have accepted purchase orders and are typically due to ship within six months.

Our policy is to include in backlog only those system orders for which we have accepted purchase orders.

All orders are subject to cancellations or rescheduling by customers with limited or no penalties.

12 unchanged sentences

These programs all contribute to both attracting and retaining a highly skilled employee base, including those with critical leadership and industry skills and experience.

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.

During 2021, our voluntary turnover rate for employees was 8.1%, or 6.9% without retirements, well below the worldwide technology industry (all reported) average of 18.2% reported in the Aon 2021 Salary Increase and Turnover Study — Second Edition, September 2021.

The success of our business is fundamentally connected to the well-being of our people.

1 unchanged sentence

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.

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.

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.

In response to the ongoing COVID-19 pandemic, we have 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.

This includes having those employees that could productively work from home continue to do so, while implementing additional safety measures for employees continuing critical on-site work.

Axcelis is dedicated to building a diverse workforce, fostering a culture built on the principle of inclusion, and maintaining a workplace free from discrimination.

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.

Axcelis’ commitment to diversity covers our Board of Directors, our leadership team and all teams and functions across our global locations.

Axcelis’ commitment to diversity extends to our Board of Directors, our leadership team and all teams and functions across our global locations.

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.

20 unchanged sentences

Brewer also manages our Global Operations.

Brewer had been our Executive Vice President, Global Operations since 2008 and our Senior Vice President, Manufacturing Operations since May 2005, prior to which he had been Vice President of Manufacturing Operations since October 2002 and Director of Operations from 1999 to 2002.

Brewer had previously been our Executive Vice President, Global Operations since 2008 and our Senior Vice President, Manufacturing Operations since May 2005, prior to which he had been Vice President of Manufacturing Operations since October 2002 and Director of Operations from 1999 to 2002.

Prior to joining Axcelis in 1999, Mr.

10 unchanged sentences

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.

Aldeborgh submitted his resignation as an executive officer effective March 1, 2021, in connection with his retirement.

Aldeborgh will continue to serve as a senior advisor to Dr.

Low for some period following his retirement.

Prior to joining Axcelis, Mr.

Aldeborgh served as the Chief Executive Officer and President, and as a Director, of innoPad, Inc., a privately held manufacturer of Chemical Mechanical Planarization pads, since 2006.

Aldeborgh served in various marketing and sales position at Varian Semiconductor Equipment Associates Inc.

(an ion implantation systems business acquired by Applied Materials Inc.

in 2011) from 2002 to 2005, including Vice President of Sales and Marketing.

Prior to Varian, Mr.

Aldeborgh served as President and Chief Operating Officer of Ebara Technologies, Inc., from 1998 to 2002.

Aldeborgh also held various positions at Genus, Inc.

from 1989 to 1998, including Executive Vice President and Chief Operating Officer.

William Bintz, 65, is our Executive Vice President, Product Development since November 2016.

11 unchanged sentences

Fallon was a partner in the Boston law firm of Palmer & Dodge LLP since 1992, where she was head of the Business Law Department from 1997 to 2001.

Fallon is a director of ClearPoint Neuro, Inc.

Lawson, 61, has been our Executive Vice President, Corporate Marketing and Strategy since November 2013, having joined Axcelis as Vice President Business Development in 2010, and holding the position of Senior Vice President of Strategic Initiatives beginning in 2011.

3 unchanged sentences

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.

What changed 10-K

Item 1. Business