What changed in this filing

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Item 1. Business

2023-02-22 compared with 2022-02-18 · 47 added, 48 removed, 210 unchanged (31% of the section changed)

8 unchanged sentences

Safety is one of Veeco’s core values.

We have taken many steps to protect our employees, customers, suppliers, and stakeholders, and operate safely and successfully throughout the COVID-19 pandemic, resulting in the overall resiliency of our business.

We have been able to serve our customers without pause and expect to continue to do so while executing on our strategic growth plans.

We have taken steps to keep employees safe throughout the COVID-19 pandemic and we continue to maintain focus on traditional workplace health and safety matters.

We understand that the culture of the Company can have a direct impact on our performance.

We made significant improvements to our culture as measured by a culture survey in 2021 compared to a baseline measured in 2019, and we remain committed to working with employees to continue to strengthen our culture.

With safety top of mind and an emphasis on improving our culture, we enter 2022 with a healthy backlog and an improved balance sheet;

We made significant improvements to our culture as measured by an initial culture survey performed in 2019, a follow-up in 2021 and a planned survey in 2023, and we remain committed to working with employees to continue to strengthen our culture;

We believe that our success depends on our ability to successfully execute in challenging environments, recognizing that our customers have high expectations.

We are focused on the execution of multiple initiatives, including on-time deliveries, quality, and our on-going customer evaluation programs.

We achieved significant revenue growth in 2021 despite a difficult supply chain environment.

The Veeco United team worked through material shortages, lead time increases, and labor shortages in our factories as well as those of our suppliers.

We are focused on continued execution throughout our entire supply chain in order to meet customer demand.

Additionally, we continue to focus on improving the quality of our products and services, in line with our core value of our commitment to never stop improving.

Finally, throughout 2021, we increased our emphasis on placing strategic evaluation systems with customers in the semiconductor and compound semiconductor markets, consistent with our growth plans.

The Veeco United team worked through material shortages, lead time increases, and labor shortages in our factories as well as those of our suppliers in 2022.

We are focused on continued execution throughout our entire supply chain, including our internal manufacturing activities, in order to meet customer demand.

Additionally, we are focused on multiple customer satisfaction initiatives, including on-time deliveries and improving customer service performance metrics;

We plan to continue our efforts in product innovation.

We have exciting new solutions in our semiconductor and compound semiconductor product development pipeline, which we believe will solve our customers’ difficult materials challenges and enable sustainable growth in the long term.

In 2022, we heavily invested in our manufacturing capabilities through our San Jose expansion, and made significant investments in our service capabilities to meet the requirements of our tier one semiconductor customers, and had a successful year of evaluation acceptances with our customers.

Additionally, we acquired Epiluvac AB, a privately held Swedish company, in January 2023, accelerating our penetration into the emerging, high-growth Silicon Carbide (“SiC”) epitaxy equipment market.

In 2023 we plan to maintain our emphasis on placing strategic evaluation systems with customers in the semiconductor and compound semiconductor markets, consistent with our growth plans.

These systems are provided to customers after significant time spent demonstrating their capabilities in our factory and represent one of the final stages in our customers’ selection process.

We invested in inventory, R&D, and service capability to support these evaluation systems.

We are focused on successful outcomes for these evaluations and in continuing the elevated level of evaluation system activity with existing and potential customers;

● Innovate and Invest:

We are focused on completing the transition of our San Jose operations to our newly leased facility.

This facility is designed for the manufacture of our semiconductor market products, and will double our manufacturing capacity compared to the existing facility.

We are also focused on continuing to invest in our service capabilities.

As we grow our business, and as our customers add capacity to their

manufacturing operations, additional investments in service engineers and inventory are required.

Finally, we will continue our efforts in product innovation.

● Growth and Profitability:

We view the semiconductor and compound semiconductor markets as significant growth opportunities in the near-term and long-term.

We expect these markets to be the primary drivers of growth in 2022, driven by strong traction in laser annealing, advanced packaging lithography, EUV mask blank and MOCVD systems.

We are focused on executing our backlog and winning additional orders to drive meaningful growth.

While we expect expenses to increase as we continue to invest for growth, we are also focused on improving profitability through responsible management of our cost structure, with an emphasis on increasing gross margins.

We are focused on maintaining profitability through near-term macroeconomic challenges and growing in our Data Storage market, as well as in our Semiconductor market despite an expected decline in wafer fab equipment (“WFE”) spending.

We are in a mixed demand environment, with strong recent order activity in the Semiconductor and Data Storage markets, offset by near term weakness in the Compound Semiconductor market.

However, we are investing for and expect long-term growth in the Semiconductor and Compound Semiconductor markets.

We are focused on executing our backlog, and also winning additional business to drive meaningful long-term growth.

We are also focused on responsible management of our cost structure, including an emphasis on gross margins.

Our products are purchased by customers in the following four end-markets:

5 unchanged sentences

Many of our systems are used to deposit advanced materials critical to the operation of the device and some of our systems are used in cleaning and surface preparation as well as the precise removal of critical materials.

We are also a leader in systems used in the advanced packaging process flow of microelectronic components such as flip chip, fan-out wafer level packaging (“FOWLP”), and other wafer level packaging approaches, such as heterogeneous integration, used in the modern integration of diverse semiconductor products, especially in consumer electronics.

We are also a leader in systems used in the advanced packaging process flow of microelectronic components such as flip chip, fan-out wafer level packaging (“FOWLP”), and other wafer level packaging approaches used in the modern integration of diverse semiconductor products, especially in consumer electronics.

In general, our customers purchase our systems to both produce current-generation devices in volume and to develop next-generation products which deliver more efficient, cost-effective, and advanced technological solutions.

4 unchanged sentences

The Semiconductor market refers to early process steps in logic and memory applications where silicon wafers are processed.

There are many different process steps in forming patterned wafers, such as deposition, etching, masking, and doping, where the microchips are created but remain on the silicon wafer.

There are many different process steps in forming patterned wafers, such as depositioning, etching, masking, and doping, where the microchips are created but remain on the silicon wafer.

As device architectures continue to shrink with advanced nodes, more precise process control is paramount to achieving high yields and competitive cost.

2 unchanged sentences

This market also includes mask blank production for extreme ultraviolet (“EUV”) lithography with Veeco’s Ion Beam Deposition technology.

Finally, this market also includes Advanced Packaging which refers to a portfolio of wafer-level assembly technologies that enable improved performance of electronic products, such as

This market also includes Advanced Packaging which refers to a portfolio of wafer-level assembly technologies that enable improved performance of electronic products, such as smartphones, high-end servers, and graphical processors.

Demand for higher performance, smaller form factors, and lower power consumption in applications such as artificial intelligence,

Laser Annealing

3 unchanged sentences

Advanced Packaging Lithography

smartphones, high-end servers, and graphical processors.

Demand for higher performance, smaller form factors, and lower power consumption in applications such as artificial intelligence, mobile devices, consumer electronics, and high-performance computing is driving the adoption of advanced packaging technologies.

mobile devices, consumer electronics, and high-performance computing is driving the adoption of advanced packaging technologies.

Veeco serves the advanced packaging market with lithography as well as wet processing equipment.

6 unchanged sentences

Power Electronics refers to semiconductor devices such as rectifiers, inverters and converters for the control and conversion of electric power in growing applications such as fast or wireless charging of consumer electronics and automotive applications.

The power electronics market has historically been dominated by silicon devices.

However, demand has been rapidly growing for applications in automotive, energy and industrial end-markets which require compound semiconductor devices such as those made from gallium nitride and silicon carbide to address higher voltages and higher power requirements.

RF power amplifiers and filters (including surface acoustic wave (“SAW”) and bulk acoustic wave (“BAW”) filters) are used in 5G communications infrastructure, smartphones, tablets, and mobile devices.

4 unchanged sentences

Wet Processing

SiC Chemical Vapor Deposition (“CVD”)

Data Storage refers to the HDD market which provides significant value for mass storage and is an important part of large capacity storage applications.

62 unchanged sentences

Finally, we have Gas-mixing systems primarily sold to the semiconductor market.

We also continue to focus on penetrating adjacent markets with organically developed and acquired technology, including Ion Beam Deposition for low resistance metals and SiC CVD systems for power electronics applications.

Sales and Service

8 unchanged sentences

Sales to Western Digital and TDK Headway each separately accounted for more than 10% of our total net sales in 2021;

and sales to Seagate Technology accounted for more than 10% of our total net sales in 2020 and 2019.

and sales to Seagate Technology accounted for more than 10% of our total net sales in 2020.

No customer accounted for more than 10% of our total net sales in 2022.

If any principal customer discontinues its relationship with us or suffers economic difficulties, our business prospects, financial condition, and operating results could be materially and adversely affected.

19 unchanged sentences

Applied Materials;

Grand Plastics Technology Corporation;

Grand Plastics Technology;

Screen Semiconductor Solutions;

and Shanghai Micro Electronics Equipment.

Shanghai Micro Electronics Equipment;

and Suss MicroTec.

Intellectual Property

4 unchanged sentences

Refer to Item 1A, “Risk Factors,” for a description of risks associated with intellectual property.

The Veeco United Team

Human Capital Resources

Veeco’s global workforce spans twelve countries around the world.

7 unchanged sentences

We are subject to various federal, state, and local regulations, and regularly monitor all key employment activities, such as hiring, termination, pay and working practices to ensure compliance with such regulations.

In addition, we supplement the Veeco United Team with contractors and other temporary workers.

In addition, we may supplement the Veeco United Team with contractors and other temporary workers.

Our Core Values

7 unchanged sentences

Employment, Recruitment and Development

Our recruitment programs are regionally focused, and hiring is done at a local level to ensure compliance with applicable regulations.

To ensure diversity within our workforce, we advertise job openings and source candidates broadly to attract a diverse candidate pool.

As a leader in our industry, we are able to attract a strong candidate pool and have been

successful in filling vacancies.

Our recruitment programs are regionally focused.

Hiring is done at a local level to ensure compliance with applicable regulations.

We advertise job openings and source candidates broadly to attract a diverse candidate pool.

As a leader in our industry, we are able to attract a strong candidate pool and have been successful in filling vacancies.

In fiscal 2022, we hired 254 employees, 197 of whom were within the United States, 49 of whom were in the Asia-Pacific region, and 8 of whom were in the EMEA region.

2 unchanged sentences

Many of our training and development programs are offered on-line for the benefit of employees located around the world.

Additional focus is placed on the development of future leaders and we leverage a talent review process where high-potential and high-performing employees are assessed for future leadership roles as part of our succession management process.

Since turnover is an important indicator of employee satisfaction, we closely monitor turnover statistics.

Additional focus is placed on the development of future leaders and we utilize a talent review process through which high-potential and high-performing employees are assessed for future leadership roles as part of our succession management process.

We monitor turnover statistics carefully, since turnover is an important indicator of employee satisfaction.

Our 12-month rolling average for voluntary turnover at December 31, 2022 was approximately 9.4%.

3 unchanged sentences

In 2019, we conducted a formal employee survey designed to assess global employee engagement, leadership, work environment and culture.

91% of our employees participated in the survey, itself an indicator of a high level of employee engagement.

Over 90% of our employees participated in the survey, itself an indicator of a high level of employee engagement.

Participants provided over 2,000 responses to open-ended questions.

1 unchanged sentence

In 2021, we conducted a second formal employee survey, using the same survey instrument.

Approximately 90% of employees participated in the survey and nearly 2,000 responses were provided to open-ended questions.

Approximately 90% of employees again participated in the survey and, again, nearly 2,000 responses were provided to open-ended questions.

We saw significant improvements across all survey areas, and we remain committed to working with employees to strengthen the Company’s culture.

In addition, our executives conduct regular meetings with our global workforce enabling all employees to engage with senior leaders and ask questions in open Q&A sessions.

Our executives conduct regular meetings with our global workforce providing employees with opportunities to engage with senior leaders and ask questions in open Q&A sessions.

Finally, we maintain and regularly remind our employees about our confidential third-party hotline service that can be utilized to share their concerns.

1 unchanged sentence

Our compensation philosophy is targeted to support our employees’ financial, physical, and mental health and well-being.

We utilize third-party benchmarking surveys to ensure that our total compensation packages are competitive.

We help employees share in the success of the Company through various programs including an Employee Stock Purchase Plan (“ESPP”), equity compensation, profit sharing and bonus plans.

We utilize independent surveys to ensure that our total compensation packages are competitive.

We help employees share in the success of the Company through various programs including profit sharing and bonus plans, equity awards, and an Employee Stock Purchase Plan (“ESPP”).

In addition to providing our employees with competitive compensation packages, we offer benefits designed to meet the needs of employees and their families, including paid time off, medical, dental and vision coverage, disability income protection, life insurance, retirement savings contributions, and more.

6 unchanged sentences

In the second quarter of 2021, Veeco established a Diversity and Inclusion Council.

The Council, composed of diverse Veeco colleagues from many different parts of the Company, represents Veeco’s ongoing commitment to inclusion of all genders, sexual orientations, races, ethnic origins, religions, and diversity of thought.

The team has recently established Veeco’s Diversity and Inclusion Mission Statement and Charter.

The Council, composed of Veeco colleagues from many different parts of the Company, represents Veeco’s ongoing commitment to inclusion of all genders, sexual orientations, races, ethnic origins, religions, and diversity of thought.

The team has recently established

Veeco’s Diversity and Inclusion Mission Statement and Charter.

The charter affirms our commitment to building awareness, enhancing community partnerships, addressing diversity in our recruiting and hiring practices, empowering employees to promote D&I initiatives, and identifying opportunities to have meaningful engagements with peers and the leadership team.

10 unchanged sentences

Our Veeco United team was committed to remaining flexible and responsive throughout the pandemic.

Our team monitored and responded quickly to local, state, and federal guidance related to the pandemic.

We developed a COVID-19 Pledge to describe all the measures we implemented in our facilities to keep employees working on-site safe throughout the pandemic.

We carefully monitored and responded to local, state, and federal guidance related to the pandemic.

We developed our COVID-19 Pledge to describe all the measures we implemented in our facilities to keep employees working on-site safe throughout the pandemic.

Available Information

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