Kenny Green: Next question will be from Craig Ellis of B. Riley.
Craig Ellis: Thanks for taking the questions. And I also wanted to pass on just the best wishes for operating in a very unusual and war impacted environment and best wishes to the team. So the first question I wanted to ask is around, some of the orders that are in hand, and some that could come in. There’s a lot of attention on both, AI related orders and heterogeneous die, and yes there have been parts of the business for industry that have seemed pretty muted this year, whether it’s CIS or front-end and some other areas. So one of the things I wanted to better understand is the degree to which the orders for the 240 systems that you have is really more heterogeneous plus AI versus some of the other applications and areas of exposure that the company has? And then the second part of the question is, to what extent do you think some of the areas that have been more muted this year have potential to emerge as areas of strength next year?
Rafi Amit: So first of all, thank you for the best wishes, Craig. Yes, it’s indeed a challenging time, but we’ll manage to it. So when we look at the business, all-in-all, I look at the 240. We’re looking forward at what is in the backlog. So, we are above 60% of our business, it’s what we call advanced packaging. No doubt the triplets and the HBMs, by itself, it’s about half of it. No doubt, and this is emerging as, I would say, as a relatively new business, we had this business, but from the volume point of view, it was much smaller. So, indeed, this is an area that will take us to a different level in the business, and this is why, really, this contribution makes us feel give us the expectation for a record there next year.
Now when we look at the other areas, so on the heterogeneous integration is definitely becoming more and more dominant in the business. We’re seeing a lot of business there from OSATs and also from IDMs. That’s another portion that is growing in the advanced packaging and in the advanced packaging, we’re also seeing the fan out is still being dominant in this business. So I think that these three areas really make today our advanced packaging business. Now the rest of the businesses are there. I think we spoke about healthy backlog from OSATs, and that’s lots of applications, advanced packaging, CMOS image sensors, some RF, so they are there. The silicon carbide, and I would say the front end, when we look forward for next year, they’re above 20% of our business.
So I think these businesses are going to be healthy. It’s very hard to give the exact extent of what they do, but definitely that’s in areas that will continue to see business. What is interesting when you look at the FRT business, the FRT business is really in these areas of the Silicon Carbide and the advanced packing. So this really strengthened our position there because we are going to do as a company more steps on the same processes and we’ll be exposed to new opportunities that were in there for us in the past.
Craig Ellis: The second question maybe more of an operational question, and it’s regarding tool lead times given how significant the recent order activity has been, and admittedly, to your point, Rafi, this is vastly for shipment in 2024. But can you just talk about tool lead times, shipment times, and the company’s confidence, given how dramatically orders have surged that you can hit, end customer shipment windows and capture all of the order potential?
Rafi Amit: So I think with that, Greg, the fact that these orders we are getting today for 2024 give us enough time to really get prepared. And we do not see any issues with our supply chain. It’s very solid. We have the inventory in place. We have the manpower in place, and to meet the forecast that we are looking at, and the surge in the business that we are forecasting. So from that point of view, we are ready, and I think we have enough, I would say, head on time or we are seeing the things early enough in the game to make sure that we will have all the material and we’ll be prepared to deliver all the machines on time.
Craig Ellis: And then lastly, for me, before I drop back in the queue. Rafi, you and I have talked on numerous calls in the past about the company’s M&A aspirations, and FRT looks like a really nicely synergistic fit, and it looks very EPS accretive, intermediate, long-term. With that deal now closed and working nicely through integration. Does that mean M&A is something that will be off the table for a while? Or how do you think about M&A from here with FRT now in the pool?
Rafi Amit: I know it’s not off table. But we continue searching for potential. But the same as FRT, this is what we call a perfect synergy. And this is definitely one of our preferable M&A consideration. To look for company that it’s easy to integrate, they are, probably, I would say, the same environment, the same system, not copy exact, but not something that totally different for what we are doing or If maybe issue that we are not understand very well the market and the potential. So we continue and we’re definitely considering more M&A.
Kenny Green: Our next question is going to be from Gus Richard of Northland Gus.
