Cabot Microelectronics Corporation (NASDAQ:CCMP) Q2 2018 Earnings Conference Call - Final Transcript

Apr 26, 2018 • 10:00 am ET

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Cabot Microelectronics Corporation (NASDAQ:CCMP) Q2 2018 Earnings Conference Call - Final Transcript

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Presentation
Executive
David Li

capacity expansions in 3D NAND underway, primarily in Korea and China, which

Along with the expected tight supply of DRAM memory, should provide growth opportunities for us in the future.

In the advanced logic and foundry segments, we have seen our customers' growth moderating a bit as they get past the traditional stronger periods associated with new smart phone launches. However, we continue to work closely with our customers to help them advance to smaller feature sizes, and believe that new applications in mobile, artificial intelligence, autonomous vehicles and block chain should continue to drive demand for advanced logic semiconductors in the future.

Finally, we continue to see a robust demand environment in the legacy logic and foundry segment driven by automotive, Internet of things, and industrial automation. We expect this demand environment to persist given the increasing connectivity requirements needed in these important applications.

Now let me turn to Company-related matters. This quarter we recorded strong results in all three key product areas; tungsten slurry's, dielectrics slurry's, and CMP pads, primarily due to strong demand across a wide range of applications and technology nodes. Geographically, all regions were up this quarter compared to the same quarter last year. Most notably, revenue in Korea was up approximately 65% year over year, primarily due to our strong positions in the growing memory market in that region.

Turning to performance by product area, revenue in our tungsten slurry's was 17% higher than in the same quarter last year. This growth was driven by the ramp of our customers' advanced technologies in memory and logic, including 3D NAND and FinFET. As mentioned earlier, we expect the memory area to remain strong, and 3D NAND expansion to continue into the second half of this fiscal year and beyond.

In addition, during this quarter we achieved record revenue from our dielectrics slurry's. This was primarily driven by increased demand and the benefit of customer wins for our ceria based solutions at advanced memory customers. We continue to see a bright future for our refreshed portfolio of dielectrics products in memory, logic, and foundry, and believe we are well positioned to continue growing revenue while also improving profitability of this product area.

Turning to CMP pads, this quarter we also achieved record revenue. We are focused on capacity expansion and driving excellence throughout our supply chain to support our customers in both advanced and legacy applications. In addition, we are seeing increased rate of adoption at major advanced memory customers due to the lower defectivity performance benefits of our NexPlanar technology. We believe the combination of our technology, global technical support, and the shorter qualification times we have experienced with our NexPlanar pad solutions combined with strong customer interest will keep us on the trajectory of our goal to grow our pads revenue to over $100 million in fiscal 2019.

I am also pleased to report that during the quarter we were awarded a Perfect Quality Award from ON Semiconductor, a leading supplier of semiconductor-based solutions