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Mattson Technology (NASDAQ:MTSN)

Q1 2013 Earnings Call

April 24, 2013 6:00 pm ET

Executives

J. Michael Dodson - Chief Operating Officer, Chief Financial Officer, Executive Vice President of Finance and Secretary

Fusen Ernie Chen - Chief Executive Officer, President and Member of The Board of Directors

Analysts

Edwin Mok - Needham & Company, LLC, Research Division

Benedict Pang - B. Riley Caris, Research Division

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

Larry Chlebina

Operator

Good day, ladies and gentlemen, and thank you for standing by, and welcome to the Mattson First Quarter Financial Results Conference Call. [Operator Instructions] As reminder today's conference may be recorded. Now my pleasure to turn the floor over to Mike Dodson, Mattson's Chief Operating Officer and Chief Financial Officer. Sir, the floor is yours.

J. Michael Dodson

Good afternoon, and thank you for joining us today to discuss Mattson Technology's financial results for the first quarter of 2013. Fusen will give you an overview of the business, then I will provide the financial results and progress on our cost-reduction program. And last, Fusen will close with our business outlook and guidance for the second quarter of 2013.

Before going into the specifics of the call, I'd like to remind everyone that information provided in today's conference call contains forward-looking statements regarding the company's future prospects, including but not limited to, anticipated market position, revenue, margins, operating expenses, earnings per share, tax rate, fully diluted shares outstanding for future periods. Forward-looking statements address matters that are subject to a number of risks and uncertainties that can cause actual results to differ materially. Such risks and uncertainties include, but are not limited to, those described in today's news release and in the company's Forms 10-K, 10-Q and other filings with the SEC. The company assumes no obligation to update the information provided in this conference call. And now, let me turn the call over to Fusen Chen. Fusen?

Fusen Ernie Chen

Thank you. Good afternoon, everyone, and welcome to our first quarter 2013 Earnings Conference Call. I have been now 2 months with Mattson and this is my second earning calls. This has been certainly a very busy and exciting first 2 months for me as I have made numerous trip across the globe and engaged in various meetings and conference calls with our customers, our employees and our shareholders. Our customers have shown their continuing support and their confidence in Mattson. Our employees are committed and our shareholders are hopeful for the direction that we are taking. We are still facing challenges but we certainly are seeing much brighter days ahead.

Now let me provide an overview of our market. I would like to point out a few factors that will likely deliver in the demand for semiconductor equipment. The semiconductor market is showing signs of recovery following the cyclical slowdown in the past couple of quarters with inventories across the electronic supply chain at a relatively lean labors. We would expect overall global semiconductor demand to strengthen. The demand for mobile products is on the rise. These devices drive demand for leading-edge foundry capacities. The market leaders are aggressively ramping up at advanced nodes. There is a growing capacity for the 28-nanometer node and they're ramping up for 20-nanometer node by semiconductor companies. This momentum is expected to extend through 2014 as sub-20-nanometers investment will follow. Mobile devices are also driving demand for NAND flash memory particularly in the 14K [ph] to 3D NAND transition. In addition, the diversification of memory use like a cloud, data warehouse, will drive long-term memory growth as witnessed by DRAM price uptick. This is a good indication of an inflection of the DRAM market. The PC-related chip market remains flat. However, the popularity of tablet and the Ultrabooks will drive growth in this segment.

Let me now provide an update for each of our product areas starting with our RTP products. The Helios XP is differentiated from our competitor's resolution due to its reduced CMOS stress across the wafer and the superior cost of ownership. Consequently, The Helios XP product [indiscernible] continues to strengthen its position in the Foundries segment, reflected by an additional shipment at a customer in Asia. Furthermore, we will shipped repeat orders for systems shipment to another foundries. These orders are target to address 20-nanometer capacity RAMs, and the [indiscernible] Helios XP DTEC capability to address pattern-loading effect will serve foundry as an evaluation system to qualify for the 20-nanometer [indiscernible] the application. DTEC stands for differential thermal energy control and it enables heating from the wafer's backside while actively compensating for heat loss on the wafer's front side. We are now looking forward to continued growth in foundries based on our system's leading capacities.

Our second summer product line, millisecond annealing system, the Millios. This has successfully transferred to our operation in Germany. There, we have completed the first system build and it is currently undergoing intensive high-volume production testing. Based on this testing, we have significantly improved the reliability of this system for high-volume manufacturing environment. We believe that Millios has differentiation in wafer stress management for [indiscernible] wafer breakage, high productivity and the superior strong wafer electrical performance. In Etch, Mattson continues to hold a strong position in advanced DRAM, thanks to the 2x technology node and has developed a strong position for 3D NAND. In the first quarter, Mattson focused on enhancing capabilities of our paradigmE products to meet requirements for advanced 2x nanometer DRAM and the 3D NAND technologies. As both of these technology go into production, Mattson will realize an increased revenue contribution from our Etch products.

In the Foundries segment, this quarter, we focused on qualifying for advanced transistor process flow. We have an Etch system for leading Etch technology node development at an Asian foundry and they have complete in-house development for another major foundry. Mattson's dry strip account for a significant portion of our revenue as the Foundries segment invest in increased 28-nanometer production capacity. Our system will continue to be used through the 20-nanometer technology node and also in use for sub-20-nanometer technologies that are currently in development. In Memory segment, the Suprema product continue to hold strong market positions as number of high memory transition to 3D NAND technologies.

Now let's turn into our result. We finished the quarter continuing our strong execution against our cost reduction program and have entered a $25 million revolving credit facility. From a financial performance perspective, the result for the first quarters came in as expected. Let me now hand the call over to Mike for further details on our financial performance. Mike?

J. Michael Dodson

Thank you, Fusen. Before I discuss the details of the financial results for the first quarter, I'd like to summarize a few key highlights. As we announced a few weeks ago, we entered a 3-year, $25 million senior secured revolving credit facility with Silicon Valley Bank. At the time of closing, we drew down $10 million with an annual interest rate of 4.75%. Closing on this financing was key to providing the company the financial flexibility to ensure, as demand picks up, we have the liquidity support the near-term working capital requirements.

The reduction in our operating expenses continues to make progress with operating expenses before restructuring charges coming in at $11.9 million in the first quarter compared to $12.7 million in the fourth quarter of 2012, representing a 32% decrease from the same period the prior year. From the inception of our cost-reduction efforts in the fourth quarter of 2011, operating expenses have decreased 34%, representing annualized savings in excess of $24 million. With the completion of phase 4 of the cost-reduction program in the first quarter, we expected operating expenses to decline to $11.5 million. Our actual expenses came in a bit higher at $11.9 million, primarily due to delayed timing of a few of the actions in Q1, along with some higher-than-expected professional fees in connection with the year allotted and related regulatory filings.

As discussed in our last call, we also expected to leave the first quarter at approximately a $10 million quarterly operating expense run rate. With Phase 4 now complete, we estimate the actual run rate leaving Q1 is approximately $10.5 million. Since commencing the cost-reduction program in the fourth quarter of 2011, the projected run rate leaving the first quarter of 2013 represents a 42% decrease from the third quarter of 2011 and an annualized cost savings of almost $30 million. To date, our efforts to reduce operating expenses have lowered the cash flow breakeven point from over $50 million to the high $20 million quarterly sales run rate.

I would now like to discuss the detailed financial results for the first quarter of 2013. Net sales for the first quarter were $20.2 million, essentially flat as compared to the net sales for the last 2 quarters. As we mentioned in our last call, the mix of sales for the quarter was heavily weighted towards strip, with the majority being the older legacy system that we still provide to one of our largest customers. Nearly 85% of the Q1 system sales were strip and the remainder of the system sales were RTP. As expected, the gross margin in the first quarter came in the low at 22%, which is down from 34% in the prior quarter. The decrease in the gross margin is primarily due to a less-favorable mix of system sales that were heavily weighted towards the low margin legacy strip system. As Fusen will outline later in the second quarter guidance Section, we expect gross margins to improve in the second quarter but not quite to 2012 levels as we still expect to have a concentration of the low margin legacy strip systems included in the second quarter. We do not expect this unfavorable mix that includes the low margin legacy strip system beyond the second quarter.

In the first quarter, operating expenses excluding restructuring charges were $11.9 million, which represented a decrease of $800,000 from $12.7 million incurred in the prior quarter. We have outlined in the prior quarterly calls the details of our 4 phases of the cost-reduction program. The estimated onetime restructuring cost resulting from the 4 phases of the cost-reduction program is $9.6 million, of which all but approximately $500,000 was incurred through the end of the first quarter of 2013. Interest and other income and expense netted the income of $300,000 in the first quarter of 2013 compared to net income of $300,000 in the prior quarter and primarily represented a net foreign exchange gain related to our foreign-denominated balances at our U.S. operations. Related to income taxes, the provision for income taxes was approximately $100,000 in the first quarter of 2013 , which consisted primarily of foreign taxes. This compared to the provision for income taxes of $300,000 in the fourth quarter that was higher than the current quarter primarily due to a provision in the fourth quarter on foreign earnings not permanently reinvested.

On a prospective basis during 2013, we expect a quarterly tax provision to approximate $100,000 represented primarily by foreign taxes. Net loss for the first quarter of 2013 was $9.5 million or a $0.16 net loss per share. This compares to a net loss for the fourth quarter of 2012 of $8.8 million or a $0.15 net loss per share and a $1.1 million or $0.02 loss per share reported in the first quarter of 2012. Excluding restructuring charges, the net loss per share in the first quarter of 2013 was $0.12 as compared to the net loss per share in the fourth quarter of 2012 of $0.10 and a loss per share in the first quarter of 2012 of $0.01. Our weighted average share count for the first quarter of 2013 was 58.7 million shares.

Now taking a look at our balance sheet. We ended the fourth quarter with working capital of $32.3 million, which was down $9.2 million from $41.5 million at the end of the prior quarter. This decrease is primarily due to a decrease in our cash and accounts receivable balances, combined with an increase in accounts payable balances during the quarter. Cash balances at the end of the first quarter were $12.7 million and represented a decrease of $3.5 million from the prior quarter. The decrease in our cash balances was primarily driven by the net loss for the quarter, offset by the decrease in accounts receivable balances and an increase in accounts payable balances. The DSO for the first quarter was 57 days compared to 69 days in the prior quarter. The decrease in DSOs during the quarter is primarily due to a more even distribution of shipments during the first quarter compared to a more back-end loaded system shipment timing in the prior quarter.

In summary, from a financial performance perspective, the results for the first quarter came in as expected. We continue to execute on our cost-reduction initiatives the position the company for a return to profitability. In addition, with the recent closing of the $25 million revolving credit facility, we are better-positioned to take advantage of the expected strengthening industry demand. Now I will turn the call back to Fusen for the business outlook and the second quarter guidance. Fusen?

Fusen Ernie Chen

Thanks, Mike. We are staying the course with the focus on raising the top line while being [indiscernible] on cost reductions. Overall, we are seeing our customers continuing to increase leading-edge capacity to meet the mobile electronics demand. And with the current investment cycle, we expect our result continue to improve.

Now let's turn to our guidance. Our guidance for the second quarters of 2013 is as follows: We expect second quarter's net sale to increase from first quarter of 2013 by approximately 20%, representing a range of $24 million plus, minus $2 million. We expect margins to be in the range of 30%, plus or minus 2%. With that, earnings will be in a range of a loss per share of $0.07, plus or minus $0.02. And the cash will be $16 million, plus or minus $2 million.

In summary, I'm pleased with how we have navigated what looks like to be the bottom of the industry investment cycle. We see momentum is picking up in both logic and the memory for our products. Moreover, the business environment is more becoming -- it is becoming more favorable. Again, it has been a very exciting first 2 months for me at Mattson. And going forward, our focus will be on execution and a stronger customer, collaboration and strengthened technical capabilities. And with that, I would like to thank you very much for listening to our business and the financial update. We are now open for your questions. Operator?

Question-and-Answer Session

Operator

[Operator Instructions] Our first question comes from the line of Edwin Mok with Needham & Company.

Edwin Mok - Needham & Company, LLC, Research Division

So my first question is related to I guess the end market. NAND researchers reported and they said that there was some pull-in in DRAM spending from the first half to the -- from the second half to the first half. Are you seeing the same pull-in from the DRAM customer?

Fusen Ernie Chen

Yes, Edwin. Yes, we see that. In our understanding for the DRAM is technology upgrade and it can also mean the potential new system revenue for us. So to answer your question sure, yes, we do see that.

Edwin Mok - Needham & Company, LLC, Research Division

So in terms of the sequential increase in revenue guidance rate, is it largely driven by the DRAM space or is it -- is the other segments also driving the sequential increase?

Fusen Ernie Chen

Sequential increase for the industry?

Edwin Mok - Needham & Company, LLC, Research Division

No, I'm sorry, in terms of your revenue guidance, right? You guide for your revenue to sequentially increase 20%, right? I'm just wondering how much of that is driven by the DRAM space and how much it is driven by the other segment?

Fusen Ernie Chen

Yes, I'm sorry. Yes, Edwin I think that DRAM for us was not in the Q2 and we see that would be very late of the Q2. So really, it's not part of our Q2.

Edwin Mok - Needham & Company, LLC, Research Division

I see. So DRAM for you guys, you expect more back half than -- the revenue will come from the other segment. That's helpful. And then in terms of RTP, thanks for giving a little bit more detail in terms of the progress there in RTP, right? I'm just wondering, in terms of the 20-nanometer, you talk about new foundries that you guys are gaining position there, right? Are you guys expect that, that will drive growth in the back half of your business for RTP business or is that more of the 2014 time horizon?

Fusen Ernie Chen

I -- we do believe RTP, once we have a position in maturity of our foundries, it's going to be steady growth for us for second quarter in the DRAM -- for second half in the DRAM.

Edwin Mok - Needham & Company, LLC, Research Division

I see. Okay. So basically you expect second half to start to have some improvement from RTP. I see. And then maybe jump onto Etch a little bit. You talk about Etch qualifying leading foundry, right? Is that more of a longer-term driver of Etch and is Etch still mostly going to be driven by memory spending?

Fusen Ernie Chen

To answer the question short -- in short, the Etch moment and maturity is going to be helped by memory. And last time, I think you asked the same question, I didn't give you an answer. The logic foundry probably take a little bit of longer time to realize the growth in the areas. But we do believe the foundry -- I'm sorry, the memory coming in is going to be a big relief in the party and therefore all its products in short term.

Edwin Mok - Needham & Company, LLC, Research Division

I see. Okay, that's helpful. And then question for you, Mike. If I look at your cash balance and what do guide for, for the coming quarter. I was wondering, how much of that already includes drawing this revolver in terms of your cash guidance for the second quarter? And assuming that Etch come back with memory in the back half and some of the RTP things also take -- come in at the back half, do you think, even with the $25 million revolver, how much cash do you think you need on your balance sheet to support that growth?

J. Michael Dodson

Yes. We have -- the guidance that we provided included the $10 million that we've drawn down. And we believe the $25 million will get us through, call it, this cycle. We have very good DSOs, so our working capital really helps to fund itself. But we do need a little bit more flexibility that's why we've taken the line out. We have reduced our operating expenses to a level that we have significant leverage in our model. So as the industry comes back, we become profitable. We intend to generate cash that will help fund our working capital on top of what we have with the line of credit.

Edwin Mok - Needham & Company, LLC, Research Division

Yes. I [indiscernible] were extended a little bit for the quarter. Is that how you guys investing or start to build some of these tools for your expected RAM in the back half of this year?

J. Michael Dodson

Well, a little bit. But we really generated cash out of our working capital during Q1 because our operating loss was obviously larger than what the cash came down. So we've actually generated a little bit of our working capital in Q1 but we expect that trend to reverse in Q2. And we're actually -- working capital is going to use our -- a little bit of our cash.

Edwin Mok - Needham & Company, LLC, Research Division

I see, yes. Okay. Great. I think that's all I have. Oh, last question I have on gross margin. You guys guided for 30%, so I assume that 1 customer was dragging while the strip sales is coming down. And as we look forward beyond the second quarter, how should we kind of think about your margin -- gross margin can trend?

J. Michael Dodson

Yes. We -- the guidance that we've given for Q2, 30% plus or minus 2%, is lower than what we had last year at 35% for the entire year. And what's putting pressure on that is this legacy strip tool, which is running at a little bit less than half as much as it did in Q1, but it's still putting pressure. But our goals and objectives are is we want to, in the back half, in Q3 and Q4, with wind in our backs, to return back to the 2012 levels and better.

Operator

Our next question comes from the line of Ben Pang with B. Riley and Company.

Benedict Pang - B. Riley Caris, Research Division

First, a follow-up on the gross margin situation. Is it fair to say that when these foundries are 20-nanometer volume purchases that the older strip tool is no longer going to be shipped?

J. Michael Dodson

Well, the -- I think part of the phenomena that we're experiencing in Q1 and Q2 is -- where our revenues are very low and a big percentage of our revenues has been to one customer with this legacy strip system. We don't see that mix going forward and we also understand or have explained that our growth drivers are RTP and Etch, which are our higher-margin products. So you kind of have to call it perfect storm where we have very low revenues and the revenues have had a very high concentration of our lowest gross margin.

Benedict Pang - B. Riley Caris, Research Division

Okay. So just so I'm clear, that customer could still be buying this lower margin product even for the next technology node, correct?

Fusen Ernie Chen

That's correct, but we do not believe the concentration is going to be so high compared to the total mix of the products.

Benedict Pang - B. Riley Caris, Research Division

Okay. That's fair. And then in terms of the OpEx, I'm not sure if I understood your comments correctly, Mike. So is your target right now $10.5 million?

J. Michael Dodson

Yes.

Benedict Pang - B. Riley Caris, Research Division

Okay. And are you starting to have to spend for 450-millimeter already and how do you look at specifically to where 450-millimeter OpEx going forward?

Fusen Ernie Chen

Well, we do have 450 program at actually a lower label. We want to make sure we invest on 450 but we'll not consume too much resource and cash label from our operation stand. So in short summary, we are working on 450 and we will not be the bottleneck. But we also not put extensive resource working on 450. As industry might have a pylon line [ph] maybe beyond 2016. I think that we probably have our time still in that. But in a big way [ph], we are working on 450.

Benedict Pang - B. Riley Caris, Research Division

Okay. And my final question is on the RTP situation. If the foundries start to add capacity for 20-nanometer, what type of growth rate would you expect to see for its Helios? Can you give some metrics around the number of wafer starts and your revenue or some kind of a growth expectation relative to the wafer starts for our 20-nanometer foundry?

Fusen Ernie Chen

Actually, I don't think we have a model but we do expect the growth will be compared to, say, 2014 compared to this year. We will expect significant growth for our Helios product.

Benedict Pang - B. Riley Caris, Research Division

Is it -- is the qualification status already done or is it still being -- is there still competition with other technologies and vendors?

Fusen Ernie Chen

We do believe our case has been done.

Operator

Our next question comes from Christian Schwab with Craig Hallum.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

What do you expect the mix of revenue to be in Q2? I mean, between strip, RTP and Etch? You kind of said that strip will be kind of half the level that you expected in Q2. Are we getting those Etch equipment in Q2?

J. Michael Dodson

Well, the half is relative to just the legacy strip tool that has really the low margin, even though the strip in general is our low-margin product, right? But in Q2, we'd expect a split that a little bit less than 2/3 of our business would be strip and a little bit more than 1/3 would be RTP.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

Okay. When are we going to start selling Etch?

Fusen Ernie Chen

So as we just had a discussion, the memory investment is likely to come in second half of the year. That would be the timing we expect Etch will start to contribute positive revenue to the company.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

All right. So is there a risk that revenues get worse in the second half when the strip customer bought but all these legacy stuff if your memory, 1 memory customer in particular, doesn't buy any Etch equipment from you?

Fusen Ernie Chen

Actually we -- likelihood of that, I think, is very low in our opinion.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

You have orders in hand for the second half of the year yet?

Fusen Ernie Chen

We just feel positive about the memory investment -- environment. I think we probably do not give guidelines for the second half at this moment. But I think in general, we feel comfortable about the memory investment we're coming in that will drive our Etch business.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

Right. And in your inventory, how many Etch boxes you have still in there?

J. Michael Dodson

No, we don't have -- we don't pre-manufacture any systems. We have obviously a mix of inventory and includes strip inventory, Etch inventory and RTP inventory. We do buy long lead time items but we don't carry finished goods.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

So how long would it take for you to make one?

J. Michael Dodson

A typical lead time is 12, 16 weeks.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

So you need to order pretty soon if they're going to be shipped in Q3, right?

J. Michael Dodson

Yes, we work very closely with our customers knowing that in this industry, similar to how quickly it can go down when we were Q1 at 2012 at $50 million, Q2 was $35 million and then we've done 3 consecutive quarters at $20 million, just as quickly as we're at this level, it will go back up. Because as we've talked and discussed, we have not lost any customer positions. We only have additional positions that we have not leveraged, in particular the RTP positions at 20-nanometer.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

Okay. Mike, if we want to be optimistic, how many Etch boxes can we ship in the second half?

J. Michael Dodson

We are very -- I mean, to say one thing, I'll let Fusen add his points. But we are optimistic that the second half will have very good demand on both the DRAM and the NAND areas or hard 3D NAND. So we feel very strongly that the wind is starting to get to our backs. We've left the worst of the downturn behind us. We see Q2 with the guidance that we've given going up 20%. So it will be with the plus or minus of $2 million off $24 million. So we believe we're headed in the right direction. The second half would be stronger than the first half. But we just -- with the visibility as poor as it is, or as difficult as it this, we just have never gone out beyond one quarter as far as providing specific ranges.

Christian D. Schwab - Craig-Hallum Capital Group LLC, Research Division

Okay, that's fair.

Fusen Ernie Chen

So Christian, if I can add, I think your question about Etch, no, we don't give our guidance beyond 1 quarter. Our basic [ph] unit and also our sales force in the region closely working with the customer. So actually, we work very hard and we know the information exactly what we need to do. So just want to let you know.

Operator

Our next question comes from Rick Solomon [ph] with Verition Fund [ph].

Unknown Analyst

Can you talk a little bit about Helios and flash anneal versus laser? Because I think there's been some differences of opinion by different managements about the relative benefits and the longevity of each product? So can you talk about that little bit?

Fusen Ernie Chen

Okay. So Rick, I personally believe the laser and the flash. These 2 technology are -- have their uniqueness. They will coexist in our customers for the next couple of years. Neither one will disappear. But most important thing for Mattson,, I do believe, is we've got to make a good tool to serve our customer need. And we have a strong expectation from our customer and strong support with our customer. And we are making very good progress in making this system in long in the high-volume in the [indiscernible] mode. So we are positive with our product and that we do believe that we have good products to serve the market.

Unknown Analyst

What's your ASP on the Helios?

J. Michael Dodson

On the Helios XP, it is in the neighborhood of 2 million.

Unknown Analyst

And if your customer is doing yet let's say next-generation NAND. For 10,000 wafer starts, how many would he want?

Fusen Ernie Chen

So I think the memory -- the biggest important product for us is probably Etch. And we have RTP provisions, but I think for the size of our business to impact us in the memory would be Etch.

J. Michael Dodson

The Helios XP, really, the sweet spot for us is the foundry.

Unknown Analyst

So let's say 10,000-wafer foundry, how many orders would you get?

Fusen Ernie Chen

We believe will be a couple of that.

Unknown Analyst

A couple -- say that again?

Fusen Ernie Chen

We will have just few of them.

Unknown Analyst

A few of them?

Fusen Ernie Chen

Yes, maybe about 5 to 7. That will be my guess. We didn't do a model for you. Probably next time.

Unknown Analyst

$10 million to $15 million opportunity. Okay.

Operator

[Operator Instructions] Our next question comes from Larry Chlebina of Chlebina Capital.

Larry Chlebina

Fusen, if I heard right, you said that you shipped the first Millios to the foundry space, is that correct, out of Germany?

Fusen Ernie Chen

Oh, actually, the system is under very high-volume testing. And we're working with customer, yes. The intention is for a larger customer.

Larry Chlebina

I see. That -- is there any expectation when that's going to revenue?

Fusen Ernie Chen

We are looking at this moment probably Q3.

J. Michael Dodson

Back half of the year, yes.

Larry Chlebina

Okay. And along the same lines, as I'm assuming that gets critical at the 20-nanometer node, what's the opportunity per, say, 10,000 wafer starts on Millios? Is that anything significant, or is that...

Fusen Ernie Chen

You probably can do a calculation, this throughput -- actually, we're really keeping our customers flow probably ranging from 30 to 60. Will depend on our individual stat. So I'll give you maybe a formula to do a calculation.

Larry Chlebina

Okay. Now that you've engaged with Mattson for several months and with pulling in your new Vice President of Sales, are you seeing traction with particularly in the foundry space and some of the new areas that Mattson has been targeting? Are you seeing any traction with the new products, even though it's not showing in sales yet? I mean can you...

Fusen Ernie Chen

So actually, we just have a tool almost 2 major customers. But I think our customer are quite pleased and they have confidence on us and give us a suggestion how can we – work with them more closely in the future to help each other. But in short summary, I think this business, unless you have a strong product, relationship I think is just a starting point. So to me, as you know, first priority is we fix whatever -- if we have relationship problem, we fix it. And we got to improve our product competitiveness. And I can tell you, my feeling of our product is quite good. For our RTP, Helios actually get traction in our foundry and the Millios really making good progress in the reliability, which a lot of expectation from our customer. And in memory, I think our environment is going to be more friendly in terms of investment. So overall, I do believe I'm quite pleased with the result at this moment.

Larry Chlebina

Over the last month or so, the turmoil on the Korean Peninsula, where over half of the solid-state memory is produced. Have you seen any turmoil or effects on equipment sales or maybe some concerns that maybe that's too much concentration in 1 area?

Fusen Ernie Chen

Larry, actually, that's a good question. Remember, we was in the part of Asia and our people have a big talk about that areas and even have some dangerous action hypothesis [ph]. And we still fly through that areas. And we see actually no disruption when we talk to the customer. And we see people still come. So in my opinion, I -- we don't see any disruption.

Larry Chlebina

I would just say, what's your biggest customer concentrated on 1 site with all their memory production. It seems to me that they might accelerate the facilitation of their foundry in China but is there nothing that you can detect as a result?

Fusen Ernie Chen

Right. So I think that's -- it was a part of [indiscernible] people consider invest outside of their [indiscernible]. Yes, so this is a real risk mitigation and we believe that. So our goal is to [indiscernible] with the customer with -- according to their plan closely. And at this moment, I think customers also have no choice. They have a big facility already in that location that can either continue to grow. But in the meantime, they will plan capacity outside over the areas, and we will work closely together with them for the planning.

Operator

We do have a follow-up question from Ben Pang with B. Riley and Company.

Benedict Pang - B. Riley Caris, Research Division

This is a follow-up on the previous question. Fusen, you talked about some of the good products you have, but what's your priority? Which one of these products demands the most attention to fix right now?

Fusen Ernie Chen

Actually, I think the Helios RTP most of the quality casing [ph] has been done. So this product, we do believe, will grow by itself. A longer time, it will continue to grow. I think in the past 2 months since I'm here, we put a lot of our efforts on Millios. I think this is a very important product for us and we do make good progress on that, and we feel very happy on that on the progress. The price actually is quite good so that will be, if it's successful, will have a good impact for Mattson. And Etch, we always have a Etch product. In the past 2 months, I think we focused on the process optimization for 2x DRAM as well as for the 3D NAND. So as the investment come, the most important thing is we capture the timing, and we do believe we have good product serving the market. So I don't think it's -- this -- I don't think there's a dependency on that. The memory will come because the timing is going to be next few quarters. But in the past few quarter, I think we fix the reliability issue of Millios that was a material resource I spent on.

Benedict Pang - B. Riley Caris, Research Division

Okay. And in terms of the Etch NAND 3D qualification, you mentioned the process tuning. Does that require a new process kit?

Fusen Ernie Chen

We do believe the maturity of our potential is going to be a new system.

Operator

And presenters, at this time, I'm showing no additional questions on the phone line. I'd like to turn the program back over to the President and CEO, Fusen Chen.

Fusen Ernie Chen

Okay. =Thank you. And once again, thank you for joining us for our First Quarter Conference Call. We look forward to updating you on our progress in the next quarter's conference call. Thanks very much.

Operator

=Thank you, sir. And again thank you, ladies and gentlemen. This does conclude today's conference. Thank you for your participation and have a wonderful day. Attendees, you may log off at this time.

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Source: Mattson Technology Management Discusses Q1 2013 Results - Earnings Call Transcript

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