Axcelis Technologies, inc (ACLS) Q3 2021 Earnings Call Transcript

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Axcelis Technologies, inc (ACLS 1.50%)
Q3 2021 Earnings Call
Nov 4, 2021, 8:30 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Good day, ladies and gentlemen, and welcome to the Axcelis Technologies call to discuss the Company's results for the third quarter 2021. My name is Daniel and I will be your coordinator for today. [Operator Instructions] I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma'am.

Mary G. Puma -- President and Chief Executive Officer

Thank you, Daniel. With me today is Kevin Brewer, Executive Vice President and CFO and Doug Lawson Executive Vice President of Corporate Marketing and Strategy. We are all participating in this call remotely, so, I would like to apologize in advance for any technical difficulties. If you've not seen a copy of our press release issued last night, it is available on our website. Playback service will also be available on our website as described in our press release. Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC safe harbor provision. These forward-looking statements are based on management's current expectations and are subject to the risks inherent in our business.

These risks are described in detail in our form, 10-K annual report and other SEC filings which we urge you to review. Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements. Good morning and thank you for joining us. Axcelis posted a very strong quarter due to the growing momentum of the Purion product line and strength of the semiconductor industry, particularly the mature process technology segment.

Revenue for the third quarter was $176.7 million with earnings per share of $0.81 driven by strong gross margins of 43.3%. Quarterly system sales increased significantly to $126.2 million and implant systems record. CS&I, our aftermarket business continue to provide a major contribution to our top line and gross margin with Q3 revenue of $50.5 million. In the third quarter, 91% of shipments went to mature foundry logic customers and 9% to memory customers with an even split between DRAM and NAND. Due to growing strength in the mature process technology market, we now estimate that segment will account for greater than 80% of system revenue for the full year 2021. The geographic mix of our systems shipments in the third quarter was China 70%, Europe 15%, Korea 5% and the rest of the world 10%. In Q4, although China will continue to account for our largest percent of systems revenue, we expect the overall regional mix to be more balanced. Turning to fourth quarter guidance, we expect revenue of approximately $190 million, gross margins of approximately 41.5%, operating profit of approximately $37 million and earnings per share of approximately $0.84. We now expect to exceed $640 million in revenue for the full year 2021.

The increase in revenues since the last quarter has been driven by the continued growth of the mature process technology segment and the early stages of a memory capacity build. We believe both market segments will contribute to what we expect will be a strong 2022 for the industry and for Axcelis. Our visibility into the first half of next year is very good as we are currently booking systems into Q3 2022. Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including chip shortages, high fab utilization across all segments causing significant new fab investment, government incentive programs creating geographical expansion opportunities for our customers. The rapid growth of the power device market both silicon and silicon carbide to support automotive industry plans for electrification. And finally, the fundamental underlying drivers that started this growth cycle, 5G, data analytics and AI. We believe that the implant TAM has increased significantly. This is driven by an overall increase in wafer starts, by the growth of foundry serving the mature markets where ion implant is a fab bottleneck due to the large mix of products.

And lastly, by the power and image sensor markets, which are more implant intensive and require our more advanced Purion product extensions. The mature and specialty markets are generating sustainable growth with Purion product extensions designed to serve the power device and image sensor markets. This is the case across all implant types, high current medium current and high energy. We have invested significantly in products for these markets over the last several years and we continue to invest to maintain the leadership, our Purion products enjoy. In Q3, we successfully closed in evaluation of a Purion H200 for silicon power customer, highlighting our continued strength in the power segment. We believe the power segment will comprise 25% to 30% of our systems revenue for 2021 with the image sensor segment accounting for 20% to 25%. Strength in these segments contribute significantly to our margin expansion. Our growth in these segments is clear and sustainable, and most importantly, it is tied to long-term trends beyond any increase is driven by semiconductor shortages.

Turning to the memory market, since the end of Q3 and early into Q4, we have seen an increase in memory shipments for both NAND and DRAM applications. Last week, we announced that we shipped multiple systems to a memory customer and successfully closed the evaluation of a Purion H for a new NAND high current customer. This customer now has both the Purion H and Purion XE qualified for production. Revenue for that system will be recognized in the fourth quarter. We maintain a strong and growing position in memory and we expect 2022 to see continued capacity additions. We believe, DRAM will be stronger in the first half of the year with the subsequent pickup in NAND later in 2022. We continue to see a high degree of activity in this logic, where we have a Purion H evaluation underway that is expected to successfully close in Q4. This qualification will open the door for production buys in 2022 and 2023. We are also seeing an increase in activity in the Japanese market, especially related to power devices, image sensors and general mature devices. Interest is strong for both our Purion and legacy tools. In fact, earlier this week we announced the launch of GSD Ovation high current and high energy batch implanters.

We expect these enhanced legacy products to be well received by 200 millimeter customers and to provide potential CS&I upgrade opportunities to our large installed base. The valuations are key to developing new customers increasing footprint at existing customers and penetrating new segments. We currently have five Purion evaluation tools in the field focused on supporting future growth. These include a Purion Dragon, a Purion H, a Purion XE silicon carbide and two Purion XE MAXs which are positioned across key target segments including advanced logic, DRAM, image sensor and power devices. We expect to close multiple evaluations in Q4 and plan to ship additional evaluations in the forth quarter and throughout 2022. In 2021 we are closing in on a $650 million revenue model, thanks to the success of Purion and a very strong semiconductor market. As a result, we are developing an implant driven revenue model beyond $650 million that we will introduce at a virtual Investor Day currently planned for December 9th. Now I'll turn the call over to Kevin to discuss third quarter financial details as well as several operational topics including supply chain management and progress with our Korean manufacturing site. Kevin.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Thank you, Mary, and good morning. Axcelis delivered solid Q3 financial results driven by strong gross margin performance and continued revenue growth, but our strength in a growing mature process technology market, we now expect to exceed $640 million in revenue for 2021. Growing systems and CS&I revenue, coupled with strong bookings and backlog have set up a strong finish to 2021 and position us well for expected growth in 2022. We are seeing significant leverage in our business model and expect full-year operating expenses to be around 24% of revenue, the gross margins above 42%. For your gross margin assumptions include, a higher pandemic and supply chain related [Indecipherable] and the impact of our investment in additional manufacturing capacity. On going gross margin improvement will be driven by the timing of cost out initiatives, customer and product mix and continued growth in our CS&I business. Based on the strength of the market and demand for our Purion products, we are developing new financial targets that will take us well beyond our current $650 million model.

We will introduce this model at our virtual Investor Day on December 9th. Before discussing the details of our Q3 financial performance, I'd like to provide an update on our supply chain and new manufacturing facility in South Korea. We have and will continue to provide guidance [Indecipherable] that reflects our current assessment of supply chain challenges. We are working closely with our established suppliers. We continue to qualify new sources of supply and carry a higher than normal level of inventory to help buffer supply chain disruption. Our sales team is also working with customers to provide purchase orders much earlier than in the past, which in improves visibility for our manufacturing team. We are adding manufacturing operations closer to our customers with the goal of increasing customer satisfaction and capacity, construction of the new facility in South Korea is complete. Manufacturing again this week, but first shipment scheduled for the first quarter. This is an exciting opportunity for us. But I want to reiterate, especially with our recent rapid growth that we currently have sufficient capacity in place to support our near-term demands and expect the Korea factory to play an important role in supporting future manufacturing requirements.

Now turning to our third quarter financial results. Q3 revenue finished at $176.7 million, compared to $147.3 million in Q2. Q3 system sales were $126.2 million and implant systems record compared to $100.1 million in Q2. Q3, CS&I revenue finished at $50.5 million compared to $47.1 million in Q2. CS&I revenue remained strong, driven by high fab utilization, the growing Purion and installed base, system upgrades and customers' purchasing safety stock. We expect Q4, CS&I revenue of approximately $50 million. Q3 sales, our top 10 customers accounted for 77.3% of our total sales compared to 75.1% in Q2. One customer was above 10% in Q3, compared to two in Q2. Q3 system bookings were $244.2 million compared to $172.1 million in Q2 with a Q3 book to bill ratio of 1.86 versus 1.71 in Q2. We are currently pointing into the third quarter of next year. Backlog in Q3, including deferred revenue finished at $406.6 million, a new record for Axcelis compared to our prior record of $271.2 million in Q2. Q3 combined SG&A and R&D spending was $40.1 million, 22.7% of revenue compared to $40 million or 27.2% in Q2. SG&A in the quarter was $23.4 million with R&D at $16.7 million.

We expect Q4 combined SG&A and R&D spending to be approximately 22% of revenue. Q3 gross margin was 43.3% driven by strength in CS&I, higher Purion Power Series shipments and continued cost out activity. Regarding Q4 gross margin to be approximately 41.5% driven by product mix and the expected closure of multiple evaluation systems. We expect full year gross margins to be above 42% including closure of these evaluation tools. Operating profit in Q3 finished at $36.4 million or 20.6% of revenues compared to $24 million in Q2. We are guiding Q4 operating profit of approximately $37 million. Q3, net income was $27.5 million or $0.81 per share compared to $18.9 million or $0.55 per share in Q2. We are guiding Q4 EPS of approximately $0.84. Q3 cash finished at $271.8 million compared to $220.5 million in Q2. In the quarter, we generated $66.2 million of cash from operations and several share repurchases of $12.5 million. Also in the quarter, we received meaningful prepayments on system sales. Q3 receivables were $78.3 million compared to $79.5 million in Q2. Q3 inventory ended at $196.8 million compared to $192.3 million in Q2. Q3 inventory turns excluding ship evaluation tools finished at 2.4 compared to 2.1 in Q2. Q3, accounts payable were $35.5 million compared to $40.7 million in Q2.

As always, I want to thank our employees and suppliers for their continued efforts and outstanding execution supporting our stiff business ramp. It is an exciting time for Axcelis, what unprecedented growth in the industry and solid customer demand for our products. Our balance sheet is strong and we have the financial strength to invest in products, infrastructure and our employees. We have also returned over $62 million of capital to our shareholders under the share repurchase program since 2019. Under the current program, we had $62.5 million of remaining authorization at the end of Q3. Thank you, and I'll now turn the call back to Mary for closing comments.

Mary G. Puma -- President and Chief Executive Officer

Thank you, Kevin. Axcelis is currently positioned for significant sustainable growth. The implant market is increasing, thanks to strength in the overall semiconductor industry, but also due to a rapidly expanding mature process technology segment. The capabilities of Purion product extensions, like the Purion DXC and Purion power series, combined with the implant intensive nature of the image sensor and power device segments, uniquely position Axcelis to benefit from the electrification of the automotive market. We will continue to partner closely with our customers across all geographies in this growth segment. Axcelis has the financial means to invest in R&D, global support infrastructure and capacity to capitalize on all of the opportunities discussed in today's call. We are in the middle of one of the most exciting times in the history of the industry and are confident that we are focused on all the elements required for leadership in ion implantation. With that, I'd like to open it up for questions.

Questions and Answers:

Operator

[Operator Instructions]. Our first question comes from Patrick Ho with Stifel. Your line is now open.

Patrick Ho -- Stifel

Thank you very market and congrats on a really nice quarter and outlook. Mary, maybe [Indecipherable] in terms of the business environment, you talked about memory picking up at least in Q3 with between [Indecipherable]. Can you give a little bit of color in terms of the kind of customer mix. Is it primarily, with one customer you're seeing or is it grow out of mix multiple customers?

Mary G. Puma -- President and Chief Executive Officer

At this point, Patrick, we're seeing that it's a broader mix with multiple customers. There is one customer in particular that has actually aggressively started placing orders but based on the quotations that we're doing in the bookings that we have, this is what gives us the confidence to say that it's broader and we'll start with DRAM and then expand into NAND in the second half of the year. Remember, we said we're actually already booking into the third quarter, so we've got pretty good visibility into the first half of the year.

Patrick Ho -- Stifel

Right. That's helpful. Maybe as my follow-up question to Kevin, congrats to you guys for managing the supply chain in a challenging environment and you gave a little bit of color on some of the variables that you'd be willing to I guess [Indecipherable]. Maybe specifically for Q3, given that there were more issues that arose. One, how did you manage to [Indecipherable] a lot more I guess compensate issues. And secondly, how are you reacting to kind of mitigate those situations in Q4, is it still persistence coming off of Q3?

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yeah, that's a good question, Pat. I mean, there is no doubt that the supply chains are very tight and really since the start of the pandemic, it was mostly driven by pandemic and closures of businesses and for us, then we got into a logistics issue and part of that because of the pandemic part of this, just because of, you know the volume is trying to move right now through the industry. But early on, I think we got very aggressive with looking at our lead time offsets in MLP with suppliers, putting a buffer inventory, moving from some of our bottleneck suppliers and getting some new capacity put online. So I think some of those early action certainly are helping now. Now we're doing, what we've been doing since the start where we're trying to stay on top of it. I mean, the team is working hard as all companies are doing right now.

We're still adding new suppliers as we see problems arise, we're reacting and we're trying to be proactive as well. We continue to look at where there may be potential bottlenecks and trying to beat it off in the past if we can. So there is a lot of hard work and I think you've heard me say before, there is a lot of luck too. I mean, it's a big supply chain so all we're going to do is continue to do those things have been working for us. So far, as you point out, we've been able to manage through this and that's our intentions as the continue to move forward. So I feel comfortable with our Q4 guidance that we have a good handle on what we need to do to execute this quarter from a supply chain point of view.

Patrick Ho -- Stifel

Great, thanks again, and congrats.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from Craig Ellis with B Riley. Your line is now open.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Yeah, thanks for taking the questions and congratulations really on two fronts, not just the near-term operating execution, which is remarkable in such a tough environment, but in the vision that you had years ago to really diversify out the Purion product line so you can be so well positioned for the secular drivers that you mentioned. And that's really where I want to start. Mary, as we look at the mature foundry market on the power side and if we look at EV activity. We're currently low single-digit million units of production by mid-decade. We should be $10 million, maybe $30 million by the end of the decade. So there is a tremendous ramp coming. And the question is, where do you sense your diverse customers are in getting capacity in place for that ramp. How much of that are we seeing here right now in second half, strength in the business and how much would you expect to fill in as we go through 2022 with the visibility that you have in your order book?

Mary G. Puma -- President and Chief Executive Officer

Well, we've talked extensively about power devices and how those are actually being driven by the electrification of the automotive market. Our customers right now who serve that market are adding pretty significant capacity, I would call it full speed ahead at this point in time. And again based on our discussions with them and we stay very close to them not only in terms of trying to understand what the forecast is, but also in terms of understanding what the trends are in the products because we've talked about how our Purion power series is really a market leader and we want to make sure that we stay that, that it remains that way. So I would say that it's quite strong right now and we believe that is going to remain strong into the foreseeable future. This is not a trend that's short term, this is a trend that's longer term. And again, we expect to be right there with our customers enabling them to continue to manufacture these chips even if they evolve over time. So this is a long-term trend, Craig, and we believe it's going to remain in place for many years to come.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Yeah, that's helpful. And then-- Go ahead, Doug.

Douglas A Lawson

Yeah. I just wanted to add that we are planning to do a deep dive on that market, on the power market in the specialty markets at the Investor Day in December. So there'll be a lot more information.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Great. And then the second question was also in mature foundry and just flipping over and Doug, you may refer me a bit to the December session. But I wanted to see if I could get some color on the, CS&I part of the mature foundry market. Certainly we're seeing very strong EV and ADAS demand there. We're also seeing very strong smartphone demand, smartphones continue to have an increase in image sensors per phone and one of the things we've been looking for is the opportunity for Axcelis to potentially gain further share in the Japanese market and I'm hoping you can provide a little bit of color on whether you've got any increase in optics into tapping that market and growing into a large well-positioned potential customer there?

Mary G. Puma -- President and Chief Executive Officer

So Craig, Doug can address any of the technical issues, but we're continuing to work with all of the image sensors manufacturers, particularly the large ones. Obviously, the target that you're talking about is something that we are working very heavily, not only with our team in Japan, but also really across the business. In Japan right now, we actually have quite a bit of interest both in image sensors but also in the power market and that's something that we'll continue to focus very heavily on. We put a Purion XE into the power device market last year and that's in production and we're using that as a reference site, which has generated a lot of interest. We actually just launched a Japanese Axcelis website and that should really help our Japanese customers become more familiar with and comfortable with Axcelis. So lots of ongoing activities and that's definitely something that will be a future event for us, a future win for us. Let's put it that way.

Douglas A Lawson

Yeah. And I think a couple of other things we are exhibiting at [Indecipherable] Japan this year with the booth. We expect quite a bit of activity and the key products relative to the image sensor market, there is the Purion XE Max, which we have two evaluation systems, in the field at a leading competitors of that customer you're referring to. So we think that that's the product that is going to drive really the next generation of image sensors.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

That's really helpful. And I'll flip it over to Kevin for a question. Kevin, interesting point on the prepayments that helped with cash, $50 million very, very strong performance. The question is, are prepayment something that we should expect to see more of in calendar '22 or were there just unique dynamics that took place in the calendar third quarter.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Well, it is customer specific and I will tell you it's one particular geography with some of our smaller and what I would say newer customers. There is, in the PO terms, there are prepays that are associated with that order so depending on where the mix is from quarter to quarter, Craig, that could occur more or less. So it's... I did want to make mention much into this quarter because it was more significant and we had a pretty significant cash generation from operations. So I just wanted to flag that.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Yeah. Helpful and congrats on that, CFO. I'll hop back in the queue. Thanks very much, team.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Thank you.

Operator

Thank you. Our next question comes from Christian Schwab with Craig-Hallum Capital. Your line is now open.

Christian Schwab -- Craig-Hallum Capital Group LLC -- Partner/Senior Research Analyst

Hey congratulations guys on this really excellent execution. Kevin, did I hear you right that your backlog went from $272 million last quarter to $406 million this quarter?

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yes, you did. In last quarter was a new record and this, obviously, was a new record. Yeah.

Christian Schwab -- Craig-Hallum Capital Group LLC -- Partner/Senior Research Analyst

Okay. Fantastic. So [Indecipherable] they come on December 9th but can you guys kind of talk about, in particular the silicon carbide market where I think you have implant product where your competitor really does not and the industry is looking for material for wafer growth and I'm sure you're aware, there's not too many cars per wafer, right now and that may or may not change in the future especially if we go to 300. But can you, kind of quantify the opportunity for you guys in that marketplace alone?

Douglas A Lawson

Well, I think, Christian. As I said, we're going to have a deeper dive on this on the Investor Day more than we can do a quick Q&A, but we expect this year power... Both silicon and silicon carbide power combined will be 25% to 30% of our large systems revenue. So that's up from last year, which I don't have the charter front of me, but I think it was about 17% and so it is continuing to grow and automotive is probably the key driver. There is a lot of power switching that goes on in the car. A lot of silicon, in addition to silicon carbide. So, we're seeing a lot of activity across all geographies. There was a lot of activity in Europe, really starting at the Japanese market has always been pretty strong in power. Recently, the US market has really started to go after it aggressively as seen by several customers earnings reports in the past week or two. And the Chinese market is very, very active. So it's a worldwide phenomenon. There is big push worldwide on EVs and so we expect it to continue to grow and we continue to develop the Purion power series family.

Christian Schwab -- Craig-Hallum Capital Group LLC -- Partner/Senior Research Analyst

Okay. That's helpful. I don't have any other questions. Again, congrats on the high visibility of the great execution. Thanks.

Douglas A Lawson

Thank you.

Mary G. Puma -- President and Chief Executive Officer

Thank you.

Operator

Thank you. Our next question comes from Tom Diffely with D. A Davidson. Your line is now open.

Tom Diffely -- D.A. Davidson -- Wall Street Analyst

Yes, good morning and thanks for the question. So first, Kevin, I wonder if you could give us a summary or an update on just where we are, where you on the evaluation systems, what you expect to close by the end of this year, which looks like the impact margins a bit and which ones are going into 2022? It might be impactful there.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yeah. So I think Mary mentioned there is five evaluation systems currently out in the field and in Q4, we expect to convert multiple e-commerce systems. So, we didn't put the exact number in there time, Tom, but let's put it this way, it's three of more. So going forward, I expect we'll still have a few evals in the field in quarter one, but we are also continuing to put evaluation tools out. As a matter of fact, a fairly large portion of our current inventory number beyond having some buffer inventory for supply chain issues is evaluation systems is both shipped or work in process in the factories. So I don't expect the evaluation tools to drop off in any meaningful way in the near term, we're going to continue to put them out there. And as you know, the more evals we have out there, the more opportunity we have to convert to revenue in future growth. So the margin impact is always a bit of a disappointment, but it's a short-term disappointment because a lot of these new evals as well or the product extensions, which are, as we've talked about before. They have higher ESP in the margins are certainly more accretive than some of the base products.

Tom Diffely -- D.A. Davidson -- Wall Street Analyst

Okay. Yeah, one of those high-class problems. Okay. Maybe shifting over to the memory market for you to Mary or Doug. A year ago at this time, we were looking into 2021 which was going to be a nice recovery year for memory, it didn't materialize, but it was worth by just the mature business being so strong. I'm curious, would you look out into '22, how this memory look different this year than it did a year ago?

Douglas A Lawson

Well, I think, if you look at pricing trends and so forth, they are beginning to support growth in terms of additional capacity. The demand, if you look at any of the Gartner or IC Insights reports show a increase in overall demand for memory over this next coming five years. So we expect that there'll be capacity additions. As Mary mentioned, in the script was we have begun to see some of that this year, we expect that to continue next year and so we expect it to be a better year than last year in terms of overall memory. But for our business, I think your comment in terms of the mature business to work this year, the mature businesses is very big for us and is more implant intensive actually than memory. So I would expect that next year, we'll continue to see percentage wise a stronger mix toward mature in memory even though memory will be growing.

Tom Diffely -- D.A. Davidson -- Wall Street Analyst

Okay, that's helpful. Thank you, Doug. And then the final question I guess for Kevin again, when you look at the backlog and ramping up here. The bookings, very strong, and this is going into the third quarter now of next year. Are you capacity constrained in any sense, I mean it is a good in the third quarter because that's when the customers need the tools or is it kind of restrictions on how fast you can get these tools out the door?

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yeah, I think we've done a very good job meeting what customers have required for ship dates so I would say, Tom, that the majority of it really is meeting with the customers' requirements are. I mentioned, we do have the Korea facility online now which extremely excited about this. If I look at the timing, how quickly you brought that up and running. So I feel quite remarkable what the team accomplished in. We just started manufacturing this week. As I mentioned, that will start shipping in Q1. So that's going to certainly help out into the next year shipments, the near-term requirements. We've got covered with our current manufacturing in Beverly right now. So there's really not any constraints there. I'll say it again, the team both manufacturing supply chain across the business people were pedal on about the bike hard right now, but we're keeping up with it. So yeah, I think maybe your question may become, I know throughout the year, we have heard from others in our peer group that they're pushing deliveries out or they couldn't take any more deliveries in 2021, things like that. We haven't, really made that an issue at this point, but I think, again we've kept up of what customers are needing for to meet their requirements.

Tom Diffely -- D.A. Davidson -- Wall Street Analyst

Okay, that's helpful. Thank you the three of you for your time today.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yeah. Thanks, Don.

Operator

Thank you. Our next question comes from Charles Shi with Needham and Company. Your line is now open.

Charles Shi -- Needham & Company -- Vice President, Equity Research

Hi, good morning. Thank you for taking my question. I'm asking on behalf of Quinn Bolton here from Needham and the company. So I wanted to start with a question. I think you guys mentioned mature foundry, logic and not only on a dollar basis, but on a percentage basis, next year is shaping up to be even stronger than this year. So I want to ask a question, given how strong bookings are and given good visibility, all the way through would like third quarter next year, how much of that demand you are seeing today is the underlying market demand or is there any like our share of those customers, the purchasing behavior from, just in time purchasing to like maybe just in case purchasing because the lead time so stretched out?

Mary G. Puma -- President and Chief Executive Officer

I would say at this point, our sales team does a really good job trying to shake out exactly where people are just trying to get in line versus where the requirements are, and they do a lot of background work on that. For example, is the fab built, what's the status of the fab, the equipment going and so we believe that the bookings that we have right now, are bookings that will remain in place. Obviously, there are going to be some movement, there always is in terms of fab readiness. But we're very comfortable with the fact that the customers who are actually placing orders are going to take that equipment, basically in the timeframe that they've indicated and we're building to that. So we watch it, we do internal reviews with the sales team and the manufacturing team. It's almost on a daily basis at a minimum, every week. There is a review, to take a look at inventory levels and things, changes in the forecast. So we manage it extremely closely. So if any of those things do happen, we're on top of it. And at this point in time, again we feel, it's pretty certain and so we don't think that there is a lot of speculative buying out there at this point.

Charles Shi -- Needham & Company -- Vice President, Equity Research

Thanks, Mary. So maybe the next question I want to ask us more specifically about power devices, the demand you're seeing. Obviously, there are probably at least three major type up power devices silicon BCD, IGBT, carbide with various in I think tends to, I would say they are high, but there may be some difference there. So based on pointed to orders, are you kind of seeing a shift in terms of the mix between these three types of power devices from '21 to '22. Is there more biased with silicon carbide, IGBT more sophisticated, power device types? Thank you.

Douglas A Lawson

It's a split, Charles. We're still relatively early in the game in terms of, I mean, power devices have been around for eternity. But we're kind of in the early game of this new use in EV applications. So I think it's split across the board. It really depends on that customers' primary strategy. Some are focused on silicon and IGBT, some focused on silicon carbide, there's other other customers that are focused on GaN. So I think we're just seeing across the board, there is a lot of power device demands across bunch of industries but automotive is probably the biggest driver.

Charles Shi -- Needham & Company -- Vice President, Equity Research

Got it. Maybe my last question back to eval, I noticed that your Purion Dragon eval for DRAM and a Purion XE Max eval for image sensor has been a little bit for a while. I wonder whether you can update the progress there, those two obviously very important for expansion in DRAM and the image sensor market. So we'd like to see if you can provide any color on those two.

Mary G. Puma -- President and Chief Executive Officer

As Kevin mentioned earlier, we have five evals in the field, two high currents and three high energys. One is the high current is the Purion Dragon that you mentioned that is being qualified for DRAM application. Now, that customer has already qualified the Purion Dragon for NAND application and it's in production. So we're going through the pace this year. I think as you know evaluations some can close early, some can take a little bit longer. Typically when it takes longer, we're working with the customers to ensure that they have all of the performance that they want and sometimes those steps actually changed from originally what we mutually agreed to and expand. So that Purion Dragon eval it's on track. We're working through it and we're looking forward to having that close and having that tool go into production very shortly. In terms of-- Let me just mention the other Purion H eval that's out there.

It's for advanced logic that's going very well also, and we believe that that is a great opportunity for us to further penetrate the advanced logic market in the future. In terms of the high energy, you mentioned the Purion XE Max, we actually have to Purion XE MAXs in the field, both for image sensor development and both of those are going very well. So there is no delay on that and again we didn't really give out a timeline in terms of when those valuations would close, but I would say that at this point they are both on track. So that's very positive. And then the last eval is a Purion XE silicon carbide system, which is out with the power device manufacturer and that's also proceeding very well. So I think we're on track. And again, I'll say that we're more or less based on each specific customer experience at this point in time.

Charles Shi -- Needham & Company -- Vice President, Equity Research

Thanks, Mary. That's all from me. Thank you.

Douglas A Lawson

Thank you.

Mary G. Puma -- President and Chief Executive Officer

Thank you.

Operator

Thank you. [Operator Instructions]. Our next question comes from David Duley with Steelhead, your line is now open.

David Duley -- Steelhead Securities -- Managing Principal

Yeah, thanks for taking my questions. Just a couple of clarifications. You gave us percentage of systems revenue for both power and CIS. Could you repeat those percentages again.

Mary G. Puma -- President and Chief Executive Officer

Yeah, let me find these. So in terms of shipments for the quarter, we had, we said 91% was mature process technology. We have-- Actually, Doug, did we set out, did we give it out by specific segment? I have it. But I don't remember actually saying that in the script. Dave, I don't think we actually gave it out. I think when we get--

David Duley -- Steelhead Securities -- Managing Principal

I'm almost positive I wrote it down, but [Indecipherable] that revenue is power and 25% of CIS is what I think you said for Q3.

Mary G. Puma -- President and Chief Executive Officer

I said yes, I didn't give a specific number. Yes, that's what we basically estimated that it would be, but we didn't give out the specific breakdown and as Doug said, you're going to get more detailed information on December 9th when we actually do a deep dive into that segment. So, I'm sorry, Dave. You are right, but we didn't give the exact numbers.

David Duley -- Steelhead Securities -- Managing Principal

Okay. And then when you talk about Power and CMOS image sensor being more implant intensive. Can you help me understand exactly what that means, how many implanters for 10,000 wafers or however you can characterize it. What does it mean to be more intensive for those particular applications with implant?

Douglas A Lawson

Yeah. So, the devices that they're building in order to adjust the transistor characteristics and so forth, they require more implants. They require deeper implants and so they tend to have a lot of high energy applications within them. They require fairly significant adjustment implants to get the performance where they want them to be, to get the adjust for the threshold voltages and leakages to enhance the device performance and so forth. So they really optimized types of devices. And so that creates a higher implant intensity. It's hard to break it down specifically to per 10,000 wafer start, per 400,000 wafer start because it's very customer mix and recipe dependent. And so, but they are more implant intensive than most other devices and more so than the memory and definitely more than FinFET transistors and so forth in advanced logic.

David Duley -- Steelhead Securities -- Managing Principal

Okay. And with this record orders and backlog. What should we expect for the first half of next year, given that you're manufacturing slots are full for the first half? What implications does that have for revenue in the first half of next year?

Mary G. Puma -- President and Chief Executive Officer

We're not going to give any guidance or forecast into 2022,that'll be something when-- We will give you some general information, we talked about some new models that are coming out that are implant specific and we'll provide that at our Investor Day and then obviously when we get to the full year call in February, we'll give you more information on 2022.

David Duley -- Steelhead Securities -- Managing Principal

Okay. Thank you.

Douglas A Lawson

Thank you.

Operator

Thank you. Our next question comes from Craig Ellis with B Riley, your line is now open.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Yeah, thanks for taking the follow-up and I wanted to direct it toward the CS&I business. Mary, you mentioned the GSD product that had press release recently. And the question is, is that something that investors should expect would be material to CS&I potential revenues in calendar '22 and on the topic of revenues, $50 million in the third quarter. I think the company said $50 million in the fourth quarter. So is $50 million kind of the new run rate for that business?

Mary G. Puma -- President and Chief Executive Officer

Let me answer the first part about Ovation, then I'll turn it over to Kevin to address the financial part of it. The GSD Ovation is basically available in terms of upgrades to our installed base of legacy tools, namely the high current and the high-energy tools. It provides our customers with a path forward for improved performance on the tools that they already have. It can be ordered as a separate configuration. But I think the main benefits we're going to see is through these upgrades that we have. So it's something that is important, but it's really part of the ongoing investment in innovation that we're making in that aftermarket business and because the mature process technology segment is so strong, and we have such a very large install base there. This is a really good investment for Axcelis to be able to continue to drive growth in that area with our customers.

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Yeah. And Craig, I think there is no doubt that $50 million seems like it's the kind of the new normal because we've been at that level for quite a few quarters now, high 40s into the low 50s. Certainly with all of the buying going out [Indecipherable] consumable business right now, it's been keeping this number elevated. And I think more importantly too our installed base is growing. We've shipped a lot of tools over the last several years and that's beginning to take hold now with this kind of entitlement that goes where they tool shipment. So, what the right number is, I mean it's certainly a lot higher than where it was when we were always seen it was in the mid-there is based on we're running. When we put out our new models on the 9th December at the Investor Day, I'll be more than happy to share our assumptions in those models for CS&I going forward. Craig, so I think if you give me a month I can probably provide a little more color on that, but certainly $50 million at this point is I think a scenario, we're going to stay in and hopefully this continues to grow. And when we brought new models again I can discuss more about them.

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Really helpful color, Mary and Kevin. Look forward to checking in on the night. Thanks.

Mary G. Puma -- President and Chief Executive Officer

Thanks.

Operator

Thank you, this concludes the Q&A portion of the call. I will now turn the call back over to Mary Puma who will make a few closing remarks.

Mary G. Puma -- President and Chief Executive Officer

Thank you, Daniel. I want to thank everyone for joining us today. We hope to talk with you virtually and see you in person in upcoming investor events. In November, we will be participating in the Benchmark Company Technology Virtual Investor Conference and in December, we will participate in person at the CEO Summit in San Francisco and at the D. A Davidson Semicap Laser and Optical Virtual Conference. We will also be hosting a virtual Investor Day on December 9th. We hope to see you there and we want to thank you for your continued support.

Operator

[Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Mary G. Puma -- President and Chief Executive Officer

Kevin Brewer -- Executive Vice President and Chief Financial Officer

Douglas A Lawson

Patrick Ho -- Stifel

Craig A. Ellis -- B Riley -- Director Of Research, Senior Semiconductor and Capital Equipment Analyst

Christian Schwab -- Craig-Hallum Capital Group LLC -- Partner/Senior Research Analyst

Tom Diffely -- D.A. Davidson -- Wall Street Analyst

Charles Shi -- Needham & Company -- Vice President, Equity Research

David Duley -- Steelhead Securities -- Managing Principal

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