Veeco, a US-based MOCVD equipment manufacturer, recently announced a merger with Axcelis Technologies Inc., an ion implantation equipment manufacturer. The merged entity will become the fourth-largest wafer fabrication equipment supplier in the United States. The transaction has been unanimously approved by the boards of directors of both companies, and a definitive agreement has been signed.
The merged company will adopt a new name and brand image . Specifically, Veeco and Axcelis will merge in an all-stock transaction to become a new semiconductor equipment supplier. Based on the two companies' share prices as of the end of September and their outstanding debt as of the end of June, the combined company has a market capitalization of approximately $4.4 billion. The merged company will further expand its product portfolio and cover more diversified markets with growth potential.
Under the agreement, Veeco shareholders will exchange 0.3575 Axcelis shares for every 1 Veeco share. Upon completion of the transaction, Axcelis shareholders will hold approximately 58% of the shares, and Veeco shareholders will hold approximately 42% (fully diluted). Based on fiscal year 2024, the combined company is projected to achieve revenue of $1.7 billion, a non-GAAP gross margin of 44%, and adjusted EBITDA of $387 million.
The transaction is expected to close in the second half of 2026, subject to shareholder approval, regulatory approval, and other customary closing conditions. Upon completion of the merger, the company will be headquartered in Beverly, Massachusetts, and will adopt a new company name, stock ticker, and brand identity.
The merger promises growth in R&D capabilities, revenue, and business scale.
Veeco primarily provides advanced thin-film process equipment to the semiconductor, compound semiconductor, data storage, and technology markets. Its core product portfolio covers a variety of key technologies, including MOCVD equipment for manufacturing LEDs, power electronics, and photonic devices; laser annealing equipment for advanced semiconductor node manufacturing; and photolithography and wet processing equipment for advanced packaging, MEMS, and RF filter manufacturing. Recently, Veeco released the Lumina+ MOCVD equipment and received orders for mass-producing compound semiconductor products.
In the field of Micro LED, Veeco has developed a 12-inch silicon-based GaN Micro LED deposition equipment. Its Lumina™ equipment meets the requirements of high uniformity, high brightness, low defect rate, and low cost in Micro LED production. At the end of 2024, Neptunus Technology ordered Veeco's Lumina™ equipment to expand its Micro LED production capacity.
In the second quarter of this year, Veeco achieved better-than-expected performance, thanks to increased demand for high-performance computing and AI technologies, as well as record-high revenue from its advanced packaging business.
During the reporting period, Veeco achieved revenue of $166.1 million, a slight decrease year-over-year, but its non-GAAP diluted earnings per share (EPS) reached $0.36, exceeding expectations. In terms of profitability, Veeco achieved non-GAAP net income of $21.5 million, with a gross margin of 43%, exceeding previously issued guidance.
Looking ahead to the third quarter, Veeco expects revenue of $150 million to $170 million, non-GAAP diluted earnings per share of $0.20 to $0.35, and gross margin of 40% to 42%.
Axcelis positions itself as a semiconductor equipment supplier, with its core product being ion implantation equipment (used to precisely implant impurity ions into silicon or compound semiconductor wafers to alter their electrical properties). In the second quarter of this year, despite a cyclical slowdown in the industry, Axcelis' performance exceeded market expectations. During the reporting period, Axcelis achieved revenue of $194.5 million, non-GAAP diluted earnings per share of $1.13, and a non-GAAP gross margin of 45.2%.
Looking ahead, the merged Veeco and Axcelis will jointly focus on high-growth markets such as AI and power devices. Their product portfolio will encompass core technologies including ion implantation, laser annealing, ion beam deposition, advanced packaging solutions, and MOCVD, supported by a global after-sales service network. In terms of R&D capabilities, the merged team and its technological strengths will be further enhanced, expanding the scale of R&D and accelerating the pace of innovation, potentially opening up new opportunities in key regions and markets. The complementary nature of their technologies is expected to generate revenue synergies through cross-product line sales and platform integration.
The two companies expect to achieve annualized cost synergies of approximately $35 million within 24 months of the transaction's completion, with the majority occurring within the first 12 months, and to achieve non-GAAP earnings per share growth in the first year. Notably, Veeco's $230 million convertible bonds maturing in 2029 will be assumed by the merged company. (Text: Janice)
