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01 Feb 2022
Owner of Spectra-Physics and Newport brands about to diversify further with Atotech acquisition.
MKS Instruments, the home of major photonics businesses including Ophir Optronics, Spectra-Physics, Newport, and Electro Scientific Industries (ESI), has posted another record financial quarter, with its “light and motion” unit providing much of the impetus.
At $764 million, sales in the three months ending December 31 were up 16 per cent on the same period in 2020, while the Andover, Massachusetts, company’s operating profit rose 24 per cent, to $182 million.
While it already offers a wide array of industrial technology products - in particular for semiconductor manufacturing - MKS is about to become significantly more diversified, thanks to its impending $5.1 billion acquisition of chemical processing firm Atotech.
Photonics sales up sharply
In the latest quarter, MKS’ “light and motion” business unit posted sales of just under $230 million, up 26 per cent year-on-year. That brought the unit’s annual turnover to $813 million - compared with $690 million in 2020, and $726 million in 2019.
The jump is largely the result of continued strong momentum in semiconductor manufacturing, where demand has intensified since the disruption caused by the initial impact of the Covid-19 pandemic on global supply chains.
Commenting on the latest quarterly results, MKS’ CEO John Lee said: “We delivered record revenue and profitability in 2021, despite unprecedented supply chain constraints and continuous disruptions associated with the pandemic.
“We exited the year on a strong note in our semiconductor market. Demand trends in the fourth quarter were broad-based across our vacuum and photonics portfolios.”
Speaking during an investor conference call discussing the latest update, company CFO Seth Bagshaw added some more detail to the photonics-specific figures, saying:
“Sales of our photonic solutions portfolio grew organically more than 50 per cent year-over-year, and grew 90 per cent year-over-year with our Photon Control acquisition.
“We continue to execute on our strategy to gain share with key lithography, metrology, [and] inspection customers. Our photonics sales to the semiconductor market exited 2021 at well over a $300 million annual run-rate.”
At $81 million in the latest quarter, photonics-related sales into semiconductor applications were nearly double the figure reported for the final quarter of 2020.
Supply chain constraints
Looking ahead, MKS’ executive team anticipates that ongoing supply-chain constraints will mean a steady start to 2022. Total sales are expected to be slightly down on the record-breaking end to 2021, but still up strongly when compared with the opening quarter of last year - not counting any potential contribution from Atotech.
Lee told investors that he still expects that deal to be finalized in the current quarter, saying: “Upon closing, MKS will occupy a unique position as a foundational provider of technology solutions across semiconductors, advanced electronics, and an array of attractive specialty industrial applications.”
CFO Bagshaw added: “We expect advanced electronics applications to be a long-term growth driver for our advanced markets, given the increased need for advanced laser-based manufacturing processes to solve miniaturization in complex electronics. That’s exactly what we experienced in 2021.”
• Following the latest update, MKS Instruments’ stock price dropped in value by around 10 per cent on the Nasdaq initially. However, in what has been a volatile period of trading in technology stocks, the firm has since regained some of those losses.
Trading at just over $150 in early exchanges on February 1, the company commanded a market capitalization of around $8.5 billion.
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