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MKS optimistic on $200M ransomware recovery

01 Mar 2023

Key supplier to the semiconductor industry expects to recoup vast majority of impacted sales in the second quarter of 2023.

MKS Instruments, the industrial equipment provider that owns major photonics brands including Spectra-Physics lasers, Newport, and ESI among others, has revealed that a recent ransomware attack will hit sales in the opening quarter of 2023 by around $200 million.

However, the Massachusetts-headquartered firm stressed that it expected the vast majority of those sales to be recouped by the end of June, with minimal impact on the year as a whole.

That message appeared to reassure markets, with MKS’s stock price rising around 5 per cent on the Nasdaq following a February 28 investor conference call.

Photonics impacted
Delayed by two weeks as a result of the cyberattack, the conference call began with CEO John Lee recounting the event.

“Of course, the first quarter did not begin the way we expected,” he told investors. “On February 3, we identified that MKS had been the victim of a ransomware incident.

“We took immediate action to contain the incident, which has materially impacted our business systems, as well as the operations of our photonics solutions division and vacuum solutions division - including our ability to process orders, ship products, and provide service to customers.”

Following the incident, the MKS web site was also down for much of February - although it now appears to be back up and running as normal. Lee suggested that the company was now well into the recovery phase and thanked the MKS team, as well as customers and suppliers, for their support during the systems outage.

“While the events of the last month have been an unpleasant distraction, they do not change the MKS story,” added the CEO, pointing to the series of recent acquisitions that have enabled the company to address applications across semiconductor wafer, chip, PCB, and electronics production.

The extent of that technology breadth was highlighted in a recent Bloomberg article linking the ransomware attack to an anticipated revenue shortfall of $250 million in the current quarter at key semiconductor industry provider Applied Materials.

The same article pointed out that MKS also supplies chip makers Intel, Samsung, and TSMC, as well as lithography giant ASML.

2023 sales
As far as the closing quarter of 2022 was concerned, MKS posted better-than-expected sales revenues of $1.09 billion. For the full year the company delivered a net income of $333 million on sales of just over $3.5 billion.

CEO Lee also pointed out that the firm’s photonics solutions business posted record annual sales in 2022, with particular traction in extreme ultraviolet (EUV) lithography applications served by ASML.

Laser drilling systems developed by 2019 acquisition Electro Scientific Industries (ESI) are also in demand, with major orders coming in for the division’s “Geode HDI” platform and Lee highlighting synergies with the more recent and much larger acquisition of chemical processing firm Atotech.

Looking ahead, Lee and MKS’s CFO Seth Bagshaw said that they had prior to the ransomware attack they had pencilled in sales of around $1 billion for the opening quarter of 2023.

That figure will now be “at least” $200 million lower, but with the company’s systems returning to normal the executive team indicated that the vast majority of those revenues will be recouped in the June quarter.

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