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17 Feb 2025
Proliferation of AI-related semiconductor production aiding the diversified equipment firm but industrial sector remains weak.
MKS Instruments, the Massachusetts-based industrial technology company that owns major photonics brands in the form of Newport, Ophir, and Spectra-Physics, has posted annual sales of $3.6 billion, down very slightly on the figure for 2023.
CEO John Lee, who highlighted the huge significance of the market for AI chip packaging to MKS’s photonics portfolio in a presentation at last month’s SPIE Global Business Forum, told an investor conference call discussing the latest results:
“We enter 2025 in a strong position, highlighted by increasing customer engagement with our world-class optics solutions, as well as solid trends in our chemistry business as we demonstrate the pivotal role we play in advanced electronics.”
Cost management
For the closing quarter of 2024 sales of $935 million were up 5 per cent from $893 million in the prior year, with solid growth in the company’s “semiconductor” and “electronics and packaging” divisions offset by a decline for the “specialty industrial” unit.
The sales figures of all three of those divisions relate to a variety of technologies, with optics and lasers featuring widely in subsystems for lithography and metrology tools, and laser drilling systems capable of producing thousands of via holes every second in circuit boards.
Other MKS products include power meters and infrared optics for high-power industrial lasers, a sector described by Lee as “bouncing along the bottom”.
Despite the flat sales performance over the past year MKS was able to post a pre-tax income of $180 million for 2024, a dramatic improvement on the loss of nearly $2 billion in the prior year - although that latter figure was largely due to a $1.9 billion asset write-down relating to its acquisition of industrial chemistry firm Atotech.
For the December 2024 quarter, the firm’s pre-tax income of $79 million mirrored a pre-tax loss of exactly the same figure a year ago, neatly highlighting how Lee and his team have focused on managing costs and cash generation in recent months.
Product launches at Photonics West
Central to that effort have been a series of refinancing efforts that have seen MKS take advantage of lower interest rates and make some early debt repayments.
The company’s latest income statement shows the positive impact of those decisions, with interest repayments of “only” $54 million in the December 2024 quarter, down from $90 million a year earlier.
Looking ahead, Lee and his executive team expect sales of around $910 million for the opening quarter of 2025, impacted slightly by the lunar new year, and also taking account of recent US import tariffs that are so far expected to have only a minimal impact on business.
“Our broad and deep technology portfolio serving an array of semiconductor, electronics and industrial applications enables us to address key demand opportunities as broader end market recovery begins to develop,” added the CEO.
Lee also pointed out that while cost management had been the focus in 2024 MKS had continued investing in new technologies, as evidenced at the recent SPIE Photonics West technology exhibition.
Product launches at the event in San Francisco included new industrial ultrafast lasers aimed at semiconductor production, freeform mirrors and tunable sources from Newport, and water-cooled power meters from Ophir compatible with laser outputs of up to 150 kilowatts - a level compatible with emerging applications in laser weapons.
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