MKS Instruments Inc at Cantor Global Technology Conference Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : <_ALACRA_META_ABSTRACT>Thank you both for joining us today. I wanted to kick off with the NAND market today, given the early signs of life here in MKS' leverage to the area. First, how are you thinking about the upgrade cycle through 2025, kind of the key drivers and the magnitude? And then how do we think about that cycle translating to growth for MKS' power business?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. So do you now see maybe growth roughly in line with the market in NAND because I assume that's a NAND comment, not just an overall.

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Perfect. Maybe you could talk about the competitive landscape today for the power products specifically regarding Lam highlighting conductor etch system this Analyst Day and pulsed DC being a primary topic of discussion today.

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. And I think there's a view that in that pulsed DC transition, when and if it happens more meaningfully, it happens on one of the three boxes within the system. So why one of three boxes? Why can't it pull three curves all? And you said you're also working on a product offering here potentially. Where are you with customer conversations there? What's the reception, early feedback, anything like that?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : If there is a move to pulsed DC, and you see one of those boxes upgraded, does that favor your competitor on the other two boxes? Or do they stick with MKS on those other two boxes and then that one can go elsewhere over the ground?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. I guess moving to the optical side. I believe you talked about three primary wins year-to-date. Can you maybe walk us through the timing, magnitude and breadth of these ramps? And then what is it that is primarily driving the wins here for MKS?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. And now one of these wins, I believe, is for an optical system upgrade. That seems like a pretty big deal in terms of solidifying your position as the optical market, given you're kind of newer to this market, newer to playing here and really bolstering the portfolio. So with that said, now that we have these three wins under our belt, we have the upgrade. Is there now a snowball effect in terms of driving new wins, new designs? Or are we still in the proven phase that MKS is a real deal here.

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Is there an opportunity for consolidation there given all these smaller players and to kind of bolster your portfolio to give a greater breadth of offerings?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : And then given these wins that you're now accruing, how do we think about MKS's growth rate maybe versus the litho inspection and metrology markets in '25 and '26 as these wins ramp?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Is there an area within that litho inspection metrology market that you guys are greater levered to today? Or are you providing a solution -- optical solution that can kind of play across all markets?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. Now I guess, looking to broader semis now. Any updates you can offer on customer utilization rates, spare parts, ordering patterns, really anything that helps inform your view on how 2025 dynamics play out for the business?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : And you guys typically talk about underperforming during the downturn and outperforming during an upturn. How should we think about this dynamic as we look at 2025 and the moving parts, if we are in a flat to plus mid-single WFE environment? And then how does that change if we look to 2026 and say there's growth of 15%. And in that world, how do we think about MKS's growth opportunity? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 5:00PM, MKSI.OQ - MKS Instruments Inc at Cantor Global Technology Conference

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. In a plus 15% world, how do you think about the leverage for your growth there? Because I know you give overall through cycle, how you outperformed WFE. But in that upturn, is there typically a rule of thumb we can use?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. And will there be a restocking of inventory at that point as well? Will that help you? Or is inventory kind of at a healthy level right now that there doesn't need to be a restock, anything about that dynamic?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Got it. And now with all the drama and leading-edge foundry logic, how are you thinking about MKS's position within this construct? And what would it potentially mean for MKS if we were to see consolidation of these leading-edge players? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 5:00PM, MKSI.OQ - MKS Instruments Inc at Cantor Global Technology Conference

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. And then you recently touched on advanced ozone applications for gate-all-around as an incremental opportunity for MKS. Within this broader semi bucket, are there any other notable areas that could be incremental to the growth story versus overall WFE spend outside of the power and optical that could drive kind of outperformance?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Alright. So in your electronics and packaging market, about 25% of overall revenues, you saw stronger-than-expected uptick in equipment orders for both drilling and electroplating a couple of quarters ago, I believe, still flowing through the P&L today. Will these be a headwind as they roll off? Or is there even further traction that will kind of rezone some sustainability here moving forward?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Maybe we could just dig a bit deeper to that AI opportunity specific to electronics and packaging. This used to be just substrates to now benefiting more of that MLB and HDI, what changed here? Why are these other markets all of a sudden becoming growth drivers? And has this dynamic impacted your vision for growth for the MLB and HDI market? I think you previously talked about MLB less than 4% and HDI around 5% for the market. Is that vision now changed?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Can that layer growth sustain from here? Or is that kind of a onetime tick up to make these boards appropriate for AI and now we're at a level that I can handle it? Or are we just going to as the AI performance improves, we're just kind of keep seeing higher and higher layers?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. Well, since we're talking about the surface area, maybe it makes sense to talk chemistry for a second since you're winning when you cope that surface area. How do you view the trends today in that market, especially as you have the secular trends plus the market that's kind of not so great. So are you bouncing along the bottom here with kind of seasonal trends in chemistry? Or is there some other dynamic we should be thinking of?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : And as you maybe look towards the equipment orders, which have been doing pretty well, how does that help inform your view on chemistry sales maybe over the next 12, 24 months as that equipment gets put in place, how do you think about the chemistry sales over the next year or two?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Now you've talked about for that laser business here, the interesting back-end opportunity with the HBM win, I think you talked about maintaining momentum there last quarter. So can you talk about traction maybe beyond this initial customer? Is there more opportunity beyond that? And how do you think about just the size of this opportunity over the coming years?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : As you prove to be successful with this laser product in HBM, are you seeing other market opportunities open up where people are coming to you in other advanced packaging areas or anywhere else?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : All right, great. And then maybe last question on this topic. How should we be thinking about the ramps of the MKS ATC synergy wins? And can you offer an update on where we stand today in terms of those wins and new customer traction over the past few months?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Okay. And then moving to specialty industrial quick. Market recently came in a bit worse than expected. I know you shock given the industrial backdrop overall. But maybe you can walk us through the moving parts here. How should we be thinking about the growth potential through the rest of the year? And are there areas of the business where you're perhaps a bit more excited about the opportunities and the other areas which may be greater risk within today's backdrop? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. MARCH 11, 2025 / 5:00PM, MKSI.OQ - MKS Instruments Inc at Cantor Global Technology Conference

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : And how do you think about the growth potential this year kind of within today's backdrop.

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Great. So deleveraging, obviously, remains a key focus of MKS today. How should we be thinking about the debt -- pace of the debt pay-down from here? Kind of what are guardrails we should be thinking about maybe in terms of free cash flow allocation towards this goal or minimum cash balance or even the target interest rate reduction by the end of the year. I think last year you paid down $130 million on the annual reduction in interest rate expense throughout the year. Any help you can give us in deleveraging story?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Alright. And do you still have a targeted minimum cash balance there, so we can think of what portion of excess cash?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Alright. That's helpful. And then Ram, you've been in the CFO seat for nearly five months now. On a company level, any changes to operations, targets or strategies that have been implemented or you're planning on implementing in the not-so-distant future? And just kind of what's your focus over the next 12 months for MKS?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : But we only have a few seconds left, so I want to sneak in one more question here. China. And I know you guys, direct --

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Yeah. Direct exposure at this point is relatively low. So how do you think about your exposure to the region just through the OEMs? How does that track maybe this year, next year? How do you view risk? And then just tariffs? Any comment you can make on how many you're managing the situation today?

Question: Matthew Prisco - Cantor Fitzgerald - Analyst : Wonderful. Well, thank you guys both so much for chatting today.