MKS Inc. (MKSI) Earnings Call Transcript & Summary

I'm Shane Brett, U.S. Semiconductor Equipment Analyst. Let me just read out the disclosure real quick. For important disclosures, please see the Morgan Stanley research disclosure website at www.morganstanley.com/researchdisclosures. If you have any questions, please reach out to your Morgan Stanley sales representative. Joining me today from MKS are Dr. John Lee and Paretosh Misra from IR. Get started?

Yes.

Okay. I'd like to begin with some longer-term questions. So it's been a few years since your last Analyst Day, and a lot has changed since then. Can you discuss just the direction MKS is headed in. Just as a CEO, what are your top priorities over the next 2 to 3 years?

Yes. Well, I think the direction really hasn't changed. I think at the Analyst Day 4 years ago, we talked about packaging becoming more important and part of the really important ecosystem of enabling advanced electronics. So that's still the case. I think more and more of our investors understand that pattern now. So Semiconductor still remains one of our core markets as does electronics and packaging. So that strategy was the reason we acquired Atotech, the reason we moved into developing advanced packaging. And so between those two markets, we now address 85% of every piece of equipment in every semiconductor fab in the world. So just think about that every fab in the world, 85% of all pieces of equipment have multiple MKS subsystems in them. And then on packaging, we address 80% of all the -- 70% of all the steps to enable packaging with laser drilling via holes, chemistry plating and chemistry equipment. And so those two areas are our growth trajectory and strategies for MKS. So that really hasn't changed. In fact, I would say it's accelerating.

Got it. So I guess, as you kind of focus on semi and E&P over the next few years? You sort of talked about covering 80% to 85% of those respective markets. Is MKS' strength as you approach as markets kind of scale? Is it a specific tool that stands out? Is it R&D? Just can you level set what your strength is when approaching those markets?

Yes. I think the uniqueness of MKS is that we've been able to figure out how to manage a broad portfolio. We have the broadest portfolio, not just in semi, but also in electronics and packaging. And what that broad portfolio gets to you is conversations with customers every day. And what that gets you is understanding inflections and their road maps and how those inflections could affect the products that we make, the critical subsystems, the chemistry, the systems. And when you have that kind of insight, you have a lot more confidence in terms of knowing where to go, making those big bets. And I think having that broad portfolio allows you to make those bets without having to start something brand new. And that's been our strategy for decades in terms of allowing us to outgrow the markets that we are playing in.

Got it. So I guess before we start going into your end markets, so you're talking about these inflections, kind of codeveloping with almost with customers. Just 2 to 3 years out, just what do you think this audience would be most surprised about kind of thinking about MKS?

Yes. I don't know if we were surprised, but I think even some investors today are a little surprised that we're not just a semiconductor critical subsystems company anymore. I think that's been our longest -- the long part of our history. And people are a little surprised now to understand that, well, we're just not just vacuum equipment, critical subsystems, but we're also lithography, metrology inspection equipment as well. And now we have systems. We have entire tools, and now we have chemistry. I think those are the kind of some of the surprising things that will enable us to grow in the future. And I think we are positioned really well from our standpoint in terms of addressing those two markets, semiconductor and electronics and packaging with the broadest portfolio and not just a critical subsystem supplier just by itself anymore.

Got it. It's almost kind of like a broadening of your supplier status.

Exactly.

Got it. Got it. So let's start with semi, conditions are clearly getting better. And I feel like the key question now for you guys is just how strong this cycle could be, but just how much demand you're positioned to me, just what we think about in supply. Can you walk us through just what you're currently seeing on the demand profile and just manufacturing capacity, what you're able to meet?

Yes. I think the industry is very positive about this particular ramp, if you will. I think what's a little different about this particular cycle is that people are much more confident about how much longer it will last? A lot more confidence that it will be multiple years. And when you kind of look at why I think a lot of that is driven by AI. A lot of the uses of AI are making those customers money, right? And so they'll continue to need more chips. I think when you look at MKS' capacity and our ability to meet that, our factories are -- have plenty of capacity. We were prepared for $125 billion WFE 2 years ago with a 30% surge on top of that. We just talked about a Malaysia plant that will have a groundbreaking -- or sorry, a grand opening in the middle of this year, and we'll start putting products into that factory. That's not needed for this particular cycle, we don't think, but it's there in case we do. So we're not really worried about our internal factory capacity at all in terms of meeting this demand, whether last year or 2 years or even longer. I think we're well positioned to meet even larger demand should that arise in the future as well.

So just going back on that $125 billion question. So at this moment, I guess, if you can supply $125 million plus 30% based on just the current capacity you have?

Correct.

And I guess just talking about Malaysia, could you just give us a little bit of color on what the kind of capacity would look like, if there's any kind of benefits around margin, financial margin anything there? And just kind of location efficiencies from closer to customer proximity as well?

Yes. Well, number one, Malaysia is the biggest factor we've ever built in the history of MKS. It's about 500,000 square feet and that allows us the ability to scale that particular region. It is closer to a lot of the supply chain. So it is more efficient. It's close to many of our customers' factories as well. So a little more efficiency there. Certainly, as it comes up, there's always a little headwind to gross margin, just like any big CapEx investment. But as it becomes utilized, of course, that becomes accretive to gross margin, that's our expectation. So I think, again, it's something we planned on 2 years ago, and we decided to do this. This was a business continuity planning for just thinking about 2 to 5 years from now. and we're ready to open it in another 2 quarters.

Is that semi or is there some fungibility with other end markets?

Today, the current plan is semi, but it's a big place. Also the site allows us to build other buildings if we wanted to. And so remember, we're really a final test and assembly kind of manufacturing house. So we can certainly transition to non-semi, if that made sense, or E&P, that matter.

Got it. Got it. So I want to talk about kind of you MKS reflective to the cycle. So were back in 2020, you guys grew semiconductor 49%, and your two biggest customers are up in the mid-20%. Just as we enter this up cycle, just how should we think about your ability to outperform -- just what are the key differences versus 2020 per se?

Yes. Well, typically, where we are in the supply chain, we do outperform. We talk about our long-term outperformance of WFE being WFE CAGR plus 200 basis points. During the ramp, we certainly outperformed to your point, we did 2.5x in 2020, 2021, and we did 3x in 2016, in fact, I would say the only -- the differences between those ramps and now is that there's not as much NAND actually in this particular ramp as expected versus those two. So a little more muted because we do have a great position in NAND. Back in 2016, we didn't really have lithography metrology inspection kind of a different kind of amplitude in terms of the WFE cycle. So we have that now that smooth things out a little bit. And certainly, we didn't have E&P right? And E&P is also growing at -- the reason E&P is growing is because semi is growing. And so that's going to be another area for us to see positive growth as well.

So I guess, just going to clarify, you don't see as much of the NAND tailwind in 2020, but you have other drivers that you've kind of built up over the last few years that maybe would offset that a little bit?

Yes. We expect to outperform WFE during the ramp. No one is designing new things in the ramp. They're ordering things that have been designed in, right? These are all the things we've already worked on with our customers over time. So -- and as I said earlier, we're addressing 85% of WFE. So whether it's logic that's driving the demand or DRAM or NAND, we're going to see most of that.

Got it. And it does feel, given kind of your etch and depth customers have put out a relatively higher WFE target. Those two customers have historically been your biggest customers that does bode well for MKS.

That's right. They put in some numbers in that 20% range, right? And of course, we're in direct contact -- constant contact with them in Q4 as well as Q1. And we understand their needs. We understand their motivations, they want to prepare to be able to meet their customer needs. They also want to prepare for the ramp. And everybody's thinking this ramp might last a lot longer than a few quarters. And so we kind of all have to run through the tape at the end of 2026. We can't be slowing down. We might have to be accelerating. And so building up inventory, we'll have to build up inventory, they'll have to build up inventory, just to be able to make sure that we can run through the tape at end of 2026 into 2027.

So you're keeping very busy.

We're very busy. We are totally focused on our supply chain for sure, because we need them. We think that our supply chain is stronger now than it was the last cycle. You learned things, you make different changes. We went to some bigger suppliers. We went to multiple suppliers. We also even took inventory, obviously, in certain components. So we're better prepared now, and we'll see how that works out. But I think our ability to deliver and not disappoint our customers in every ramp. We expect to do that as well.

I guess you called out litho, metrology is something that's probably different to your position this cycle. But kind of based on those customer wins over the last 2, 3 years, just are there any specific technology wins or strategic investments that you made, that should kind of meaningfully contribute to growth and share gains over the next 1 to 2 years?

Yes. I think our power, if NAND takes off, will be icing on the cake. I think litho, metrology inspection also will grow because we've actually made those investments over the last 5 years. A lot of our peers talk about this design win, that design win, the number of design wins there. We have exactly the same kind of pattern except we have 20 product categories with design wins that might be an extra $5 million or an extra $15 million. But when you add it all up, it's really a much larger number. So we do have this broad portfolio. As I said, again, this allows us to talk to all our customers all the time. about what they need. So I think overall, all of our products are continuing to be that #1 or #2 in their position in their particular product category.

Before moving to E&P, I feel a big thing that's happened with MKS over the last 4 years is you've had demand come intra-quarter. Just given how much demand has strengthened through the quarter. Just at what point does it become tricky to kind of meet that demand surge late in the quarter? What are you asking in terms of visibility from these customers right now?

Yes. I think in the last couple of quarters in '25, we did exceed expectations within the quarter because lead times are short 4 weeks to 12 weeks, and we can turn things within the quarter if new demand came in within the quarter. I think right now, we have great visibility with our customers. They have given us targets to meet for the next several quarters. So we know what our goal is, what our bogey is, and we're preparing that supply chain for that. So I think that's -- we'll still be shipping quickly as much as we can every quarter. And I think our guidance showed a little bit up, semi, for sure, quarter-on-quarter. But as we've talked about, when semi ramps, it can really take off quickly.

Got it. Got it. I'd like to turn to E&P next. I want to kind of break this discussion into tools, which is roughly 1/3 of the segment and then chemistries, which is kind of the remaining 2/3. Let's start with the tools portion first. Can you just kind of level set the audience on what is this tools business consist of? What's the growth drivers? What's kind of demand outlook you're seeing?

Yes. So in E&P, our electronics and packaging market, as you said, tools, equipment is about 1/3 of that market. It's made of two components. One is flexible laser drilling of flexible circuits. And that is driven by a lot of things like smartphones or wearables, things like that, a lot of things that need flexible circuits. And that's our ESI business, if you will. That's seen 2 years of normalized up cycle. It's a consumer product cycle. So Q1, Q2 are the big quarters, and then it tails off through the year. So we've seen that. That's part of that equipment for E&P. The second part is chemistry equipment. And that's what we talked about being at record levels today. We talked about it being at record levels of '25. We talked about full for the first half of '26. The incremental thing we talked about in the earnings call was we've continued to have another 90 days of constructive discussions and bookings with those customers. And so you can do that math. And that continues. And so that equipment for chemistry is really installed base that then follows through with the chemistry, our chemistry which has a very high attach rate.

If you like throughout the course of 2025, we kept discussing the durability of chemistry tool growth, and it kept sort of surprising to the upside. But just can you approximate that sort of mix within that total business. Is there any kind of hints you can give the audience and how much of that might be sort of more chemistry related versus sort of flex drilling related.

Yes. I would say on the chemistry equipment side, it's driven by AI customers as well as a China Plus One customer base. I would say that we are at kind of that $200 million a year run rate. And to your point, we kind of -- it's a CapEx industry, so it always has cycles. We were thinking, when is this going to go into the downturn and surprisingly, it's continued to stay at this high level. So we're not constraining our customers today. But we certainly have enough capacity should the volume pick up. And I think $200 million of equipment going in every year, would be really great eventually for that chemistry revenue to can follow with.

I want to talk about that attach rate in a second. Just before we go to that, just -- how are you thinking about the demand outlook for these customers? You kind of said it's just kept getting better than your expectations throughout 2025. If you had to have sort of kind of an outlook for '26 and '27, it's okay, I don't have one as well, but like what would you kind of say towards that outlook?

Yes, I would say this. As I said, constructive discussions for another 90 days. 90 days from now, we'll update you in the next quarter. If that continues, then it will be 2 full years, right, of kind of record level chemistry equipment. So it's hard to predict after that, but it's certainly a CapEx industry. So it will have a cycle to it. This one is quite long, longer than it's ever been. And maybe that's a important of the fact that everybody kind of expects this current WFE cycle. Lasts a lot longer than maybe we have confidence in the past. So right now, we're just working hard to meet the demand. And we'll see quarter-on-quarter, if that continues.

Got it. Got it. I want to switch over to the chemistry portion because when I think about your chemistry business, the consumer electronics exposure, which may not be that great, you have an AI exposure business where things are getting great, but you also have the attach rate from just a better more on installed base. Just can you level set us on just kind of that chemistry mix per se? Well, part of it might be AI part of it might be consumer electronics.

Yes. I would say this, as we talked about in the past, the PCB industry, we look at it as 1/3, 1/3, 1/3. 1/3 is multilayer boards. 1/3 is HDI boards. And 1/3 is substrate board. So increasing complexity. But kind of 1/3 of the revenue is in these three subsegments. I would say we talked about the percentage of chemistry revenue that's AI related. In 2024, that was 5% of our chemistry revenue. In 2025, it was 10%. So it doubled. And then I think in our earnings call, we talked about in '25, 10% was the average. But quarter-on-quarter and quarter-on-quarter, it was increasing. So we expect that run rate to continue through 2026. And then the PCs and the smartphones does have that consumer product cycle. The lowest chemistry revenue is in Q1 because of the Lunar New Year. And then Q2 picks up and Q3 picks up and then Q4 back down again. Those are large markets as well. PCs and smartphones. So that's still a strong, healthy component of our revenue.

Got it. So can you give us a little bit of clarity on where your kind of chemistries play a part in the AI supply chain doubling is pretty good growth. But just kind of what are you seeing there? Where are you playing part in?

Yes. I think those three subsegments of the PCB market, it turns out we were a little surprised. We thought it was always the high end, this package substrate that was going to be driven by AI. And that's true. So a lot of the chemistry revenue goes to that. But it turns out that a lot of the substrates have been put on to HDI layers, which have to be put onto MLB layers. And so those are also driving the equipment revenue, but also the chemistry revenue. So chemistry is actually being driven at all three subsegments of the PCB industry by AI. Equipment for us is really about the HDI level and the MLB level.

Got it. Got it. And as we think about sort of -- so you have a bit of a consumer electronics headwind, you have an AI tailwind, but you have a tailwind on the chemistry tool attach rate as well. I know we've spoken about kind of for every $100 million of tool purchases, you get sort of a $20 million to $40 million attach rate. Just could you kind of level set the audience on what that kind of $20 million to $40 million tails what do we need to get to the $40 million versus $20 million?

Yes. I think -- so number one, there's the lead time for it, right? So we get the order. It takes us 6 to 12 months to build a tool depending on the size of it. And then we install it, they have to qualify it test revenue. So just the new chemistry. So we are already starting to see some revenue come from those tools installed that we talked about in the last 1.5 years. But most of the chemistry revenue is coming from tools that were installed 3 years ago. For every $100 million of equipment, you're right, we can get $20 million to $40 million of annualized chemistry revenue forever, basically. And whether it's $20 million or $40million, it depends on the process, it depends on the size of the tool. And so that's really where the range occurs. And so that $20 million to $40 million, though, is that much higher gross margin, right? Our chemistry revenue gross margin is in that high 50s range. and the attach rate is extremely high in the beginning and stays at 85% even after the long term.

Got it. Got it. And I want to talk a little bit about kind of sequencing the year for chemistry because the attach rate is great, but I do want to talk about the consumer electronics weakness that we might see in the second half. So just for this kind of first half, you have the Lunar New Year weakness in Q1, you kind of -- hopefully, that reverses in Q2. Just how are -- are there any discussions around just a possibility of a consumer electronics tailwind? Just where is your kind of mind at in terms of that front?

Yes. I think for consumer products, there are a couple of things that are a little bit of a tailwind. I think the smartphone market this cycle is a little healthier than it has been in the last year or 2. And I think there's some exciting new form factors coming up in the next cycle, this fall or early next year. So I think those are good for chemistry for flex PCB drilling. And then, of course, everybody is talking about could there be headwinds because memory is too expensive, et cetera. And as I said in the earnings call, if it does lower handsets and PCs by low single double digits, low single digits, then I think the AI revenue will more than make up for that.

Got it. Got it. But maybe not as well if it was down more than low single digits?

Yes. I think we hear some reports that have really large numbers, which are quite hard to believe, right? I would just say this, there's a lot of demand for smartphones and PCs. And yes, they can go down a little bit. But if they were going down that much, they will be a lot more demand and people would figure out a way to get those PCs and those smartphones into the hands of the consumers. If there is a little degradation in supply, then it just pushes out that demand maybe into the next year, which is not necessarily a bad thing.

Got it. And just before I go to financial questions, so I want to talk about kind of 2 to 3 years ahead, what and MKS might surprise on the E&P front for the audience. So I guess for 2025 was the strength of this tooling business. Just anything two to three [indiscernible] where there might be an inflection or just kind of the strength of demand, the attach rate, what do you think people will be surprised about regarding your E&P business?

Yes. Well, I think one of the things that, hopefully, happens when we execute on our strategy is that the idea of being able to serve with a complete portfolio of solutions should allow us to be more important to our customers and should allow us, therefore, to gain share. So I think part of the strategy that we have is we're going to address 70% of E&P and 85% of WFE. And if we can do that, we will be able to provide solutions faster to our customers and therefore, gain share. We have laser drilling as well, right? And so I think in E&P, that's an amazingly exciting area. I think what's new for some of our investors is that when we talked about buying Atotech 2021, and we said packaging matters, I think a lot of people really just didn't understand that, especially a lot of our customers -- or investors were semi-oriented I think people are starting to understand that now. A lot of more of the questions are on E&P. People are understanding that market better. We have talked about E&P potentially. It is already as important as semi. It's coming from a semi guys is a big statement, right? So E&P, if it was not for the ability of the industry to put 40 layers together or 60 layers below those chips, you wouldn't need as many chips for AI, just one. So it is already as important as making those chips better. And so I think that's hopefully going to be the strategy that we demonstrate to the investors over the next few years.

I don't want to put you on the spot, but E&P grew more than semi in 2025. So if I look at E&P and semi, you're allowed to say both, but which should we be more excited for?

Yes. Both. Now I would say this, semi was relatively muted for us in '24 and '25. So even though we outgrew semi in '25, it was by 4%, 3%. That's nothing compared to what we talked about earlier, where it's 2x potentially, right, during that ramp. And so that's the expectation in '26. We should see that kind of normal historical overperformance during the beginning of a ramp. That shouldn't be a surprise. But then having E&P continue to grow because that's more of a consumable revenue stream, that's going to be exciting as well. That will demonstrate that people are utilizing the tools out there. And then when our tools come online with chemistry, even better for us from a market share standpoint.

Got it. I'll ask two questions on financials, and then I'll pass it to the audience for questions. But you have a little bit of a delimiting gross margin because you have better tool sales, that's a little bit lower gross margin than the chemistries. And you also have the impact of palladium costs. Just could you kind of level set the audience on where your gross margins are now why they're maybe a little bit lower than last year and where you kind of see gross margin progressing for the year?

Yes, I'll ask Paretosh to talk about that.

Yes. So Shane, I mean you know that our gross margins even last year were pretty good if you exclude the tariffs. And as you look ahead for Q1, when you look at our outlook, I mean the basic moving drivers are the same, the volume and the mix. In Q1, we have the Lunar New Year, that impacts the E&P business because of the chemistry. But keep in mind, even the specialty industrial as chemistry, so it back to two places. And then as you pointed out, palladium, which is a pass-through, so no impact to our gross profit but it does create some dilution. So we can't predict palladium, but we -- what we have in Q1 is what the prices have done in the last 3 to 6 months. So that's an adverse impact. So as you look into these moving parts, you can -- that gives you a clear path forward as to what the gross margins will be and you look into Q2, Q3, Q4.

So I guess just on the clarification of the palladium point is -- that's the biggest input cost for the E&P chemistries, you passed it on for revenue but not gross profit. So it kind of weighs on the gross margin line a little bit.

Exactly.

And then on the kind of seasonal for the year, I guess, just given the utilization on the chemistry front, Q1 just looks a little bit lighter for gross margin.

Yes.

Okay. And then last one before I open it up. So at your 2022 Analyst Day, you outlined a 26% operating margin target. In 2024, it might have seemed like a little bit of a distant target, but just given the industry tailwinds that we're seeing, it may seem a little bit more realistic just where you guys are on operating margin? What should we expect for the year?

Yes. I mean, look, high volumes or higher revenue, make a lot of these targets a lot easier. What we have said for Q1 and for the rest of the year. But for the Q1, we have given you specific OpEx guidance. And for the rest of the year, what we have said is that OpEx will grow less than revenue. So the OpEx percentage sales was, what, 26% last year and Q1 is also at around that level. So that gives you a good base level. and then you can build it from there.

Got it. I'd like to open it up to the audience. If anyone has got any questions? If not -- Stephen?

When it comes to the E&P equipment side of the business, right? Is there any reason that, that piece for us should undergrow substrate and CapEx. Because I think if we look at substrate and PCB CapEx plans going forward, right, the Asia guys are extremely aggressive when it comes to this CapEx ramp, right? So, I mean, if hypothetically, their CapEx is all up 30% year-on-year into '26 or '27, is there any reason that, that portion for us weren't grow the same sort of magnitude?

Yes, thanks for the question. I think one bit of clarification just so the audience understands, the equipment we are shipping is we said for HDI and MLB because it's a horizontal piece of equipment. For substrates, it's vertical. So we don't do the vertical equipment. So there, we just compete for chemistry. But in general, if you're going to increase your CapEx, our customers are going to increase their CapEx for PCBs for AI they have to increase the vertical, horizontal and the horizontal for [ HDI ] and horizontal for [ MLB ]. So in general, we shouldn't see any kind of difference. We do have leading market share in those horizontal tools. And so -- as well as the chemistry. So I think, as you know, we have the top 30 PCB substrate customers as our customers. So we are certainly intimately involved with all the discussions that they have with CapEx, we see that they are aggressive for sure. So if they have those kinds of numbers, we should see our fair share is how would characterize it.

I want to follow up on that. So as we go to higher layer counts, how does that intensity differ between the vertical and the horizontal?

So every layer is made one at a time. So that's important. So that's important because in [ MLB ], those layers are increasing the fastest. [ HDI ], the next and then substrates not increasing but not as fast. So if you're going to increase MLB layers the fastest, you need more equipment. And then HDI and then substrates. So I think in that sense, you probably need even more equipment for MLB and HDI than you might need for substrate.

Got it. But just between kind of like the horizontal tooling versus, I guess, the vertical laser drilling?

So the vertical chemistry tools, those are for substrates, but the horizontal are for HDI and MLB. So those are the tools we're making. And those HDI and MLB are the layers growing the fastest. The number of layers are growing the fastest versus substrates. All are growing, and MLB the fastest HDI next and substrate next.

Got it. Any other questions? Great. Just going back to the E&P front. Just can you kind of level set the audience on what your lead times are for these tools because you've kept talking about kind of orders strengthening throughout last year. like what your current capacity is sort of the questions that we asked on the semi front and capacity, but kind of plugged in E&P?

Yes. So we're kind of running at a $200 million a year run rate. that capacity consumes the major factor we have, which is in China. We've done a little expansion there. We have not built a new building there because we have an entirely larger independent site in Germany. And that site is already taking some of the overflow. So we have plenty of capacity to do both. So now longer term, as we look at strategic planning for the company 3 to 5 years out, if we think equipment is going to continue to grow because it's more critical, then of course, we might start thinking about capacity then, but we have plenty of capacity right now.

Got it. So enough capacity to meet stronger demand signals that your customers are giving.

Yes.

I think it's on that $200 million, just how long do these tools take to install? And when should we start thinking about that $20 million to $40 million attach rate, like when does that start kicking into the numbers?

Yes. So as I said, we get an order and then it takes us 6 to 9 months to build the thing. During that time, we actually recognized some revenue because we can because we already have prepayments. So as we're building it. So that's kind of a little subtlety, but it's important to note. So the first, let's call it, 9 months, we still have the tool. We haven't shipped it, but we're recognizing revenue. So then we ship it, installation could take 6 months. and then commissioning. And then they're testing a particular process for their customers. And if they get qualified, they can run. So you could add another 6 months, you could add another 12 months, right, depending on that customer. So that's what we say 18 to 24 months from the first recognition of revenue, you should start seeing some of that revenue from that piece of equipment. And then it's just a matter of when does that become fully utilized? When it's fully utilized, that's a $20 million or $40 million number that we're talking about.

So I guess for the strong tool shipments that you had in 2025, we probably shouldn't factor that $20 million to $40 million this year. But maybe start trickling that in for '27?

I think that's fair. I think we were seeing some of it already, but these are like pilot line chemistries. So it's not really that $20 million, $40 million, but I think that would be a fair way to look at it. The chemistry revenue, we expect to grow this year. we grew last year. That's on equipment we installed in 2022, 2021.

Got it. Just last question for me. Anything that you think that investors misunderstand about MKSI, anything that you think you're probably a little bit more excited about than kind of this audience on MKSI and then we can wrap that.

Yes. I would say that the uniqueness of MKS is the fact that we're the only company that is addressing semi and packaging of semi right? There's no one else doing that. A lot of our peers and even our customers who talk about in semi, who talk about packaging, they're talking about CoWoS. That's the one or two layers of the redistribution layer. We're talking about the 50 layers below, PCBs. That's what we talk about when we talk about packaging. And as I said, there's no other company who's leverage in both of these. And the most important point is that you need both of them equally to enable today's advanced electronics like AI.

Great. Well, we'll call it a day there. Thank you, John. Thank you, Paretosh.

Thanks, Shane. Okay. Thanks, everybody.