Axcelis Technologies Inc

NASDAQ:ACLS

Earnings Call Transcript 2021-Q2

[Operator]

Good day, ladies and gentlemen, and welcome to the Axcelis Technologies call to discuss the company's results for the second quarter 2021. My name is Mary, and I will be your coordinator for today. [Operator Instructions]

As a reminder -- I would now like to turn the presentation over to your host for today's call, Mary Puma, President and CEO of Axcelis Technologies. Please proceed, ma'am.

[Mary Puma, executive]

Thank you, Mary. With me today is Kevin Brewer, Executive President and CFO; and Doug Lawson, Executive Vice President of Corporate Marketing and Strategy. We are all participating in this call remotely, so I would like to apologize in advance for any technical difficulties.

If you have not seen copy of our press release issued last night, it is available on our website. Playback service will also be available on our website as described in our press release.

Please note that comments made today about our expectations for future revenues, profits and other results are forward-looking statements under the SEC's safe harbor provision. These forward-looking these statements are based on management's current expectations and are subject to the risks inherent in our business. These risks are described in detail in our Form 10-K annual report and other SEC filings, which we urge you to review.

Our actual results may differ materially from our current expectations. We do not assume any obligation to update these forward-looking statements.

Good morning, and thank you for joining us. Axcelis posted another strong quarter. This resulted from overall strength in the semiconductor industry, as well as growing momentum in the Purion product line, notably from the Purion Power series. Revenue for the second quarter was $147.3 million with earnings per share of $0.55, driven by strong gross margin of 43.5%.

Quarterly system sales surpassed $100 million for the first time since 2004. CS&I, our aftermarket business, continued to provide a significant contribution to our top line and gross margin, with Q2 revenue of $47.1 million.

In the second quarter, 70% of shipments went to mature foundry/logic customers and 30% to memory customers, with an even split between DRAM and NAND. We believe the mature process technology segment will account for greater than 70% of system revenue for the full year 2021.

The geographic mix of our system shipments in the second quarter was China, 58%; Korea, 18%; Europe, 12%; Taiwan, 3%; and the rest of the world, 9%.

Turning to third quarter guidance. We expect revenue of approximately $170 million, gross margins of approximately 42.5%, operating profit of approximately $32 million and earnings per share of approximately $0.70. We now expect Q4 revenue to be above Q3 guidance, allowing us to exceed $625 million in revenue for the full year 2021.

This is driven by the rapid growth of the mature process technology segment and the early stages of the memory capacity build. We expect both markets to remain strong well into 2022, and we are currently booking systems into Q2 of next year.

Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including supply chain shortages, high-fab utilization across all segments causing significant new fab investment, government incentive programs creating geographic expansion opportunities for our customers and the fundamental underlying drivers that started this growth cycle of 5g, data analytics and AI.

As a result, we believe that the implant TAM has increased significantly. In addition, the rapid acceleration of the electrification of the automotive industry is driving substantial demand for power devices and image sensors. This is not related to the shortage of general-purpose mature devices like MPUs for automotive. It is driven by the 10- to 15-year strategic road maps of all automotive manufacturers and their suppliers.

These markets are generating sustainable growth, with Purion product extensions in high current, medium current and high energy, designed to serve the power device and image sensor market. We've invested significantly in both of these markets over the last several years. As a result, we expect Power to make up approximately 30% of our systems revenue in 2021, with continued growth driven by the Purion product extensions specifically developed for this market.

Our growth in this area is clear and sustainable. And most importantly, it is tied to a long-term trend beyond any increases driven by supply chain shortages.

Looking at the memory market, we maintain a strong and growing position. We expect 2022 to be a good year for capacity additions in this segment and are already seeing bookings for shipments later this year and into next year. We continue to see a high degree of activity in both advanced logic, where we have a Purion H evaluation underway and in the Japanese market, especially related to power device manufacturing.

The market in China continues to be one of our strongest. This market includes a large number of both domestic and international customers in both the mature and memory market. We currently have licenses for all planned SMI shipments in Q3 and continue to receive licenses for future shipments.

Evaluations are key to developing new customers, increasing footprint at existing customers and penetrating new segments. We currently have 6 Purion evaluation tools in the field focused on supporting future growth. These include 1 Purion Dragon, 1 Purion H200, 2 Purion Hs and 2 Purion XEmaxes, which are positioned across key target segments, including advanced logic, NAND, DRAM, image sensor and power devices. We expect 4 of these systems to close this year.

We are also planning to ship 1 to 2 additional evaluations in 2021. Given that our current guidance is at the quarterly run rate for the $650 million revenue model, much sooner than previously anticipated, we are developing implant-driven revenue model beyond $650 million that we will publish by the end of this year.

As we mentioned last quarter, we are also putting in place offshore manufacturing capacity to support this growth. Kevin will provide additional details on this project as part of his financial review of the quarter. Kevin?

[Kevin Brewer, executive]

Thank you, Mary, and good morning. Axcelis delivered solid Q2 financial results driven by strong gross margin performance and continued revenue growth. Based on our third quarter guidance and current review of the fourth quarter, we now expect to exceed $625 million in revenue for 2021. At the current run rate, we are seeing significant leverage in our business model and expect full year operating expenses to be around 24% of revenue. The gross margin is expected to finish slightly above 42%.

Ongoing gross margin improvement will continue to be driven by the timing of cost-out initiatives and mix assumptions that include a higher number of Purion product line extensions. Full year gross margin assumptions include higher pandemic and supply chain-related costs and the impact of our investment in additional manufacturing capacity. Based on the strength of the market and demand for our Purion products, we're developing new financial models that we plan to share later in the year that should take us well beyond our current $650 million model.

On our last call, I mentioned plans to add manufacturing capabilities closer to customers with a goal of increasing customer satisfaction and capacity. We are well underway with those plans and expect to have a new Axcelis manufacturing facility in South Korea by the end of this year. We currently have sufficient capacity in place to support our near-term demand and expect the Korea factory to play an important role in supporting future manufacturing requirements.

Now turning to our second quarter financial results. Q2 revenue finished at $147.3 million compared to $132.8 million in Q1. Q2 system sales were $100.1 million compared to $81 million in Q1. This is the first time since 2004 that we exceeded $100 million in quarterly system sales.

Q2 CS&I revenue finished at $47.1 million compared to $51.8 million in Q1. CS&I revenue remains strong driven by high fab utilization, the growing Purion installed base, system upgrades and customers purchasing safety stock. We expect Q3 CS&I revenue of approximately $47 million.

Q2 sales to our top 10 customers account for 75.1% of our total sales compared to 79.8% in Q1. 2 customers were at or above 10% in Q2 compared to 1 in Q1. Q2 system bookings were $172.1 million compared to $148.4 million in Q1, with a Q2 book-to-bill ratio of 1.71 versus 1.92 in Q1. We are currently booking into the second quarter of next year.

Backlog in Q2, including deferred revenue, finished at $271.2 million, a new record for Axcelis compared to our prior record of $186.5 million in Q1. Q2 combined SG&A and R&D spending was $40 million or 27.2% of revenue compared to $36.1 million or 27.2% in Q1. SG&A in the quarter was $23.4 million, with R&D of $16.6 million. We expect Q3 combined SG&A and R&D spending to be approximately $40 million or 23% of revenue, highlighting the significant leverage in our business model.

Q2 gross margin was 43.5% and well above guidance, driven by strength in CS&I, increased Purion Power series shipments and continued cost-out activity. We're guiding Q3 gross margin to be approximately 42.5%, driven by product mix and the expected closure of one evaluation system. We expect full year gross margin will be slightly above 42%, including the closure of 4 additional evaluation tools.

Operating profit in Q2 finished at $24 million compared to $20.3 million in Q1. We're guiding Q3 operating profit of approximately $32 million. Q2 net income was $18.9 million or $0.55 per compared to $16.5 million or $0.48 per share in Q1. We're guiding Q3 earnings per share of approximately $0.70. Q2 cash finished at $220.5 million compared to $207.5 million in Q1.

In the quarter, we generated $30.8 million in cash from operations and settled share repurchases of $13.4 million. Q2 receivables were $79.5 million compared to $75.9 million in Q1. Q2 inventory ended at $192.3 million compared to $174.4 million in Q1. Q2 inventory turns, excluding ship evaluation tools, finished at 20%, the same as in Q1. Q2 accounts payable were $40.7 million compared to $40.5 million in Q1.

I would like to thank all of our employees and suppliers for their continued efforts and outstanding execution, supporting our steep business ramp during the ongoing pandemic. It is an exciting time for Axcelis, with unprecedented growth in the industry and solid customer demand for our products. Our balance sheet is strong, and we have the financial strength of investment products, infrastructure and our employees. We've also returned over $50 million of capital to shareholders since the start of our share repurchase programs and have $75 million remaining authorization under the current program at the end of Q2.

Thank you. And I'll now turn the call back to Mary for the closing comments.

[Mary Puma, executive]

Thank you, Kevin. Axcelis is currently positioned for strong, sustainable growth. The strength of the industry is a positive for all semiconductor capital equipment suppliers, but Axcelis is uniquely positioned to benefit significantly from the long-term electrification of the automotive market through the strength and established base of our Purion products, in particular, the Purion Power series implanter family and high energy products for image sensors, like the Purion VXE and Purion XEmax.

These implementers provide significant and enabling capability to our customers and result in better margin profiles for Axcelis. We will continue to partner closely with our customers across all geographies in this growth segment.

Axcelis has the financial means to invest in R&D, global support infrastructure and capacity to capitalize on all of the opportunities discussed in today's call. We are in the middle of one of the most exciting times in the history of the industry and are confident that we have in place the ingredients to maintain our leadership position in ion implantation.

With that, I'd like to open it up for questions.

[Operator]

[Operator Instructions] Your first question comes from the line of Patrick Ho from Stifel.

[Patrick Ho, analyst]

Congratulations on a really nice quarter and outlook. Maybe first off for Kevin in terms of the supply chain and how you manage -- given your results and the strong outlook, obviously, it looks like you manage them very well, and it looks like it's not having an impact on you guys. Can you discuss qualitatively what steps you've taken [ in addition to ] that inventory [indiscernible], that's coming over the next few quarters. What are some of the steps you've taken to kind of mitigate the situation given that the higher ecosystem is taking challenges today?

[Kevin Brewer, executive]

Yes. Thank you, Patrick. It's a good question because, certainly, there is a lot of pressure out there, and we're seeing it certainly in a lot of peer earnings. But we've been dealing with supply chain disruption really, since the start of the pandemic. What was pandemic related moved more to just a steep ramp. Many of those problems are still out there, and we're seeing it as well as others.

But I think probably what helped us, certainly, early on, we tried to stay ahead of it. We took a hard look at our supply chain. We started moving some of the commodity level things. So we put additional material, some new suppliers. We really wanted the MRP aggressively and opened up the lead time offsets to drive more material ahead of schedule.

And the other area that we focused on with engineering was making sure we kept ahead of any potential obsolescence that may be coming and took a look at long lead items. So I'm not going to tell you it's easy, but we've been managing it. We took people out of manufacturing from the manufacturing engineering ranks and put them looking at suppliers and working with suppliers.

So it's a continuing challenge, logistics, freight. All this stuff is adding cost. But our gross margins, we're still on track to our margin improvement plans that we have, and we're capturing some of that through the volume.

So I think that, Patrick, it's probably what we do with the MRP and moving some of that material early on that's helped us. And so far, we've been able to keep ahead of it with meeting demand.

[Patrick Ho, analyst]

Great. That's helpful. And maybe as my follow-up question also, kind of the [indiscernible] to the gross margin. You've done a really good job there from -- always has a lot of moving pieces. Some of the evaluation [indiscernible], typically, they tend to have lower margins, but you're still on target for your long-term gross margin models of over 42% and even close to 43%, as you get to $650 million in your revenue. What are some of the steps there to, I guess, mitigate the evaluation units and [ squeezing ] your gross margins within that long-term target model rate?

[Kevin Brewer, executive]

Yes. Well, the obvious one is we're continuing to focus on the cost-out activity. We've got numerous value engineering programs ongoing. The other thing, Patrick, is going to help to a lot of these evals replacing around our product extensions, and those are higher gross margin tools. So as we flip some of these evaluation tools and start getting into some follow-on business, that will also help.

So it's really going to be continuing to hammer away at cost out and get these extensions into the field. Those are things we're focused on. And we're taking -- obviously, taking advantage of the volume right now. As I mentioned, there are some other things pressuring as well. But the net of it all is we're still continuing in a positive direction. So we're just going to keep focusing on those things that I mentioned.

[Operator]

Your next question comes from the line of Craig Ellis from B. Riley Securities.

[Craig Ellis, analyst]

I'll echo the congratulations on the very robust execution, especially on the fulfillment side in the current environment. Mary, I wanted to go back and follow up on that comments that you made about booking business into the second quarter of '22 and to see if you can help us with some color on what you're seeing as things work out that far relative to maybe the mix of business, mature foundry versus memory. Does it look similar to where we are now? Or is it tilting one way or the other?

And maybe secondly, just in the composition of what you're seeing, what are you seeing with respect to uptake on some of the new products and the product line extensions that have had very good momentum over the last 18 months?

[Mary Puma, executive]

Okay. So Craig, right now, now the demand is really strong across, really, all markets and geographies. And in terms of the segments, the mature process technology markets remain robust, and this is really driven by high fab utilization.

If you go one level down, image sensors, general mature foundry business and the power devices are also strong. And in particular, we're seeing a lot of growth in the power device area driven by a recovery in automotive.

And so when you combine what I mentioned before about the long-term commitment to electrification of the automotive market and you combine that with the success that we're seeing from the Axcelis Purion Power series in this market, this is really one of the things that created a sustainable growth opportunity for Axcelis. So again, this is not just 2021, but this is moving into 2022 and beyond.

In terms of the split, we said this, I think, on the last call. We expect mature process technology segment is going to account for over 70% of our systems revenue in 2021 just because of the strength that we're seeing there.

So -- but let's turn to memory. So we've been talking about how memory is recovering and we expect steady business in 2021. We are seeing initial capacity buys coming into our slot plan at the end of this year and early next year. So we are seeing a pickup in memory. And we've always said that our memory business is additive to the strong mature process technology business, and that's really what's driving us to say that we are going to exceed $625 million in revenues this year.

The customer interest remains strong. We've got a lot of demo activity. We've got 6 evaluation units out in the field. We have -- we believe we have the right products, the right market positioning. And as we've talked about our execution at this point in time, it is really quite good. So this is really what's going to lead to future growth even beyond our $650 million business model.

I'm going to -- I'll turn it over to Doug in a second. But as I said, we have -- the second part of the question the product line extensions and how are the products doing. Well, the products are doing extremely well. And I did mention that we have 6 evaluation units in the field right now. We've got 2 in memory, 3 in mature process technology and 1 in advanced logic. And we're looking to all of those evaluations to drive future growth. Four of them are in high current, which is the largest segment out of the implant product type, and that's a place where we're really focused in terms of driving additional growth. And 2 of them are in high energy, and our high energy business remains very strong. And we have a leadership position there, and we're putting these product line extensions out into the field.

So for example, out of those 6 evaluation units to our Purion XEmaxes, leading image sensor manufacturers, one of them is a Purion H200 that's our leading power device manufacturer. And the other that I'll mention is the Purion H at an advanced logic customer. And we truly believe that this is the opportunity that we've been looking for to penetrate this segment and really get a foothold and some growth in this very important market.

So Doug, I don't know if you want to add anything to that in terms of some of the details on the products themselves?

[Doug Lawson, executive]

I think you covered most of it. The -- I think, Craig, the silicon carbide tools, both Purion and -- Purion H200 and the Purion XE in that market are doing very well. And the Purion H200, especially, has -- appears to be a very popular option for customers in the power market. So we're looking forward to good growth in that product line.

[Craig Ellis, analyst]

That's really helpful, Mary, Doug. So the follow-up question relates to the remarks around the point on moving capacity closer to customers and with the facility getting ready to ramp up in South Korea. So the question is this. When that facility is opened and operational, what's the revenue capacity of the firm in the near term, next 1 to 2 years? And as we look at some of the longer-term trends which, Mary, you identified the multi-decade dynamics in auto-related EV and ADAS and the very robust position that Axcelis has there, will existing capacity plus South Korea give you the 3- to 5-year headroom that you need? Or will there be other capacity that you'll need to bring online as we look at getting from here to at least kind of the first step forward with some of the secular auto dynamics by 2025, 2026?

[Kevin Brewer, executive]

Yes. So -- Craig, this is Kevin. Let me grab the first part of that. So from a capacity point of view, what I'll tell you is that we're -- the models we're looking at beyond 650 right now that we're going to publish at the end of the year. We'll have plenty of capacities between our Beverly site and the new facility in South Korea to cover those models. Longer term, if we need to do additional expansion, we can take a look at what we're doing in South Korea and add capacity there.

But I think we did a lot of work over the last couple of years with our existing infrastructure through Kaizen events. We invested in capital equipment, so we freed up space. So I think between all the things we've done in South Korea, there won't be capacity issues from a pure build point of view moving forward.

[Mary Puma, executive]

Can I just add one thing to that? So Craig, you didn't specifically ask this, but I did want to just add that we have spoken, we know we have a very strong position with customers in Korea. And I've been in personal contact with -- in fact, I have the pleasure of telling one of our largest customers in person about the fact that we're adding this capacity in South Korea, and they're all extremely pleased.

So the good news is we'll have the capability to be able to meet those needs. And again, I think it's a plus not only in terms of the capacity, but I think it's a plus in terms of our positioning in South Korea as well as in the Asian market.

[Kevin Brewer, executive]

Yes. Just one other quick follow-up. I should have mentioned too, Craig. The plan for South Korea is that we'll be able to ship to any of our customers from that facility as well. So it's not going to be set up just for 1 or 2 particular customers. The plan is that whatever we're building there has the capability to ship to any of our customers.

[Craig Ellis, analyst]

Okay. So you could meet some of that very strong China market demand from South Korea after it opens?

[Kevin Brewer, executive]

Yes. Yes.

[Operator]

[Operator Instructions] Your next question comes from Tom Diffely from D.A. Davidson.

[Thomas Diffely, analyst]

Yes, thanks for the question. Mary, I want to -- I was hoping could hear a little bit more about the emerging memory recovery and how you think it rolls out over the next year or 2 in terms of both NAND, DRAM and maybe the timing.

[Kevin Brewer, executive]

Okay. Well, I think as we said -- or as I just said, we're starting to see this pick-up now come at the end of the year. We expect it to build into 2022. Our business right now, as I just mentioned, for example, in Q2 was evenly split between NAND and DRAM. And honestly, we've said this a number of times, in terms of our preference, it doesn't really matter what specific type of device capacity the memory customers lay in because there's a little bit more high energy in the NAND, there's a little bit more high current in the DRAM and we have exposure in our process tool of record to both of those types of devices. So it doesn't -- we're just waiting to see really how it lays out.

Again, Doug, I don't know if you any additional color you want to add on with your thoughts.

[Doug Lawson, executive]

Yes. So Tom, for implants, we're very much capacity dependent in terms of growth. So as they add wafer starts, they need to add implant. And as you can see from the various memory company earnings calls this quarter, demand continues to be very strong and supply is tightening. The last year, they did a lot of technology increases to increase their output, either additional layers or shrinks in terms of DRAM. And now they're at a point where they're beginning to fill the shelves that they've put in place. So we expect that as we go into the end of this year and throughout next year to be a pretty good cycle in terms of memory capacity wafer start adds.

[Thomas Diffely, analyst]

That's quite helpful. And then so you talked about your business, your systems business being 70% mature this year. What is your long-term view of the mix between mature and memory? It seems like it's been skewing more towards mature over the last year or 2, but has your long-term view changed?

[Mary Puma, executive]

I don't think our long-term view has changed. I mean -- go ahead, Doug. Doug, did you want to say something?

[Doug Lawson, executive]

No, I was going to say the same thing. Back -- the days when it was 50-50 or even 70-30 in favor of memory are probably behind us given the strength in sort of the diverse and large customer base that we've developed. So as the power market continues to grow in the image sensor market, as we establish a foothold in Japan and in advanced logic, then memory will continue to be strong as it cycles in terms of capacity adds. But I think we would expect to continue to see a stronger mix from the other technologies, over time.

[Thomas Diffely, analyst]

All right. Great. And then finally, when you look at the eval tools, and 4 of them potentially closing up later this year, I was going to ask you about the hit rate of follow-on orders because it sounds like -- Mary mentioned it earlier that you expects business from all 4. So I guess curious at this point, what is the typical timing of closing of an eval tool to maybe some volume production tools?

[Mary Puma, executive]

Well, it can vary. I mean we've talked about how evals typically run 1 year, some run a little bit longer, some run a little bit shorter. But in general, it's about a year where we become process tool of record and then get repeat orders.

Now there are systems where we are able to get repeat orders even prior to closing the valuation. What's happened is we work very closely with the customer. The results have been very good, and the customer has requirements to add capacity. And so we have gotten repeat orders again less than -- in less than 12 months. So it really varies by customer, but I think in general, 12 months is a good benchmark.

[Operator]

[Operator Instructions] Your next question comes from the line of Quinn Bolton from Needham & Company.

[Quinn Bolton, analyst]

I offer my congratulations on the nice results and outlook. I wanted to start just with the eval tools to make sure I've got the numbers right. Mary, I think you said you will complete 4 evals or expect to close 4 evals before the end of the year with 1 in the third quarter, so likely 3 then in the fourth quarter. Is that correct?

[Kevin Brewer, executive]

No. Quinn, this is Kevin. So we have 1 in the third quarter, that's in our guidance. And then we expect to see 4 additional tools before the end of the year.

[Quinn Bolton, analyst]

So that's in addition to the 1 in the third quarter, so it's 4 then in Q4?

[Kevin Brewer, executive]

Yes.

[Quinn Bolton, analyst]

Got it. Okay. And then, Kevin, the guidance for the full year on gross margin of just over 42% sort of implies a step down in margin in the December quarter. I assume a lot of that reflects those 4 eval tools you recognize. But I'm wondering whether the South Korea facility carries any start-up costs or absorption issues as it begins to ramp capacity in late this year?

[Kevin Brewer, executive]

Yes. So initially, there is some drag from that, Quinn, for those exact reason you brought up, the absorption issue. I mean we're hiring people right now. We're training people. And the expectation is that once we're fully operational, sometime into next year, that this becomes a margin accretive type of thing a very -- a slight drag this year. But yes, so there is a little bit of margin pressure coming from that.

And then, as you mentioned, the additional evals closing out as well. But I think that the key point on our margins are we're -- we've had road maps in place. We're following those road maps. Some of them are timing-based. So I mean we're way ahead of our models right now in terms of where we thought it would be on revenue. And the gross margin is coming along, and it should continue to move up as we execute on these cost-out initiatives we have, get the factory fully operational over there, flip some of these evaluation tools, which are product extensions and high margin and to follow on orders that Mary was just talking about.

And I think those are really the levers that are going to move -- continue to give us margin growth. And the timing is, again, will be based on the quickness that we can get some of this work done.

[Quinn Bolton, analyst]

Kevin, I wanted to ask a longer-term question. Mary, you had mentioned that you think the ion implant TAM now is much larger than perhaps it had been. I think for a fairly long time, you've described the TAM of ion implant of about $1 billion. Wondering if you have an updated TAM you might give us. And I know you're going to give us new -- sorry, new long-term models, but I think your $550 million and $650 million model sort of assumed up to 45% share of the old TAM. Wondering if you might update sort of your market share thoughts given that the TAM is now much larger.

[Kevin Brewer, executive]

I'm going to grab it, Doug, unless you want to -- why don't you take it?

[Doug Lawson, executive]

Yes. I was -- so the TAM, let's start with the first question. On the TAM, as we've said numerous times, it's difficult to actually quantify that because there's not a lot of actual reporting. We had been for the last several years been saying that the TAM has been about $1 billion and was growing at 10% to 15%. So at this point, if you look at some of the more recent industry analyst numbers, it's now looking like it's probably up in the $1.5 billion range. So we're, right now, trying to quantify that and get our estimate. In terms of share, again, it becomes a very difficult thing for us to exactly calculate given that the denominator is kind of a moving target.

And so what we do know is we have very high share of technology leadership, management leadership and market leadership, especially in the targeted segments like the power device and image sensor markets. And we continue to do extremely well with the focused products that we've developed for the Purion extensions. So we'll update the model and, at that point, make some decisions on how much additional color we do around any TAM calculation or share.

[Quinn Bolton, analyst]

Great. And then last question just on the China business, I know you received licenses to ship to one of the Chinese foundries. Wondering if you could comment, was the China revenue concentrated this quarter, as a result, to receive those licenses? Or is it pretty diversified -- yes, was it a fairly diversified revenue stream?

[Mary Puma, executive]

It was a mix. We -- there was a concentration to one particular customer just based on the timing of some of the export licenses that we received. But China is really -- it's made up of a large and diverse group of both the domestic and multinational customers and the particular customer that you're referring to and that I mentioned is only one of many, many customers that we have in China. So there was a little bit of that, but I would say, in general, it was much more of a mix across a broad number of -- or a large number of customers.

[Kevin Brewer, executive]

Quinn, it's Kevin again. I want to go back to the evals. So it is -- it's 1 in Q3, it's a total of 4 more for the remainder of the year. So it's 1 in Q3, 3 in Q4, which I think is what Mary had said earlier, so I apologize for that. I think I confuse the issue. So there's 4 more we expect: 1 in Q3 and 3 remaining ones in Q4 for [ total addition ].

[Operator]

This concludes the Q&A portion of the call. I will now turn the call back over to Mary Puma, who will make a few closing remarks.

[Mary Puma, executive]

Thank you, Mary. I'd like to thank everyone for joining us today, and we hope to talk with you virtually and see you in person at upcoming investor events. In August, we will be participating in the Needham Second Annual Virtual SemiCap and EDA conference and also the Jefferies 2021 Semiconductor IT Hardware and Communications Infrastructure Summit. And we thank you for your continued support.

[Operator]

This concludes the presentation. Thank you for your participation in today's conference. You may now disconnect. Good day.