Good day, ladies and gentlemen, and welcome to the Axcelis Technologies call to discuss the company's results for the third quarter 2021. My name is Daniel, and I will be your coordinator for today. As a reminder, this conference is being recorded for replay purposes. 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.

Thank you, Daniel. With me today is Kevin Brewer, Executive Vice 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 a 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 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 a very strong quarter due to the growing momentum of the Purion product line and strength of the semiconductor industry, particularly the mature process technology segment. Revenue for the third quarter was $176.7 million with earnings per share of $0.81, driven by strong gross margins of 43.3%. Quarterly systems sales increased significantly to $126.2 million in implant systems, a record. CS&I, our aftermarket business, continued to provide a major contribution to our top line and gross margin with Q3 revenue of $50.5 million. In the third quarter, 91% of shipments went to mature foundry logic customers, and 9% to memory customers, with an even split between DRAM and NAND. Due to growing strength in the mature process technology market, we now estimate that this segment will account for greater than 80% of system revenue for the full year 2021. The geographic mix of our systems shipments in the third quarter was China, 70%; Europe, 15%; Korea, 5%; and the rest of the world, 10%. In Q4, although China will continue to account for our largest percent of systems revenue, we expect the overall regional mix to be more balanced. Turning to fourth quarter guidance, we expect revenue of approximately $190 million, gross margins of approximately 41.5%, operating profit of approximately $37 million, and earnings per share of approximately $0.84. We now expect to exceed $640 million in revenue for the full year 2021. The increase in revenue since the last quarter has been driven by the continued growth of the mature process technology segment and the early stages of a memory capacity build. We believe both market segments will contribute to what we expect will be a strong 2022 for the industry and for Axcelis. Our visibility into the first half of next year is very good as we are currently booking systems into Q3 2022. Overall demand for capital equipment in the semiconductor industry is being driven by several factors, including chip shortages, high fab utilization across all segments, causing significant new fab investment, government incentive programs, creating geographical expansion opportunities for our customers, and the rapid growth of the power device market, both silicon and silicon carbide to support automotive industry plans for electrification. And finally, the fundamental underlying drivers that started this growth cycle, 5G, data analytics, and AI. We believe that the implant TAM has increased significantly. This is driven by an overall increase in wafer starts by the growth of foundries serving the mature markets where ion implant is a fab bottleneck due to the large mix of products. And lastly, by the power and image sensor markets, which are more implant intensive and require our more advanced Purion product extensions. The mature and specialty markets are generating sustainable growth with Purion product extensions designed to serve the power device and image sensor market. This is the case across all implant types, high current, medium current, and high energy. We have invested significantly in products for these markets over the last several years, and we continue to invest to maintain the leadership our Purion products enjoy. In Q3, we successfully closed an evaluation of a Purion H200 for a silicon power customer, highlighting our continued strength in the power segment. We believe the power segment will comprise 25% to 30% of our systems revenue for 2021, with the image sensors segment accounting for 20% to 25%. Strength in these segments significantly contributes to our margin expansion. Our growth in these segments is clear and sustainable, and most importantly, it is tied to long-term trends beyond any increases driven by semiconductor shortages. Turning to the memory market. Since the end of Q3 and early into Q4, we have seen an increase in memory shipments for both NAND and DRAM applications. Last week, we announced that we shipped multiple systems to a memory customer and successfully closed the evaluation of a Purion H for a new NAND high current customer. This customer now has both the Purion H and Purion XE qualified for production. Revenue for that system will be recognized in the fourth quarter. We maintain a strong and growing position in memory, and we expect 2022 to see continued capacity additions. We believe DRAM will be stronger in the first half of the year, with a subsequent pickup in NAND later in 2022. We continue to see a high degree of activity in advanced logic, where we have a Purion H evaluation underway that is expected to successfully close in Q4. This qualification will open the door for production buys in 2022 and 2023. We are also seeing an increase in activity in the Japanese market, especially related to power devices, image sensors, and general mature devices. Interest is strong for both our Purion and legacy tools. In fact, earlier this week, we announced the launch of GSD Ovation, high-current and high-energy batch implanters. We expect these enhanced legacy products to be well received by 200-millimeter customers and to provide potential CS&I upgrade opportunities to our large installed base. The evaluations are key to developing new customers, increasing footprint at existing customers, and penetrating new segments. We currently have five Purion evaluation tools in the field focused on supporting future growth. These include a Purion Dragon, a Purion H, a Purion XE silicon carbide, and two Purion XEmax, which are positioned across key target segments, including advanced logic, DRAM, image sensors, and power devices. We expect to close multiple evaluations in Q4 and plan to ship additional evaluations in the fourth quarter and throughout 2022. In 2021, we are closing in on our $650 million revenue model, thanks to the success of Purion and a very strong semiconductor market. As a result, we are developing an implant-driven revenue model beyond $650 million that we will introduce at a virtual Investor Day currently planned for December 9. Now I'll turn the call over to Kevin to discuss third quarter financial details as well as several operational topics, including supply chain management and progress with our Korean manufacturing site.

Thank you, Mary, and good morning. Axcelis delivered solid Q3 financial results driven by strong gross margin performance and continued revenue growth. With our strength in a growing mature process technology market, we now expect to exceed $640 million in revenue for 2021. Growing systems and CS&I revenue, coupled with strong bookings and backlog have set up a strong finish to 2021 and position us well for expected growth in 2022. We are seeing significant leverage in our business model and expect full-year operating expenses to be around 24% of revenue, with gross margins above 42%. Full-year gross margin assumptions include higher pandemic and supply chain-related costs and the impact of our investment in additional manufacturing capacity. Ongoing gross margin improvement will be driven by the timing of cost-out initiatives, customer product mix, and continued growth in our CS&I business. Based on the strength of the market and demand for our Purion products, we are developing new financial targets that will take us well beyond our current $650 million model. We will introduce these models at our Virtual Investor Day on December 9. Before discussing the details of our Q3 financial performance, I'd like to provide an update on our supply chain and new manufacturing facility in South Korea. We have and will continue to provide guidance that reflects our current assessment of supply chain challenges. Beyond working closely with our established suppliers, we continue to qualify new sources of supply and carry a higher-than-normal level of inventory to help buffer supply chain disruptions. Our sales team is also working with customers to provide purchase orders much earlier than in the past, which improves visibility for our manufacturing team. We are adding manufacturing operations closer to our customers with a goal of increasing customer satisfaction and capacity. Construction of the new facility in South Korea is complete. Manufacturing began this week, with first shipments scheduled for the first quarter. This is an exciting opportunity for us, but I want to reiterate, especially with our recent rapid growth, that 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 third quarter financial results. Q3 revenue finished at $176.7 million compared to $147.3 million in Q2. Q3 system sales were $126.2 million, and implant systems reached a record compared to $100.1 million in Q2. Q3 CS&I revenue finished at $50.5 million compared to $47.1 million in Q2. CS&I revenue remained strong, driven by high fab utilization, the growing Purion installed base, system upgrades, and customers purchasing safety stock. We expect Q4 CS&I revenue of approximately $50 million. Q3 sales. Our top 10 customers accounted for 77.3% of our total sales compared to 75.1% in Q2. One customer was above 10% in Q3 compared to two in Q2. Q3 system bookings were $244.2 million compared to $172.1 million in Q2, with a Q3 book-to-bill ratio of 1.86 versus 1.71 in Q2. We are currently booking into the third quarter of next year. Backlog in Q3, including deferred revenue, finished at $406.6 million, a new record for Axcelis compared to our prior record of $271.2 million in Q2. Q3 combined SG&A and R&D spending was $40.1 million or 22.7% of revenue compared to $40 million or 27.2% in Q2. SG&A in the quarter was $23.4 million, with R&D at $16.7 million. We expect Q4 combined SG&A and R&D spending to be approximately 22% of revenue. Q3 gross margin was 43.3%, driven by strength in CS&I, higher Purion power series shipments, and continued cost-out activity. We're guiding Q4 gross margin to be approximately 41.5%, driven by product mix and the expected closure of multiple evaluation systems. We expect full-year gross margins to be above 42%, including closure of these evaluation tools. Operating profit in Q3 finished at $36.4 million or 20.6% of revenues compared to $24 million in Q2. We are guiding Q4 operating profit of approximately $37 million. Q3 net income was $27.5 million or $0.81 per share compared to $18.9 million or $0.55 per share in Q2. We are guiding Q4 EPS of approximately $0.84. Q3 cash finished at $271.8 million compared to $220.5 million in Q2. In the quarter, we generated $66.2 million of cash from operations and settled share repurchases of $12.5 million. Also in the quarter, we received meaningful prepayments on system sales. Q3 receivables were $78.3 million compared to $79.5 million in Q2. Q3 inventory ended at $196.8 million compared to $192.3 million in Q2. Q3 inventory turns, excluding ship evaluation tools, finished at 2.4 compared to 2.1% in Q2. Q3 accounts payable were $35.5 million compared to $40.7 million in Q2. As always, I want to thank our employees and suppliers for their continued efforts and outstanding execution supporting our steep business ramp. 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 to invest in products, infrastructure, and our employees. We have also returned over $62 million of capital to our shareholders under a share repurchase program since 2019. Under the current program, we had $62.5 million of remaining authorization at the end of Q3. Thank you. And I'll now turn the call back to Mary for her closing comments.

Thank you, Kevin. Axcelis is currently positioned for significant sustainable growth. The implant market is increasing, thanks to strength in the overall semiconductor industry, but also due to a rapidly expanding mature process technology segment. The capabilities of Purion product extensions, like the Purion VXE and Purion power series combined with the implant-intensive nature of the image sensor and power device segment uniquely position Axcelis to benefit from the electrification of the automotive market. 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 are focused on all the elements required for leadership in ion implantation. With that, I'd like to open it up for questions.

Our first question comes from Patrick Ho with Stifel.

Congrats on a really nice quarter and outlook. Mary, maybe first off, in terms of the business environment, you talked about memory picking up at least in 3Q DRAM and NAND. Can you give a little bit of color in terms of kind of customer mix? Is it primarily with one customer you're seeing increased demand? Or is it a broader mix with multiple customers?

At this point, Patrick, we're seeing that it's a broader mix with multiple customers. There's one customer in particular that has actually aggressively started placing orders, but based on the quotations that we're doing and the bookings that we have, this gives us the confidence to say that it's broader, and we'll start with DRAM and then expand into NAND in the second half of the year. Remember, we said we're already booking into the third quarter, so we've got pretty good visibility into the first half of the year.

Great. That's helpful. And maybe as my follow-up question for Kevin. Kudos to you guys for managing the supply chain in this challenging environment. And you gave a little bit of color on some of the variables that you are seeing to mitigate these issues. Maybe specifically for Q3, given that there were more issues that arose. One, how did you manage through a lot more competitive issues? And secondly, how are you reacting to mitigate those situations in Q4, which appear to be still persistent coming off of Q3?

Yes, that's a good question, Patrick. I mean, there's no doubt that the supply chain is very tight and has been since the start of the pandemic, mostly driven by pandemic and closures of businesses. Then we got into logistics issues, partly due to the pandemic and partly because of the volume trying to move through the industry. But early on, I think we got very aggressive with looking at our lead time offsets to MRP with suppliers, putting buffer inventory, moving from some of our bottleneck suppliers and getting extra capacity online. So I think some of those early actions certainly are helping now. Now we're doing what we've been doing since the start. We're trying to stay on top of it. The team is working hard, as all companies are doing right now. We're still adding new suppliers as we see problems arise. We're reacting, and we're trying to be proactive as well. We're looking at where there may be potential bottlenecks and trying to address them beforehand if we can. So there's a lot of hard work, and as I think you've heard me say before, there's a lot of luck, too. I mean, it's a big supply chain. So all we're going to do is continue doing those things that have been working for us, and we've been able to manage through this. That's our intention as we continue to move forward. So I feel comfortable with our Q4 guidance that we have a good handle on what we need to do to execute this quarter from a supply chain point of view.

Our next question comes from Craig Ellis with B. Riley.

Congratulations really on two fronts, not just the near-term operating execution, which is remarkable in such a tough environment, but in the vision that you had years ago to really diversify the Purion product line so you can be so well positioned for the secular drivers that you mentioned. That's really where I want to start. Mary, as we look at the mature foundry market on the power side and as we look at EV activity, we're currently low single-digit million units of production. By mid-decade, we should be at $10 million, maybe $30 million by the end of the decade. So there's a tremendous ramp coming. The question is, where do you sense your diverse customers are in getting capacity in place for that ramp? How much of that are we seeing here and now in the second-half strength in the business? And how much would you expect to fill in as we go through 2022 with the visibility that you have in your order book?

Well, we've talked extensively about power devices and how those are being driven by the electrification of the automotive market. Our customers right now who serve that market are adding pretty significant capacity. I would call it full speed ahead at this point in time. And based on our discussions with them, we stay very close to them, not only in terms of trying to understand what the forecast is, but also in terms of understanding trends in the products because we've talked about how our Purion power series is really a market leader. We want to ensure that it remains that way. So I would say that it's quite strong right now, and we believe that it's going to remain strong into the foreseeable future. This is not a trend that's short term; this is a long-term trend. And we expect to be right there with our customers, enabling them to continue to manufacture these chips even as they evolve over time. This is a long-term trend, Craig, and we believe it's going to remain in place for many years to come.

Yes, that's helpful. And then, go ahead, Doug.

Yes. I just wanted to add that we are planning to do a deep dive on that market on the power market and the specialty markets at the Investor Day in December. So there will be a lot more information.

Great. And then the second question was also in mature foundry and just flipping over. Doug, you may refer me a bit to the December session, but I wanted to see if I could get some color on the CIS part of the mature foundry market. Certainly, we're seeing very strong EV and ADAS demand there. We're also seeing very strong smartphone demand as smartphones continue to have an increase in image sensors per phone. One of the things we've been looking for is the opportunity for Axcelis to potentially gain further share in the Japanese market. I'm hoping you can provide a little bit of color on whether you've got any increase in optics into tapping that market and growing into a large, well-positioned potential customer there.

So Craig, Doug can address any of those technical issues, but we're continuing to work with all of the image sensors manufacturers, particularly the large ones. Obviously, the target that you're talking about is something that we are working very heavily, not only with our team in Japan but also really across the business. In Japan right now, we have quite a bit of interest, both in image sensors and also in the power market. That's something we will continue to focus on very heavily. We put a Purion XE into the power device market last year, and that is in production. We're using that as a reference site, which has generated a lot of interest. We actually just launched a Japanese website, Axcelis website, and that should really help our Japanese customers become more familiar with and comfortable with Axcelis. So lots of ongoing activities, and that's definitely something that will be a future event for us, a future win for us, let's put it that way.

Yes. And I think a couple of other things: we are exhibiting that semi Japan this year with a booth. We expect quite a bit of activity. The key products relative to the image sensor market are the Purion XEmax, which we have two evaluation systems in the field that are leading competitors to that customer you're referring to. We think that's the product that is going to drive the next generation of image sensors.

That's really helpful. And I'll flip it over to Kevin for a question. Kevin, interesting point on the prepayments that helped with cash, $50 million, very strong performance. The question is, are prepayments something that we should expect to see more of in calendar '22? Or were there just unique dynamics that took place in the calendar third quarter?

Well, it is customer specific. I will tell you, it's one particular geography with some of our smaller and, what I would say, newer customers. There are prepays that are associated with that order. So depending on where the mix is from quarter to quarter, Craig, that could occur more or less. I wanted to mention this quarter because it was more significant, and we had a pretty significant cash generation from operations, so I just wanted to flag that.

Our next question comes from Christian Schwab with Craig-Hallum Capital.

Congratulations guys on this really fabulous execution. Kevin, did I hear you right that your backlog went from $272 million last quarter to $406 million this quarter?

Yes, you did. And last quarter was a record, and this obviously was a new record, yes.

Okay. Fantastic. So not just maybe some of the thunder that might come on December 9, but can you guys kind of talk about, in particular, the silicon carbide market where I think you have an implant product where your competitor really does not and that industry is looking for material wafer growth? I'm sure you're aware, there's not too many cars per wafer right now. That may or may not change in the future, especially if we go to $300 million. But can you kind of quantify the opportunity for you guys in that marketplace alone?

I believe, Christian, we'll provide more detailed information on this during the Investor Day, which is beyond what we can cover in a brief Q&A. We expect that this year, the combined revenue from both silicon and silicon carbide power will be 25% to 30% of our systems revenue, up from approximately 17% last year, although I don't have the exact numbers in front of me. This area continues to grow, and automotive is likely the main driver. There's a lot of power switching that goes on in the car, a lot of silicon in addition to silicon carbide. So we're seeing a lot of activity across all geographies. There was a lot of activity in Europe, really starting it. The Japanese market has always been pretty strong in power. Recently, the U.S. market has really started to go after it aggressively, as seen by several customers' earnings reports in the past week or two. The Chinese market is very, very active, too. It's a worldwide phenomenon, and there's a big push worldwide on EVs. We expect it to continue to grow, and we continue to develop the Purion power series family.

Our next question comes from Tom Diffely with D.A. Davidson.

So first, Kevin, I wonder if you could give us a summary or an update on just where we are in the evaluation systems, what you expect to close by the end of this year, which looks like the impact margins a bit? And which ones are going into 2022 that might be impactful there?

Yes. So I think Mary mentioned there are five evaluation systems currently out in the field. In Q4, we expect to convert multiple systems. We didn't put the exact number in there, Tom, but let's put it this way: it's three or more. So going forward, I expect we'll still have a few evaluations in the field in quarter one. We are continuing to put evaluation tools out. A fairly large portion of our current inventory number, beyond having some buffer inventory for supply chain issues, is evaluation systems both shipped and work in process in the factory. I don't expect the evaluation tools to drop off in any meaningful way. In the near term, we're going to continue to put them out there. The more evaluations we have out there, the more opportunity we have to convert to revenue and future growth. So the margin impact is always a little bit of a disappointment, but it's a short-term disappointment because a lot of these new evaluations, as well as the product extensions, have higher ASP and the margins are certainly more accretive than some of the base products.

Okay. Yes, one of those high-class problems. Okay. Maybe shifting over to the memory market for either Mary or Doug. A year ago, at this time, we were looking into 2021, and we thought it would be a nice recovery year for memory. It didn't materialize, but it was dwarfed, I guess, by the mature business being so strong. I'm just curious, when you look out into '22, how does memory look different this year than it did a year ago?

Well, I think if you look at pricing trends and so forth, they're beginning to support growth in terms of additional capacity. The demand, if you look at any of the Gartner or IC Insights reports, shows an increase in overall demand for memory over the next five years. We expect that there will be capacity additions, as Mary mentioned in the script. We have begun to see some of that this year, and we expect it to continue next year. I would expect that next year, we'll continue to see a stronger mix towards mature memory even though memory will be growing.

Okay. That's helpful. And then final question, I guess, for Kevin again. When you look at the backlog ramping up here, the bookings are very strong, and business going into the third quarter and now next year, are you capacity constrained in any sense? I mean is it going into the third quarter because that's when the customers need the tools? Or is it kind of restrictions on how fast you can get these tools out the door?

Yes. I think we've done a very good job meeting what customers have required for ship dates. So I would say, Tom, that the majority of it really is meeting what the customer’s requirements are. As I mentioned, we do have the Korea facility online now, which I am extremely excited about because of how quickly we brought that up and running. We did start manufacturing this week, and we'll start shipping in Q1. That's going to certainly help with shipments next year. The near-term requirements are covered with our current manufacturing. So there's really not any constraints there. I'll say it again: the teams, both manufacturing and supply chain, are pedaling the bike hard right now, but we're keeping up with it. So I think maybe your question might become, throughout the year, we have heard from others in our peer group that they are pushing deliveries out or they quit taking more deliveries in 2021. We haven't made that an issue at this point because I think we've kept up with what customers are needing to meet their requirements.

Our next question comes from Charles Shi with Needham & Company.

I'm asking on behalf of Quinn Bolton here from Needham & Company. So I want to start with a question. I think you guys mentioned mature foundry logic, not only on a dollar basis but on a percentage basis, next year is shaping up to be even stronger than this year. I want to ask a question: given how strong the bookings are, and given your visibility all the way through like third quarter next year, how much of that demand you are seeing today is the underlying market demand? Or is there any shift in customer purchasing behavior from just-in-time purchasing to maybe just-in-case purchasing because the lead time is so stretched out?

I would say at this point, our sales team does a really good job trying to understand where people are just trying to get in line versus where the requirements are, and they do a lot of background work, for example, is the fab built? What's the status of the fab? Where is the equipment going? We believe that the bookings we have right now are bookings that will remain in place. Obviously, there is going to be some movement; there always is in terms of fab readiness. But we're very comfortable with the fact that customers placing orders will take that equipment in the timeframe they've indicated. And we're building to that. We do internal reviews with the sales team and the manufacturing team. It's almost on a daily basis at a minimum every week, and we take a look at inventory levels and any changes in the forecast. So we manage it extremely closely. So if any of those things happen, we're on top of it. At this point in time, again, we feel it's pretty certain, and we don't think there is a lot of speculative buying at this point.

Mary, so maybe the next question: I want to ask more specifically about power devices, the demand you are seeing. Obviously, there are probably at least three major types of power devices: silicon BCD, IGBT, silicon carbide, with various implant intensity. I would say they're all high, but there may be some difference there. Based on the 2022 order book, are you kind of seeing a shift in terms of the mix between these three types of power devices from '21 to '22? Is there more bias toward silicon carbide or IGBT does more sophisticated power device types?

It's a split. We're still relatively early in the process regarding the use of power devices in electric vehicle applications. The demand varies significantly depending on the customer's primary strategy. Some focus on silicon and IGBT, while others prioritize silicon carbide or GaN. Overall, we're witnessing a demand for power devices across different industries, but automotive is likely the largest contributor.

Got it. Maybe my last question, back to the evaluations. I noticed that your Purion Dragon evaluation for DRAM and Purion XEmax evaluation for image sensor have been out for a while. I wonder whether you can update the progress there, and those two, obviously, are very important for your expansion in DRAM and the image sensor market. So I would like to see if you can provide any color on those two.

Yes. As Kevin mentioned earlier, we have five evaluations in progress: two for high currents and three for high energies. One of the high current evaluations is the Purion Dragon, which is being tested for a DRAM application. That customer has already approved the Purion Dragon for a NAND application, and it's currently in production. We're following the necessary steps. Evaluations can conclude at different times; some may finish quickly, while others may take longer. When there's a delay, we collaborate with customers to ensure they receive the performance they expect. Sometimes the steps we agreed on initially shift. The Purion Dragon evaluation is proceeding as planned, and we're eager to finalize it and have that tool enter production soon. In terms of the other Purion H evaluation that's out there, it's for advanced logic, and that's going very well. We believe that this is a great opportunity for us to further penetrate the advanced logic market in the future. In terms of the high energy, you mentioned the Purion XEmax. We actually have two Purion XEmax in the field, both for image sensor development, and both of these are going very well. There's no delay on that. And again, we didn't give a timeline in terms of when these evaluations would close. However, I would say that at this point, they're both on track. That's very positive. Lastly, the last evaluation is a Purion XE silicon carbide system, which is out with a power device manufacturer, and that's also proceeding very well. I think we're on track, and again, I'll say that's based on each specific customer experience at this point in time.

Our next question comes from David Duley with Steelhead.

Just a couple of clarifications. You gave us a percentage of systems revenue for both power and CIS. Could you repeat those percentages again?

Yes. Let me find this. In terms of shipments for the quarter, we had, as I said, 91% going to mature process technology. We didn't give a specific number; however, Doug, did we give that out by segment, specific segment? I have it here, but I don't remember actually stating that in the script. So Dave, I don't think we actually provided these precise figures. However, we will provide more detailed information on December 9, when we conduct a deeper dive into that segment.

Okey dokey. No. When you talk about power and CMOS image sensor being more implant intensive, can you help me understand exactly what that means? How many implants are there for 10,000 wafers or however you can characterize it? What does it mean to be more intensive for those particular applications with implant?

Yes. So the devices that they're building require more implants in order to adjust the transistor characteristics and so forth. They require deeper implants, and so they tend to have a significant amount of high-energy applications. They need a fairly significant amount of adjustment plants to get the performance where they want them to be, to adjust for the presale voltages and leakages to enhance device performance and so forth. They are very optimized types of devices, so that creates a higher implant intensity. It's hard to break it down specifically to per 10,000 wafer starts or per 100,000 wafer starts because it's highly customer mix and recipe dependent. But they are certainly more implant intensive than most other devices and definitely more so than memory and FinFET type transistors and so forth in advanced logic.

Okay. And with this record orders and backlog, what should we expect for the first half of next year? Given that your manufacturing slots are full for the first half, what implications does that have for revenue in the first half of next year?

We're not going to give any guidance or forecast into 2022. That will be something we discuss when we: We'll provide some general information. We talked about some new models coming out that are implant specific, and we'll provide that at our Investor Day. And, of course, when we reach the full-year call in February, we'll give you more information on 2022.

Our next question comes from Craig Ellis with B. Riley.

I wanted to direct it towards the CS&I business. Mary, you mentioned the GSD product that had a press release recently. The question is, is that something investors should expect would be material to CS&I's potential revenues in calendar '22? On the topic of revenues, $50 million in the third quarter, and I think the company said $50 million in the fourth quarter. Is $50 million kind of the new run rate for that business?

Let me answer the first part of that Ovation, and then I'll turn it over to Kevin to address the financial part of it. The GSD Ovation is available as upgrades to our installed base of legacy tools, namely the high current and high energy tools. It provides our customers with a path forward for improved performance on the tools they already have. It can be ordered as a separate configuration, but I think the main benefits we're going to see are through these upgrades we have. This is important, but it's really part of the ongoing investment in innovation we're making in that aftermarket business.

And Craig, there's no doubt that $50 million seems like it's the new number because we've been at that level for quite a few quarters now, in high 40s into the low 50s. Certainly, with all the buying going on and what our consumables business right now has been keeping this number elevated. More importantly, our installed base is growing, right? We've shipped a lot of tools over the last several years, and that's beginning to take hold now where there's kind of an entitlement that goes with a tool shipment. What's the right number? I mean, it's certainly a lot higher than where it was when we were always saying it was in the mid-30s based on where we're running. When we put out our new models on the 9th of December at the Investor Day, I'll be happy to share our assumptions in those models for CS&I going forward. So if you give me a month, I can provide more color on that. But $50 million at this point is an area we’re going to stay, and hopefully, this continues to grow.

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.

Thank you, Daniel. I want to thank everyone for joining us today. We hope to talk with you virtually and see you in person at upcoming investor events. In November, we will be participating in the Benchmark Company Technology Virtual Investor Conference. In December, we will participate in person at the CEO Summit in San Francisco and at the D.A. Davidson Semicap, Laser and Optical Virtual Conference. We will also be hosting a virtual Investor Day on December 9. We hope to see you there, and we want to thank you for your continued support.

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