Speaker 1: All right, let's move on. Now. Joining us is John Lee,
Speaker 1: president and CEO at m k S Instruments. It's a
Speaker 1: nasdack listed company. He's here to discuss earnings as well
Speaker 1: as that acquisition of Carlile's Atto Tech. Uh. John, good morning,
Speaker 1: good evening to you. We want to talk about that acquisition,
Speaker 1: of course, but of course we're Bloomberg. We need to
Speaker 1: dig into some of the uh, the issues in the
Speaker 1: in the supply chain, in the chip industry and the like.
Speaker 1: On that second quarter earnings call, m KS said it's
Speaker 1: still going to be supply constrained throughout the year. Can
Speaker 1: you give us kind of an update on the supply
Speaker 1: and backlog situation? How long your chip equipment customers have
Speaker 1: to wait to get your products now, et cetera. Yeah, sure,
Speaker 1: and thanks for having us on. We still remain supply
Speaker 1: chain constrained, um. You know, some of the components that
Speaker 1: we've seen in the past, electronic components remain constrained. Um.
Speaker 1: But I think things are getting a little better. Uh.
Speaker 1: The industry and a m CAST themselves are handling better
Speaker 1: with much more collaboration between us and our plot and
Speaker 1: our customers. So things are gradually getting better, but it
Speaker 1: still remains a constrained environment. The acquisition of auto Tech,
Speaker 1: I'm curious about um why and what it brings to you?
Speaker 1: And then also how what are you expecting from the
Speaker 1: integration process? Yes, well, you know, m CASS is a
Speaker 1: strategy of being a provider of foundational technologies for advanced electronics,
Speaker 1: next generation electronics. And the best example is your smartphone.
Speaker 1: And in that smartphone, of course is semic connectors, which
Speaker 1: are always getting better. But inside as well are all
Speaker 1: these other components. And these other components require packaging. And
Speaker 1: the packaging is where at a Tech plays, So they're
Speaker 1: the leader in putting the metal interconnects in these packages
Speaker 1: that allows all these chips to work together. And so
Speaker 1: with at a Tech and with the legacy m CAST,
Speaker 1: we believe we are now the broadest supplier enabling the
Speaker 1: next generation electronics. John, with the US efforts to reshore
Speaker 1: chip production, how beneficial will that be for your business?
Speaker 1: How will your company benefit from the Chips Act? But
Speaker 1: we certainly will benefit as more fabs get built. But
Speaker 1: you know, in in the way MCAST looks at it
Speaker 1: is the fabs that get built no matter where they're built,
Speaker 1: they're gonna need advanced equipment to make those chips, and
Speaker 1: m CAST provides of the various components that go into
Speaker 1: that equipment. So we're really looking at really overall demand
Speaker 1: of the semi country industry and the fabs that get built.
Speaker 1: Certainly having it built in the United States is beneficial,
Speaker 1: but we really look at where the total number of
Speaker 1: fabs are being built, regardless of where the geography is.
Speaker 1: One positive note, I know you spoke to this a
Speaker 1: little bit, but I wanted to get to this note
Speaker 1: from Susquehanna Financial Group that chip delivery time so shrank
Speaker 1: again in August and that that could be a sign
Speaker 1: that the global shortage of semiconductors is easing further. Can
Speaker 1: you shed any light on that, Yeah, that's certainly. You know,
Speaker 1: we read the same things and we've seen some some
Speaker 1: of that in our own supply chain. Um, you know,
Speaker 1: in the semi country industry does go through cycles. Uh
Speaker 1: In many companys have looked at d RAM being the
Speaker 1: next area of memory being the next area that might
Speaker 1: go through kind of a dip. But you know, we've
Speaker 1: been through this many times in our sixty year history
Speaker 1: and semic connectors we have a playbook. We know how
Speaker 1: to react to it. And actually downturns are great, great
Speaker 1: times to continue investing in R and D and come
Speaker 1: out even stronger. A John, your your major customer. Land
Speaker 1: Research mentioned in its latest learnings called that the US
Speaker 1: is now forbidding American equipment suppliers to ship equipment that
Speaker 1: can make fourteen or more advanced chips to China. Do
Speaker 1: you do you see a big impact from the new
Speaker 1: US restrictions? Yeah, it's hard to tell. Uh, Certainly, we're
Speaker 1: going to be abiding by any kind of laws that
Speaker 1: the United States puts there. But as I said before,
Speaker 1: you know, if the equipment doesn't go to China to
Speaker 1: have the chips built in China, they'll go somewhere else.
Speaker 1: And as I said, we are going to be the
Speaker 1: provider for some of that critical technology no matter where
Speaker 1: that that chip is built. And I'd like to hear
Speaker 1: a comment just about overall demand. A lot of people
Speaker 1: are worried about because of what we've seen from semiconductors
Speaker 1: that it's a kind of a leading indicator on perhaps
Speaker 1: the economy turning lower. Do you do you see that?
Speaker 1: How is your business? Our business remains really strong, actually,
Speaker 1: and you know, the bookings and the backlob remain very strong.
Speaker 1: As I said earlier, we're still supply chain constrained. Um,
Speaker 1: you know, things can change. We read the same things
Speaker 1: where you know chip demand could be going down. But
Speaker 1: as I said, we really look at chip demand in
Speaker 1: the long term and long term semicunter chip demand, I
Speaker 1: think we could all agree it's a great place to be.
Speaker 1: It's it's ubiquitous in all of our lives, and so
Speaker 1: we're really bullish about the long term transfer semic counter demand. Well,
Speaker 1: in the next six months or so, we're gonna likely
Speaker 1: have even higher interest rates and a possible recession. How
Speaker 1: are you factoring those in? Well, certainly. Uh, you know,
Speaker 1: we have a playbook if if things do turn down
Speaker 1: a little bit. We have a variable cost structure. We've
Speaker 1: done this many times. We watch costs, we uh, we
Speaker 1: watch our bookings and very quickly react to that. And
Speaker 1: so we've done that pretty well over the last sixty years.
Speaker 1: So the biggest challenge at the moment, then, our biggest
Speaker 1: challenge is getting parts so we can ship. As I said, yeah,
Speaker 1: we still supply and constraint all right, John, thanks very
Speaker 1: much for being with this best of Luck, John Lee,
Speaker 1: President and CEO at m k S Instruments, discussing m
Speaker 1: KS earnings and also the acquisition of out of Tech