By David Lammers

Veeco Instruments (Plainview, N.J.) is on track to become a billion-dollar company in 2011 as the company’s new “MaxBright” GaN MOCVD systems roll out to customers, Veeco CEO John Peeler said.

On a conference call following release of the company’s Q4 financial results, Peeler said the MaxBright tool features a multi-reactor cluster architecture. With the four-reactor configuration that most high-volume LED manufacturers are expected to buy, the MaxBright system can simultaneously process 26 of the industry-standard 150 mm (6-inch) wafers. A closed-loop thermal control system contributes to a 25 percent improvement in per-reactor throughput. Moreover, each chamber can be optimized for a particular layer of the LED, giving customers more flexibility, Peeler said.

The MaxBright tool follows on the company’s K465i system unveiled last year, which improved on the automation and chamber cleaning steps. That propelled Veeco’s market share during 2010 to 46 percent by Q3 2010, up from 30 percent in 2009, Peeler said. MaxBright systems begin shipping this quarter.

Quoting data from IMS Research, Peeler said the K465i became the best selling MOCVD system in the third quarter, not long after its Q1 launch. “Now we are changing the LED game again, extending our leadership position,” he said, adding that the MaxBright tool has 5x the throughput in twice the footprint of the K465i.

While much of the market growth in MOCVD systems has come from LEDs used in TV backlighting, Peeler said the much larger opportunity is in general LED lighting applications. IMS Research estimated the total worldwide market for packaged LEDs in lighting to be $0.9 billion in 2009, growing to $1.4 billion in 2010 and $2.1 billion in 2011. Peeler said about half of the systems – 12 of 24 which shipped in Q4 – went to China, where subsidies to LED manufacturers are robust and cities are participating in the “Million Lights” program to promote LED lighting.

Veeco’s financial performance has mirrored its technical strength. Sales increased 38 percent in 2010 to $933 million ($300 million in Q4), of which about $800 million went to LED and solar customers. “We are on track to being a billion dollar company,” Peeler said.

A small, but potentially much larger, market for MOCVD systems is in making the CIGS (cadmium indium gallium di-selenide) solar cells. OLED displays and lighting is another emerging opportunity, Peeler said, with R&D projects going on with all the largest display companies.

“TV backlighting remains an important growth driver, but LED lighting is the larger opportunity and it is clearly just beginning, with a unit demand CAGR of 68 percent out to 2015. Outdoor lighting applications will lead, followed by commercial and industrial. Lighting will drive demand for many years to come,” Peeler said. To grow the LED pie, MOCVD systems must continue to improve deposition throughputs in dramatic fashion, lowering LED production costs.

Veeco predicts that with lighting presenting “a huge opportunity for MOCVD systems” that 5,000 reactors will ship during the 2011 to 2015 period. Peeler said one Wall Street firm is predicting 7,000 will ship over the same five-year period.

Veeco developed its MOCVD skills partly in the market for thin film heads used in hard disk drives, which remains a significant business for the company. Veeco’s revenues from the data storage market will grow in 2011, he said, as HDD makers seek to increase aerial density.

The MaxBright system borrowed technologies used in the data storage deposition sector. And MaxBright re-uses about 70 percent of the components used in the earlier K645i system.

Peeler, perhaps with an eye to the interest Applied Materials has shown in developing LED production equipment, said he is aware that “companies both large and small” are trying to gain traction in LED tools. “We are more interested in maximizing market share gain than in micro-managing each quarter,” he said. “We are taking a long-term perspective, asking ourselves ‘How do we win in the market?’ That is what is driving our strategy.”

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