EDGAR 10-K Filing

Company CIK: 1113232
Filing Year: 2025
Filename: 1113232_10-K_2025_0001558370-25-001855.json

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ITEM 1. BUSINESS
Item 1. Business.
Overview of Our Business
Axcelis Technologies, Inc. (“Axcelis,” the “Company,” “we,” “us,” or “our”) designs, manufactures and services ion implantation and other processing equipment used in the fabrication of semiconductor chips. We believe that our Purion family of products offers the most innovative implanters available on the market today. We sell to leading semiconductor chip manufacturers worldwide. The ion implantation business represented 98.3% of our revenue in 2024, with the remaining 1.7% of revenue derived from aftermarket sales associated with other legacy processing systems. In addition to equipment, we provide extensive aftermarket lifecycle products and services, including used tools, spare parts, equipment upgrades, maintenance services and customer training.
Axcelis’ business commenced in 1978 and its current corporate entity was incorporated in Delaware in 1995. We are headquartered in Beverly, Massachusetts and maintain an internet site at www.axcelis.com. On or through our website, investors may access, free of charge, our annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Exchange Act as soon as reasonably practicable after we electronically file such material with, or furnish it to, the Securities and Exchange Commission. Our website and the information contained therein or connected thereto shall not be deemed to be incorporated into this Annual Report on Form 10-K.
Revenue for 2024 was $1,017.9 million, compared to $1,130.6 million in 2023. Systems revenue for 2024 was $782.6 million, compared to $883.6 million in 2023. Gross margin percent for 2024 was 44.7% compared to 43.5% in 2023. Operating profit for 2024 was $210.8 million, compared to $265.8 million in 2023. Net income for 2024 was $201.0 million, compared to $246.3 million in 2023.
The Company is in a strong competitive position. A focused strategy on ion implant, combined with the hard work and dedication of our employees and the support of our customers and suppliers, enabled us to achieve critical milestones in our drive to market leadership. Important accomplishments in 2024 included:
● We delivered revenue of $1,017.9 million in 2024 and earnings per share of $6.15.
● We remained a technology leader and supplier of choice in the implant-intensive power device segment, which accounted for 56% of the value of our 2024 system shipments.
● We continued working to expand our footprint with existing and new customers and currently have two Purion evaluation systems in the field at strategic customer sites in key market segments.
● We continued our investment in our Customer Solutions & Innovation (“CS&I”) aftermarket business to drive financial growth and increased customer satisfaction levels, including the “Digital Tool Box,” an innovative service offering with online training, remote diagnosis and install, and automated troubleshooting guide.
● We received 22 customer satisfaction awards in 2024. In addition, Axcelis was named to both the 2023 and 2024 editions of Forbes’ List of America’s Best Mid-Cap Companies and to both the Fortune Magazine’s 2023 and 2024 lists of the Top 100 Fastest Growing Companies.
We continue to work diligently to ensure that manufacturing and operating expense levels remain well aligned to business conditions. We believe that the most fundamental interest of our stockholders is consistent, profitable financial performance, which we expect to continue to deliver in 2025. Our performance is subject to the risks and uncertainties discussed below under Item 1A, Risk Factors.
Industry Overview
Semiconductor chips, also known as integrated circuits, are used in a continuously evolving range of consumer and industrial products, including for example, personal computers, mobile devices, automobiles, sensors and controllers for the “internet of things” and data storage servers. Types of semiconductor chips include dynamic random-access memory
(“DRAM”) and “Not AND” (“NAND”) Flash memory; logic devices to process information; and “system on chip” devices (which have both logic and memory features). The demand for chips continues to increase, as a result of the electrification of vehicles, the evolution of digital communications (including the introduction of 5G mobile networks), artificial intelligence, large language models e.g. (ChatGPT), data analytics and visualization, and the growth in the Internet of Things, and the increasing complexity of device features. These chips are used in power management, data input, such as image sensors, which are often manufactured using mature processing technologies, as well as for memory to support the storage of data, internet streaming and “cloud computing” data analytics.
Most semiconductor chips are built on silicon or silicon carbide (“SiC”) wafers of 150mm (6 inches), 200mm (8 inches) or 300mm (12 inches) in diameter. Each semiconductor chip is made up of millions of tiny transistors or “switches” to control the functions of the device. Transistors are created in the wafer by introducing various precisely placed dopants into the silicon or SiC in specific patterns.
Semiconductor chip manufacturers own or manage wafer fabrication facilities (often referred to as “fabs”), which utilize many different types of equipment in the making of integrated circuits. Over 300 process steps utilizing over 50 different types of process tools are required to make a single device like a microprocessor. Semiconductor chip manufacturers seek device performance benefits through new products and technology enhancements and productivity improvements through increased throughput, equipment utilization and higher manufacturing yields. Capacity is added by increasing the amount of manufacturing equipment in existing fabrication facilities and by constructing new fabrication facilities.
We have different types of customers, which impacts the timing of purchases and technology requirements. Some customers are integrated electronics manufacturers, making semiconductor chips for their own devices. These same companies may also act as foundries, manufacturing semiconductor chips for other electronic manufacturers or chip design companies. Some customers only function as foundries. A few companies design and manufacture branded chips that are sold to device manufacturers. In addition, some customers have partnerships or joint ventures with two or more semiconductor chip manufacturers to share the technology development and capital investment. The timing of purchases by foundry customers will depend on their success in securing manufacturing contracts. Also, foundry customers will look for equipment that can deliver the broadest capabilities to be prepared to manufacture all chip types, while integrated electronics manufacturers may invest in processing equipment dedicated to a specific application they require for their products.
The semiconductor capital equipment industry has historically been cyclical as global chip production capacities successively exceed, then lag behind, global chip demand. When chip demand is high, and inventories are low, chip manufacturers add capacity through capital equipment purchases. Given the difficulties of forecasting and calibrating chip demand and production capacity, the industry periodically experiences excess chip inventories and softening chip prices. Device manufacturers react with muted capital spending, lowering the demand for capital equipment. Changes in consumer and business demand for products in which chips are used also affect the industry. A successful semiconductor capital equipment manufacturer must not only provide some of the most technically complex products manufactured in the world but also must manage its business to thrive during downturns in the cycle.
Axcelis’ Strategy
Axcelis’ 2025 strategic goals are to:
● Continue to build the foundation on our long-term implant-only business model
o Win new customers with Purion products and aftermarket offerings that solve high value customer challenges with differentiated, valuable, and sustainable (“DVS”) solutions
o Improve customer satisfaction to drive repeat business
o Execute on identified growth opportunities in Japan and advanced logic
o Deliver CS&I target business model revenues of approximately 25% of total revenues, in line with expectations
● Drive profitable growth by focusing on key customers and targeted market/geographic segments
o Achieve market share leadership across all served markets
o Deliver attractive earnings per share and cash generation as defined in targeted business models
o Monitor spending in line with growth initiatives and industry trends
o Execute capital strategy that allows for appropriate business investments while returning value to shareholders
● Increase gross margins by deriving maximum value from enabling upgrades, system specials and product extensions while lowering cost through use of “Design for X” (“DFx”) principles, right sourcing, and providing the industry’s best products and services
● Expand beyond ion implant by launching identified corporate development growth initiatives
We continue to invest in research and development to ensure our products meet the needs of our customers. We take pride in our scientists and engineers who are adding to our portfolio of patents and proprietary technology to ensure that our investment in technology leadership translates into unique product advantages. We strive for operational excellence by focusing on ways to lower our product, manufacturing, and design costs and to improve our delivery times to our customers. Global customer teams and a focused account management structure maintain and strengthen our customer relationships and increase customer satisfaction. Finally, we endeavor to generate strong cash flows from operations and maintain a sufficient cash balance to ensure we continue to have the necessary capital to fund business growth.
Ion Implantation Systems
Ion implantation is a principal step in the transistor formation cycle of the semiconductor chip manufacturing process. Ion implantation is also used to change the material characteristics of the silicon or silicon carbide for reasons other than electrical doping, a process known as “material modification.” An ion implanter is a large, technically advanced system that injects dopants such as arsenic, boron or phosphorus into a wafer. These dopants are ionized and therefore have an electrical charge state. This electric charge state allows the dopants to be accelerated, focused and filtered with electric and magnetic fields. Ion implanters use these fields to create a beam of ions with a precisely defined energy level (ranging between several hundred and eight million electron-volts) and with a precisely defined beam current level (ranging from microamps to milliamps). Certain areas of the silicon wafer are blocked off by a polymer material known as photoresist, which acts as a “stencil” to pattern devices so that the dopants will only enter the wafer where needed. Typical process flows require twenty implant steps, with the most advanced processes requiring substantially more steps. Each implant step is characterized by four key parameters: dopant type, dose (amount of dopant), energy (depth into the silicon) and tilt/twist (angle of wafer relative to the ion beam).
To efficiently cover the wide range of implant steps, three different broad categories of implanters have been developed, each targeted at a specific range of applications, primarily defined by dose and energy. The three traditional implanter categories are referred to as high current, high energy and medium current:
● High current implanters were the second type of implanter to emerge, having low energy capability and high dose range.
● High energy implanters emerged to address the need for deeper implants with a high energy range and low dose.
● Medium current implanters are the original model of ion implanter, with mid to low-range energy and dose capability.
Axcelis Ion Implanters
Axcelis offers a complete line of high energy, high current, and medium current implanters for all application requirements. Our Purion flagship systems are all based on a common platform which enables a unique combination of implant purity, precision, and productivity. Combining a state-of-the-art single wafer end station, with advanced spot beam
architectures (that ensures all points across the wafer see the same beam condition at the same beam angle), Purion products enable exceptional process control to optimize device performance and yield, at high productivity.
In addition to the Purion family of ion implanters, the Company offers the Ovation™ family of multi-wafer, or “batch” implanters. These systems extend Axcelis’ industry benchmark GSD platform into the future, delivering the highest reliability, serviceability, and lowest cost of operations. The Ovation configuration is designed to seamlessly integrate with the existing fleet of Axcelis batch implanters, while providing incremental performance improvements with updated components for long-term sustainability.
Beyond the traditional categories of implanters, Axcelis has developed systems designed for specific applications. For example, the Axcelis Purion Power Series, which provides full recipe coverage for power device applications critical to electric vehicles and industrial applications. The Purion Power Series is comprised of a group of high current, medium current and high energy implanters that optimize semiconductor devices created on SiC wafers, which is advantageous for certain power devices.
An overview of specific Axcelis ion implantation products is below:
● High Current Ion Implant. Our Purion H, Purion Dragon, Purion H200, and GSD/E2 Ovation spot beam, high current systems cover all traditional high current requirements as well as those associated with emerging and future devices. Our Purion high current capabilities extend beyond traditional high current energy and dose ranges, to cover new device fabrication requirements as well as to maximize capital utilization and flexibility. In addition, Axcelis’ Purion systems provide advantages for material modification applications, including those requiring hot and cold implant capabilities.
● High Energy Ion Implant. Axcelis has been a market leader in high energy ion implanters for many years, and offers a range of new Purion systems which have differentiated capabilities for specialty applications as well as legacy high energy systems. Our Purion XE, EXE, and other Purion high energy systems combine Axcelis’ production-proven RF Linac high energy, spot beam technology with the Purion platform wafer handling system. The Purion XE Power Series implanters include Purion XE and EXE models for high volume power devices aluminum implantation, available with 150mm SiC wafer handling or 200mm thin Si wafer handling. Our batch high energy systems include the GSD/HE Ovation implanter, a 10 stage Linac with energies up to 3 MeV and the GSD/VHE Ovation system, a 14 stage Linac with energies up to 4.9 MeV.
● Medium Current Ion Implant. Our Purion M Si and SiC medium current systems offer higher productivity and lower electrical energy consumption compared to competitive offerings, in addition to other advantages. With high energy capability far beyond competitive implanters, the Purion M is ideal for fabs at higher elevations or those dealing with heavy mass species. The Purion M is 20% more energy efficient than competing platforms, and is among the industry’s lowest cost of ownership.
We believe our ion implant products will continue to meet customer demand for advantages in productivity, process performance and technical extendibility.
Aftermarket Support and Services
Through our CS&I business, we offer our customers extensive aftermarket service and support throughout the lifecycle of the equipment we manufacture. Approximately 3,300 of our products are in use in 28 countries worldwide. The service and support that we provide includes used tools, spare parts, equipment upgrades, and maintenance services. We offer varying levels of sales, service and application support out of our field offices. Revenue generated through our CS&I business of $235.3 million, $247.0 million, and $227.9 million represents 23.1%, 21.8% and 24.8% of total revenue in 2024, 2023 and 2022, respectively.
To support our aftermarket business, we have sales and marketing personnel, field service engineers, and spare parts and applications engineers, as well as employees located at our manufacturing facilities who work with our customers to provide customer training and documentation, and product, process, and applications support.
Most of our customers maintain spare parts inventories for our machines. In addition to our web-based spare parts management and replenishment tracking program, we offer several Business-to-Business options to support our customers’ parts management requirements. Our Axcelis Managed Inventory service offering provides the customer with full spare parts support through a parts consignment arrangement in which Axcelis retains responsibility for the complete supply chain. These services provide ease of use alternatives that reduce order fulfillment costs and improve cycle time, resulting in an expanded customer base for this service offering.
Sales and Marketing
We primarily sell our equipment and services through our direct sales force. We conduct sales and marketing activities from our sales offices located in the United States, Taiwan, South Korea, China, Singapore, Japan, Germany and Italy.
International revenue, including export sales from our U.S. manufacturing facilities to foreign customers and sales by foreign subsidiaries and branches, accounted for 85.8%, 84.1% and 84.4% of total revenue in 2024, 2023 and 2022, respectively. In 2024, approximately 93.8% of our sales were denominated in U.S. dollars. See Note 17 to our Consolidated Financial Statements contained in Item 15 of this Annual Report on Form 10-K for a breakdown of our revenue and long-lived assets in the United States, Europe and Asia. See also Item 1A, “Risk Factors,” for information about risks attendant to our foreign operations.
Customers
In 2024, according to Gartner Inc., the top 20 semiconductor chip manufacturers accounted for approximately 87.6% of total semiconductor capital equipment spending, which decreased from 92.0% in 2023. These manufacturers are from the largest semiconductor chip manufacturing regions in the world: the United States, Asia Pacific (Taiwan, South Korea, Singapore, Japan and China) and Europe.
Information on net sales to unaffiliated customers is included in Note 2 of Notes to Consolidated Financial Statements. For the year ended December 31, 2024, no customer represented 10% or more of our consolidated revenues.
U.S. export controls impact our ability to sell to certain customers in China, a country that has represented a significant portion of our sales in recent years. One of our major Chinese customers, Semiconductor Manufacturing International Corporation (“SMIC”), is on the U.S. Entity List, but is subject to a 2020 licensing policy that allows shipments to certain mature process SMIC fabs, which to date, we have been able to obtain. Other Chinese chipmakers are on the U.S. Entity List, without a similar policy allowing licensed shipments. In October 2022 (with modifications in 2023), the U.S. Commerce Department established an export controls regulatory framework for U.S. exports of semiconductor equipment to China. This framework limits all semiconductor equipment shipments to Chinese customers who are producing or developing logic, DRAM and NAND chips that meet specific advanced parameters. The U.S. Commerce Department implemented further regulatory changes in December 2024, creating a new Export Controls Classification Number for certain 300mm ion implanters and adding certain Chinese customers to the U.S. Entity List, some of which have a licensing policy that should allow us to continue to support them. While these regulations have further excluded exports to certain Chinese customers, we currently are able to continue to ship to substantially all of our Chinese customers. In general, however, sales to Chinese customers represent a higher risk than sales to customers in other international locations because of trade tensions between the U.S. government and the Chinese government, and other challenges reflecting China’s stage of development and rapid growth. For example, the U.S. government has imposed tariffs on certain foreign products, including most recently from Canada, Mexico and China, that in the past have resulted in and may result in future retaliatory tariffs on U.S. goods and products. We cannot predict whether these policies will continue, or if new policies will be enacted, or the impact, if any, that any policy changes could have on our business.
Research and Development
Our industry continues to experience rapid technological change, requiring us to frequently introduce new products and enhancements. Our Beverly, Massachusetts Advanced Technology Center houses a process development
laboratory with a 13,500 square feet class 10/100/1000 clean room for product demonstrations and process development and a 17,500 square feet customer training center. The Advanced Technology Center provides infrastructure and process capabilities that allow customers to test their unique process steps on our systems under conditions that substantially replicate the customers’ production environments. This facility also provides significant capability for our research and development efforts.
We devote a significant portion of our personnel and financial resources to research and development programs and seek to maintain close relationships with our customers to remain responsive to their product needs. We have also sought to reduce the development cycle for new products through a collaborative process whereby our engineering, manufacturing and marketing personnel work closely together with one another and with our customers at an earlier stage in the process. We use 3D, computer-aided design, finite element analysis and other computer-based modeling methods to test new designs and accelerate the technology innovation process.
Our expenses for research and development were $105.5 million, $96.9 million and $78.4 million in 2024, 2023 and 2022, respectively, or 10.4%, 8.6% and 8.5% of revenue, respectively.
Manufacturing
We manufacture products at our 417,000 square feet ISO 9001:2015, ISO 4001:2015 and ISO 45001:2018 certified plant in Beverly, Massachusetts as well as our 38,000 square feet ISO 4001:2015 and ISO 45001:2018 certified Axcelis Asia Operations Center in South Korea and our 101,800 square feet state-of-the-art logistics and flex manufacturing Axcelis Logistics Center in Beverly, Massachusetts. Our facilities employ best in class manufacturing techniques, including lean manufacturing, six sigma controls and advanced inventory management, purchasing and quality systems.
Our clean manufacturing process uses class 1,000/10,000 space to facilitate most of our manufacturing requirements.
Our core competency in manufacturing and supply chain management is built around system assembly and testing, which remains an in-house capability due to the high degree of expertise and intellectual property associated with the process and design. Non-core work is sourced to global partners and includes items such as vacuum systems, wafer handling and commodity-level components. We continuously pursue outsourcing opportunities where the economics are justified, with a goal of enabling quality and margin improvement. Our supply chain team is globally focused and is located in Beverly, South Korea and Singapore. Customized and commercially available software solutions drive our planning, purchasing and inventory tracking process.
The companies supplying Axcelis play a critical part in our success. We want to ensure these companies share our values and have adopted a Supplier Code of Conduct, which contains our expectation that our suppliers will comply with our Environmental Policy, our Corporate Social Responsibility Policy, and other industry standards and policies. Our Supplier Code of Conduct provides that if a supplier fails to comply with these policies, our business relationship with that company will be permanently severed, although a compliance remediation period of up to 90 days may be allowed.
Our products are designed to be assembled and tested in a modular fashion, which facilitates our industry-recognized “ship-from-cell” process. Specially developed test stands, software and tooling provide the framework for this accelerated delivery process. Customers that choose the “ship-from-cell” process substantially improve their delivery times while receiving the same high level of quality provided by more traditional, longer cycle integration techniques. Product margins and inventory turns also improve because of shorter factory cycle times and increased labor productivity.
Installation of our equipment is provided by factory and field teams. The process includes assembling the equipment at our installation site, and after it has been connected, recalibrating it to factory specifications.
Competition
The semiconductor equipment industry is highly competitive and is characterized by a small number of participants ranging in size. Significant competitive factors in the semiconductor capital equipment market include price, cost of ownership, equipment performance, customer support, capabilities, and breadth of product line.
In the market for ion implantation systems, we mainly compete against Applied Materials, Inc. (“Applied Materials”). Axcelis and Applied Materials are the only ion implant system manufacturers with a full range of implant products. Other implantation equipment manufacturers we compete with include Sumitomo Heavy Industries Ion Technology Co. Ltd. and Nissin Ion Equipment Co., Ltd in Japan, Advanced Ion Beam Technology, Inc. in Taiwan, as well as Kingstone Semiconductor and CETC Electronics Equipment Group Co., Ltd. in the People’s Republic of China. Non-U.S. suppliers may have an advantage over U.S. suppliers under recently established U.S. export controls regulation for shipments to China. We also provide aftermarket service and parts to service our customers globally. In this market, there are many competitors, often based in the customer’s location, offering alternatives to Axcelis services and certified products.
Intellectual Property
We rely on patent, copyright, trademark and trade secret protection in the United States and in other countries, as well as contractual restrictions, to protect our proprietary rights in our products and our business. As of December 31, 2024, we had 185 active patents issued in the United States and 349 active patents granted in other countries, as well as 160 patent applications (58 in the United States and 102 in other countries) on file with various patent agencies worldwide. Patents are generally in effect for up to 20 years from the filing of the application.
We intend to file additional patent applications and grow our intellectual property portfolio as appropriate. Although patents are important to our business, we do not believe that we are substantially dependent on any single patent or any group of patents.
We have trademarks, both registered and unregistered, that are maintained to provide customer recognition for our products in the marketplace. Trademark registrations generally remain in effect as long as the trademarks are in use. From time to time, we enter into license agreements with third parties under which we obtain or grant rights to patented or proprietary technology. We do not believe that any of our licenses are currently material to us.
Backlog
Systems backlog, including deferred systems revenue, was $645.8 million and $1,061.2 million as of December 31, 2024 and 2023, respectively. The systems backlog amount at December 2023 reflects a correction reported in our Form 8-K filed on November 6, 2024. We believe it is meaningful to investors to include deferred systems revenue as part of our backlog. Deferred systems revenue represents revenue that will be recognized in future periods based on prior shipments or customer prepayments. Our policy is to include in backlog only those system orders for which we have accepted purchase orders. All orders are subject to cancellations or rescheduling by customers with limited or no penalties.
Backlog does not include orders received and fulfilled within a quarter. Our backlog at the beginning of a quarter typically does not include all orders required to achieve our sales objectives for that quarter. Backlog is not necessarily an indicator of future business trends because orders for services or parts received during the quarter are generally performed or shipped within the same quarter.
Bookings in the quarter ended December 31, 2024 were $84.5 million compared to $235.5 million in the quarter ended December 31, 2023.
Human Capital
As of December 31, 2024, we had 1,524 employees and 39 agency temporary staff worldwide. During 2024, our total employee and temporary staff headcount decreased by approximately 8%. While the majority of our headcount is
based in the U.S. at our main manufacturing facility in Beverly, Massachusetts, our business requires our presence where our customers are located around the world, resulting in Axcelis employees working in 28 different countries. Of our total year end 2024 employees and agency temporary staff, 1,081 work in North America, 396 in Asia and 86 in Europe.
Our future success largely depends upon our continued ability to attract and retain highly skilled employees. We provide competitive compensation and benefits programs. In addition to salaries, all Axcelis employees are eligible for cash incentive programs with annual payouts tied to annual financial metrics, as described in our proxy statements, with two exceptions: (i) certain sales staff receive commission and other sales compensation, and (ii) in order to provide greater certainty of compensation to lower level U.S. employees, we pay quarterly bonuses to those employees in amounts communicated at the start of the year. Beyond these basic forms of cash compensation, we offer recognition bonuses, equity awards, an Employee Stock Purchase Plan, a 401(k) plan with a competitive employer match, healthcare and insurance benefits, health savings and flexible spending accounts, paid time off, family leave, family care resources, flexible work schedules, employee assistance programs, and tuition assistance. These programs all contribute to both attracting and retaining a highly skilled employee base, including those with critical leadership and industry skills and experience.
During 2024, our voluntary turnover rate for employees was 9.1%, or 6.5% without retirements, below the worldwide technology industry (all reported) voluntary turnover average of 11.4% reported in the Aon 2024 Salary Increase and Turnover Study -- December 2024.
We also recognize that training is an important aspect of both employee retention and talent development. Axcelis conducts an annual talent review process and establishes individualized development programs agreed upon by employees and their managers. Human Resources provides training on personal development planning and leadership skills. All Axcelis employees have access to LinkedIn Learning to pursue independent training on business subjects. Our manufacturing staff each receives 35 hours of training upon commencement of employment, and our field service and other technical employees receive training on various ion implanter systems to develop product support, applications and service skills on all of our products. Finally, all staff are required to complete monthly, annual or biennial training on cybersecurity, various health and safety topics, and legal matters, such as the Foreign Corrupt Practices Act, export controls compliance, ethical business practices, and confidentiality. At a minimum, all Axcelis employees are required to complete at least 15 hours of training per year, and they can access additional voluntary training at the Company’s expense.
The success of our business is fundamentally connected to the well-being of our people. Accordingly, we are committed to the health, safety, and wellness of our employees. We provide our employees and their families with access to health and wellness insurance and programs that offer choice where possible so they can customize their benefits to meet their needs and the needs of their families. Following the COVID-19 pandemic, we have maintained flexible working opportunities for those employees who can, and wish to, work remotely. This flexibility allows us to access workers who do not live near our facilities and provides a desired quality of life benefit to those who wish to work remotely for personal reasons.
Axcelis is dedicated to accessing a workforce that has the skills and qualities required for our jobs, fostering a culture built on the principle of inclusion, and maintaining a workplace free from discrimination. We strongly believe that a the experiences, perspectives and backgrounds of our entire workforce will lead to a better environment for our employees and better products for our customers. Axcelis’ commitment extends to our Board of Directors, our leadership team and all teams and functions across our global locations.
We encourage you to review our 2024 ESG Report (located in the “ESG Hub” under the “Investors” section of our Axcelis.com website). Nothing on our website, including our ESG Report or sections thereof, shall be deemed incorporated by reference into this Annual Report on Form 10-K.
Environmental
Axcelis is deeply committed to our role as a responsible corporate citizen and dedicated to our Environmental, Social, Governance (“ESG”) and Net Zero commitments. In 2022, Axcelis became a founding member of the Semiconductor Climate Consortium (“SCC”) of Semiconductor Equipment and Materials International (“SEMI”), our industry organization serving the manufacturing supply chain for the micro- and nano-electronics industries. In doing so, we expect to bolster our own sustainability work with the power of the semiconductor ecosystem. By collaborating with
SCC member companies' joint knowledge and innovative technologies, Axcelis hopes to promote progressive action towards climate change.
We are proud that our Power Series ion implantation systems have become enabling technology for the production of power management devices, which are critical to the electrification of vehicles, an important component of our society’s actions to address climate change.
Additional disclosures regarding our environmental initiatives and goals can be found in our 2024 ESG Report located in the “ESG Hub” under the “Investors” section of our Axcelis.com website.
We are proud of our commitment to improving our environment. Axcelis is subject to environmental laws and regulations in the countries in which we operate that regulate, among other things: air emissions; water discharges; and the generation, use, storage, transportation, handling and disposal of solid and hazardous wastes produced by our manufacturing, research and development and sales activities. As with other companies engaged in like businesses, the nature of our operations exposes us to the risk of environmental liabilities, claims, penalties and orders.
We believe that our operations are in compliance with applicable environmental laws and regulations and that there are no pending environmental matters that would have a material impact on our business. We are ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certified at our Beverly, Massachusetts facility and ISO 14001:2015 and ISO 45001:2018 at our Asia Axcelis Operations Center.
Information about our Executive Officers
Russell J. Low, Ph.D., 54, became Axcelis’ CEO in May 2023, also joining the Company’s Board of Directors at that time. Dr. Low joined Axcelis in October 2016, first serving as Executive Vice President, Engineering and then as Executive Vice President, Global Customer and Engineering Operations effective January 2021. Prior to joining the Company, Dr. Low held the position of Vice President of Engineering, MOCVD Business Unit at Veeco Instruments since 2013, prior to which he was Veeco’s Senior Director of Engineering, Molecular Beam Epitaxy Business Unit beginning in 2012. From 2003 to 2012, Dr. Low held a number of positions at Varian Semiconductor Equipment Associates, most recently as Director of Technology. Prior to that, Dr. Low held engineering positions in the thermal processing and ion implant divisions of Applied Materials, Inc. Dr. Low joined the North American Advisory Board (NAAB) of SEMI International in 2023. He is also a member of the Massachusetts High Tech Council.
James G. Coogan, 44, joined Axcelis as Executive Vice President and CFO in September 2023. Mr. Coogan brings more than 20 years of finance, accounting, and investor relations experience across multiple industries, most recently in aerospace and defense. Mr. Coogan joins Axcelis after serving as Senior Vice President, Chief Financial Officer at Kaman Corporation, a leading provider of aerospace and defense products. During his 15 years with Kaman, he held various management positions including Vice President, Investor Relations and Corporate Development, Assistant Vice President, External Reporting and SEC Compliance, and Director, External Reporting and SEC Compliance. After starting his career at PwC, he held several financial management roles at Ann Taylor Stores Corporation and Mohegan Tribal Gaming Authority before joining Kaman.
Gerald M. Blumenstock, 56, became Axcelis’ Executive Vice President, Research, Development and Engineering in June 2023 leading product development, engineering and R&D. With over 30 years of experience in technology, primarily in the semiconductor capital equipment industry, Mr. Blumenstock brings a unique blend of leadership, technical and business skills gained over a distinguished career. Immediately before joining Axcelis, Mr. Blumenstock was self-employed as a management consultant from 2022 to 2023. Prior to that, Mr. Blumenstock led multiple product business groups as Senior Vice President and General Manager at Veeco Instruments and Vice President and General Manager at Advanced Energy from 2020 to 2022 and as Senior Vice President and General Manager at Veeco Instruments from 2011 to 2020. Additionally, Mr. Blumenstock held the role of Chief Marketing Officer at Veeco directing a corporate rebrand. Prior to that, Mr. Blumenstock held Senior Director level business roles at KLA, Cymer (ASML) and FormFactor, bringing several new products to market. Mr. Blumenstock began his career as an Optics & Materials Engineer at SVGL (ASML) and NASA.
Eileen J. Evans, Esq., 57, joined Axcelis as Executive Vice President and General Counsel in December 2024. Ms. Evans brings more than 25 years of legal and technology business experience to Axcelis, including commercial transactions, merger and acquisition integration, intellectual property, compliance, and corporate matters. Before joining Axcelis, from October 2022 to December 2024, she served as Chief Legal Officer at SunPower, a solar and energy services provider in North America, whose key assets were acquired by Complete Solaria, Inc. From July 2021 to October 2022, Ms. Evans held the top legal job at Redaptive, a tech-enabled sustainability-as-a-service company. Prior to that, from September 2017 to July 2021, she served as Deputy General Counsel at Micro Focus International, a British multinational software and information technology business and before that, as Vice President and Deputy General Counsel at Hewlett Packard Enterprise and Hewlett-Packard Company and Associate General Counsel at Oracle Corporation and Sun Microsystems, Inc. Ms. Evans earned her Juris Doctor from the University of California, Davis and her Bachelor of Arts in Political Science from the University of California, Berkeley. She currently serves on the Board of Directors for the Linux Foundation.
Gregory F. Redinbo, Ph.D., 60, is our Executive Vice President, Marketing and Applications, a position he assumed in September 2022. He joined Axcelis in 2021 as Senior Vice President of Strategic Marketing and Business Development. Dr. Redinbo has over 25 years of experience in the semiconductor capital equipment industry. Prior to joining Axcelis, he held the position of Vice President, Global Strategic Accounts at ASML from 2017 to 2020, where his focus was on business and relationship growth with a leading logic manufacturer and prior to that was Global Vice President of Sales, Service and Applications at FEI, a microscopy solutions company, where he worked from 2012 to 2017. Dr. Redinbo’s past positions also include Director of Sales, US and Europe, and Director of Product Marketing, High Current Products at Varian Semiconductor and Product Management in the Thermal Processing Division at Applied Materials.
Christopher J. Tatnall, Ph.D., 52, became Axcelis’ Executive Vice President, Global Customer Operations in September 2023. In this capacity, Dr. Tatnall is responsible for Worldwide System Sales and Sales Operations, Global Service, Support and Training and the Axcelis Customer Solutions organization. Dr. Tatnall joined Axcelis in March 2022 as Senior Vice President of Sales. Prior to joining Axcelis, he was Vice President and General Manager at MKS Instruments, Plasma and Reactive Gas Division from May 2018 to March 2022, where he led a cross functional team of over 200 members with multiple product lines with both semiconductor and industrial applications. Prior to that, Dr. Tatnall was Senior Director of Customer Operations at Brooks Automation, Semiconductor Sales Manager at Alcatel Vacuum Technology, and Development Engineer at Edwards Vacuum.

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ITEM 1A. RISK FACTORS
Item 1A. Risk Factors.
Risks Related to Our Business and Industry
Set forth below and elsewhere in this Annual Report on Form 10-K and in other documents we file with the SEC are risks and uncertainties that could cause actual results to differ materially from the results contemplated by the forward-looking statements contained in this Annual Report on Form 10-K. It is not possible to predict or identify all such risk factors. Consequently, the following is not a complete discussion of all potential risks or uncertainties.
If semiconductor chip manufacturers do not make sufficient capital expenditures, our sales and profitability will be harmed.
New systems orders and used tool sales depend upon demand from semiconductor chip manufacturers who build or expand fabrication facilities. When the rate of construction or expansion of fabrication facilities declines, demand for our systems will decline, reducing our revenue. In addition, all or a portion of the demand for increased capacity may be satisfied by a semiconductor chip manufacturer’s ability to reconfigure and re-use equipment they already own. Revenue decline also hurts our profitability because our established cost structure and our continued investments in engineering, research and development, and marketing necessary to develop new products and to maintain extensive customer service and support capabilities, limit our ability to reduce expenses in proportion to declining sales.
If we fail to develop and introduce reliable new or enhanced products and services that meet the needs of semiconductor chip manufacturers, our results will suffer.
Rapid technological changes in semiconductor chip manufacturing processes require us to respond quickly to changing customer requirements. Our future success will depend in part upon our ability to develop, manufacture and successfully introduce new systems and product lines with improved capabilities. This will depend upon a variety of factors, including new product selection, timely and efficient completion of product design and development as well as manufacturing and assembly processes, product performance in the field and effective sales and marketing. In particular:
● We must continue to develop competitive technical specifications for new systems, or enhancements to our existing systems, and manufacture and ship these systems or enhancements in volume in a timely manner.
● We will need to accurately predict the schedule on which our customers will be ready to transition to new products, in order to accurately forecast demand for new products while managing the transition from older products.
● We will need to effectively manage product reliability or quality problems that often exist with new systems, in order to avoid higher manufacturing costs, delays in acceptance and payment and additional service and warranty expenses, and ultimately, a lack of repeat orders.
● Our new products must be accepted in the marketplace.
Our failure to meet any of these requirements will have a material adverse effect on our operating results and profitability.
Axcelis is subject to the risks of operating internationally: we derive a substantial portion of our revenue from outside the United States, especially from Asia.
We are substantially dependent on sales of our products and services to customers outside the United States. International sales, including export sales from our U.S. manufacturing facilities to non-U.S. customers and sales by our non-U.S. subsidiaries, accounted for 85.8% of total revenue in 2024. Customers based in Asia dominate our international sales. Ion implanter system shipments to customers in Asia represented 81.0% of total system revenue in 2024. We anticipate that international sales will continue to account for a significant portion of our revenue. In particular, we expect
that sales to Chinese customers (both global and domestic Chinese chip manufacturers) will continue to represent a significant portion of our total sales, creating both risk and opportunity.
U.S. export controls on shipments to Chinese customers have been notably increasing since 2020. Since the placement of SMIC on the U.S. Entity List in 2020, we are required to obtain export control licenses to ship to mature process SMIC fabs, which to date, we have been able to obtain. Other chipmakers have been placed on the Entity List, some with, and some without, a similar policy allowing licensed shipments on specified conditions. A new export controls regulatory framework issued by the U.S. in October 2022 and supplemented in 2023, prohibits all semiconductor equipment shipments to Chinese customers (other than certain multi-nationals) who are producing or developing logic, DRAM and NAND chips meeting specific advanced parameters. While these regulations have further excluded exports to certain Chinese customers, we currently are able to continue to ship to the majority of our Chinese customers. In general, however, continuing revenue from Chinese customers is at higher risk than continuing revenue form customers in other international locations because of trade tensions between the United States government and the Chinese government, and other challenges reflecting China’s stage of development and rapid growth.
Increased U.S. export controls and other political and trade tensions exacerbate the risk that Chinese customers will change suppliers to non-U.S. vendors, such as Advanced Ion Beam Technology, Inc., Nissin Ion Equipment Co., Ltd. and Sumitomo Heavy Industries Ion Technology Co., Ltd. In addition, two Chinese entities, known as Kingstone Semiconductor and CETC Electronics Equipment Group Co., Ltd., are developing ion implanters for the Chinese domestic market. The loss of a significant customer or any reduction or delays in our ability to ship to any significant customer will adversely affect us.
We source a substantial portion of our materials from outside of the United States. Because of our dependence upon international sales and our global supply chain, our results and prospects may be adversely affected by a number of factors, including:
● changes in laws or regulations resulting in more burdensome governmental controls, tariffs, restrictions, embargoes or export license requirements;
● volatility in currency exchange rates;
● political and economic instability;
● global health emergencies, such as pandemics have the potential to disrupt our manufacturing operations and those of our supply chain, as well as cause our customers to delay or cancel shipments;
● difficulties in accounts receivable collections;
● extended payment terms beyond those customarily offered in the United States;
● difficulties in managing suppliers, service providers or representatives outside of the United States;
● difficulties in staffing and managing foreign subsidiary operations; and
● potential adverse tax consequences.
The U.S. government has proposed or enacted tariffs and substantial changes to trade policies, which could adversely affect our business. For example, the U.S. government has imposed tariffs on certain foreign products, including most recently from Canada, Mexico and China, that in the past have resulted in and may result in future retaliatory tariffs on U.S. goods and products. We cannot predict whether these policies will continue, or if new policies will be enacted, or the impact, if any, that any policy changes could have on our business.
Our dependence upon suppliers for many components and sub-assemblies could result in increased costs or delays in the manufacture and sale of our products.
We rely to a substantial extent on outside vendors to manufacture many of the components and sub-assemblies of our products. We obtain many of these components and sub-assemblies from a limited group of suppliers. Accordingly, based on situations outside of our control, we may be unable to obtain an adequate supply of required components on a timely basis, on price and other terms acceptable to us, or at all. In addition, we often quote prices to our customers and accept customer orders for our products before purchasing components and sub-assemblies from our suppliers. If our
suppliers increase the cost of components or sub-assemblies, we may not have alternative sources of supply and may not be able to raise the price of our products to cover all or part of the increased cost of components, negatively impacting our gross margin.
The manufacture of some of these components and sub-assemblies is an extremely complex process and requires long lead times. As a result, we could experience delays or shortages. If we are unable to obtain adequate and timely deliveries of our required components or sub-assemblies, we may have to seek alternative sources of supply or manufacture these components internally. This could delay our ability to manufacture or to ship our systems on a timely basis, causing us to lose sales, incur additional costs, delay new product introductions, and suffer harm to our reputation.
Moreover, if actual demand for Axcelis’ products is different than expected, Axcelis may purchase more or fewer parts than necessary or incur costs for canceling, postponing, or expediting delivery of parts. If Axcelis purchases inventory in anticipation of customer demand that does not materialize, or if customers reduce or delay orders, Axcelis may incur excess inventory charges.
A significant portion of our revenue depends on customers electing to buy aftermarket products and services from Axcelis.
Historically, a significant portion of our product revenue and all of our service revenue relates to our sale of “aftermarket” products and services, which include parts, consumables, upgrades, service contracts, and time and materials billings. Some of our customers purchase fewer aftermarket products and services, often training their own staff to maintain and service semiconductor capital equipment rather than relying on the equipment manufacturer for these services. In addition, we compete against third-party parts suppliers for the sale of parts and consumables that are not protected by patents or otherwise proprietary. To the extent our customers purchase parts and services from other vendors or provide their own system maintenance labor, our revenue and profitability will be reduced.
If we fail to compete successfully in the highly competitive semiconductor capital equipment industry, our sales and profitability will decline.
The ion implant segment is highly competitive and includes one company with substantially greater financial, engineering, manufacturing, marketing and customer service and support resources that may better position it to compete successfully than we can, as well as several smaller companies that could provide innovative systems with technology that may have performance advantages. We expect our competitors to continue to improve the design and performance of their existing products and processes and to introduce new products and processes with improved price and performance characteristics. If we are unable to improve or introduce competing products when demanded by the markets, our business will be harmed. Finally, if we must lower prices to remain competitive without commensurate cost of goods savings, our gross margin and profitability will be adversely affected.
We are dependent on sales to a limited number of large customers; the loss of a significant customer or any reduction in orders from them could materially affect our sales.
Historically, we have sold a significant portion of our products and services to a limited number of semiconductor chip manufacturers. In 2024, our top ten customers accounted for 45.9% of our net sales, in comparison to 51.7% and 59.4% in 2023 and 2022, respectively. None of our customers have entered into a long-term agreement requiring it to purchase our products. Our customers located in China represent a significant portion of our revenue, and are subject to U.S. export controls restrictions, as discussed above. Although the composition of the group comprising our largest customers has varied from year to year, the loss of a significant customer or any reduction or delays in orders from any significant customer will adversely affect us. Consolidation of semiconductor chip manufacturers may result in the loss of a customer.
Our international operations involve currency risk.
Substantially all of our system sales are billed in U.S. dollars. We also pay almost all non-U.S. vendors providing materials, components, and subassemblies to our U.S. factory in U.S. dollars. Aftermarket revenues of our non-U.S.
subsidiaries are denominated in both local currency and U.S. dollars. The majority of operating expenses of these non-U.S. subsidiaries, are received and incurred in local currencies. The establishment of the Axcelis Asia Operations Center in South Korea has increased the volume of our transactions in non-U.S. dollar currencies and increased the impact of foreign exchange gain / loss on the Company’s financial results. The Company experiences translation adjustments when local currency accounts payable on non-U.S. subsidiary books are re-measured for consolidated financial reporting. Similarly, the translation of long-term asset and liability values to U.S. dollars are recorded in stockholders’ equity as an element of accumulated other comprehensive income (loss). The value of the asset or liability in U.S. dollars will increase or decrease relative to the local currency based on changes in the exchange rate between the two currencies over the period. As a result, any unplanned non-cash gains or losses are recorded in the Company’s consolidated financial statements. Accordingly, fluctuations in exchange rates can impact reported revenues, expense, and profitability and asset values in our Consolidated Financial Statements. During the year ended December 31, 2024, approximately 6.2% of our revenue was derived in local currencies from foreign operations with this inherent risk. In addition, at December 31, 2024, our operations outside of the United States accounted for approximately 9.2% of our total assets, the majority of which was denominated in currencies other than the U.S. dollar.
We may not be able to maintain and expand our business if we are not able to hire, retain and integrate qualified personnel.
Our business depends on our ability to attract and retain qualified, experienced employees. There is substantial competition for experienced engineering, technical, financial, sales and marketing personnel in our industry. In particular, we must attract and retain highly skilled design and process engineers. Competition for such personnel is intense, both in the Boston metropolitan area and in other locations around the world. If we are unable to retain our existing key personnel, or attract and retain additional qualified personnel, we may experience insufficient levels of staffing to fully develop, manufacture and market our products and perform services for our customers. As a result, our growth could be limited or we could fail to meet our delivery commitments or experience deterioration in service levels or decreased customer satisfaction, all of which could adversely affect our financial results.
Our financial results may fluctuate significantly.
We derive our new systems revenue from the sale of a small number of expensive products to a relatively small number of customers. The selling prices on our ion implant systems range from approximately $2.6 million to $12.0 million. We also sell used equipment in our aftermarket business. Each sale, or failure to make a sale, may have a significant effect on us in a particular quarter. In a given quarter, a number of factors can adversely affect our revenue and results, including changes in our product mix, increased fixed expenses per unit due to reductions in the number of products manufactured, and higher fixed costs due to increased levels of research and development and expansion of our worldwide sales and marketing organization. Our financial results also fluctuate based on gross profit realized on sales. A variety of factors may cause gross profit as a percentage of revenue to vary, including the mix and average selling prices of products sold, costs to manufacture and customize systems, warranty costs and the impact of changes to inventory reserves. New product introductions may also affect our gross margin. Fluctuations in our financial results may have an adverse effect on the price of our common stock.
Our financial results may fall short of anticipated levels because forecasting revenue and profitability is complex and may be inaccurate.
Management may from time to time provide financial forecasts to investors. These forecasts are based on assumptions, which are believed to be reasonable when made, of the timing of system orders, system shipments, system acceptance and aftermarket revenue. Any of these assumptions can prove erroneous and the level of revenue recognizable in a particular quarter may vary from the forecast. Our lengthy sales cycle, coupled with customers’ competing capital budget considerations, make revenue difficult to predict. In addition, our backlog at the beginning of a quarter typically does not include all orders required to achieve our sales objectives for that quarter and is not a reliable indicator of our future sales. As a result, our revenue and operating results for a quarter depend on our shipping systems on previous orders as scheduled during that quarter, receiving customer acceptance of previously shipped products, and obtaining new orders for products and services to be provided within that same quarter. Any delay in, or cancellation of, scheduled shipments and
customer acceptances or in revenue from new orders, including aftermarket revenue, could materially affect our financial results.
Accounting rules addressing revenue recognition add more complexity in forecasting quarterly revenue and profitability. Orders for our products usually contain multiple performance obligations that result in revenue deferral under generally accepted accounting principles. Due to the foregoing factors, investors should understand that our actual financial results for a quarter may vary significantly from our forecasts of financial performance for that quarter. Failure to meet forecasted financial performance may have an adverse effect on the price of our common stock.
The semiconductor equipment industry is cyclical and we expect that demand for our products will increase and decrease, making it difficult to manage the business and potentially causing harm to our sales and profitability.
The semiconductor industry is cyclical, experiencing upturns when the demand for our products is high and downturns when our customers are not investing in new or expanded fabrication facilities. From time to time, inventory buildups in the semiconductor device industry produce an oversupply of semiconductors. This can cause a reduced demand for capital equipment such as our products, negatively impacting our sales and level of profitability. Our revenue can vary significantly from one point in the cycle to another, making it difficult to manage the business, both when revenue is increasing and when it is decreasing. In addition, a substantial portion of our operating expenses do not fluctuate with changes in volume. Significant decreases in revenue can therefore have a disproportionate effect on profitability. In addition, reduced demand for our products and services may require Axcelis to implement cost reduction efforts, including restructuring activities, which may adversely affect Axcelis’ ability to capitalize on opportunities that arise in the future.
Axcelis is exposed to risks related to cybersecurity threats and incidents.
In the conduct of our business, Axcelis collects, uses, transmits, and stores data on information technology systems. This data includes confidential information belonging to Axcelis, our employees or our customers or other business partners, some of which is personally-identifiable information of individuals. As reported in the 2024 Verizon Data Breach Investigation Report, cyber-attacks in the manufacturing industries are almost entirely financially motivated. Axcelis has been and expects to continue to be subject to cybersecurity threats and incidents, including through employee error or misuse; individual attempts to gain unauthorized access to information systems; and sophisticated and targeted measures known as advanced persistent threats, none of which have had a material impact on the Company to date.
Axcelis implements a “Layered Security Strategy” that aligns with National Institute of Standards and Technology Cybersecurity Framework. To do so, we devote resources to network security, data encryption, employee training and other measures to protect our systems and data from unauthorized access or misuse. This includes continuously monitoring and reacting to the cybersecurity environment, by implementing best-in-class solutions from several vendors. On an on-going basis, we engage a cybersecurity consultant to validate and advise on the Company’s cyber landscape and to drive employee vigilance through employee cyber training and messaging. We continually replace less secure legacy systems to improve internal and external cyber defenses and maintain a cyber incident response plan including reporting and recovery processes. See Item IC “Cybersecurity” below. In addition, as discussed in our proxy statement, the Audit Committee and the full Board of Directors receive quarterly reports on cybersecurity risks and annual reports on management initiatives to promote cybersecurity.
However, depending on their nature and scope, cybersecurity incidents could result in business disruption; the misappropriation, corruption or loss of confidential information and critical data (Axcelis’ and that of third parties); reputational damage; unnecessary expense; litigation with third parties; diminution in the value of Axcelis’ investment in research, development, and engineering; data privacy issues; and increased cybersecurity protection and remediation costs. These adverse outcomes could negatively impact our revenues, expenses, profitability, and asset values.
Axcelis is subject to risks associated with compliance with environmental, health and safety regulations.
Axcelis is subject to environmental, health and safety regulations in connection with its global business operations, including but not limited to: regulations related to the development, manufacture, shipping, and use of its products; handling, discharge, recycling and disposal of hazardous materials used in its products or in producing its products; the
operation of its facilities; and the use of its real property. The failure or inability to comply with existing or future environmental and safety regulations could result in: significant remediation or other legal liabilities; the imposition of penalties and fines; restrictions on the development, manufacture, sale, shipment or use of certain of its products; limitations on the operation of its facilities or ability to use its real property; and a decrease in the value of its real property. Axcelis could be required to alter its manufacturing and operations and incur substantial expense in order to comply with environmental, health and safety regulations. Any failure to comply with these regulations could subject Axcelis to significant costs and liabilities that could adversely affect Axcelis’ business, financial condition, and results of operations.
Our financial condition and results of operations could be adversely affected by global pandemics.
Global pandemics have in the past and may again in the future cause disruptions and restrictions on our operations and ability to travel, and similar disruptions and restrictions impacting our suppliers or customers could adversely affect our sales and operating results. Axcelis’ products rely on an extensive global supply chain, and shortages of certain parts could impact our ability to meet customers’ shipment expectations, negatively affecting our revenues. Such pandemics may drive changes in the demand for certain of our customers’ products, resulting in their delay or cancelation of purchases from us. The extent to which pandemics may impact our results will depend on future developments, which are highly uncertain and cannot be predicted.
Our proprietary technology may be vulnerable to efforts by competitors to challenge or design around, potentially reducing our market share.
We rely on a combination of patents, copyrights, trademark and trade secret laws, non-disclosure agreements and other intellectual property protection methods to protect our proprietary technology. Despite our efforts to protect our intellectual property, our competitors may be able to challenge, design around or legitimately use the proprietary technology embedded in our systems or other technology or information used in our business. If this occurs, the value of our proprietary technology will be diminished. Our means of protecting our proprietary rights may not be adequate and our patents may not be sufficient to prevent others from using technology that is similar to or the same as our technology. Patents issued to us may be challenged and might be invalidated or circumvented and any rights granted under our patents may not provide adequate protection to us. Our competitors may independently develop similar technology, duplicate features of our products or design around patents that may be issued to us. As a result of these threats to our proprietary technology, we may have to resort to costly litigation to enforce or defend our intellectual property rights. Finally, all patents expire after a period of time (in the U.S., patents expire 20 years from the date of filing of the patent application). Our market share could be negatively impacted by the invalidation or expiration of a patent which had created a barrier for our competitors.
Axcelis also has agreements with third parties for licensing of patented or proprietary technology with Axcelis as the licensor or the licensee. Termination of license agreements or claims of infringement with respect to such technology could have an adverse impact on our financial performance or ability to ship products with existing configurations.
We (or customers that we indemnify) might face intellectual property infringement claims or patent disputes that may be costly to resolve and, if resolved against us, could be very costly to us and prevent us from making and selling our systems.
From time to time, claims and proceedings may be asserted against us relative to patent validity or infringement matters. We typically agree to indemnify our customers from liability to third parties for intellectual property infringement arising from the use of our products in their intended manner. Therefore, we may receive notification from customers who believe that we owe them indemnification or other obligations related to infringement claims made against the customers by third parties. Our involvement in any patent dispute or other intellectual property dispute or action to protect trade secrets, even if the claims are without merit, could be very expensive and could divert the attention of our management. Adverse determinations in any litigation could subject us to significant liabilities to third parties, require us to remove certain features from our products or seek costly licenses from third parties or prevent us from manufacturing and selling our systems. In addition, infringement indemnification clauses in system sale agreements may require us to take other actions
or require us to provide certain remedies to customers who are exposed to indemnified liabilities. Any of these situations could have a material adverse effect on our business results.
If operations were to be disrupted at Axcelis’ manufacturing facilities, it would have a negative impact on our business.
Our primary manufacturing facility is located in Massachusetts, with a smaller facility located in South Korea. Our operations could be subject to disruption for a variety of reasons, including, but not limited to severe weather events, other effects of climate change, natural disasters, work stoppages, operational facility constraints and terrorism. Such disruption could cause delays in shipments of products to our customers and could result in cancellation of orders or loss of customers, which could seriously harm our business.
If we do not have access to capital on favorable terms, on the timeline we anticipate, or at all, our financial condition and results of operations could be materially adversely affected.
We require a substantial amount of capital to meet our operating requirements and remain competitive. We routinely incur significant costs to purchase inventory to meet expected system sales, to develop and introduce new products, and to place evaluation systems at new customer sites. There can be no assurance that we will realize a return on the capital expended. Although our current cash levels and borrowing capacity are expected to be adequate for our foreseeable cash requirements, if our operating results falter, or our cash flow or capital resources prove inadequate, we may incur debt to fund these requirements. Significant volatility or disruption in the global financial markets may result in us not being able to obtain additional financing on favorable terms, on the timeline we anticipate, or at all, and we may not be able to refinance, if necessary, any outstanding debt when due, all of which could have a material adverse effect on our financial condition. Any inability to obtain financing on favorable terms, on the timeline we anticipate, or at all, may cause us to curtail our operations significantly, reduce planned capital expenditures and research and development, or obtain funds through arrangements that management does not currently anticipate, including disposing of our assets and relinquishing rights to certain technologies, the occurrence of any of which may significantly impair our ability to remain competitive, and materially and adversely affect our results of operations and financial condition.
The market price of our common stock may be volatile, which could result in substantial losses for investors.
The stock markets in general, and the markets for semiconductor equipment stocks in particular, have experienced extreme volatility that has often been unrelated to the operating performance of particular companies. These broad market fluctuations may adversely affect the trading price of our common stock. The market price of the common stock may also fluctuate significantly in response to the following factors, among others, some of which are beyond our control:
● variations in our quarterly results;
● the issuance or repurchase of shares of our common stock;
● changes in securities analysts’ estimates of our financial performance;
● changes in market valuations of similar companies;
● announcements by us or our competitors of significant contracts, acquisitions, strategic partnerships, joint ventures, capital commitments, new products or product enhancements;
● loss of a major customer or failure to complete significant transactions;
● additions or departures of key personnel; and
● new positions adopted by investor stewardship groups and proxy advisory firms regarding desired environmental, social and governance disclosures, policies, ranking systems, and other initiatives.
The trading price of our common stock in the past has been significantly volatile, and we cannot accurately predict every potential risk that may materially and adversely affect our stock price.
We operate in jurisdictions with complex and changing tax laws.
We are also subject to laws and regulations in various jurisdictions that determine how much profit has been
earned and when it is subject to taxation in that jurisdiction. In the United States, for example, the Inflation Reduction Act (IRA) imposes a 15% book minimum tax on corporations with three-year average annual adjusted financial statement income exceeding $1 billion. To date, the IRA has not materially impacted our effective tax rate.
Corporate tax reform, anti-base-erosion rules and tax transparency continue to be high legislative or regulatory priorities in many jurisdictions. Changes in laws and regulations regarding these matters could impact the jurisdictions where we are deemed to earn income, which could in turn adversely affect our tax liability and results of operations. As of December 31, 2024, 54 countries have enacted various aspects of the Organization for Economic Co-operation and Development’s Base Erosion and Profit Shifting 2.0 Pillar Two global minimum tax (GMT). In 35 of those countries, the GMT is effective beginning in 2024. Based on currently enacted law and countries we operate in, the impact of GMT on our 2024 results did not have an impact on our business.

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ITEM 1B. UNRESOLVED STAFF COMMENTS
Item 1B. Unresolved Staff Comments.
None.

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ITEM 2. PROPERTIES
Item 2. Properties.
We lease our principal facility in Beverly, Massachusetts, which comprises 417,000 square feet. The facility is used for manufacturing, research and development, sales/marketing, customer support, advanced process development, product demonstration, customer-training center and corporate headquarters. We also lease our Axcelis Asia Operations Center in South Korea, which comprises 38,000 square feet and is principally used for manufacturing, and the Axcelis Logistics Center, a state-of-the-art logistics and flex manufacturing center with 101,800 square feet built to our specifications, in Beverly, Massachusetts.
We believe that our manufacturing facilities and equipment generally are well maintained, in good operating condition, suitable for our purposes, and adequate for our present operations.
We own 23 acres of undeveloped property in Beverly, Massachusetts, adjacent to our headquarters.
As of December 31, 2024, we also leased 47 other properties, of which 10 are located in the United States and the remainder are located in Asia and Europe, including offices in Taiwan, Singapore, South Korea, China, Japan, Italy and Germany. These properties are used for sales, service and warehousing.
Our Beverly, Massachusetts facility is ISO 9001:2015, ISO 14001:2015, and ISO 45001:2018 certified, our European office is ISO 9001:2015 certified, and our Asia Axcelis Operations Center is ISO 14001:2015 and ISO 45001:2018.

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ITEM 3. LEGAL PROCEEDINGS
Item 3. Legal Proceedings.
We are not presently a party to any litigation that we believe might have a material adverse effect on our business operations. We are, from time to time, a party to litigation that arises in the normal course of our business operations.

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ITEM 4. MINE SAFETY DISCLOSURE
Item 4. Mine Safety Disclosures.
Not applicable.
PART II

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ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
Our common stock trades on the Nasdaq Global Select Market under the symbol ACLS. As of February 23, 2025, we had approximately 668 stockholders of record.
The following table summarizes the stock repurchase activity for the 12 months ended December 31, 2024 pursuant to our stock repurchase program:
Total Number of Shares Purchased
Average Price Paid per Share
Total Number of Shares Purchased as Part of Publicly Announced Program
Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
(in thousands except per share amounts)
January 1 through January 31
$124.72
$
182,523
February 1 through February 29
$121.31
175,007
March 1 through March 31
-
-
175,007
April 1 through April 30
$103.33
166,999
May 1 through May 31
$110.03
160,011
June 1 through June 30
-
-
160,011
July 1 through July 31
$137.48
150,387
August 1 through August 31
$111.33
145,011
September 1 through September 30
-
-
145,011
October 1 through October 31
$96.23
135,003
November 1 through November 30
$85.37
130,012
December 1 through December 31
-
-
$
130,012
Total
We currently maintain one equity compensation plan, the 2012 Equity Incentive Plan (the “2012 Equity Plan”). The number of shares issuable upon vesting of outstanding restricted stock units granted to employees and non-employee directors, as well as the number of shares remaining available for future issuance, under the 2012 Equity Plan and our 2020 Employee Stock Purchase Plan as of December 31, 2024 are summarized in the following table:
(A)
(B)
(C)
Plan category
Number of shares to be issued upon exercise of outstanding options, warrants and rights (1)
Weighted-average exercise price of outstanding options, warrants and rights (2)
Number of shares remaining available for future issuance under equity compensation plans (excluding shares reflected in column (A)) (3)
Equity compensation plans approved by stockholders
464,904
$ -
1,299,342
Equity compensation plans not approved by stockholders
-
N/A
N/A
Total
464,904
1,299,342
(1) Represents 464,904 shares issuable on vesting of outstanding RSUs under the 2012 Equity Plan (some of which will be withheld in respect of tax withholding obligations).
(2) For the purposes of this table, the weighted-average exercise price of outstanding options, warrants and rights includes RSUs as if they had a $0.00 exercise price.
(3) Represents the total shares available for issuance under our 2012 Equity Plan and our 2020 Employee Stock Purchase Plan, as of December 31, 2024, as follows:
(A)
419,955 shares were available for future issuance under the 2012 Equity Plan. Such amount represents the total number of shares reserved for issuance under the 2012 Equity Plan ((7,762,500 shares approved by the shareholders, plus 1,777,029 shares added in accordance with the terms of the 2012 Equity Plan as a result of the expiration or forfeiture of awards granted under our prior equity grant plan that were outstanding at the time of the adoption of the 2012 Equity Plan), less the shares issuable on options and restricted stock units (counted at 1.5 shares each) outstanding under the 2012 Equity Plan included in column (A)) and the shares issued prior to such date on exercise of options and vesting of restricted stock units granted under the 2012 Equity Plan. This plan is generally used for grants to employees and directors and was initially approved by our stockholders at our 2012 annual meeting.
(B)
879,387 shares were available under our 2020 Employee Stock Purchase Plan, which represents the total number of shares reserved for issuance under the plan (1,000,000) less the shares purchased through December 31, 2024.

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ITEM 6. SELECTED FINANCIAL DATA
Item 6. [RESERVED]

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ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
Certain statements in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” are forward-looking statements that involve risks and uncertainties. Words such as may, will, should, would, anticipates, expects, intends, plans, believes, seeks, estimates and similar expressions identify such forward-looking statements. The forward-looking statements contained herein are based on current expectations and entail various risks and uncertainties that could cause actual results to differ materially from those expressed in such forward-looking statements. Factors that might cause such a difference include, among other things, those set forth under “Liquidity and Capital Resources” and “Risk Factors” and others discussed elsewhere in this Annual Report on Form 10-K. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s analysis only as of the date hereof. We assume no obligation to update these forward-looking statements to reflect actual results or changes in factors or assumptions affecting forward-looking statements, except as may be required by law.
Overview
The semiconductor capital equipment industry is subject to cyclical swings in capital spending by semiconductor chip manufacturers. Capital spending is influenced by demand for semiconductors and the products using them, the utilization rate and capacity of existing semiconductor chip manufacturing facilities and changes in semiconductor technology, all of which are outside of our control. As a result, our revenue may fluctuate from year to year and period to period. Our established cost structure does not vary significantly with changes in volume. We may also experience fluctuations in operating results and cash flows depending on our revenue level.
Revenue for 2024 was $1,017.9 million, compared to $1,130.6 million in 2023. Systems revenue for 2024 was $782.6 million, compared to $883.6 million in 2023. Gross margin percent for the year was 44.7% compared to 43.5% in 2023. Operating profit was $210.8 million in 2024, compared to $265.8 million in 2023. Net income for the year was $201.0 million, compared to $246.3 million in 2023.
The Company is in a strong competitive position. A focused strategy on ion implant, combined with the hard work and dedication of our employees and the encouragement and support of our customers and suppliers, enabled us to achieve numerous critical milestones in our drive to market leadership. Important accomplishments in 2024 included:
● We delivered revenue of $1,017.9 million in 2024 and earnings per share of $6.15.
● We remained a technology leader and supplier of choice in the implant-intensive power device segment, which accounted for 56% of the value of our 2024 system shipments.
● We continued working to expand our footprint with existing and new customers and currently have two Purion evaluation systems in the field at strategic customer sites in key market segments.
● We continued our investment in our Customer Solutions & Innovation (“CS&I”) aftermarket business to drive financial growth and increased customer satisfaction levels, including the “Digital Tool Box,” an innovative service offering with online training, remote diagnosis and install, and automated troubleshooting guide.
● We received 22 customer satisfaction awards in 2024. In addition, Axcelis was named to both the 2023 and 2024 editions of Forbes’ List of America’s Best Mid-Cap Companies and to both the Fortune Magazine’s 2023 and 2024 lists of the Top 100 Fastest Growing Companies.
We continue to work diligently to ensure that manufacturing and operating expense levels remain well aligned to business conditions.
The market for our systems and aftermarket products and services is represented by a relatively small number of companies. In 2024, the top 20 semiconductor chip manufacturers accounted for approximately 87.6% of total semiconductor capital equipment spending, down from 92.0% in 2023. Our net revenue from our ten largest customers accounted for 45.9% of total revenue for the year ended December 31, 2024 compared to 51.7% and 59.4% of revenue for the years ended December 31, 2023 and 2022, respectively. For the year ended December 31, 2024, no customers represented ten percent or more of total revenue.
Critical Accounting Estimates
Management’s discussion and analysis of our financial condition and results of operations are based upon Axcelis’ consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States. The preparation of these financial statements requires management to make estimates and judgments that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosure of contingent assets and liabilities. On an on-going basis, we evaluate our estimates and assumptions. Management’s estimates are based on historical experience and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.
We believe the following accounting policies are critical in the portrayal of our financial condition and results of operations and require management’s most significant judgments and estimates in the preparation of our consolidated financial statements. For additional accounting policies, see Note 2 to the consolidated financial statements for the year ended December 31, 2024 included in this Annual Report on Form 10-K.
Revenue Recognition
Our accounting policies relating to the recognition of revenue require management to make estimates, determinations and judgments based on historical experience and on various other assumptions, which include (i) the existence of a contract with the customer, (ii) the identification of the performance obligations in the contract, (iii) the value of any variable consideration in the contract, (iv) the standalone selling price of multiple obligations in the contract, for the purpose of allocating the consideration in the contract, and (v) determining when a performance obligation has been met. Our revenue recognition policies are set forth in section (j) of Note 2, Summary of Significant Accounting Policies, to the consolidated financial statements for the year ended December 31, 2024 included in this Annual Report on Form 10-K. Recognition of revenue based on incorrect judgments, including an erroneous allocation of the estimated sales price between the units of accounting, could result in inappropriate recognition of revenue, or incorrect timing of revenue recognition, which could have a material effect on our financial condition and results of operations.
Inventory-Provision for Excess and Obsolescence and Lower of Cost or Net Realizable Value
We record a provision for estimated excess and obsolete inventory and lower of cost or net realizable value. The provision is determined using management’s assumptions of materials usage, based on estimates of forecasted and historical demand and market conditions. Specifically, our assumptions of forecasted system sales and the size and utilization of the installed base of systems may have a significant effect on estimated materials usage. If actual market conditions become less favorable than those projected by management, additional inventory write-downs may be required.
Although we make every effort to ensure the accuracy of our forecasts or product demand and pricing assumptions, any significant unanticipated changes in demand, pricing, or technical developments would significantly impact the value of our inventory and our reported operating results. In the future, if we determine that inventory needs to be written down, we will recognize such costs in our cost of revenue at the time of such determination. If we subsequently sell product that has previously been written down, our gross margin in that period will be favorably impacted.
Product Warranty
We generally offer a one-year warranty for all of our systems, the terms and conditions of which vary depending upon the product sold. For all systems sold, we accrue a liability for the estimated cost of standard warranty at the time of system shipment and defer the portion of systems revenue attributable to the relative fair value of non-standard warranty. Costs for non-standard warranty are expensed as incurred. Factors that affect our warranty liability include the number of installed units, historical and anticipated product failure rates, material usage and service labor costs. We periodically assess the adequacy of our recorded liability and adjust the amount as necessary.
Income Taxes
We record income taxes using the asset and liability method. Deferred income tax assets and liabilities are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective income tax basis, and net operating loss and tax credit carryforwards.
We establish a valuation allowance when it is more likely than not that some portion or all of the deferred tax assets will not be realized. Significant management judgment is required in determining our provision for income taxes, the deferred tax assets and liabilities and any valuation allowance recorded against those net deferred tax assets.
We evaluate the weight of all available evidence such as historical losses, the expected timing of the reversals of existing temporary differences and projected future taxable income to determine whether it is more likely than not that some portion or all of the net deferred income tax assets will not be realized.
Our income tax expense includes the largest amount of tax benefit for an uncertain tax position that is more likely than not to be sustained upon audit based on the technical merits of the tax position. Settlements with tax authorities, the expiration of statutes of limitations for particular tax positions or obtaining new information on particular tax positions may cause a change to the effective tax rate. We recognize accrued interest related to unrecognized tax benefits as interest expense and penalties as operating expense.
Results of Operations
The following year-to-year comparative statements include the 2024 and 2023 year periods. For comparative statements for the 2023 and 2022 periods, please refer to our 2023 Annual Report on Form 10-K, filed with the Securities
and Exchange Commission on February 23, 2024, as amended by Amendment No. 1 thereto, filed with the Securities and Exchange Commission on February 28, 2024.
The following table sets forth our results of operations as a percentage of total revenue:
Year ended
December 31,
Revenue:
Product
96.0
%
96.9
%
Services
4.0
3.1
Total revenue
100.0
100.0
Cost of revenue:
Product
51.5
53.8
Services
3.8
2.7
Total cost of revenue
55.3
56.5
Gross profit
44.7
43.5
Operating expenses:
Research and development
10.4
8.6
Sales and marketing
6.7
5.6
General and administrative
6.9
5.8
Total operating expenses
24.0
20.0
Income from operations
20.7
23.5
Other income (expense):
Interest income
2.4
1.6
Interest expense
(0.5)
(0.5)
Other, net
0.1
(0.0)
Total other income
2.0
1.1
Income before income taxes
22.7
24.6
Income tax provision
2.9
2.9
Net income
19.8
%
21.7
%
Revenue
The following table sets forth our revenue:
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
Revenue:
Product
$
976,881
$
1,095,650
$
(118,769)
(10.8)
%
Percentage of revenue
96.0
%
96.9
%
Services
40,984
34,954
6,030
17.3
%
Percentage of revenue
4.0
%
3.1
%
Total revenue
$
1,017,865
$
1,130,604
$
(112,739)
(10.0)
%
Product
Product revenue, which includes new system sales, sales of spare parts, product upgrades and used system sales was $976.9 million or 96.0% of revenue in 2024, compared with $1,095.7 million or 96.9% of revenue in 2023. The decrease in product revenue in 2024 was primarily driven by a decrease in the number of Purion systems sold.
A portion of our revenue from system sales is deferred until installation and other services related to future deliverables are performed. The total amount of deferred revenue at December 31, 2024 and 2023 was $138.2 million and $210.9 million, respectively. The decrease was primarily due to a decrease in system prepayments.
Services
Services revenue, which includes the labor component of maintenance and service contracts and fees for service hours provided by on-site service personnel, was $41.0 million, or 4.0% of revenue for 2024, compared with $35.0 million, or 3.1% of revenue for 2023. Although services revenue typically increases with the expansion of the installed base of systems, it can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities, which affects the need for equipment service.
Revenue Categories used by Management
In addition to the line-item revenue categories discussed above, management also uses revenue categorizations which break down revenue into other groupings. Management regularly disaggregates revenue in the following categories, which it finds relevant and useful:
● Systems and Customer Solutions and Innovation (“CS&I”, or “aftermarket”) revenue is
A. The portion of Product revenue relating to spare parts, product upgrades and used systems combined with;
B. Service revenue, which is the labor component of aftermarket revenues
Aftermarket revenue reflects current fab utilization as opposed to System revenue, which reflects capital investment decisions by our customers, which have differing economic drivers;
● Revenue by geographic regions, since economic factors impacting customer purchasing decisions may vary by geographic region; and
● Revenue by our customers’ end markets, since they tend to be subject to different economic environments at different periods of time, impacting a customer’s likelihood of purchasing capital equipment during any particular period; currently, management uses three end market categories: Memory, mature process technology and leading edge foundry and logic.
The CS&I/aftermarket revenue categories for the twelve month periods ended December 31, 2024 and 2023 are discussed below.
CS&I/Aftermarket
Revenue from our aftermarket business was $235.3 million in 2024, compared to $247.0 million for 2023. Aftermarket revenue generally increases with the expansion of the installed base of systems but can fluctuate from period to period based on capacity utilization at customers’ manufacturing facilities which affects the sale of spare parts and demand for equipment service.
Gross Profit / Gross Margin
The following table sets forth our gross profit (dollars in thousands):
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
Gross Profit:
Product
$
452,430
$
487,538
$
(35,108)
(7.2)
%
Product gross margin
46.3
%
44.5
%
Services
2,224
3,763
(1,539)
(40.9)
%
Services gross margin
5.4
%
10.7
%
Total gross profit
$
454,654
$
491,301
$
(36,647)
(7.5)
%
Gross margin
44.7
%
43.5
%
Product
Gross margin from product revenue was 46.3% for the twelve months ended December 31, 2024, compared to 44.5% for the twelve months ended December 31, 2023. The increase in gross margin resulted from a favorable mix of system shipments and improved margins on Purion systems.
Services
Gross margin from services revenue was 5.4% for the twelve months ended December 31, 2024, compared to 10.7% for the twelve months ended December 31, 2023. The decrease in gross margin is attributable to changes in the mix of service contracts.
Operating Expenses
The following table sets forth our operating expenses:
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
Research and development
$
105,497
$
96,907
$
8,590
8.9
%
Percentage of revenue
10.4
%
8.6
%
Sales and marketing
68,046
62,805
5,241
8.3
%
Percentage of revenue
6.7
%
5.6
%
General and administrative
70,317
65,794
4,523
6.9
%
Percentage of revenue
6.9
%
5.8
%
Total operating expenses
$
243,860
$
225,506
$
18,354
8.1
%
Percentage of revenue
24.0
%
20.0
%
Our operating expenses consist primarily of personnel costs, including salaries, commissions, bonuses, stock-based compensation and related benefits and taxes; project material costs related to the design and development of new products and enhancement of existing products; and professional fees, facilities and amortization and depreciation expenses. Personnel costs are our largest expense, representing $144.2 million, or 59.1% of our total operating expenses, for the year ended December 31, 2024; and $135.1 million, or 59.9% of our total operating expenses for the year ended December 31, 2023.
Research and Development
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
Research and development
$
105,497
$
96,907
$
8,590
8.9
%
Percentage of revenue
10.4
%
8.6
%
Our ability to remain competitive depends largely on continuously developing innovative technology, with new and enhanced features and systems and introducing them at competitive prices on a timely basis. Accordingly, based on our strategic plan, we establish annual research and development budgets to fund programs that we expect will drive competitive advantages.
Research and development (“R&D”) expense was $105.5 million in 2024, an increase of $8.6 million, or 8.9%, compared with $96.9 million in 2023. The increase was primarily due to increased outside services, materials and supplies expense to support ongoing R&D projects as well as higher personnel expenses associated with an increase in wages and benefits partially offset by a decrease in variable compensation expense and temporary employee expenses.
Sales and Marketing
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
Sales and marketing
$
68,046
$
62,805
$
5,241
8.3
%
Percentage of revenue
6.7
%
5.6
%
Our sales and marketing expenses result primarily from the sale of our equipment and services through our direct sales force.
Sales and marketing expense was $68.0 million in 2024, an increase of $5.2 million, or 8.3%, compared with $62.8 million in 2023. The increase was primarily due to higher personnel expenses associated with an increase in wages and stock compensation partially offset by a decrease in variable compensation expense.
General and Administrative
Year ended
Period-to-Period
December 31,
Change
$
%
(dollars in thousands)
General and administrative
$
70,317
$
65,794
$
4,523
6.9
%
Percentage of revenue
6.9
%
5.8
%
Our general and administrative expenses result primarily from the costs associated with our executive, finance, information technology, legal and human resource functions.
General and administrative expense was $70.3 million in 2024, an increase of $4.5 million, or 6.9%, compared with $65.8 million in 2023. The increase was primarily due to higher bad debt expense and higher personnel expenses associated with an increase in wages and benefits partially offset by a decrease in variable compensation expense.
Other Income (Expense)
Other income (expense) consists of interest earned and accretion on our invested cash balances, interest expense relating to the finance lease obligation we incurred in connection with the 2015 sale of our headquarters facility (“sale
leaseback”) as well as foreign exchange gains and losses attributable to both fluctuations of the U.S. dollar against the local currencies of certain of the countries in which we operate and forward currency exchange contracts.
Year ended
Period-to-period
December 31,
change
$
%
(dollars in thousands)
Other income (expense):
$
19,480
$
12,804
$
6,676
52.1
%
Percentage of revenue
2.0
%
1.1
%
Other income for the year ended December 31, 2024 was $19.5 million, which includes $24.4 million of interest income on our investments, partially offset by $5.5 million of interest expense related to our sale leaseback obligation and $9.1 million of foreign exchange losses, offset by $9.1 million of foreign exchange gains from forward exchange contracts. Other expense for the year ended December 31, 2023 was $12.8 million, which includes $18.2 million of interest income on our investments, partially offset by $5.3 million of interest expense related to our sale leaseback obligation.
Income Taxes
Year ended
Period-to-period
December 31,
change
$
%
(dollars in thousands)
Income tax provision
$
29,282
$
32,336
$
(3,054)
(9.4)
%
Percentage of revenue
2.9
%
2.9
%
Income tax expense was $29.3 million for the year ended December 31, 2024, compared to $32.3 million in 2023. The effective tax rate for the year ended December 31, 2024 was 12.7% compared to 11.6% for year the ended December 31, 2023. The increase in the effective tax rate in 2024 is primarily due to a decrease in the benefit associated with stock-based compensation.
Liquidity and Capital Resources
Our liquidity is affected by many factors. Some of these relate specifically to the operations of our business. For example, our sales and other factors are influenced by the uncertainties of global economies, including the availability of credit and the condition of the overall semiconductor capital equipment industry. Our industry requires ongoing investments in operations and research and development that are not easily adjusted to reflect changes in revenue. As a result, profitability and cash flows can fluctuate more widely than revenue.
In 2024, $140.8 million of cash was provided by operating activities. This compares to $156.9 million of cash provided by operations in 2023. Cash and cash equivalents at December 31, 2024 was $123.5 million, compared to $167.3 million at December 31, 2023. Approximately $41.8 million of cash was located in foreign jurisdictions as of December 31, 2024. In addition to the cash and cash equivalent balance at December 31, 2024, we had $7.6 million in restricted cash which relates to a $5.9 million cash collateral relating to our lease for our headquarters in Beverly, Massachusetts, a $0.9 million letter of credit for customs purposes, a $0.7 million letter of credit relating to workers’ compensation insurance and a $0.1 million deposit relating to customs activity. Working capital at December 31, 2024 was $916.1 million. At December 31, 2024, we had no bank debt.
In 2024, $108.7 million of cash was used in investing activities, $12.2 million of which was used for capital expenditures. We used $539.1 million of cash for purchases of short-term investments in 2024, partially offset by maturities of short-term investment of $442.6 million. We held $447.8 million of short-term investments at December 31, 2024. These short-term investments consist of U.S. Government securities and agency investments. In 2023, $100.9 million of cash was used in investing activities, $20.7 million of which was used for capital expenditures. We used $388.8 million of cash for purchases of short-term investments in 2023, partially offset by maturities of short-term investments of $308.6 million. Total capital expenditures for 2025 are projected to be approximately $20 million. Future capital expenditures beyond 2025
will depend on a number of factors, including the timing and rate of expansion of our business and our ability to generate cash to fund them.
Cash used in financing activities for the year ended December 31, 2024 was $71.2 million, which consisted of $60.5 million related to our stock repurchase program, $11.6 million related to net settlement of restricted stock issuances and $1.5 million related to principal reduction on our finance lease. These amounts were partially offset by $2.4 million in proceeds from our employee stock purchase plan. Cash used in financing activities was $68.3 million for the year ended December 31, 2023, which consisted of $52.5 million related to our stock repurchase program, $16.6 million related to net settlement of restricted stock issuances, and $1.2 million of principal reduction on our finance lease. These amounts were partially offset by $2.1 million in proceeds from our employee stock purchase plan.
We have outstanding letters of credit, surety bonds and deposits in the amount of $17.5 million to cover the security deposit under the lease of our headquarters, our workers’ compensation insurance program, customs and bank deposits and certain value added tax claims in Europe.
The following represents our commercial commitments as of December 31, 2024 (in thousands):
Amount of
Commitment
Expiration by Period
Other Commercial Commitments
Total
Surety bonds
$
9,927
$
7,183
$
2,110
$
Standby letters of credit and deposits
7,536
7,536
-
-
Total
$
17,463
$
14,719
$
2,110
$
The following represents our contractual obligations as of December 31, 2024 (in thousands):
Payments Due by Period
Contractual Obligations
Total
2026-2027
2028-2029
2030-Beyond
Sale leaseback obligation
$
79,653
$
5,930
$
12,136
$
12,627
$
48,960
Purchase order commitments
187,450
178,644
8,315
Operating leases
42,119
6,663
8,422
4,650
22,384
Total
$
309,222
$
191,237
$
28,873
$
17,746
$
71,366
We have no off-balance sheet arrangements as of December 31, 2024. See Note 18 - Income Taxes in the Notes to the Consolidated Financial Statements for information related to our unrecognized tax benefits.
We consider the undistributed earnings of our foreign subsidiaries as of December 31, 2024 to be indefinitely reinvested and, accordingly, no U.S. income taxes have been provided thereon. As of December 31, 2024, there was no cash associated with indefinitely reinvested foreign earnings. We have not, nor do we anticipate the need to, repatriate funds to the United States to satisfy domestic liquidity needs arising in the ordinary course of business. Upon repatriation of those earnings, in the form of dividends or otherwise, we could be subject to withholding taxes payable to the various foreign tax jurisdictions.
Under the rules of the U.S. Securities and Exchange Commission (the “SEC”), we qualify as a “well-known seasoned issuer,” which allows us to file shelf registration statements to register an unspecified amount of securities that are effective upon filing. On August 3, 2023, we filed such a shelf registration statement with the SEC for the issuance of an unspecified amount of common stock, preferred stock, various series of debt securities and/or warrants to purchase any of such securities, either individually or in units, from time to time at prices and on terms to be determined at the time of any such offering. This registration statement was effective upon filing and will expire in August 2026. We may file another shelf registration statement to maintain the availability of this financing option.
We have a cash collateralized letter of credit of $5.9 million, which is classified as long-term restricted cash on our balance sheet at December 31, 2024.
We believe that based on our current market, revenue, expense and cash flow forecasts, our existing cash, cash equivalents and short-term investments will be sufficient to satisfy our anticipated cash requirements for the short and long-term.
Related-Party Transactions
There are no significant related-party transactions that require disclosure in the consolidated financial statements for the year ended December 31, 2024, or in this Annual Report on Form 10-K.
Recent Accounting Pronouncements
A discussion of recent accounting pronouncements, the impact of some of which may be material, is included in Note 2 to the consolidated financial statements for the year ended December 31, 2024 included in this Annual Report on Form 10-K.

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ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
Interest Rate Sensitivity
Our exposure to market risk for changes in interest rates relates primarily to our investment portfolio, which consists of cash equivalents and short-term investments at December 31, 2024. The primary objective of our investment activities is to preserve principal. This is accomplished by investing in marketable investment grade securities. We do not use derivative financial instruments in managing our investment portfolio. Due to the nature of our investments, we do not expect our operating results or cash flows to be affected to any significant degree by any change in market interest rates.
Foreign Currency Exchange Risk
Substantially all of our sales are billed in U.S. dollars, thereby reducing the impact of fluctuations in foreign exchange rates on our results. We are exposed to certain risks relating to our ongoing business operations, including market risks relating to fluctuations in foreign currency exchange rates. Operating margins of certain foreign operations can fluctuate with changes in foreign exchange rates to the extent revenue is billed in U.S. dollars and operating expenses are incurred in the local currency. We have entered forward exchange contracts in order to mitigate risks associated with fluctuations in exchange rates on forecasted transactions denominated in foreign currencies and to minimize the impact of foreign currency fluctuations on our earnings and cash flows. These contracts have month-to-month settlement dates. During the years ended December 31, 2024 and 2023, approximately 6.2% and 5.8% of our revenue, respectively, were derived in local currencies from foreign operations with this inherent risk. In addition, at December 31, 2024 and 2023, our operations outside the United States accounted for approximately 9.2% and 9.4% of our total assets, respectively, the majority of which was denominated in currencies other than the U.S. dollar.

---

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Item 8. Financial Statements and Supplementary Data.
Response to this Item is submitted as a separate section of this report immediately following Item 15.

---

ITEM 9. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS
Item 9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.
None.

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ITEM 9A. CONTROLS AND PROCEDURES
Item 9A. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures.
Our management, with the participation of our principal executive officer and principal financial officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this Annual Report on Form 10-K (the “Evaluation Date”). Based on this evaluation, our principal executive officer and principal financial officer concluded that, as of the Evaluation Date, these disclosure controls and procedures are effective.
Internal Control over Financial Reporting
Management’s Annual Report on Internal Control over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rule 13a-15(f) under the Exchange Act. Because of its inherent limitations, internal control over financial reporting may not prevent or detect all misstatements. A control system, no matter how well designed and operated, can provide only reasonable assurance with respect to financial statement preparation and presentation. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management assessed the effectiveness of our internal control over financial reporting as of December 31, 2024. In making this assessment, management used the criteria set forth in the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”) Internal Control-2013 Integrated Framework.
Based on this assessment, management has concluded that, as of December 31, 2024, our internal control over financial reporting is effective based on those criteria.
The independent registered public accounting firm of Ernst & Young LLP, as auditors of our consolidated financial statements, has issued an attestation report on its assessment of our internal control over financial reporting.
Report of Independent Registered Public Accounting Firm
To the Stockholders and the Board of Directors of Axcelis Technologies, Inc.
Opinion on Internal Control Over Financial Reporting
We have audited Axcelis Technologies, Inc.’s internal control over financial reporting as of December 31, 2024, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, Axcelis Technologies, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2024, based on the COSO criteria.
We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the 2024 consolidated financial statements of the Company and our report dated February 27, 2025 expressed an unqualified opinion thereon.
Basis for Opinion
The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Annual Report on Internal Control over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.
Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control Over Financial Reporting
A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect
misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Ernst & Young LLP
Boston, Massachusetts
February 27, 2025
Changes in Internal Control over Financial Reporting
There was no change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) identified in connection with the evaluation of our internal control that occurred during our fourth quarter that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

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ITEM 9B. OTHER INFORMATION
Item 9B. Other Information.
During the quarter ended December 31, 2024, no director or officer adopted or terminated any contract, instrument or written plan for the purchase or sale of Axcelis securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or any non-Rule 10b5-1 trading arrangement as defined in Item 408(c) of Regulation S-K.

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ITEM 10. DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
Item 10. Directors, Executive Officers and Corporate Governance.
A portion of the information required by Item 10 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in the Axcelis Proxy Statement for the Annual Meeting of Stockholders to be held May 7, 2025 (the “Proxy Statement”) captioned:
● “Proposal 1: Election of Directors,”
● “Board of Directors,”
● “Board Committees,” and
● “Corporate Governance.”
The remainder of such information is set forth under the heading “Information about Our Executive Officers” at the end of Item 1 in Part I of this report and is incorporated herein by reference.

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ITEM 11. EXECUTIVE COMPENSATION
Item 11. Executive Compensation.
The information required by Item 11 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in the Proxy Statement captioned:
● “Executive Compensation,” and
● “Board Committees-Compensation Committee Interlocks and Insider Participation.”

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ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.
The information required by Item 12 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in the Proxy Statement captioned:
● “Share Ownership of 5% Stockholders,” and
● “Share Ownership of Directors and Executive Officers.”

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ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Item 13. Certain Relationships and Related Transactions and Director Independence.
The information required by Item 13 of Form 10-K is incorporated by reference from the information responsive thereto contained in the sections in the Proxy Statement captioned:
● “Executive Compensation,”
● “Board of Directors,” and
● “Corporate Governance-Certain Relationships and Related Transactions.”

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ITEM 14. PRINCIPAL ACCOUNTING FEES AND SERVICES
Item 14. Principal Accountant Fees and Services
The information required by Item 14 of Form 10-K is incorporated by reference from the information responsive thereto contained in the section captioned “Proposal 2: Ratification of the Appointment of our Independent Registered Public Accounting Firm” in the Proxy Statement.
PART IV

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ITEM 15. EXHIBITS, FINANCIAL STATEMENT SCHEDULES
Item 15. Exhibits and Financial Statement Schedules.
(a)
The following documents are filed as part of this Report:
1) Financial Statements:
Report of Independent Registered Public Accounting Firm (PCAOB ID: 42)
Consolidated Statements of Operations - For the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Comprehensive Income - For the years ended December 31, 2024, 2023 and 2022
Consolidated Balance Sheets - December 31, 2024 and 2023
Consolidated Statements of Stockholders’ Equity - For the years ended December 31, 2024, 2023 and 2022
Consolidated Statements of Cash Flows - For the years ended December 31, 2024, 2023 and 2022
Notes to Consolidated Financial Statements
2) Financial Statement Schedules:
Schedule II-Valuation and Qualifying Accounts for the years ended December 31, 2024, 2023 and 2022.
3) Exhibits
The exhibits filed as part of this Annual Report on Form 10-K are listed on the Exhibit Index immediately preceding the signature page, which Exhibit Index is incorporated herein by reference.
All other schedules for which provision is made in the applicable regulation of the Securities and Exchange Commission are not required under the related instructions or are inapplicable, and therefore have been omitted.