VEECO INSTRUMENTS INC.VEECO INSTRUMENTS INC.INVESTOR PRESENTATIONINVESTOR PRESENTATION

JULY 26, 2005JULY 26, 2005

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VEECO PROVIDES ENABLING TECHNOLOGY VEECO PROVIDES ENABLING TECHNOLOGY FOR PROCESS EQUIPMENT AND METROLOGY FOR PROCESS EQUIPMENT AND METROLOGY

FOR MULTIPLE GROWTH MARKETSFOR MULTIPLE GROWTH MARKETS

1” Drives for CE; iPod, 90 and 65nm; 300mm HB-LEDs, Automotive, Nanotech & Life ScienceCell Phones, Perpendicular TFHs Camera Cell Phones, LCD TV

Data Storage Semiconductor LED/WirelesData Storage Semiconductor LED/Wireless s Scientific ResearchScientific Research

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ENABLING SOLUTIONS ADDRESS COMMON CHALLENGES ACROSS MULTIPLE END-MARKETS

Process Equipment

• Ion Beam Etch & Deposition

• Physical Vapor Deposition

• Molecular Beam Epitaxy

• Metal Organic CVD

• Diamond-Like Carbon

• Lapping, Dicing & Slicing

Metrology

• Automated Atomic Force Microscopes

• Research AFMs and SPMs

• Stylus Profilers/Optical Interferometers

Enabling SolutionsCore technologies, capable of R&D and manufacturing, key to multi-year technology road maps

Data Storage

Semiconductor LED/Wireless

Scientific Research

• Technology solutions for R&D and production challenges

• Smaller geometries• New/ difficult

materials• Higher performance• Lower costs

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ADD MATERIAL (DEPOSITION)

REMOVE MATERIAL

IMAGE, MEASURE & MONITOR

VEECO LEVERAGES CORE TECHNOLOGIES IN GROWTH MARKETS

MARKETS WE SERVE...

Multiple markets provide stable growth …Broader opportunities

than silicon semiconductor

2004 REVENUE ($390M;UP 40%)

WE PROVIDE “KEY TECHNOLOGIES” FOR DEVELOPMENT AND MANUFACTURING

% of Veeco Revenue

• Ion Beam Deposition (IBD)• Physical Vapor Deposition (PVD)• Molecular Beam Epitaxy (MBE)• Diamond-Like Coating (DLC)• Metal Organic CVD (MOCVD)

• Ion Beam Etch (IBE)• Reactive Ion Beam Etch (RIBE)• Precision Lapping/Slicing

• Atomic Force Microscopy (AFM)

• Scanning Probe Microscopy (SPM)

• Stylus Profilers

• Optical Profilers

• Interferometers

• Quasi-static Magnetic Measurements

Semiconductor

Data StorageWireless

25%25%

32%32%

14%14%

29%29%

Scientific Research

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OUR CORE TECHNOLOGIES SERVE MULTIPLE MARKETS

DATA STORAGE SEMI/WIRELESSSCIENTIFIC RESEARCH

KEY LEADERSHIP TECHNOLOGIES CREATE CRITICAL MASS IN STRATEGIC GROWTH MARKETS, AT MAJOR ACCOUNTS

METROLOGY

Auto AFM, Res AFM, Optical

PROCESS EQUIPMENT

IBE IBD PVD Lapping-Slicing MBE MOVCD$227M $163M

$124M $152M $114M

$ amounts represent 2004 revenues

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• In the post PC era…microdrives, HB-LEDs, color displays, and wireless technology will enable a wave of new high volume, digital consumer electronics for mass markets (installed base of1.5B cell phones)

• A diverse market and product mix allows Veeco a broader customer base than most other semi equipment companies

• Veeco well positioned to benefit from growth in “converging” data storage, semiconductor, HB-LED display opportunities…based on Veeco’s core technologies

VEECO INVESTMENT THEMES

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SERVING INDUSTRY LEADERS IN MULTIPLE MARKETS

Semiconductor

LED/Wireless

Data Storage

Scientific Research

#1 Equipment Supplier for TFMHs;

Etch, Deposition, Lapping, Slicing, Dicing and

Metrology

Only Broad line Equipment and Metrology Supplier

MBE, MOCVD (Epitaxial Deposition) and Metrology

#1 3D AFM Metrology

Automated Atomic Force Microscopy and Optical

Profilers

#1 AFMs, SPMs and Optical Profilers

Breadth of research solutions

MARKETS PRODUCTS CUSTOMERS

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VEECO MULTI-MARKET GROWTH OPPORTUNITY

Data Storage Microdrive growth to enable new wireless consumer products (iPod, MP3 players, camera/cell phones). Development of next generation 160/200 GB drives and advanced development of perpendicular heads for 2006/2007. Industry to add capacity to double HDD unit manufacturing in 3 years

Semiconductor Complete deployment of 90/65nm, 300mm (8-10 AFMs per fab)

Wireless New application opportunity for Blue/White LED’s for backlighting of color displays, handheld camera/ cell phone, large area color displays, PDA, Wi Max, automotive, and solid state lighting

Scientific Research Continued strength of research AFMs/SPMs, characterization of new materials. Nanoscience emerges (life sciences, material sciences, genomics)

The content of Veeco’s enabling technologies increases in new consumer and nanotech applications

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THE NEXT BIG GROWTH OPPORTUNITY…beyond the PC

A $150B DIGITAL CONSUMER

ELECTRONICS MARKET BY 2007

$150B

$ 60B

Consumer Electronics Opportunities

High Chip, LED, color display, storage content (40%)

Capital Equip. required (17%)

Compared to:

IC capital equipment 2004… a 22% expansion to traditional market size

$ 10B

$ 45B

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DRAMATIC CONSUMER PRODUCT GROWTH (CG’04-’08)

Flat Panel Display Backlighting

HB-LED Headlights

Home Media Server

Enabled by the convergence of

semiconductor chips, wireless chips,

microdrives, high resolution color

displays, and high brightness LEDs

HDD for DVR/DVT

HDD for GPS; Auto Nav.

HDD for Digital Cameras, Audio/

Video PlayerWireless Mobile

Consumer Products

+35.9% CAGR

+61.4% CAGR

+33.6% CAGR

+145.7% CAGR

+159.2% CAGR

+71.2% CAGR

Sources: IDC, 2004; Strategies Unlimited 2004

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NEW CONSUMER ELECTRONICS BASED ON MICRODRIVE, HB LED, COLOR DISPLAY TECHNOLOGY

Apple iPod includes 6,10, 20 GB small

drives with content (higher ASP)

Palm One Camera-Equipped Smart Phone

Samsung introduces cell phone with small

drive

Seagate introduces 5 GB palm size,

pocket hard drives

Verizon to introduce music/TV downloads

for smart phones

Palm One sold 300,000 camera equipped Smart

Phones in 3 months

Nokia WiFi-equipped Communicator Cell Phone targets traveling executives

Apple sold 15 million units(sold 5M at Christmas)

iPod, MP3, smart cell phones, will converge Opportunity for small drives, HB LED growth

MARKET TRENDSMARKET TRENDS

DATA STORAGEDATA STORAGE

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DATA STORAGE… growth continues, orders up 33% to $60M, following increases in Q105 and Q404

• Record orders of $60M included Veeco Ion Beam, Slider, Optical Metrology and Auto AFM buys…multi million dollar orders from all 5 leading hard drive head manufacturers

• Drive manufacturers are reporting near 100% utilization rates in wafer and slider factories…essentially selling every drive they manufacture…many are reviewing capexspending increases quarterly

• Veeco record Data Storage revenue of $47M increased 85% in Q2. Ion Beam product revenue $46.6M; GM 43%

• Q1/Q2 buys reflect increases to current capacity and investment in technology for development of perpendicular heads for next generation areal density requirements

• Increased capex spending appears better aligned to increased demand than in previous cycles (volatility still a concern)

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DATA STORAGE… growth continues, orders up 33% to $60M, following increases in Q105 and Q404

• Digital consumer electronics will drive growth in the HDD industry over the next several years… CE forecasted to grow 39%/year through 2008… Sub 1.8” drives to penetrate

– set top boxes (DVR/DTV) – digital cameras/cell phones (could be 100 million drives) Nokia, Samsung– information appliances – “pocket” drives– automotive GPS

• Continued proliferation of new consumer drive products…approaching 20GB microdrives and 1TB desktop

• Overall industry drive revenue forecasted to grow 20% in 2005 (consumer applications)

• Heads per drive are increasing with 2005 forecasted growth (up 20%) to 900 million heads from 740 million in 2004

• Veeco breadth of technology provides strategic value to our customers…will allow introduction of new products ALD/PVD/DLC/next generation slider mechanical processing…in 2006

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0200400600800

1000120014001600

1956

1966

1976

1986

1996

2006

M U

nits

–A

nnua

l HD

D S

hipm

ents

PC era

3.5” 2.5”

3rd era 20

16

Mainframe era

24”, 14”

1st era Minicomputer era

8”, 5.25”

2nd era

2004

Consumer era

2.5” 1.8” 1”3.5”

DVD/HDD recorder since 2002

MP3 HDD since 2001

4th era

Source : Hitachi GST Estimate

CONSUMER APPLICATIONS ENABLE EXPONENTIAL GROWTH

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TiVo/DVR

Entertainment Centers/PCs

Laptop

Game (Xbox, PlayStation, etc)

Automobile GPS Navigation

MP4 Video

DATA STORAGE HOME OF THE (NEAR) FUTURE

Mobile Phone

By 2010 each household will include 10 HDDs*

MP3 Music (i.e., iPod)

Home Applications

Mobile Applications

New Microdrive(.85 dia.)

Home Media Server

* Source: Hitachi Global Storage Technologies

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Xbox

DATA STORAGE …Hard Disk Drive Unit Growth

1980 1985 1990 1995 2000 2005 2010 2015

Uni

t Driv

e Sh

ipm

ents

(mill

ions

)

800

700

600

500

400

300

200

100

0

Consumer Electronics

Laptop PC

Desktop PC

Enterprise

Servers

Desktop

Laptop

TiVo

iPodGPS

MobilePhones

Approx30%

ofHDDsby

2006

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DATA STORAGE HARD DRIVE GROWTHCONSUMER ELECTRONICS ADOPTION

Source: IDC Mar2005

ConsumerElectronics

Traditional (PC,Laptop, Enterprise)

CAGR(2004-2008)

39%

9%

15%Total0

100

200

300

400

500

600

CY04 CY05 CY06 CY07 CY08

HD

D U

nits

(Mill

ions

)

CE 1 out of 7

CE 1 out of 3

Growth in CE and traditional computer markets

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UNPRECEDENTED TECHNOLOGY AND FORM FACTOR CHANGES OCCURRING SIMULTANEOUSLY

1000

100

10

1

100

10

1

100

10

1

100

10

100

10

100

10

100

10

100

10

100

10

1

100

10

1

100

10

1

100

10

100

10

100

10

100

10

100

10

00 01 02 03 04 05 06 07

Are

alD

ensi

ty (G

bit/i

n2 )2 )

Perpendicular

Recording

Longitudinal Recording

CPP

GMR

TMR

Reader & Writer Development

Pico Slider

Femto Slider

Mini Micro Namo Pico Femto(100%) (70%) (50%) (30%) (20%)

1975

19871990

1995 2004?

Mini Micro Namo Pico Femto(100%) (70%) (50%) (30%) (20%)

1975

19871990

1995 2004?

Slider Shrinks

Microdrives

MicrodrivesTFMH Technology Changes Drive Capital Equipment Growth

Areal density roadmap increases (50%) per year toward CPP (perpendicular recording) capable of 1 Terabit/in² (2006)…will

require new manufacturing technology

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VEECO: IN EVERY STEP OF YOUR TFMH PROCESS

WAFER PROCESSES ROWBAR/SLIDER PROCESSES HGS, FINAL ASSY AND TEST

NEW MTI

Slicing

NEW MTI

Dicing

SEMICONDUCTORSEMICONDUCTOR

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IN SEMICONDUCTOR …Q2 orders $19M, up 32% sequentially, include (1) Ion Beam deposition system for advanced masks

• Despite our initial 2005 expectations of an industry-wide Semi Capexsoftening…we see continued world wide acceptance of our Auto AFMin Wafer Fabs for 90nm and 70nm, 300M applications

• Q2 Auto AFM orders remain steady. Received order for IBD-LDD advanced photomask deposition tool

• In general, our AFM sales will be paced by leading edge 90/70 nmdeployment in 2005

• KLA, a key competitor, has withdrawn their AFM product (10 beta site units have been returned)

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VEECO’S SEMICONDUCTOR OPPORTUNITY:SHRINKING DIMENSIONS REQUIRE 3D METROLOGY• Veeco has the broadest line of 3D

AFM non-destructive Metrology solutions

• Our goal is to be a step ahead of industry roadmap…90…65…45nm

• Top 10 semi device manufacturers have at least one AFM in line wafer fab – 300 systems installed…TAM 10 per fab

• We have launched new systems for specific applications in Etch, CMP, CD control, Photolithography

Veeco Dimension X3D and 65nm scan

26nm lines in R&D sample

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LEADING ATOMIC FORCE MICROSCOPE TIP TECHNOLOGYLEADING ATOMIC FORCE MICROSCOPE TIP TECHNOLOGY

Veeco tip development roadmap addresses leading edge 45nm and

25nm applications

• Recent JDP with Leti and Team NanoTech for advanced tip development

• Next-gen tips required to meet industry roadmap and improve customers’ CoO

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VEECO HAS PENETRATED KEY SEMICONDUCTOR CUSTOMER BASE

• Tech. Dev. CentersIBMTSMCUMCAMDInfineonSematechLetiSeleteTICNT

• IDMsIntelSamsungMicronIBMHynixToshibaST MicroAMDInfineonTI

• FoundriesTSMCUMCUMCiSMICPromosInotera

9 out of 10 Top Semi Customers use Veeco’s AFM solutions

Veeco expanded applications support identifiying new “AFM applications”

LED/WIRELESSLED/WIRELESS

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LED/WIRELESS…Q2 orders $13.3M, down 5% sequentially, signal “market bottom”

• As we expected, Veeco LED 2005 revenue will decline 25% as mobile cell phone growth slows, Taiwan/China have excess capacity…and supplier consolidation proceeds

• Industry LED device growth was 37% in ’04 to $3.5B; ’05 to be marked by ASP declines and slower unit growth

• Next LED growth wave…large area flat panel LCD TVs, automotive lighting and specialty architectural lighting expected in 2006

• The LED market is forecasted to double from $3.5B to $7.0B in the next 5 years driven by Blue/Green/White LED penetration evolving from keypad and color display backlighting

• To large area LCD TV (Sony/Samsung/Philips announcing 20”/40” TV’s)• To automotive tail light/turn signals/interior light, eventually headlights • To specialty lighting for buildings/bridges/museums/airports high resolution signs

and eventually to general illumination in homes and offices penetrating the $12B/year world-wide lighting business (2008 to 2010 timeframe)

• Veeco to use 2005 to improve product reliability, reduce warranty cost, introduce GaNzilla II plus…prepare for 2006 growth and improved gross margins

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Color LCD DisplayCamera Phone—Flash LED (camera phones will show rapid growth ‘04-’07)Mid-end using 11 LED, High-End using 24 LED

Sideview Whitefor color displays 1.0/0.8/0.6t600mcd ~1cdWhite Multi LEDs

for Camera flash3 White or RGB whitemore than 2cd

Multi chip indicators

Slim SMD Blue or Whitefor keypads0.35t

4 or 1 chip

3 chips

Main : 3 chip(sub-display :2)

8 ~ 12 chips

LEDS IN MOBILE PHONES…over 45 LED chips per phone~670M phones sold in 2004

Source: Samsung SEMCO, Blue 2004

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LED FORECAST…GaN HB LED market continues to grow (22% CAGR ’05 to ’09)

Source: Strategies Unlimited

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1960 1970 1980 1990 2000 2010 2020

Rel

ativ

e LE

D U

nit S

hipm

ents

EnterpriseRed Indicator Lights

Red HB-LEDs

Blue & Green

HB-LED (GaN)

White

Backlighting

Gener

alIllu

min

atio

n

Red LED

Blue & Green HB-LEDRed HB-LEDTail Light

HB-LED Headlights

Small LCD Backlighting

Cell Phone PDA

Large LCD Backlighting

$12BHB-LEDMarket

Size

SOLID STATE LIGHTING GROWTH OPPORTUNITYRed, Green, Blue HB-LEDs >20% CAGR

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EPITAXY ROADMAP…DEFINES NEXT GENERATION VEECO MOCVDGaN HB-LEDS

Color Binning (wavelength in nanometers)

Brig

htne

ss(m

Wpe

r std

LE

D a

rea)

8mW

7mW

6mW

5mW

4mW

3mW

2mW

1mW 2001

2002

2003

2005

+ 5nm + 4nm + 3nm < + 2.5nm <+ 2nm

Headlights

OutdoorSignage

MobilePhones

Large LCDBacklighting

Blue Keypads

20062007

TrafficLights

2004

20 lumens/watt

40 lumens/watt

60 lumens/watt

General Illum.

>2012

>100

lumens/W

GaNzilla I MOCVD

GaNzilla II MOCVD

NexGenMOCVD

New Applications Enabled By Advanced Epitaxy Films

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GANZILLA II MOCVD VALUE PROPOSITION

Value Proposition:

Superior Productivity from Higher Throughput and Narrower Device Binning

FEATURE BENEFIT1. New Flow Flange Narrower Binning =

Higher Yields

2. Heater Filament Improved Reliability

3. Advanced controls Improved Reliability

4. PyroControl & Temp Stability = RealtempTemp Higher Yields.

5. Automation Increased t'put

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COMPOUND SEMICONDUCTOR: HIGH BRIGHTNESS LIGHT EMITTING DIODES (HB-LEDS)

Primary Growth Demand

Timeframe Application

2015-2020 General Illumination

2010-2015 Automobile Headlights

2005-2010 Large LCD Backlights

2000-2005 Mobile Phone Backlights2002 2003 2004 2005 2006 2007

$5B

$4B

$3B

$2B

$1B

$5B

$4B

$3B

$2B

$1B

30% CAGR2002-2007

2002 2003 2004 2005 2006 2007

$5B

$4B

$3B

$2B

$1B

$5B

$4B

$3B

$2B

$1B

30% CAGR2002-2007

GaN-based HB-LEDs

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KEY LED APPLICATIONS

AutomotiveLighting

GeneralIllumination

OutdoorSignage

Mobile Appliances

HeadlampsDashboard

Heads up displays

60 million light vehicles produced per year; only 40% use LEDs

Headlamps and DRL will be introduced as

brightness continues to increase

Interior lightingIndustrial

Event lighting

5% of LED market in 2004, growing fast

Flexibility of light quality and color drives

novel applications

5-10 years before major adoption into

general lighting

Large displaysTraffic signals

Storefront lighting

Signage displays continue to become

larger and more dynamic

Beijing 2008 Olympics driving adoption in

China

Cell phonesPDAs

Flashlights

57% growth in LEDs for backlighting in

2004

Expected growth for white “flash” LED and other small displays

LCDBacklighting

Flat Panel TVsLaptops

Retail Display

Color rendering significantly higher than CCFL (100%

NTSC)

Adopted for high-end TV units; will increase penetration as price

falls

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SOLID STATE LIGHTING TO PENETRATE $12B GENERAL ILLUMINATION MARKET

•20% of Global Electricity Demand is for Lighting•Solid State Lighting (HB-LED) will Cut Consumption in Half

Satellite Composite Photo at Night

2015

Solid State Lighting

2005

Incandescent

SCIENTIFIC RESEARCHSCIENTIFIC RESEARCH

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IN SCIENTIFIC RESEARCH… Q2 orders $26M, up 3% sequentially

• We see continued strength of our profitable optical and AFM Metrology products in Material Science/Life Science and Nanotech material applications

• We will introduce new metrology products for extended applications in the second half of 2005 to grow this profitable Veeco segment

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WHY THE FOCUS ON “NANO-BIO”?

• Life Science Instrumentation is fastest growing portion of analytical instrumentation business

• Forecasted to grow 29% CAGR from 2003-2008 (versus 6% overall for the analytical instrumentation market)

• Nanomaterials: $35B market by 2020 ($200M in 2002)

• Industry lacks nanoscale metrology standards: a key bottleneck in development and manufacturing of commercial nano and bio-materials

• Veeco believes that the “nano-bio” instrumentation market is a large growth opportunity – should surpass GNP, electronic industry and information technology growth rates – and we are aligning our new product development programs to this area

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NANOTECHNOLOGY “All The World’s Industry Is In Its Path”

AFMs Image, Measure and Manipulate Nanoscale Structures

Life Science Information TechnologyNano Ruler

Magnetic Bits (HDD)160nmx40nm (100Gb/in2).

MEMS10um – 1mm

Transistor0.5um – 90nm

Quantum Dots20nm wide ea.

Silicon Atom0.2nm dia

Human Hair70um wide

Red Blood Cells3um dia

DNA Strand2nm wide

1,000,000nm

100,000nm

10,000nm

1,000nm

100nm

10nm

1nm

0.1nm

Magnetic Bits (HDD)160nmx40nm (100Gb/in2).

MEMS10um – 1mm

MEMS10um – 1mm

Transistor0.5um – 90nm

Quantum Dots20nm wide ea.

Silicon Atom0.2nm dia

Human Hair70um wide

Red Blood Cells3um dia

DNA Strand2nm wide

Silicon Atom0.2nm dia

Human Hair70um wide

Red Blood Cells3um dia

DNA Strand2nm wide

1,000,000nm

100,000nm

10,000nm

1,000nm

100nm

10nm

1nm

0.1nm

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AFM APPLICATIONS ‘LAB-TO-FAB’

CMP Etch Litho Resist Litho Masks

DNA

Nano-manipulation& PicoForce

Topography Magnetics Life Science Nano ‘Pull / Position”

Non-destructive(SARS virus)

Polarization Meas.(BiFeO3 spheres)

Atomic Scale Meas.(Copper seed layer)

RESEARCH & SCIENTIFIC (installed base >7000 systems)

PRODUCTION FAB (installed base >300 systems)

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• Nano Metrology

• Nano Manipulation

• Nano Material

Carbon Nanotube Transistor

VEECO’S SCIENTIFIC RESEARCH BUSINESS INCLUDES:

Nanotechnology

Materials Research

Life Sciences

• Semiconductor• Future Data Storage• Polymers

• Living Cells• DNA• Proteomics

Polymers Cu Films Magnetic Storage Media

DNA Lipids Protein Crystal Detection

$116

$961

$-

$200

$400

$600

$800

1997 2004

NANOTECHNOLOGY ($M)

Government Nanotech Funding Source: NNI

$116

$961

$-

$200

$400

$600

$800

1997 2004

NANOTECHNOLOGY ($M)

Government Nanotech Funding Source: NNI

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NANOMATERIALS

• Nanomaterials: $35B market by 2020 ($200M in 2002)

• Industry lacks nanoscale metrology standards: a key bottleneck in development and manufacturing of commercial nanomaterials

Veeco and Dow receive a $6M NIST/ ATP to Develop New Nanotechnology tools

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PICOFORCE AND NANOMAN FOR SINGLE MOLECULE MEASUREMENTAND NANOMANIPULATION

Pulls or stretches molecules and produces force spectroscopy

readings at Pico-Newton levels

MANIPULATION OF DNA USING VEECO’S NANOMAN SCANNING PROBE

100+ Units Sold Since Introduction

THE 2005 MODELTHE 2005 MODEL

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THE 2005 REVENUE MODEL by Business Segment

$390M TO $400M

$168M TO $171M

$68M TO $71M

$154M TO $158M

2005 RANGE

+3% TO +5%

-24% TO -27%

+15% TO +18%

2005 CHANGE

$390M

$163M

$93M

$134M

2004

Total

Metrology(Auto AFM/Research AFM

and Optical)

Epitaxial Equipment(MOCVD/MBE)

Ion Beam and Mechanical Equipment(IBE/IBD/Slider)

PROJECTED REVENUE/PRODUCT MIX CHANGE FOR 2005

Revenue mix change favors higher Vecco gross margin

Data Storage Growth

LED Decline

Scientific Research/Industrial Metrology Growth

Flat to modest growth

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THE GROSS MARGIN MODEL 2005

50%

55%

44%

46%

2006TARGET GROSS MARGIN

39.5%

52%

24%

35%

’04 YEAR

43%-44%40% 46%Total

53%52% 55%Metrology(Auto AFM/Research

AFM and Optical)

30%25% 33%Epitaxial Equipment(MOCVD/MBE)

42%36% 44%Ion Beam and Mechanical Equipment(IBE/IBD/Slider)

‘05 YEAR’05 QUARTERLY

INCREASE

IMPROVED GROSS MARGINS IN EACH BUSINESS SEGMENT

Q2 Disappointing…GaNzilla II helps GM 30-35%

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“THE 2005 INCOME MODEL”

16%

34%

50%

100%

Q206

13%

35%

48%

100%

Q106

8%

36%

44%

100%

2005 YR

3%

37%

40%

100%

Q1

10%8%5%EBITA

36%

46%

100%

Q4

36%37%Operating Expenses

44%42%Gross Margin

100%100%Sales

Q3Q2

IMPROVE GROSS MARGINS 2% PER QUARTER

APPROXIMATE TIME FRAME

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2005 PROFIT GROWTH PLAN ON FLAT REVENUE

54

60

98

114109

117

90

124 15540

40

73

$0

$50

$100

$150

$200

$250

$300

$350

$400

$450

2003 2004A 2005E

+4%

+35%

+37%

+151%$279M

$390M +40% $405M +4%

-26%

+11%

+25%

+2%

Favorable product mix change (higher Data Storage, less Epitaxial revenue, stable Scientific Research/Metrology)… improves Veeco profitability

CS

Semi

DS

SciRes

▲ ▲

EBITA $13.0M $13.8M $~30M*

* Based on projected cost reductions, material savings, new products, warranty cost reductions and mix change

Q3 2005 GUIDANCEQ3 2005 GUIDANCE

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Q3 2005 GUIDANCE (as of 7/25/05)

• Q3 revenues and orders in the range of $95-105 million

• Q3 2005 GAAP earnings in the range of $(0.02) to $0.05 per share

• Q3 2005 non-GAAP (excluding amortization) earnings per diluted share are expected to be between $0.08 and $0.13 using a 35% taxrate

FINANCIALSFINANCIALS

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ORDERS, REVENUE AND EBITA UP…Exceed guidance and prior quarter

• Q2 revenue $103M, up 10% sequentially, above $90-$95M guidance, up 4% from prior year.

• Sequentially Data Storage up 85% $47.4M Semiconductor down 3% 16.9LED/Wireless down 38% 13.9Scientific Research down 12% 25.2 Total up 10% $103.4M

• Strong Data Storage Ion Beam, Slider and Metrology revenue as hard drive growth continues

Semiconductor

Scientific Research

LED/Wireless

13%13%25%25%

16%16%46%46%

Data Storage

(Record level)

Benefit of Diverse Market Mix and Data Storage Growth

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VEECO 6 MONTHS REVENUE

• 6 months revenue $197M, up 4% Y/Y; Semiconductor and Data Storage increase

6 months revenue Data Storage up 9% $73.0MSemiconductor up 19% 34.3LED/Wireless down 5% 36.2Scientific Research down 5% 53.8 Total up 4% $197.3M

Semiconductor

Scientific Research LED/Wireless

18%18%28%28%

17%17%

37%37%Data Storage

Benefit of Diverse Market Mix

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VEECO 2ND QUARTER… Orders up 20%...strength in Data Storage and Semiconductor

• Q2 orders $119M, up 20% sequentially, above $90-95M guidance, down 5% from prior year

Sequentially Data Storage up 33% $60.4M (record level) 1.30Semiconductor up 32% 19.0 (AFM and IBD mask) 1.10LED/Wireless down 5% 13.3 0.96Scientific Res. up 3% 25.9 1.03Total up 20% $118.6M 1.15

• Positive Book/Bill 1.15 to 1 (above sector performance)

• Ending Backlog > $155M• Record Data Storage Orders

(consumer electronic growth, continuedData Storage capacity ramp, technology investment in perpendicular

head investment)

Semiconductor

Scientific Research

LED/Wireless

11%11%

22%22%

16%16%51%51%

Data Storage

Diverse market mix allows Veeco greater growth than Silicon/Semi market

B/B

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Q2 ORDERS BY GEOGRAPHIC REGION

• Good penetration of International Markets

• 31% growth in APAC region as it becomes our largest region

• Data Storage, LED and Semiconductor customers shift additional decision making to APAC

APAC

N. America

Japan16%16%

27%27%

38%38%

19%19%

Europe

Q2 Orders $119M

$31.4M

$22.7M

$45.4M

$19.1M

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Q2 HIGHLIGHTS…Gross Margins and EBITA improve

• EBITA $6.1M up130% sequentially, up 21% y/y• EPS excluding amortization $.09

• above $.04 to $.07 guidance• Gross Margin 42%, 2% above Q1…in line with guidance, above prior

year 41.2%• Margins on track with 40, 42, 44, 46% Gross Margin quarterly

improvement plan (Ion Beam out- performs, Epitaxial under-performs)• Operating Expenses $37.4M or 36% in line with forecast…Q3/Q4 to

be 35%, 33%... • Inventory decreased $5.7M• Accounts receivable DSO reduced to 54 days• Cash flow was a positive $8.7M• Balance Sheet cash increased to $109M

• Pre-tax Veeco was breakeven on a GAAP basis

57

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STRONG VEECO BALANCE SHEET

($ IN MILLIONS)

Cash and Investments $ 109.4 $100.3

Working Capital 217.9 216.8

Fixed Assets 70.8 73.5

Total Assets 553.7 576.9

Long-Term Debt 229.4 229.6

Shareholders’ Equity $ 244.7 $ 252.4

June 30, 2005

Dec. 31,2004

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VEECO MULTI-MARKET GROWTH OPPORTUNITY

Data Storage Microdrive growth to enable new wireless consumer products (iPod, MP3 players, camera/cell phones). Development of next generation 160/200 GB drives and advanced development of perpendicular heads for 2006/2007. Industry to add capacity to double HDD unit manufacturing in 3 years

Semiconductor Complete deployment of 90/65nm, 300mm (8-10 AFMs per fab)

LED/Wireless New application opportunity for Blue/White LED’s for backlighting of color displays, handheld camera/ cell phone, large area color displays, PDA, Wi Max, automotive, and solid state lighting

Scientific Research Continued strength of research AFMs/SPMs, characterization of new materials. Nanoscience emerges (life sciences, material sciences, genomics)

The content of Veeco’s enabling technologies increases in new consumer and nanotech applications

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VEECO IS WELL POSITIONED FOR OPPORTUNITIES IN GROWTH MARKETS

2004 2007

Wireless consumer Electronics

with embedded

Micro drives

White LED backlighting

LCD TV, automotive and general illumination

Use of In-Line 3D AFM

Metrology for 90, 65 and

45 nm

Extending Nanoscience

Applications to Life Sciences

and NanoMaterials

~$600MRevenue*

Technology Convergence

Enabling Consumer Electronics

$400M+Revenue*

2005 2006

+40% +6%

$390MRevenue*

+40%

3 YR 15% CG RATE

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SAFE HARBOR STATEMENT

• To the extent that this presentation discusses expectations about market condition, market acceptance and future sales of Veeco’s products, Veeco’s future financial performance, or otherwise makes statements about the future, such statements are forward-looking and are subject to a number of risks and uncertainties that could cause actual results to differ materially from the statements made. These factors include the challenges of continuing weakness in end market conditions and the cyclical nature of the telecommunications/wireless, data storage, semiconductor andresearch markets, risks associated with integrating acquired businesses and the acceptance of new products by individual customers and by the marketplace and other factors discussed in the Business Description and Management’s Discussion and Analysis sections of Veeco’s Annual Report on Form 10-K, subsequent Quarterly Reports on Form 10-Q and current reports on Form 8-K .

VEECO INSTRUMENTS INC.VEECO INSTRUMENTS INC.INVESTOR PRESENTATIONINVESTOR PRESENTATION

JULY 28, 2005JULY 28, 2005

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2005 2004 High End Low End

Operating income $2,032 $420 $1,750 $4,000

Amortization expense 4,026 4,575 4,000 4,000

Earnings excluding certain charges before interest, income taxes and amortization ("EBITA") 6,058 4,995 5,750 8,000

Interest expense, net 1,959 2,239 2,000 2,000

Earnings excluding certain charges before income taxes 4,099 2,756 3,750 6,000

Income tax provision at 35% 1,435 (1) 965 (1) 1,313 (2) 2,100 (2)

Earnings excluding certain charges $2,664 $1,791 $2,438 $3,900

Earnings excluding certain charges per diluted share $0.09 $0.06 $0.08 $0.13

Diluted weighted average shares outstanding 30,003 30,177 30,300 30,300

(1) The actual income tax expense (benefit) for the three months end June 30, 2005 and June 30, 2004 was $0.5 million and ($0.2 million), respectively.

(2) The forecasted income tax expense for the three months end September 30, 2005 high end and low end guidance is $0.6 million and $0.3 million, respectively.

NOTE - The above reconciliation is intended to present Veeco's operating results, excluding certain charges and providing income taxes at a 35% statutory rate. This reconciliation is not in accordance with, or analternative method for, generally accepted accounting principles in the United States, and may be different from similar measures presented by other companies. Management of the Company evaluates performance of its business units based on EBITA, which is the primary indicator used by management to plan and forecast future periods. The presentation of this financial measure facilitates meaningful comparison with prior periods, as management of the Company believes EBITA reports baseline performance and thus provides useful information.

June 30, September 30, 2005Three months ended Guidance for three months ended