ACCURATE RELIABLE RESPONSIVE
Corporate OverviewJune 18, 2019
Forward Looking Statements
This Presentation contains “forward-looking statements” within the meaning of applicable Canadian securities legislation. These statements generally can be identified by use of forward-looking words such as “may”, “will”, “could”, “would”, “should”, “might”, “expect”, “estimate”, “anticipate”, “intend”, “consider”, “believe”, “anticipate”, “plan”, “project”, “assume”, “strategy”, “goals”, “objectives”, “potential”, “possible” or “continue” or the negative thereof or similar variations. Such forward-looking statements concern the business and anticipated financial performance of the Company and include, without limitation, the Company’s outlook on the long-term prospects of the market and the Company, the Company’s expectations with respect to the overall order activity for the balance of the year, growth in the dollar value of the wafer fabrication equipment market, revenue from new products, growth in the etch market and the Company’s ability to build on its financial and operational foundation in the future.
These forward-looking statements are based on certain factors and assumptions, including, without limitation: the Company’s ability to develop, manufacture and sell new products that meet the needs of its customers and gain commercial acceptance; the Company’s ability to continue to sell its products in line with quantity, price and delivery expectations; the Company’s ability to attract new business; the Company’s ability to successfully complete new purchase orders along the timelines expected; continued and future demand for the Company’s products; continued sales to the Company’s major customers; the continued financial health of the semiconductor industry; the Company’s ability to continue and further enhance revenue diversification and open new market opportunities; and the Company’s expectations regarding market risk, including interest rate changes, tax changes and foreign currency fluctuations.
Forward-looking statements are subject to a variety of known and unknown risks, uncertainties and other factors which could cause actual events or results to differ from those expressed or implied by the forward-looking statements, including, without limitation: additional measures and controls may not be implemented as expected or along the timelines anticipated; uncertainties relating to the market for the Company’s products and maintaining a stable level of orders; fluctuations in revenue as a result of volatility in the markets and product mix; risks relating to the Company’s present reliance on its major customers for the majority of its sales; risks relating to the Company’s reliance on the financial health of the semiconductor industry; risks relating to the development of competing technologies and the possibility of increased competition; the effect of slow growth in the United States, the Company’s principal market, as well as other economies and other economic trends and conditions in the markets that the Company and its customers serve; risks associated with technical difficulties or delays in product introductions, improvements, implementation; uncertainties in product pricing or other initiatives of the Company and its competitors; uncertainties in factors that may result in a reduction in capital expenditures and/or delayed buying decisions affecting demand for the Company’s products; risks relating to currency fluctuations, particularly between the Canadian and United States dollars; risks in pursuing additional development projects to support existing customers or pursue other business opportunities; and such other risks as are identified in the Company’s Annual Information Form and other disclosure documents filed on SEDAR atwww.sedar.com.
The foregoing assumptions, risks and uncertainties are not exhaustive of the items that may affect our forward-looking statements. Should underlying assumptions prove to be incorrect or one or more of these risks and uncertainties materialize, actual results may vary materially from those described in the forward-looking statements. The Company’s forward-looking statements are based on beliefs, expectations and opinions of management on the date the statements are made.
For the reasons set forth above, readers should not place undue reliance on forward-looking statements. The Company undertakes no obligation to update or revise any forward-looking statements included herein if these beliefs, estimates and opinions or other circumstances should change, except as otherwise required by applicable law.
2
Leadership Team
3
Board of Directors
Management Team
Over 100 Years of Semiconductor Experience
Nigel Hunton (CEO & Director)
Neil McDonnell (Board Chair)
Chuck Cargile (Independent Director)
Michele Klein (Independent Director)
Ronan McGrath (Independent Director)
Nigel Hunton (CEO)
Daniel Lee(CFO)
John Rydstrom(SVP Sales)
Sal Akram(SVP Engineering)
Nalini McIntosh(VP Human Resources)
Photon Control
4
1 A global critical subsystems supplier of fiber optic sensors for process monitoring of wafer fabrication equipment (WFE)
Continued investments in innovation and new product development to serve our customers and grow organically
Deeply integrated with customers, with locations in Vancouver, Canada; San Jose, California; and Asia
Strong balance sheet to manage through semiconductor cycles, whilst supporting corporate priorities to create long-term shareholder value
A growing installed base of over 100,000 fiber optic sensors for process monitoring applications
2
3
4
5
Aligned New Product programs to ensure long-term growth
Our high-accuracy fiber optic sensors enable improved process monitoring, uniformity, and repeatability in harsh environments, which provides value throughout the supply chain.
PhotonControl
Wafer Fabrication Equipment
Manufacturers(OEMs)
SemiconductorChip
Manufacturers
ElectronicsManufacturers
Increasedyield and
productivity
Photon Control is a Critical, Integrated Supplier
High-accuracy Fiber Optics
Sensors
Well controlled semiconductor
equipment
Improved process monitoring,
uniformity and repeatability
Servers, 5G, IoT, AI, VR/AR
Greater accessibility of technology
5
Higher performance and
lower cost
Logic and Memory chips
Deep Integration in Semiconductor Supply Chain
6
Head Office• Vancouver, BC, Canada• State-of-the-art and
scalable manufacturing facility with Class 1,000 cleanroom
• ISO 9001:2015 certified
Photon Control is a Worldwide Company
Asia Distribution Network• Japan - Japan Laser Corporation• China - Crowntech Photonics• South Korea - QSP Co., Ltd.
Silicon Valley Office• Sales• Engineering and R&D
Financial Snapshot
Fiscal 2018 Q1 2019
Revenue $47M $8M
Gross Margin 55% 53%
EBITDA Margin 33% 19%
Free Cash Flow $12M -$2M
As at March 31, 2019
Cash $37M
Order Backlog $11M
$8.9
$12.0$11.0
$13.9 $14.6
$10.1$8.2 $8.0
$0
$5
$10
$15
$20
Q22017
Q32017
Q42017
Q12018
Q22018
Q32018
Q42018
Q12019
Reve
nue
7
(in $ millions)
Management Delivering Operational Efficiencies
Markets & Technology Drivers
Global Semiconductor Market Is Large
9
Source:IC Insights (2018), The Robot Report (2018), Statistica (2018, Technvio (2017))Labeling convention: “Market”: IC Revenue in 2020 (CAGR 2016-2020)
Growth in these end markets and the trend toward smart semiconductor manufacturing will lead to growing demand for Photon Control’s products
(In $USD)
Artificial Intelligence
Exponentialgrowth
ConsumerVR / AR Digital
displays
Industrial/Medical
Smart Grid/Mobile Medical
Big Data/Cloud
Bandwidth/Memory
AutomotiveAutonomous
driving
Internet of Things
200B connected devices by 2020
MobilityTransition to 5G
Autos: $28B (9%)
Robotics $10B (30%)
IoT $21B (15%)
Phones: $90B (4%)
Servers: $17B (6%)
VR/AR: $10B (15%)
Medical: $5.9B (11%)
Deposition24%
Litho & Track20%
Automation5%
Inspection & Met.11%
Other 4%
Thermal & doping
5%
Other clean & removal10%
Plasma Etch 21%
Global WFE Market by Process(in $USD)
Lam Research
$47%
Tokyo Electron
$26%Applied Materials
19%
Hitachi $4%
Others4%
Sources Gartner, Market Share: Semiconductor Wafer Fab Equipment, Worldwide, 2017
Plasma Etch Equipment Market = $10.8BTotal WFE Market = $51B
Dry Etch Equipment Market Share(In $USD)
Photon Control’s Served Market SegmentsPlasma Etch and Deposition accounted for ~45% of the WFE market
Photon Control supplies to the largest WFE suppliers
10
Semiconductor Manufacturing Process Steps
11
Significant Opportunity For Growth in Deposition
Device Scaling Trends & the Role of Sensors
Increased manufacturing challenges as device scale and process windows shrink:• More sensors used to monitor and control
critical process parameters• More accurate sensors• Smarter sensors
Trends toward “smart” factories which use more sensors for process monitoring to:• Accelerate time to market• Increase yield • Increase uptime• Expand data analysis
Logic
3D NAND
ProcessWindow
7nm 5nm 3nm
64L 96L 128L
12
ChuckWafer
EdgeRing
Centered (using position sensors)
Higher Yield
Off-center (no position sensors)
Lower Yield
Yield loss
Market Potential
There is an opportunity to expand Photon Control’s fiber optic sensors into other markets with these attributes:• Harsh environments• Strict manufacturing tolerances
• High cost of yield, uptime and efficiency
Capitalize on Photon Control’s successful market penetration in the semiconductor industry by extending our product reach
13
Medical
Military
Aerospace
?
Transformers
Power Generation
Food ProcessingLife Sciences
Products & Differentiators
Building World-Class Products For Advanced WFE
Accurate fiber optic sensors
Uniform process in plasma etch and deposition
Improved uniformity on final wafer out of fab
Greater Chip Yieldand higher fab uptime ($$$)
Photon Control’s Fiber Optic Temperature
Probes and Converter
15
Improved Uniformity Enables Higher Chip Yields and Fab Efficiency
Our solutions become “designed in” to our customers’ products, producing stable growing revenue streams with multi-year life cycles.
Aligned New Product programs to ensure long-term growth
Photon Control’s Fiber Optic Temperature Sensors
Our fiber optic temperature sensors are used to measure the electrostatic chuck temperature in plasma etch systems
• The measured temperature is used to maintain a uniform wafer temperature during processing
Why does temperature uniformity matter?
• The performance of an individual chip is very sensitive to the local wafer temperature
• More sensors and higher accuracy sensors enable better wafer temperature control which produces higher yield
• Photon Control’s current accuracy specification is +/-0.5oC
Process Gases
Plasma
ChuckWafer
Photon Control
converter
Process Chamber
Photon Control fiber optic temperatureprobes
16
Controller
Plasma Etch Chamber (with strong RF electromagnetic fields)
Plasma
Photon Control’s Temperature Sensor Products
17
Single Channel Temperature Converters
MC5 Multi-Channel Temperature Converters
Fiber Optic Contact and Immersion Probes
• Reduced cost and form factor for multi-probe applications
• FLEXGLOTM technology improves long-term stability and lifetime
• Added self-diagnostic capabilities for predictive maintenance
• EtherCAT communication option
• Highly accurate, stable, and reliable converter
• Field-proven - Over 100,000 in the field for semiconductor manufacturing
• Proprietary optical materials and manufacturing process enables high accuracy and stability within a temperature range of -100°C to +450°C
• In-house calibration expertise ensures tight probe-to-probe repeatability
Photon Control’s Position Sensor Systems
We custom design, develop, and manufacture optical position and displacement sensors that can accurately measure wafer/chuck edge and center locations
18
Accurate and repeatable wafer placement and wafer leveling in the process chamber are critical for achieving high yield
Wafer on Chuck in a Generic Process Chamber
ChuckWafer Edge
Ring
Centered (using position sensors)
Higher Yield
Off-center (no position sensors)
Lower Yield
Yield loss
• Precise wafer placement for processing is a critical requirement for high yield
• Photon Control’s position sensors improve precision and repeatability of wafer placement
Competitive Advantages
Customer knowledgeProduct expertise, fast response time, relationship focused, local support
Product performance Best accuracy and long-term stability in harsh environments NPI to deliver high performance and achieve cost down
Proven in high volume semiconductor manufacturing >100,000 sensors in semiconductor fabs worldwide
Rapid prototypingRapid prototyping helps our customers quickly develop process monitoring solutions
World-class manufacturingNew scalable manufacturing facility, in-house phosphor lab, calibration expertise, ISO clean room, on-time-delivery
Thermal Couple /
RTD
Pyrometer, IR detector (non-contact)
Fiber Optic: GaAs bandgap
detection
Fiber Optic: Phosphor
Thermometry
Ability to perform on harsh environments
Accu
racy
and
per
form
ance
19
Advantages of phosphor fiber optic technology:High accuracy process control and improved yieldLong term stability wafers will not be misprocessedImmune to magnetic fields No interference from RF plasma or microwave sources
Advantages vs. Competing Technologies Our Advantages vs. Direct Competitors
Low value
High value
Financial Information
Key Financial Metrics
21
Proven Business Model Strong Cash Position
(in $ millions) (in $ millions)
$11.9
$8.9
$12.0 $11.0
$13.9 $14.6
$10.1
$8.2 $8.0
60%
53% 54%
45%
57% 57%
52%
52% 53%
Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Revenue
Gross Margin
$25.1 $27.0
$34.3 $33.4
$40.8 $42.7 $42.4
$37.3
Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1
2017 2018 2019
Stock Information
TSX: PHOClosing Share Price (June 14/19) $1.22
# of Shares Outstanding (Basic) 107M
# of Shares (Fully Diluted) 110M
52-Week High $2.60
52-Week Low $0.84
Market Capitalization (@June 14/19) $130M
Enterprise Value (“EV”) (@June 14/19) $93M
22
Valuation MetricsPrice-to-Earnings ratio (TTM) 17.4x
EV-to-Revenue ratio (TTM) 2.3x
EV-to-EBITDA ratio (TTM) 7.7x
Cash/Share $0.35
Key Takeaways
23
1 Continuing to invest in product development and innovation in anticipation of improving industry trends
2Investing with customers on joint development provides organic growth from etch and deposition product lines
3 Managing the business through the cyclical downturn
4Opportunities for growth within high tech industries and part of M&A committee’s focus
www.photoncontrol.comTSX: PHO