Veeco's Q2 2025: Unraveling Contradictions in China Revenue, Tariffs, and Advanced Packaging Growth

Strong Financial Performance and Semiconductor Business Growth:
- Veeco Instruments reported revenue of $166 million for Q2 2025, exceeding the high end of guidance.
- The semiconductor business posted another robust quarter, driven by record revenue for advanced packaging systems and increased demand for ion beam deposition systems and laser spike annealing systems.

China Revenue Dynamics and Tariff Impact:
- Revenue from China customers decreased to 17% of Q2 revenue from 42% in Q1, and China accounted for 30% of first half of the year revenue.
- The decrease was partly due to the impact of reduced tariff rates, enabling previously delayed shipments to be accepted.

AI and Advanced Packaging Demand:
- AI was identified as a key driver for growth, with broad demand for Veeco's advanced packaging systems from leading foundries and OSATs.
- The company's advanced packaging business is expected to double in 2025, reflecting high demand for wet processing systems.

Growth in Key Semiconductor Applications:
- Veeco's exposure to leading-edge inflections such as gate-all-around, high-bandwidth memory, EUV lithography, and 3D packaging is expected to expand its served available market.
- The company forecasts its SAM for laser annealing to grow to $1.3 billion in 2029, driven by shrinking device geometries and new architectures.