Investor Essentials Daily

This company is at the heart of the memory chip boom

April 16, 2024

The demand for memory chips has skyrocketed in recent years due to increased investments in artificial intelligence (AI) and global data center expansion, driving the need for higher production of chips like DRAM and NAND flash.

These chips are essential for powering AI applications and storing vast amounts of data.

Axcelis Technologies (ACLS) stands out in this booming market as the leading provider of ion implantation systems necessary for memory chip manufacturing.

Their Purion product line, known for high efficiency and over 90% uptime, has become indispensable in the industry, contributing to Axcelis’ financial success and significant role in meeting the growing demand for memory chips, expected to continue rising annually through 2030.

Axcelis is well-positioned to benefit from the ongoing expansion in AI and data infrastructure, marking it as a promising investment in the semiconductor sector.

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The past few years have seen unprecedented growth in the demand for memory chips thanks to increasing investments in artificial intelligence (AI) and the expansion of global data centers.

As the amount of data generated and processed continues to rise exponentially, major chip manufacturers are ramping up production to meet this surge.

Memory chips such as Dynamic Random-Access Memory (DRAM) and NAND flash are seeing rising demand to power AI applications and store the massive amounts of data generated through these technologies.

As AI models become more advanced and complex, requiring massive training datasets, there is an increasing need for high-capacity memory chips.

Similarly, companies are building large data centers globally to store consumer and business data as digital transformation accelerates.

These are driving the demand for memory chips upwards.

At the forefront of this boom stands Axcelis Technologies (ACLS), the market-leading provider of ion implantation systems critical for memory manufacturing.

Ion implantation involves bombarding silicon wafers with energized ions to impart crucial doping properties during chip fabrication. As memory chip designs have advanced with each new generation, implantation has become ever more complex.

Meeting the throughput needs of major foundries requires the most sophisticated implantation tools on the market.

For over two decades, Axcelis’ Purion product line has delivered the high current and high energy required for memory chip doping operations. The Purion implanter offers unparalleled productivity through faster wafer processing and uptime of over 90%.

It’s no surprise the Purion has become the tool of choice, with Axcelis shipping over 500 systems worldwide.

Nowhere has the Purion’s dominance been more evident than in the financials of Axcelis.

Axcelis’ leading position in the ion implantation systems for semiconductor equipment manufacturers has allowed it to achieve a record 27% Uniform ROA, aligned with a robust 17% asset growth.

Big-name customers like Samsung, SK Hynix, and Micron, have committed tens of billions to expand production. Their spending has directly fueled Axcelis’ rise.

With memory demand projected to increase over 15% annually through 2030, all signs point to a multi-year memory boom.

As the clear leader in ion implantation, Axcelis is positioned to ride this wave of memory growth to new heights. Its technology leadership and deep customer partnerships have established a track record of outperforming peers and rewarding shareholders.

For investors, Axcelis Technologies offers unique exposure to the secular trends of AI and data infrastructure – two forces that will shape the semiconductor industry for years to come.

That is why it is a great FA Alpha 50 name.

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Best regards,

Joel Litman & Rob Spivey

Chief Investment Strategist &
Director of Research
at Valens Research

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