Webinar with Intevac Hosted by Intro-Act John Chen June 18, 2020 - - PowerPoint PPT Presentation

June 2020

Webinar with Intevac

Hosted by Intro-Act

John Chen

June 18, 2020

June 2020

HDD Capacity Shipments Fueled by Nearline

2000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Actual Forecast Nearline Exabytes Feb '20 Forecast 2020 Rev (May '20) 3000 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Actual Forecast HDD Exabytes Client/PE EB NL EB

2019-2024 HDD Exabyte CAGR: 23% 2019-2024 Nearline HDD Exabyte CAGR: 32%

2020 Y-Y growth upgraded from 37% to 45% 2024 Nearline Revenue: $21.5 Billion 5-Yr CAGR = 19%

• COVID-19 and WFH accelerating cloud growth
• 2020 nearline capacity outlook upgraded due to

the stronger growth of the cloud

• Longer-term shift to WFH and economic recovery

may further accelerate move to cloud

• >50% of capacity shipped in 2019 was nearline
• By 2024, nearline will capture more than

three-quarters of all HDD capacity shipped

June 2020

Nearline Critical for Cloud/Enterprise Storage

• Nearline capacity growth dwarfs SSDs in enterprise storage
• Even if new flash technologies enable some nearline

cannibalization, there will not be enough overall NAND to significantly replace nearline HDDs

• SSDs for cloud applications will remain 8X to 10X higher in

$/GB compared to nearline through 2024

• New recording technologies will still require

high disk-per-drive ratios to deliver the needed capacity to the cloud

• Nearly 40% of all HDD units shipped in 2024

will be nearline

1 2 3 4 5 6 7 8 9 2019 2020 2021 2022 2023 2024 Disk-per-Drive Ratio Nearline DT/CE Mobile/CE

• Perf. Ent

200 400 600 800 1000 1200 1400 1600 1800 2000 200 400 600 800 1000 1200 1400 1600 1800 2000 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 Nearline and NAND Exabytes Performance Storage Exabytes eSSD Self-Built eSSDs Nearline Exabytes Total NAND

June 2020

Media Forecast: Units by Type

200 400 600 800 1,000 1,200 1,400 2019 2020 2021 2022 2023 2024 Actual Forecast Media Units, M DT/CE Mobile/CE Performance Ent Nearline

• Mfg. Capacity
• Media growing at 8% CAGR (Feb. ‘20

pre-COVID forecast)

• New recording technologies such as

HAMR and MAMR will improve areal density at increased costs

• High disk-per-drive ratios for

nearline will drive maximum capacity and lowest $/GB with these new technologies

• Demand for media expected to cross
• ver industry capacity by 2023
• Faster cloud growth or a push to

>nine disks-per-drive could outpace production capacity sooner, accelerating media growth rates beyond 8% CAGR (Feb ‘20 forecast)

PROPRIETARY

June 2020 1 PROPRIETARY

Intevac Webinar with TrendFocus

Hosted by Intro-Act

June 18, 2020 Wendell T. Blonigan

Chief Executive Officer

James P. Moniz

Chief Financial Officer

POWERING INNOVATION. DELIVERING VALUE.

PROPRIETARY

June 2020 2

Cautionary Disclaimer

During the course of this presentation, we will comment upon future events and may make projections about

• ur

future financial performance, including statements related to strategies, our expected sales, product shipments and acceptance, gross margin, operating expense, profit, cash flow, income tax expense, and capital allocation. We will discuss our business strategy, our products, the markets our products address, our position in those markets, expected market acceptance of those products and production capacity. We wish to caution you that these are forward looking statements that are based upon our current expectations, and that actual results could differ materially as a result of various risks and uncertainties, including, without limitation, the following: inability to develop and deliver new products as planned; inability to accurately forecast the demand for our products and services; the possibility that

• rders in backlog may be cancelled, delayed or rescheduled; inability to achieve

gross margin and expense goals; and other risk factors discussed in documents filed by us with the Securities and Exchange Commission, including our Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. We undertake no

• bligation

to update the forward-looking statements made during this presentation.

PROPRIETARY

June 2020 3

500 600 700 800 900 1,000 1,100 1,200 1,300

• 500

1,000 1,500 2,000 2,500 3,000 2019 2020E 2021E 2022E 2023E 2024E

HDD Media Units Exabytes Shipped on HDDs and SSDs

Total Industry Exabyte Shipments vs. Forecasted Media Units

Total HDD Exabytes Total SSD Exabytes Media Forecast Current Media Capacity

Q1’20 Data Center/Nearline Demand Drove Record Tie Ratio

>80% Capacity by Q4 >80% Capacity by Q4 Additional Capacity Required Additional Capacity Required

Source – Q1 2020 actual media units and CY 2020 media unit est. from TrendFocus May 8, 2020. Long-Range media unit estimates, and HDD and SSD exabytes, from TrendFocus February 2020.

Strong Data Center in COVID-19 Era Drove Sharp YoY Increase in Media Units

• 0.5

1.0 1.5 2.0 2.5 3.0 3.5 2014 2015 2016 2017 2018 2019 Q1 2020 Actual

Average # of Disks per Drive

PROPRIETARY

June 2020 4

HDD Media Capacity Cycles

12 98 15 29 4 17 17 10 20 30 40 50 60 70 80 90 100 2003-2004 2005-2007 2008-2009 2010-2011 2012-2013 2014-2018 2019-2023E

200 Leans Shipped To Date and Estimate 2020-2023

Beginning of HDD Media Technology Change Technology Change and Capacity Needs Collide Global Recession Response to Supply Constraints Exiting 2009 Beginning of SSD Penetration and Shift to Cloud-Based Storage Market Technology Upgrades and Legacy Tool Retirement Beginning of Capacity Additions

5-year estimate for 2019-2023 period provided in all 2019 and 2020 Investor Presentations

PROPRIETARY

June 2020 5

How to Look at Potential Upside to HDD Media Business

$- $50 $100 $150 $200 $250 $300 $350 $400 $450 $500 2014-2018 2019-2023 Last 5 Years Next 5 Years TFE REVENUE ($M)

TFE Revenue Drivers *

HDD Media VERTEX Solar (MATRIX+ENERGi) Emerging Market Opportunities

~17 Tools in Both 5-Yr Periods

* TFE Revenue Drivers and 5-year estimate for 2019-2023 period provided in all 2019 and 2020 Investor Presentations

• Expectation to Date: Intevac’s Revenues from HDD

Media Market in 2019-2023E Time Period at Least Equal To, Or Will Slightly Exceed, Prior 5-Year Period

• 17 Tools Shipped 2014-2018 (No Capacity Added) + Technology

Upgrades, Spares and Field Service

• 6 Tools to Ship 2019-2020E (Adding Capacity)
• ~11 (+/-) Systems Expected in 2021-2023 Based on ~8% CAGR

Forecast for Media Units

• Upside Scenario Based on Secular Shift in Data

Center / Nearline Spending

• Each 1% Increase in Media CAGR Adds Need for ~1.5 Additional

200 Leans Per Year

• If Media CAGR Increases to 10-12% Range, Result Could be

Upside of 10 to 12 Additional Systems in 2021-2023 Timeframe

• Potential Upside in 200 Lean Shipments 2021-2023

Subject to a Number of Caveats

• Our customers are still running at modest utilization rates; supply

constraints exist for substrates

• Current media capacity levels appear to be sufficient for several

quarters

• Current forecast for ~17 tools is an estimate subject to risk and

potential revision at any time

• Sustained upside in nearline spending will need to be evident for

2H’21 in order to drive upside in tool orders for the next 3 years