Advanced Energy Industries Stock

Advanced Energy Industries, Inc. (Advanced Energy) provides highly engineered, critical, precision power conversion, measurement, and control solutions to global customers. The company designs, manufactures, sells and supports precision power products that transform, refine, and modify the raw electrical power coming from either the utility or the building facility and convert it into various types of highly controllable, usable power that is predictable, repeatable, and customizable to meet the necessary requirements for powering a wide range of complex equipment.

Advanced Energy is organized on a global, functional basis and operates in the single segment of power electronics conversion products. Within this segment, the company’s products are sold into the Semiconductor Equipment, Industrial and Medical, Data Center Computing, and Telecom and Networking markets.

Products and Services

The company’s precision power products and solutions are designed to enable new process technologies, improve productivity, and provide critical power capabilities for its customers. These products are designed to meet the company’s customers’ demanding requirements in efficiency, flexibility, performance, and reliability. The majority of Advanced Energy’s products are capable of meeting various customer requirements. The company also provides repair and maintenance services for its products.

The company’s plasma power products offer solutions to enable innovation in complex semiconductor and thin film plasma processes, such as dry etch and deposition. The company has a broad portfolio of high and low voltage power products used in a wide range of applications, such as semiconductor equipment, industrial production, medical and life science equipment, data centers computing, networking, and telecommunications. The company also supplies related sensing, controls, and instrumentation products primarily for advanced measurement and calibration of power and temperature for multiple industrial markets. The company’s network of global service support centers provides repair services, calibration, conversions, upgrades, refurbishments, and used equipment to companies using its products.

The company’s service group offers warranty and after-market repair services, providing its customers with preventive maintenance opportunities to support a lower cost of ownership and higher utilization for their capital equipment. The company offers comprehensive repair service and customer support through its worldwide support organization in the United States, China, Japan, Korea, Taiwan, Germany, Ireland, Singapore, Israel, and the United Kingdom. Support services include warranty and non-warranty repair services, calibration, upgrades, and refurbishments of the company’s products.

End Markets

Advanced Energy generates revenue from the sale of a broad range of advanced and embedded power products and services to global original equipment manufacturers (OEM) and end customers. The company’s customers select its products based on various performance metrics, such as high power conversion efficiency, high power density, and low noise emission, as well as its ability to customize its solutions to meet the unique requirements of a wide range of critical applications. The future growth and demand for the company’s products is driven by a combination of factors within each of the end markets it serves, as follows:

Semiconductor Equipment Market

The company’s plasma power solutions are used to create plasma-based etch and deposition processes, and transition to advanced technology nodes typically require higher content of its advanced power solutions per tool. The company’s other semiconductor market products are incorporated in a wide range of applications including ion implant, inspection, metrology, thermal, epitaxy, and back-end test and packaging.

The company’s strategy is to strengthen its proprietary positions in its core applications with leading market share, such as conductor etch and deposition, grow its market position in targeted applications with lower market share, such as dielectric etch and remote plasma source, and leverage its broad product portfolio to expand its content at its OEM customers.

Industrial and Medical Market

The company supplies this market with critical, precision power conversion products that deliver precise and highly reliable, low noise and/or differentiated power. In addition, the company’s sensing, control, and instrumentation products complement its power solutions. The company’s products are used in a wide variety of applications, such as advanced material fabrication, medical devices, analytical instrumentation, test and measurement equipment, robotics, industrial production, and large-scale connected light-emitting diode applications. The company serves its broad customer base through both its direct sales force and indirect sales channels including independent sales representatives, channel partners, and distributors.

The company’s strategy in the market is to expand its product offerings and channel reach, leveraging common platforms, providing platform derivatives, and offering customizations to further penetrate a broader set of applications.

Data Center Computing Market

The company’s products are designed into data center server and storage systems, as well as used by cloud service providers and their partners in their custom designed server racks and power shelves. The company’s strategy in the market is to penetrate selected customers and applications based on its differentiated capabilities and competitive strengths in power density, efficiency, and controls.

Telecom and Networking Market

The company’s solutions are often customized with unique features such as ruggedization for mobile radio in the field. The company’s strategy in the market is to optimize its portfolio of power conversion products to more differentiated applications, and to focus on 5G infrastructure applications.

Customers

The company’s products are sold worldwide to OEMs, distributors, and directly to end users. During the year ended December 31, 2023, Applied Materials, Inc. accounted for 22% of the company’s total revenue.

Marketing, Sales, and Distribution

The company sells its products through direct and indirect sales channels. The company’s sales operations are primarily located in China, Germany, Hong Kong, India, Ireland, Israel, Japan, South Korea, the Philippines, Singapore, Taiwan, the United Kingdom, and the United States.

In addition to a direct sales force, the company has independent sales representatives, channel partners and distributors that support its selling efforts. The company maintains customer service offices at many of the locations, as well as other sites near its customers’ locations.

Intellectual Property

The company holds numerous U.S. and foreign patents and has multiple patent applications pending in the U.S., Europe, and Asia.

Competition

Semiconductor Equipment: The company’s competitors include COMET Holding AG; Daihen Corp.; MKS Instruments, Inc.; and TRUMPF Hüttinger GmbH + Co. KG.

Industrial and Medical: The company’s competitors include Cosel Co., Ltd.; Delta Electronics, Inc.; MEAN WELL Enterprises; TDK-Lambda Americas Inc.; TRUMPF Hüttinger GmbH + Co. KG; and XP Power Ltd.

Data Center Computing: The company’s competitors include Acbel Polytech Inc.; Delta Electronics, Inc.; Flex Ltd.; and Lite-On Technology Corp.

Telecom and Networking: The company’s competitors include Acbel Polytech Inc.; Delta Electronics, Inc.; and Lite-On Technology Corp.

History

Advanced Energy Industries, Inc. was founded in 1981. The company was incorporated in Colorado in 1981 and reincorporated in Delaware in 1995.