Good afternoon, my name is Laporcia, and I will be your conference operator today. At this time, I would like to welcome everyone to the Ultra Clean Technology Second Quarter Financial Results Conference Call. [Operator Instructions] Joining us today is Mr. Sheri Brumm, our Vice President of Finance; Mr. Casey Eichler, Chief Financial Officer; and Mr. Clarence Granger, Chairman and Chief Executive Officer. I will now turn the call over to Ms. Brumm. Ma'am, you may begin your conference.

Thank you, Laporcia. Welcome to our first quarter financial results conference call. Presenting today is Clarence Granger, Ultra Clean's Chairman and Chief Executive Officer and Casey Eichler, Ultra Clean's Chief Financial Officer. Casey will begin by presenting the financial results for our first quarter and Clarence will follow with some remarks about the business. A few moments ago, we issued a press release reporting financial results for the first quarter ended March 30, 2012. The press release can be accessed from the Investor Relations section of Ultra Clean's website, along with the information for the tape delay and replay of the live webcast at uct.com. Together with our recently issued press release, this conference call enables the company to comply with the SEC regulations for fair disclosure. Therefore, investors should accept the contents of this call as the company's official guidance for the second quarter of fiscal 2012. Investors should note that only the CEO and CFO are authorized to provide company guidance. If at any time after this call we communicate any material changes in guidance, it is our intent that such updates will be done officially via public forum such as a press release or a publicly announced conference call. The matters that we discuss today include forward-looking statements as defined in the U.S. Private Securities Litigation Reform Act of 1995 related to matters including our future financial performance, new product orders and shipments and industry growth. Investors are cautioned that forward-looking statements involve risks and uncertainties that may cause actual results to differ materially from those projected in the forward-looking statements. Some of those risks and uncertainties are detailed in our filings with the Securities and Exchange Commission. The company disclaims any obligation to publicly update or revise any such forward-looking statements or to reflect events or circumstances that occur after this call. Now here is Casey with the first quarter financial highlights.

Thank you, Sheri. Revenue for the first quarter was $110.6 million or an increase of 27% from the prior quarter and a decrease of 13% when compared to the same period a year ago. Semiconductor revenue for the first quarter was $94.1 million, an increase of 36% and non-semiconductor revenue was $16.5 million, a decrease of 7% when compared to the fourth quarter. Semiconductor revenue was 85% of total revenue for the quarter. Revenue outside the U.S. was 32% in the quarter compared to 29% in the prior quarter. 2 customers had a revenue over 10% for the quarter, and the gas delivery systems business represented 56% of our revenue. Gross margin for the first quarter increased to 14.2% compared to 11% in the fourth quarter and 13.9% in the same period a year ago. While we are pleased with our margin expansion, we continue to drive several initiatives to improve our margins. Operating expenses were $9.4 million or 8.5%, an increase of approximately $1.4 million from the prior quarter. This increase was primarily due to annual audit fees, no mandatory time off and performance pay in the first quarter. Our operating expenses as a percentage of revenue will be in the range of 8% to 9% in Q2. Our operating income was $6.3 million or 5.7% before interest expense and income taxes compared to $1.6 million or 1.8% in the fourth quarter. An income tax expense of $1.5 million was recorded in the first quarter. The tax rate for the second quarter should be modeled at 24%. First quarter net income was a $4.7 million or $0.20 per share, this compares to net income of $1.4 million or $0.06 per share in the fourth quarter without the valuation allowance. The fully diluted share count was 23.7 million, an increase…

Thanks, Casey. During the first quarter of 2012, UCT performed very well. Not only were we able to beat the high-end of our revenue and earnings guidance, but most importantly, we were able to do so at significantly higher gross margins. Our revenue for Q1 was $110.6 million, and our earnings per share was $0.20. On our previous earnings call, we had guided to Q1 revenue of $105 million to $110 million and $0.15 to $0.18 earnings per share. A majority of our revenue increases during the quarter occurred with our semiconductor equipment customers. Semiconductor equipment-related revenues increased from $69.1 million in Q4 to $94.1 million in Q1 or a 36% increase quarter-over-quarter. In addition, revenue from our Asian operations increased from 29% of total revenue in Q4 to 32% in Q1. Our gross margins for Q1 were at 14.2%, a 3.2 percentage point increase from Q4. With regards to cash, UCT's cash levels are at an all-time high of $54.8 million, an increase of $2.6 million quarter-over-quarter, and we anticipate a significant increase in cash during Q2. Finally, we received several new business awards during Q1. I'll now review highlights of our activities for the first quarter. In March of 2011, I announced that UCT had hired a new President and COO, Dr. Gino Addiego, and that one of his primary objectives was to restructure UCT operations with an emphasis on improving our gross margins. I'm very pleased that we are beginning to see the results of these efforts. In Q1 2011, at a much higher revenue level of $126.7 million, our gross margin was 13.9%. And in Q3 2011, at a revenue level of $105 million, fairly comparable to revenue in Q1 2012, our gross margin was 12.2%. This overall improvement in gross margin during Q1 is related…

[Operator Instructions] Your first question is from the line of Edwin Mok with Needham & Company.

Let me first start by asking you just on the non-semi side was down modestly sequentially. Was it all FEIC or is other -- some other business also declined sequentially?

Edwin, this is Clarence. Thanks for your kind comments. No, the decline was not with FEIC, we didn't actually experience any decline with FEIC in this quarter. So I'm not sure how much the decline was with other customers, but I don't think it was particularly large.

It was kind of across the board, and it was around 7%.

Yes.

I see. Okay, that was helpful.

So there's definitely -- something you wanted to point at there, Edwin?

It was not with Intuitive Surgical. Intuitive Surgical continues to be very strong.

So then maybe I can point to kind of the LED area which was already very low last quarter. Did you guys see any pickup there?

No. The LED unfortunately, I don't think we're going to see a come back in that until at least Q3, maybe Q4 or even beyond. So LED was still below $1 million last quarter, right around the $1 million level.

I see. That was helpful. And then for the guidance, for the coming quarter you mentioned that FEI you expected to be down sequentially. Are you guys modeling any revenue from FEI because it sounds like you guys are not ready to provide more detail there yet. So at least you can help us account not just directionally but at least magnitude-wise that is based on the guidance. And then the other question I have is on the core semi, are you guys modeling just flattish? Is that what it leads to kind of a sequential decline there on the top line?

Sure. Most of the decline will be in FEI next quarter, almost all of it. Edwin, again, this is Clarence. And with regard to semiconductor, so it's relatively flat next quarter. As I've said all the decline will come in FEI. The FEI revenue will be almost 0 moving forward. We do have some products that we'll continue to sell to them. But essentially, that's the biggest decline that we'll be experiencing in revenue in Q2.

I see. So you expect some marginal revenue there. Great. And then I guess a question regarding semi. So it was a very strong bounce this quarter, and you guys expected to come in the quarter to be flattish, right? I know that obviously, your visibility is somewhat limited, because even your customers are saying their visibility is limited. But any kind of thoughts beyond the current quarter or do you think that you're just maintaining this level, there's room for growth or there's risk for down, can give me some...

Yes, I would say on the semiconductor, relative to the industry itself, it looks like Q2 will certainly be relatively flat. That's kind of the input we're getting from all our customers. Again, and the general information we're hearing longer term is relatively flat in Q3 and Q4. It sounds like some of our customers are saying this first half and the second half should be relatively well-balanced. For ourselves, we're starting to see some new product wins. And so we do actually expect over time our revenue associated in the semiconductor industry to start increasing, specifically I mentioned one new opportunity associated with the cleaner module that we'll be providing and also with the cleaner gas delivery system and also with 450-millimeter tools as we start to make those. So I think there's some opportunities for us for growth in the semiconductor side, primarily through the new business opportunities and some market share gains.

I see. Yes, that was helpful. Just regarding the cleaner, it is a dry product right? I mean, your opportunity there is a gas panel opportunity, is that correct?

We'll be providing a gas delivery option. A gas and a liquid delivery option, but it is not a dry cleaner. It's a wet cleaner.

Great. That was very, very helpful. And then I have 2 more question, I'll go away, right. So it looks like Asia is ramping at least sequentially, it was up quite a bit sequentially, and it helps you in the gross margin area, right? As you kind of look through the year, I know on the prepared remark you talked about Asia potentially being higher, right? But is that susceptible to your customer mix? And as your Asia mix continue to improve, do you see yourself expanding beyond this 14.2% that you just printed on the first quarter?

Yes, Edwin, let me take that. So Asia, I think as I mentioned was up from 29% to 32%. And that does help with the margin, but I would say, it didn't really drive as much of the margin as some of these operational changes and improvements that we've made really drove the margin. I think you'll see more business continue to move to Asia, and in particular, some of the low-cost region business into China, and that will help us. But I think that, as you know, we control to a certain degree, but what we can control is a lot of the things that the operations team and the finance team have been partnering on to build on. And that piece, I think, was more responsible for the improvement than the mix in Asia. To double back onto the first question you asked Clarence, just to be clear, if you were asking the question about driving -- I'm sorry our semi versus non-semi, obviously, the semi was up because I said, there was nothing in particular there. It was up to 85% because of strong kind of overall performance in semi, the rebound from Q4 to Q1. If the question was really related to, did FEI impact the non-semi piece of the business? The answer is yes. It was down quarter-on-quarter. But there isn't anything to read into that. It's just a matter of how we were transitioning from the old model where we were manufacturing everything to the new model, which we're going to have for the next couple of quarters. But there's nothing to read into that. But if that was the question, that some of the weakness on the non-semi side was because FEI was down quarter-on-quarter.

Great. That was helpful. Sorry, I have a few more questions.

I just wanted to make sure you're clear.

Yes, and I was just looking at the revenue on the non-semi side, it was almost dead flat in terms of dollars. So as a percentage, it was down, but it was almost dead flat in terms of dollars.

Great. That's helpful.

And without the decline in FEI, it would have actually been up.

Yes, that's right. So can I ask you one question regarding the -- you mentioned several opportunity, Clarence, for the -- obviously some of them is more 2013 time horizon, right? But any way you can kind of size up those opportunity?

Yes.

And specifically regarding Intuitive Surgical, it sounds like you're pretty confident, not only in that you have in the next generation, but you're confident that your revenue opportunity there could be expanding because of the increased level of content, right? But is that something that is more immediate or is it just you guys are still at kind of the early stage share, and you won't see any real revenue until 2013?

Yes, we would probably see a couple of million dollars in revenue associated with that in 2012. But the big hitter is in 2013. It's hard to get too specific on some of this stuff. But the content that we have associated with the next-generation robot, there's more complexity, and there's more -- a greater part that UCT is providing than we've provided in the past. We could see a dramatic increase in our revenues with them next year as they start to introduce this. It's a -- it could be a greater than 50% increase in our FEI business -- I mean, excuse me, our Intuitive Surgical business. And overall, the one -- the new product opportunities that I've discussed today in total would be greater than our revenue with FEIC in 2013, and our total revenue with FEIC was -- and by 2013.

Great. That was very, very helpful. Lastly, I just have one question. So a few of your large customer in the semi area has -- are gone from merger, right? So your experience Applied buying Varian and Lam obviously is trying the process of integrating Novellus I was wondering kind of in your discussion with these 2 large customer, have you seen any change in terms of their kind of thoughts, process in terms of kind of their outsourcing strategy there? And specifically on -- for example on Varian, since the deal was already kind of formal for a few months, have you seen incremental opportunity there or are they still kind of working through that? Can you give us some sense there?

I would say if anything, Edwin, we have an opportunity to be a beneficiary here. We are a very large supplier to all 4 of those customers. So we are very well-respected by all 4 of those customers. And as they start to look at ways to consolidate their supply base, we think we're in a very strong position to be a beneficiary of that. So far, with Varian, it's been -- they're still relatively in the early stages, but everything we've heard is relatively positive -- is positive relative to UCT. And so we think this is ultimately going to be a good thing for us.

Your next question is from the line of Krishna Shankar with Roth Capital.

Beyond the sort of flat-ish outlook in semi equipment for Q2, what do you think would be the drivers in Q3 and Q4? Do you think that a pickup in foundry spending, where recently there's been some indications of tight capacity and perhaps LED coming back, would that offset maybe some decline in memory spending? Or what are your sort of thoughts on sector spending within semiconductors?

Yes, I think it's now becoming very public that the demand on 28-nanometer is very tight. And so we expect to see increasing demand in that area, which should be a -- we should benefit from. We know a lot of Intel's purchases are going to start occurring in the second half. So we think that's very positive for UCT. So LED demand, obviously at some point, that is going to come back. The question is when, not if. And so we expect that to be a very significant driver for us when it comes back. But it is difficult to predict the timing on that. I would say on the semiconductor, we think the biggest demand driver right now is going to be 28-nanometer.

What was gas distribution as a percent of your revenues again? And will that have sort of a bigger revenue opportunity as you focus on this 28-nanometer foundry business?

Yes, we're trying to dig, I think...

Yes, gas delivery, I think, was about 56%.

Okay.

I'm sorry. What was the second question?

Go ahead Krishna.

Will that mix will become higher as you target this 28-nanometer foundry type bottleneck, with customers start targeting that segment?

I think temporarily obviously it comes a little bit higher as FEI rolls off. There's no gas delivery related to there. As some of these opportunities that Clarence has mentioned start to roll in, I think it comes back to a balance. Intuitive Surgical has been a great customer as we've talked about over the years. Obviously, everyone's seen their announcements, and they continue to build their business, and I think that will be good and help us continue to build the non-gas delivery. We're expert at the gas delivery. We're the world's largest provider, and so we love that business, but we also like to see the balance coming to the business as well. So we're going to try to build both of them.

Yes, I would say it'll probably stay in the mid-50% range for quite a while.

Okay. And then on gross margins. Was this sort of low hanging fruit that helped get this sort of really nice pickup in gross margins? Or what should be the outlook for sort of operating efficiencies and improvement in terms of driving gross margins from here?

Go ahead.

No such thing as low hanging fruit when it comes to gross margin. It's a lot of hard work. Across broadly -- across the operations team and also supported by the finance team. So you obviously look for the opportunities where you can have the most impact quickly, and so we've prioritized our initiatives. But all of these has been pretty high hanging fruit that we've really worked hard for, and I'm very proud of the operational team and everybody involved in really kind of delivering these type of results. I think there continues, as I mentioned to be -- we've had some of the impact, but I think we'll continue to see some of that impact, and I think we'll continue to be able to expand the margin side of the business. And we worked very hard to try to get to the 15% to 18% margins we talked about, and certainly that is our goal is just deliver on that 15% to 18% on a gross margin basis.

Yes, Krishna...

Yes, really that was -- sort of congratulating you on the progress in gross margins and just wondering if there were more -- sort of more improvements here or would it be more mix related which would lead?

No, absolutely, Krishna. This is largely related to improvements we've made. So if you look back at 2010, our gross margin for the entire year was 13.3%. 2011, our gross margin for the entire year was 13%. We're now starting off 2012 at 14.2%. So a move of over 1.2% roughly in gross margin is not an easy thing to do, and it's largely due to a lot of the operational things that we've changed. How we're handling direct labor, how we're dealing with inventory, how we're dealing with supply chain management. All of these things have been significantly improved. And we're just starting to see the results of those changes. So we're confident, as Casey said, that we're well on our way to our targeted gross margins of greater than 15%. And so we would expect to see continued improvements, sustainable improvements. So we're very proud and very excited about what we've been able to accomplish in the operations group.

Yes, congratulations on that. And finally, Casey, what are the revenue mix? You had only provided revenue mix by end market, semiconductors, LED and the other areas. If you could give the revenue mix by end market?

Yes, we typically don't go end market by end market. We do a split between semiconductor and non-semiconductor. And the semiconductor revenue was 85% for the quarter. But we typically don't go market by market.

[Operator Instructions] And your next question is from the line of Colin Rusch with ThinkEquity.

Can you talk a little bit about the impact of these new product wins on your margin trajectory and if you can use them to apply additional pressure on the supply chain?

Yes, Colin, this is Clarence. So in terms of applying additional pressure on the supply chain, I don't think it's so much additional pressure. I think it's a focus on looking at potentially different suppliers. We have changed some suppliers that's part of what we've been able to do, obviously consolidation of more business with suppliers helps. And so we think we've been very creative with suppliers. I don't think that the new business opportunities are going to see a significantly different level of gross margin than our current products. Although newer products do tend to generate a little bit higher gross margins. Over time, they do tend to migrate to a more steady-state level. But what I do think is that these gross margin improvements that we've seen are sustainable, and we will still see even further improvements in gross margin associated with some of these activities that we've taken. Do you want to add anything, Casey?

No, I think that covers it..

Okay. And can you talk just a little bit about material prices impacting your business? And what you're hearing from your suppliers on that, just in terms of raw material and what they're trying to pass through and what they're giving up on?

Yes, I mean, I think one of the areas where we've been focusing obviously. Material is a big part of the cost in our business -- is the material in the supply chain. We've had an individual, Mark Bingaman, who's been involved in the company for quite a while, but really has been able to focus on those areas just in the last 6 to 9 months, and I think some of the benefit we're seeing is the hard work and the skill of the whole supply chain team led by Mark. And so I think that as we move forward, we're always looking into qualifying new suppliers, looking at opportunities to try to improve upon our supply chain. But again, a lot of it we're also looking at -- is just pure operational efficiency and coordination across sites and across continents. And I think it's a combination of all of those things.

Your next question is from the line of Jagadish Iyer with PJC.

A couple of questions. Just wanted to understand on the claimed win that you guys alluded to. Was that a competitive win? Can you talk about the competitor dynamics as well?

Well, sure, Jagadish. This is Clarence. Yes, it is a competitive win. It was based on our performance. They are looking to shift from a smaller supplier to UCT based on our performance and history with other divisions within that company. And so we're very excited about this. Again, it represents a new area of opportunity for us. We haven't participated in clean tools significantly in the past. And so this should be a very good win for us. And we earned it, and we're very excited about it.

Okay. Congratulations. So on the second one, I wanted to find out what is the difference in the opportunity? You alluded to the OLED opportunity that you guys have recently gotten traction? Can you tell how much is the -- kind of the differential between your existing supply to LED versus OLED on a per-tool basis?

This is a very different tool than a typical MOCVD tool. Our revenue opportunity is fairly significant, but less than on an MOCVD tool. It would be, maybe 2/3 the opportunity that we have on an individual MOCVD tool. It is a different customer than the customers we're serving in the LED market. This is a startup company in the OLED market, but they are very well funded by some very large players, and they seem to have a very good product that we're getting an opportunity to participate in. We're not doing just the gas delivery system on this OLED tool as we are on the MOCVD tools. So we actually have a little bit larger content as a percentage of the cost of the whole tool. But in terms of dollars, it is less than on a MOCVD tool.

Okay. Finally, Casey, on the second half, when you guys talked about being flattish, I just wanted to find out if there is upside of the second half if spending comes back from all the end customers? Do you expect your gross margins to possibly hit 15% by the end of this year?

Yes, I mean, obviously our gross margins are dependent on the traditional things: the volume, revenue and also the mix between low cost regions and here. Right now, they're also dependent on our operational improvements that we're talking about. And so depending on how those 3 play together, I think that we're going to take the market that's dealt to us and optimize for it. As far as the second half of the year, as I think was mentioned earlier, with some of the spending that TSMC has announced and other people, I think that there's an opportunity that you might see some strength in the second half, 28-nanometer capacity that Clarence talked about earlier. And so on the one hand, we're optimistic and continue to build the business, on the other hand, what we're really focused on is sticking to our own knitting and making sure that we're running the most efficient business globally, and we're pretty pleased that we're starting to see some of the results for that.

Yes, we are not focused on the second half. I mean, don't interpret anything that I said as guidance with regard to the second half. We really do not have that kind of visibility. What we do have is the ability to control our own destiny, and a large part of that is our gross margin, and we are definitely moving in the right direction on gross margin, and I expect to continue to do so throughout this year.

[Operator Instructions] Your next question will come from the line of Jay Deahna, Individual Investor.

The first question embedded into your 2Q guidance, it looks like your gross margin is expected to be flattish or maybe up a tad. Is that right or what?

Again, I think if you look at it working, if we're going to continue to execute, we don't guide you to the margin number specifically on a forward quarter basis. But I think that we're thinking that the numbers we put up there represent a pretty good solid story for Q2.

Again, Jay, what we've said is that -- the gross margins have improved, and we anticipate continued movement in a favorable direction.

Yes, I mean, flat gross margin sequentially and down $5 million in revenue would be indicative of an improvement. So I just wanted to make sure I was understanding what was worked into that.

Yes, absolutely. If we came in flat or even slightly down on a gross margin basis, when you got a midpoint that's roughly $8 million below the current quarter that we just did. I think that hopefully continues to demonstrate our focus.

Okay. Casey, you guys said something about cash being -- cash generation being positive in the next quarter, but cash down because you're paying off your line of line of credit. How much is line of credit? And just put a little more detail on that whole spend?

Yes, so what I'm saying is that we are going to generate cash this quarter, but unlike the past quarters where we've always exited with some of the revolver borrowed down. Our anticipation is that exiting the quarter, we won't have anything borrowed on our revolver. And so what I was estimating was that, that would take our cash down about $10 million on a net basis.

No, gross basis.

I'm sorry, gross basis.

So we anticipate, Jay, this is Clarence, just to make it simpler. We anticipate to generate about $10 million this quarter, and we have a line of credit of about $19 million. So that's why we expect to be down about $10 million. We're going to generate cash of $10 million and then pay down $19 million. So our net cash will be up by about $10 million, but our gross cash will be down by about $10 million.

So you're going to wipe out the line of credit balance?

Yes, that's what we're planning.

I mean, it'll still be in place, but we won't have any borrowed against it at the end of the quarter.

So what will your debt be after that, will it be 0?

No, it's a very small number. We have small term piece of our debt. It's about $4 million, I think.

Okay. All right. And then the last question is, there's been a lot of discussion on this call about various new projects, existing markets, blah, blah, blah, FEI is following off obviously LED, solar FED, are probably incredibly small right now. Semi, it looks like the industry is looking at ASML, et cetera. It feels like the industry is flattish in the second half of the year. However, 28-nanometer capacity is tight, and you're talking about some share gain into clean 450 millimeter sort of on the R&D side, et cetera. Outside shot at LED, maybe starting to come back in 4Q, but that remains to be seen. Intuitive Surgical starting to ramp up into a 50% larger opportunity, maybe much later this year into the early part of next year. I mean, if you pull all that together, and obviously, there is no specific guidance at this point for the second half. But, I mean, are you thinking in the back of your minds that UCT as a company is something better than flat, half-over-half, 2H over 1H this year or you're just assuming it's sort of flattish and if it turns out to be better, you'll be prepared to deliver some upside margin on it if it happens?

So Jay, this is Clarence. So one of the points that I try to make is that in a slowdown like we've experienced for the previous 2 quarters, not in Q1, but in Q3 and Q4 last year. That's when our customers have more time to explore different new outsourcing strategies and different new products. And so when things are relatively slow, that's when we have the biggest opportunity to generate new business that we see manifest itself 2 or 3 quarters or a year after a slow down. And so my point is that we've just come out of a slowdown. We've seen -- we're now experiencing some new business opportunities. We have several other new business opportunities in our pipeline. And so we would expect to start to see these all coming to fruition in the next few quarters. And then obviously, that gives us an opportunity. Historically, what's happened to UCT is we've had -- we continue to be very cyclical. But every time there is a down cycle, we capture more new business, so that at the next peak, we end up growing to a much higher level, and that's why we keep overall growing our business. This time, our expectation is not only to grow our business as we see these new business wins materialize, but our expectation is to see this at a higher sustained gross margin. And so frankly, we're very excited about 2 things. We're excited about the margin improvement, and we're excited about the new business opportunities.

So basically, it's the same pattern as the historical pattern, except you've got a 1 or 2 quarter pot hole with the FEIC thing getting in the way.

Yes, that's very true. And like I said earlier, I think these new business wins are going to more than offset what we're experiencing with FEI.

All right. I get that. That's fine. If FEI was flat in 2Q versus 1Q, would the overall company be flat?

Flat to slightly up.

Okay. Now looking at your LED business, there's been some positive chatter over the last week or so about some of the general lighting stuff with next-gen products from Cree and I thought I heard some chatter, I don't know if it's from Edwin or whoever about utilization rates ticking up a little bit in LED although from very low levels. If you -- what are your LED customers telling you in terms of, how much excess inventory they have in their manufacturing pipeline and how long they think that will take to clean out and when they expect to see some sort of a turn in shipments that could impact what they buy from you?

Yes, again, that's still very difficult to say. But our customers have been telling us Q3 or Q4. It's when they expect the inventory to be consumed and start seeing new orders.

So if their excess inventory goes from excess to not excess, is that a situation where you could go from $0 to $5 million or $6 million overnight? Or is that a situation where you would just kind of go to a couple of million and then it would be just gauged by whatever their ramp is from there?

I really have a hard time, Jay, projecting this. We haven't seen that with the LED business. So we really don't know. I mean, it was just gang busters up until the end of Q3 and then it literally shut off. I mean, obviously, we would hope that it would turn on significantly when it turns on. But we have no history that says anything about that one way or the other.

All righty. And then last but not least, is there any light at all at the end of the tunnel on flat panel or solar?

We aren't projecting anything of significance in Q2.

I mean, I'm talking looking out a couple of quarters out?

I mean, there's fundamentally nothing that's preventing that business from coming back at some point in time. They tend to -- certainly on the flat panel, we have lots of experience with that, and that tends to go from boom to bust and back to boom again. SO -- but we don't have visibility on timing on any of that. Our customers certainly haven't been discussing that with us at this point in time. So I really don't want to stick out and make projections. But it has a long history of being very, very cyclical.

Yes, what I am reading, Jay, and you've probably seen the same stuff. LED, solar and the flat panel, nobody's baking much in for this year, and they're going to take it as upside. So I think it's just too difficult for anybody to see, but I don't think anybody is baking much in there to your point from the very low levels of where we are.

I mean, we are well-positioned in all those markets when they comeback. We have several customers in each one of those markets. So when they do come back, is when we will start doing really well again.

Yes, well you guys, congratulations on your operational and financial management improvements over the last 3 or 4 quarters. That's really what we need at the core. And obviously, you've got your fingers into a lot of different revenue buckets when they're there. So that will take care of itself. So good work managing the company.

[Operator Instructions] Your next question is a follow-up from Jagadish Iyer with PCJ.

One quick question on the 450-millimeter opportunity. Can you kind of give us an idea of what do you foresee for this year and where do you think this might potentially go for next year?

Yes, Jagadish, this is Clarence. Boy, that is really a difficult one. We are -- I would expect to ship multiple prototype units in 2012 and probably some level of production starting towards the latter part of 2013. But that is just totally speculation on my part. I know we will ship multiple units this year, but they won't be production-related units.

And we have no further questions at this time.

I appreciated that. Well, thank you very much. We appreciate everybody's interest and support. And we look forward to talking to you in the future. Thank you again. Thank you, operator.

This concludes today's conference call. You may now disconnect.