Q3 2025 Camtek Ltd Earnings Call
Part of the Investor Relations team at Caltech.
All participants oven the presenters counting use it all the formal presentation I'll provide some instructions for participating in the live question and answer session.
I would like to remind everyone that this conference call is being recorded and recording will be available from the link in the unexpressed release and on <unk> website from tomorrow.
You should have all received by now the Companys press release, if not please view it on the company's website.
With me today on the call we have Mr. Rafi, Amit <unk> CEO, Mr. Moshe Eisenberg, <unk>, CFO and Mr. Rami Langa COO Rafi will open by providing an overview of <unk> results and discuss recent market trends Moshe will then summarize the financial results for the quarter.
Following that rapidly Moshe and Rami will be available to take your questions.
Before we begin.
I'd like to remind everyone that the statements made by management on this call will contain forward looking statements.
Looking statements within the meaning of the federal Securities laws. Those statements are subject to a range of changes risks and uncertainties that can cause actual results to vary materially for more information regarding risk factors that may impact <unk> results. Please review complex earnings release, and SEC filings and specifically the forward looking statements and risk.
Speaker #2: My name is Kenny Green, and I am part of the Investor Relations team at Camtek. All participants other than the presenters are currently muted.
Speaker #2: Only the formal presentation I'll provide some instructions for participating in the live question and answer session. I would like to remind everyone that this conference call is being recorded and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow.
Factors identified in the recent press release issued earlier today and such other risk factors discussed in <unk>. Most recent annual report on SEC form 20-F <unk>.
Speaker #2: You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, CEO; Mr. Moshe Eisenberg, CFO; and Mr. Rami Langer, COO.
<unk> does not undertake the obligation to update these forward looking statements in light of new information or future events.
A discussion of our financial results will be presented on a non-GAAP financial basis, unless otherwise specified as a reminder, a detailed reconciliation between GAAP and non-GAAP financial results can be found in today's earnings release, and now I'd like to hand, the call over to Rafi, Amit <unk> CEO Rafi. Please go ahead.
Speaker #2: Rafi will open by providing an overview of Camtek's results and discuss recent market trends. Moshe will then summarize the financial results of the quarter.
Speaker #2: Following that, Rafi, Moshe, and Rami will be available to take your questions. Before we begin, I'd like to remind everyone that the statements made by management on this call will contain forward-looking statements within the meaning of the federal securities laws.
Thanks Kenny.
Hello, everyone.
To conclude the third quarter was the record performance Q3 revenues reached a record $126 million, reflecting over 12% growth year over year.
Speaker #2: Those statements are subject to a range of changes, risks, and uncertainties that can cause actual results to vary materially. For more information regarding risk factors that may impact Camtek's results, please review Camtek's earnings release and SEC filings, and specifically the forward-looking statements and risk factors identified in the recent press release issued earlier today and such other risk factors discussed in Camtek's most recent annual report on SEC Form 20F.
We also maintained solid gross margin of 51, 5% contributing to a record operating income.
Over 37 $6 million.
Our strong cash position.
Proximately $800 million include including the addition of the cash generated by our successful $500 million convertible notes offering in Q3.
Speaker #2: Camtek does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of the financial results will be presented on an on-gap financial basis unless otherwise specified.
Provide us with the phenom.
Speaker #2: As a reminder, a detailed reconciliation between gap and non-gap financial results can be found in today's earnings release. And now, I'd like to hand the call over to Rafi Amit, Camtek's CEO.
Financial flexibility to drive growth organically as well as to explore potential opportunities for inorganic growth across our market.
Speaker #2: Rafi, please go ahead.
Revenue distribution remained in line with our expectations.
Speaker #3: Thanks, Kenny. Hello, everyone. Camtek concluded the third quarter with a record performance. Q3 revenues reached a record $126 million, reflecting over 12% growth year over year.
Mitch last quarter results.
High performance computing applications contributed approximately 45% of total revenue while other advanced packaging applications accounted for about 25%.
Speaker #3: We also maintained solid growth margins of 51.5%, contributing to a record operating income of over 37.6 million dollars. Our strong cash position of approximately 800 million dollars includes the additional cash generated by our successful 500 million dollars convertible notes offering in Q3.
The balance came from Cmos image sensors compound semiconductor front end applications and other general application.
We continue to see a shift of corks like production toward or subs.
Trend that is favorable for our business given our strong position within this segment.
Speaker #3: Provide us with the financial flexibility to drive growth organically as well as to explore potential opportunities for inorganic growth across our market. Revenue distribution remained in the line with our expectations and closely matched last quarter results.
We received significant orders for installation this year from two tier one core subs.
For Cox in Cox like applications. We have also received significant orders from several offsets for fan out application.
Regarding the H beer market we.
We maintain our leadership position.
Speaker #3: High-performance computing applications contributed approximately 45% of total revenue, while other advanced packaging applications accounted for about 25%. The balance came from CMOS image sensors compound semiconductors front-end applications and other general applications.
All the manufacturer.
Our tools are not only qualified but actually are the tools of reference or three D. Metrology steps for H B M for it all the H b in players.
We have installed pool for H B M. This quarter and through the entire year for both three D and two D steps and they have orders on hand for H B M shipment for the next quarter.
Speaker #3: We continue to see a shift of coax-like production toward OSATs, a trend that is favorable for our business, giving our strong position within this segment.
Regarding our guidance for Q4.
Based on our recurrent order our sales pipeline and ongoing customer engagement. We expect Q4 2025 revenue to be around $125 million, representing annual revenue of $495 million a record year for comtech.
Speaker #3: We received significant orders for installation this year from two Tier 1 OSATs for coax and coax-like applications. We have also received significant orders from several OSATs for fan-out applications.
With a strong growth of 15% over 'twenty 'twenty four.
Speaker #3: Regarding the HBM market, we maintain our leadership position with all the manufacturers. Our tools are not only qualified but actually are the tools of reference for 3D metrology steps for HBM4 at all the HBM players.
Let me share some of our recent technological development and business highlights.
Hum.
Continue to enhance our technological capabilities and strengthen our competitive edge. The next generation of devices that will power the future of H B C will require cutting edge inspection and advanced three D metrology solutions.
Speaker #3: We have installed tools for HBM this quarter and through the entire year for both 3D and 2D steps and have orders on hand for HBM shipment for the next quarter.
Area in which <unk> is strongly positioned and continues to innovate.
Our new product <unk> were designed.
Speaker #3: Regarding our guidance for Q4, based on our current order, our sales pipeline and ongoing customer engagement, we expect Q4 2025 revenue to be around 125 million dollars, representing annual revenue of 495 million dollars, a record year for Camtek with a strong growth of 15% over 2024.
Let's move to meet the most demanding requirements and at the same time perform at very high throughput.
These models have been very well received by the market and are expected to contribute approximately 30% of our revenue in 2025 with an even larger share expected next year.
Speaker #3: Let me share some of our recent technological developments and business highlights. We continue to enhance our technological capabilities and strengthen our competitive edge. The next generation of devices that will power the future of HPC will require cutting-edge inspection and advanced 3D metrology solutions.
The <unk> five has been recently selected for <unk> applications over our main competitor at major IDM and do we ever received multiple orders for installation this year and into 2006. We have also won significant business.
At two tier one or thoughts after an evaluation of multiple vendors, including our main competitors.
Speaker #3: Area in which Camtek is strongly positioned and continues to innovate. Our new product, Eagle G5 in OAK, was designed to meet the most demanding new requirements and at the same time perform at very high throughput.
Regarding the ORC.
We have already received repeat orders for a major tier one player for shipment in 2026 and 2020 after multiple <unk> systems were used flawlessly in production for several months the Ark provide.
Speaker #3: This model has been very well received by the market and is expected to contribute approximately 30% of our revenue in 2025 with an even larger share expected next year.
The most advanced three D performance in term of throughput and accuracy.
This is our ninth generation of white light through collation that provides superior coverage for different bump types and process steps compare with laser to emulation technology used by our competitors.
We are planning to introduced an enhanced version of the Orca early next year, featuring significant improvement and throughput and overall performance across both three D metrology and to the inspection.
This advancement will further strengthen the ox position as the most advanced tool in the.
Regarding to the inspection domain, we have made significant investments over the past year to expand our capabilities of both the Oct and erg two five in the two D inspection applications.
We have implemented breaking through H eight driven algorithms into our detection technologies. We are currently evaluating these innovations with key customers and we are confident that these new cutting edge inspection solutions will enable.
To further grow our market share in this segment.
I would now like to share some insights regarding the H B C market.
With the accelerated adoption of AI and the recent announcement of a major data center investment by leading industry players. It is clear that the industry is heading towards a significant expansion of manufacturing capacity.
All at the AGM portion is expected to more than double it says in the next three years.
Featuring significant Improvement in throughput and overall performance across both 3D Metrology, and to the inspection.
Let's say, we expect a natural time lag between those investment announcement and the actual purchase of equipment to support this new capacity.
This advancement will further strengthen the ox position as the most advanced tool in the segment.
Turning to our preliminary outlook for 2026.
This industry development, which point too.
Regarding to the inspection domain. We have made significant investment over the past year to expand our capabilities of both the Oak, and elegant G5 in the 2D inspection applications
Sustained growth and continued investment in wafer fab equipment strengthen our expectation that 2026 will be another year of growth for comtech.
We have implemented breakthrough, high-driven algorithms into our detection technologies.
At this stage, we expect our 'twenty 'twenty six revenue to be weighted toward the second half of the year with a somewhat slower start as the market continues to absorb existing capacity before the next wave of expansion begins.
We are currently evaluating these Innovations with key customers. And we are confident that this new Cutting Edge inspection Solutions will enable to further grow, our market share in this segment.
I will now like to share some insight regarding the HPC Market.
In summary.
The massive investment in data centers and the accelerating adoption of AI driven applications are expected to translate into increasing demand for advanced semiconductor manufacturing equipment with context strong market position and the cutting edge capabilities.
With the accelerated adoption of AI and the recent announcements of major data center investment by leading industry players, it is clear that the industry is heading toward a significant expansion of manufacturing capacity.
Holiday hbm, portion is expected to more than double itself in the next 3 years.
We have recently added we are well position to capitalize on this trend and deliver significant growth while further expanding our market share in the coming years.
That said, we expect a natural time lag between those investment announcements and the actual purchase of equipment to support this new capacity.
And now <unk> will review the financial results Moshe.
Turning to our preliminary outlook for 2026.
Thank you Rafi.
Financial summary ahead I will provide the results on a non-GAAP basis, a reconciliation between the GAAP results and non-GAAP results appear in the table at the end of the press release issued earlier today.
this industry development, which points to
Third quarter revenues came in at a record $126 million.
Sustain growth and continue investment in wafer fab equipment. Strengthen our expectation that 2026 will be another year of growth for context.
Increase of 12% compared with the second quarter third quarter.
Paul.
The geographic revenue split for the quarter was as follows Asia was 93% and the risk reward accounted for 7%.
At this stage, we expect our 2026 revenue to be weighted toward the second half of the year, with a somewhat slower start as the market continues to observe existing capacity before the next wave of expansion begins.
Gross profit for the quarter was $65 million the gross margin for the quarter was 51, 5% similar to the previous quarter.
In summary.
Improvement from the third quarter of that.
Operating expenses in the quarter were $27 $2 million compared with 22.
$9 million in the third quarter of last year, and $26 6 million in the previous quarter.
The massive investment in data centers and accelerating adoption of AI driven applications are expected to translate into increasing demand for advanced, semiconductor manufacturing equipment, with cic, strong Market position and The Cutting Edge capabilities. We have recently added, we are
The increase over last year is mainly a result of increased R&D expenses.
Operating profit in the quarter was $37 $6 million compared to $34 2 million.
Recorded in the third quarter of last year.
Well positioned to capitalize on this trend and deliver significant growth while further expanding our market share in the coming years. Now, Moshe will review the financial results. Moshe.
37 $4 million in debt.
The second quarter.
The improvement over last year is due to the increase in gross profit partially offset by the increase in operating expenses.
Thank you, Rafi, in my financial summary ahead. I will provide the results on a non get basis, the reconciliation between the Gap results and the non-gaap results appear in the table. At the end of the press release issued earlier today.
Operating margin was 30% female to deliver.
Last year and a lot of water.
Financial income for the quarter was $6 5 million compared to $6 4 million reported last year and $4 9 million in the previous quarter within debt interest income increased slightly slightly due to the increased cash balance.
Third quarter revenues came in at a record, 126 million and increase of 12%. Compared with the second quarter, third quarter of 2024,
The geographic Revenue split for the quarter was as follows Asia was 93% and the rest of the world accounted for 7%.
Uh huh.
From a profit cash from operations as well as.
From the convertible notes issued towards the end of the quarter.
Gross profit for the quarter was $65 million, and the gross margin for the quarter was 61.5%, similar to the previous quarter and an improvement from the third quarter of last year.
Net income for the third quarter or frankly, any five was $40 9 million or 82 cents per diluted share.
Operating expenses in the quarter were $27.2 million, compared to $22.9 million in the third quarter of last year and $26.6 million in the previous quarter.
This is compared to a net income of 30 million or 75.
The increase over last year is a result of increased R&D expenses.
In the third quarter of last year.
Total diluted number of sure sure.
The end of the third quarter was.
$50 3 million.
In the next quarter the number of shares will increase.
Operating profit in the quarter was 37.6 million compared to 34.2 million recorded in the third quarter of last year.
Fact of the convertible notes will apply to the fourth quarter and it is expected to be around 51 million shares.
In $37.4 million in the second quarter.
Turning to some high level balance sheet and cash flow metrics.
The improvement over last year is due to the increase in growth profit, partially offset by the increase in operating expenses.
Cash and cash equivalents, including short and long term deposits and marketable securities as of September 30, bringing 25 were $794 million. This is compared with $543 $9 million at the end of the second quarter, we generated $34 3 million daus in <unk>.
And similar to the level last year and, uh, last quarter.
As for operations in the quarter.
In the quarter, we successfully completed a 500 million over a new convertible notes offering that.
Financial income for the quarter. Was 6.5 million compared to 6.4 million reported last year and 4.9 million in the previous quarter. Within that interest income increased slightly slightly due to the increased cash balance.
uh,
At the same time, we repurchased $267 million of existing convertible notes with the balance sheet value of $167 million or less expensive.
From uh, profit cash from operations, as well as uh from the convertible notes issued towards the end of the quarter.
A result of the tax asset as a result of tax I think was created in the amount of $12 3 million dollar, which led to a one time GAAP loss of 89 million daus.
Net income for the third quarter of 2025 was $40.9 million, or $0.82 per diluted share.
This is compared to a net income of 30 million or 75 cents per share in the third quarter of last year.
The positive net cash flow from this activity was $219 million.
Inventory levels decreased to 142 million from $149 million and we haven't been able to introduce blending efficiencies.
Total diluted number of share shares. As of the end of the third, quarter was 50.3 Million.
The accounts receivable has remained stable at $212 million, representing 81 days outstanding.
In the next quarter, the number of shares will increase as the effect of the convertible notes will apply to the full quarter, and it is expected to be around 51 million shares.
Turning to some high-level balance sheet and cash flow metrics.
And obviously like we said before we expect revenues of around 127 million daus in the fourth quarter.
And with that Rafi, Rami and I will be open to take your questions. Okay. Thank you Ms. Shang at this time, we will begin the question and answer session. If you have a question. Please raise your hand by this in platform I would introduce you and ask it's on mute after which you may ask your question.
Cash and cash equivalents including short and long-term, deposits and marketable, securities as of September 30th, 2025 were 794 million. This is compared with 543.9 million. At the end of the second quarter, we generated 34.3 million dollars in cash flow operations in the quarter.
In the quarter, we successfully completed, a 500 million new convertible notes. Offering
And our first question will be from Charles sheet from Needham Charles Please go ahead.
Hi.
Thanks for taking my question.
Maybe the first one and Rafi you.
At the same time, we repurchased for 267 million existing convertible notes, with the balance sheet value of 167 million less expensive.
You mentioned about that timing lag.
Between announcement and implementation.
Just kind of wonder if there is another timing lag, let's say between a.
DRAM front and buy equipment investment or SUS packaging and how.
As a result of the tax asset. As a result, a tax asset was created in the amount of 12.3 million dollars, which led to a 1-time gap loss of 89 million net.
The positive net cash flow from this activity was $290 million.
How should we think about.
When you mentioned about the second half weighted next year, a lot of that property attributes to that timing lag about the how how how should we think about.
Inventory levels decreased to 142 million dollars from 149 million. As we have been able to introduce planning efficiencies
The level of let's say a little bit of moderation in first half safe since it seems like that's what you alluded to and what's.
Accounts receivables, remain stable at 112 million dollars representing 81 days outstanding.
What's that based on the order based on and grow customer engagement, how big the second half of next year could be thank you.
said, before we expect revenues of around, 127 million in the fourth quarter,
Okay. In General you know we are also in the period of preparing the budget for next year.
So when we collect all that information all the discussion with customer or we called the <unk>.
Pipeline all in order all of these show us that.
We can feel very comfortable more for the second for the second half.
And with that roughly roughly, and I will be open to take your questions. Okay. Thank you. Moshe at this time, we'll begin the question and answer session. If you have a question, please raise your hand by the impact Forum. I will introduce you and ask you to unmute after which you may ask your question.
And the first half because you know delivery time of Fusses about three or four months maximum so it's a little bit to get no not easy for us to predict more than this period.
And our first question will be from Charles XI from nem Charles, please go ahead.
So when.
When I collect all the information. This is based on this we feel more comfortable on the second half to say, what we can see and what they can fill it but maybe rami can contribute to more details about this.
You know Charles So we feel very comfortable with 2026 is going to be a growth year.
We feel comfortable speaking with customers and <unk> will be announced smedes.
There is no doubt this is going to be growth, we have the pipelines.
We feel very comfortable about next year.
I think at this stage, we cannot anticipate exactly the numbers and we don't usually give any indications about one quarter. After the next one so at this stage, we cannot provide a solid guidance about the first quarter.
Hi. Um, thanks for taking my question. Uh, maybe the first 1, um uh Raffia. You mentioned about the timing lag, uh, between announcement and, uh, implementation. Um, just kind of wonder if there is another timing lag. Let's say between, uh, a d Ram from and uh, my equipment investment versus packaging. And uh, how should I think about when you mentioned about the second half weighted? The next year, a lot of that probably attributes to that uh, a timing lag but how how how how should I think about. Uh, the the level of let's say a little bit moderation in the first half since it seems Seems like that's what you alluded to and uh,
What's the based on the order based on your customer engagement? How big the second half of next year? Could be. Thank you.
Okay, look in general. You know, we are also in the period of preparing the budget for next year.
So we're very very comfortable about one in 26, it will be a growth year, we feel that the second half will be better than the first half, although the numbers and exactly how it will be the details it's too early to comment.
So when we collect all the information, all the discussion with customer or we call the pipeline or in order, all of these uh show us that uh we can feel very comfortable more for the second for the second half.
Yeah.
Got it.
Thanks.
Yeah.
Most of them maybe a question for you.
And the first half because, you know, delivery time of us is about 3, 4 months maximum. So it is a little bit, you know, not easy for us to predict more than this period.
So,
The opex it looks like a Q3 doesn't good amount of R&D expense increase.
Maybe offset by a spotlight the operation.
Sure.
See what I can feel, but maybe Ramey can contribute to more details about this.
I think based on all the commentary you're talking about a <unk> Phy Hawk.
It's probably not a surprise R&D expense come up a little bit.
But still would like to see if they can provide any more color.
On the R&D expense and the let's say going forward.
Do you expect that this level of R&D will continue and how should we think about a little bit in Q4 and beyond Q4, how you plan for Opex. Thank you.
You know, Charles we feel very comfortable, the 2026 is going to be a growth year. We we, we feel comfortable, but speaking with customers and seeing all the announcements and there is no doubt that it's going to be growth, we have the pipelines and and it's we feel very comfortable about next year.
And frankly, the hi Chas.
So definitely the one area within the Opex that we continue to increase in spend.
More resource resources on the R&D, we see that as an investment for our future growth.
We are continually continuously adding capabilities.
Have you had from a rocky in his prepared remarks.
I think at this stage, we cannot anticipate exactly the number that we don't usually give any indications about one quarter after the next one. So, at this stage, we cannot provide solid guidance about the first quarter. We are very, very comfortable about 2026; it will be a growth year. We feel that the second half will be better than the first half. Although the numbers and exactly how will be the details, it's too early to come into this page.
So we do not expect any major decline in R&D, but it could vary from quarter to quarter based on certain activities, but it will remain at this level.
Got it. Um, thanks. Uh
Sure.
As a percentage of revenue.
As we grow the revenue story.
Yeah.
Thank you.
Okay.
Thanks Charles.
Our next question will be from Brian Chen.
Yeah. Uh motion. Maybe a question for you. Um the r packs. Uh, looks like uh Q3 uh does a good amount of R&D expense increased. Uh, maybe offset by 8 and moderation, so I see you later. Bye. Um, I think, uh, based on all the commentary you're talking about the
Of Stifel. Brian. Please go ahead.
Hi, there good afternoon, thanks for letting us ask a few questions.
Maybe firstly, China has clearly been a very strong geography for <unk>. This year can you comment on what has driven the strengths and off a strong 2025 do you expect China up in 2026 and also more second half weighted.
Uh, Ego G5 Hawk. Um, it's probably not the surprise R&D expense. Come up a little bit, uh, but still would like to see if you can provide any more color, um, on the R&D expense and let's say going forward. Uh, do you expect that this level of R&D will continue? And, uh, how should we think about a little bit that in Q4 and beyond Q4 how you plan for Opex? Thank you.
Mhm.
So.
You know, we feel comfortable with what's happening in China. We see continued investments as you know a lot of the business in China is more Osage related.
Definitely the, you know, High chance. Um, so so definitely the 1 area within the Opex that we continue to increase and spend uh, more resource resources on is the R&D. We see that as an investment for our future growth,
And there is a lot of room to continue and invest in this space.
We are seeing also investments by the way from other offsets in the world. So all in all I think the <unk> segment is pretty healthy.
And I think Rafi mentioned in his prepared remarks that we have won business in a couple of offsets significant orders. So we definitely expect China to continue and be healthy in 2026.
We are continually adding capabilities, as you heard from Rafi Amit in his prepared remarks. So we do not expect any major decline in R&D, but it could vary from quarter to quarter based on certain activities. However, it will remain at this level and should increase as a percentage of revenue.
And we grow the revenue. Sorry.
Thank you.
Okay, great. Thank you.
Thanks Charles.
Reflecting again also on your commentary about a slower start to next year. It sounds like the preliminary outlook might be for Q1 revenue to decline relative to Q4 levels.
Our next question will be from Brian chin of stifel Brian, please go ahead.
And this is more tied to HBC or China or would you expect <unk> revenue to still improve on a year over year basis.
Hi, hi. Hi there. Good afternoon. Thanks for letting us ask a few questions.
So you know I think at this stage.
We said that it's too early for us to comment on accurate numbers, we were not in a position to state them and I think Rafi mentioned it and we've talked about in the prepared remarks, I think what is important if we see 2026 years of growth here.
Maybe uh, firstly, China has clearly been a very strong geography for camtech this year. Can you comment on what has driven the strength and off a strong 2025? Do you expect China up in 2026 and also more second half weighted?
So,
Lots of opportunities definitely the HBC continues to be very strong.
If you take the <unk> the <unk> business is growing at over 30% a year its going to double.
In the next three years.
We see a lot of investments there.
Our market position and.
And as we mentioned is very strong with all the <unk> manufacturers, we have the tool a preference towards the HBM for each of these locations. So we feel comfortable and I think in three months, we'll be in a much better position to comment on the <unk>.
You know we we feel comfortable with what's happening in China. We see continued Investments as you know a lot of the business in China is is more also, it's related and there is a lot of room to continue and invest in this space. Um, we are seeing also Investments by the way, from other offsets in the world. So all in all, I think the Osa segment is pretty healthy. Um, I think Rocky mentioned in his prepared remarks that we have won business in a couple of octs significant orders. So we definitely, uh, expect China to continue and be healthy in 2026.
Great, great. Thank you. Um,
As a quick follow up just based on that when.
When you say tool of record at HP and for are you talking about three D. And also can you also comment I will I will I will elaborate in any one region, but I just want to mention one thing there is no weakness in Korea.
Reflecting again, also on your commentary, about a slower start to next year. It sounds like the preliminary Outlook might be for q1 Revenue to decline relative to Q4 levels.
Is this more tied to HBC or China?
And would you expect 1 key Revenue to still improve on a year-over-year basis?
So,
And now let's talk about a little low frequency. So first of all where tool of record for all the three D metrology for H beam for it or the HB and manufacturers.
We are also tool of record for several run to the inspection steps.
It's a different stance.
Print manufacture.
Okay, great. Thank you.
Thank you Brian Thanks, Thanks, Brian.
Our next question will be from Matt Chris go of Cantor Fitzgerald. Please go ahead.
To be very strong. You know, if you take the HBM, the HBM business is growing at over 30% a year. It's going to double in the next 3 years.
And we see a lot of investment here. Our Market position.
Great. Thanks for taking the questions guys first just maybe a little more detail on our first half versus second half waiting.
Any areas of your business or end market that has seen this dynamic more pronounced and then what's giving you that confidence in the second half bounces that actual orders on the books today or is that more just generally what youre seeing in terms of the industry trends and customer conversations.
As we mentioned is very strong at all. The hbm, manufacturers, we are the tool of reference for the hbm for at each of these locations. So we feel comfortable and I think in in 3 months, we'll be in a much better position to comment on the on the
So you know the way, we work with with our customers.
Whole a lot of discussions with them, we build a very detailed what we call a pipeline that is.
As a quick follow-up. Just based on that. Um, when you say tool of record at hm4, are you talking about 3D? And also, can you also comment on? I will, I will, I will, I will, I will elaborate in in 1 minute but I just want to mention 1 thing, there is no weakness in China.
The customer per the requirements that he's doing.
And then we correlated with what we see on the market.
So all in all and I think you have seen from previous years that we were able to understand the market.
More or less to be on target.
With the discussion that we had with you so.
And now let's talk about the tool of frequency. So so first of all, we are a tool of record for all the 3D Metrology for hbm for at all the hbm manufacturing. We are also a tool of record for several 2D inspection steps.
I think that from those discussions understanding the market understanding the the HBC market is a market that is going to grow but I think that what you see from the things that we're seeing around there as we said there is a certain time lag.
It's a different steps at different manufacturers.
Okay, great. Thank you. You're welcome. Thank you Brian. Thanks. Thanks Brian. Our next question, will be from Matt prisco of cancer. Fitzgerald's Matt, please go ahead.
And we don't think it's going to be very long, it's probably going to be pretty short and therefore, we are we are very confident with the second half with the first half we will be able to comment in three months.
Helpful. Thank you and then.
On that HPE front, maybe can you.
Walk us through the contribution expectations for next year, you're thinking that that grows as a percentage of revenues versus today and are there any expected difference in that revenue contribution from HBC first half versus second half.
Great. Thanks for taking the questions guys. Um, first just maybe a little more detail on that first half or second half waiting, um, any areas of business or, or end markets that are seen this Dynamic more pronounced. And then what what's giving you that confidence in the second half balance, is that actual orders on the books today? Or is that more just um, generally what you're seeing in terms of those industry Trends and customer conversations?
so, you know, the way we work with the, with our customers
Even though we if you go back we have grown the business in 'twenty four and 25.
We hold a lot of discussions with them. We build a very detailed, what we call a, a pipeline that is, um, that is spare customer there. The requirements that he's doing.
And definitely we expect to do the same in 2006.
And then we correlate it with what we see on the market.
What are what we call the high performance computing was roughly 50% of our business and definitely when you look ahead. This business will continue to grow the HB aim is going to grow the cost contributed is going to grow we see the applications growing you are seeing also.
So all in all and I think you have seen from previous years that we were able to to understand the market and and more or less be on target with the discussion that we had with you guys. So
When you talk about the applications today being Z applications with the servers you are going to see end of 'twenty six 'twenty seven also a big growth in the density of the HBM memory that is going to use third the applications. So what we are seeing looking doing we are seeing two things.
I think that from those discussions understanding the market understanding the the HPC Market is a market that is going to grow, but I think that what you see from the things that we are seeing around there, as we said, there is a certain timeline.
One hand, you're seeing a lot of growth through the capacity that will come as well.
And we don't think it's going to be very long. It's probably going to be pretty short, and therefore we are very confident with the second half. With the first half, we will be able to comment in 3 months.
This application. The current application is going to require more density of memory and also we will see new applications.
Helpful. Thank you. And then, um,
On the other hand, the move to H B M. Four is going to be what we call inspection and metrology intensity.
Because of the bumps are getting tighter they're going to be more bumps. The density grow they will need to do more inspection and metrology. So if you couple all of these things together definitely we will continue to see growth and then I believe.
On that HPC fund, maybe. Um, if you walk us through the contribution and expectations for next year, are you thinking that that growth as a percentage of revenues versus today? And are there any expected differences in that revenue contribution from HPC, first half versus second half? You know, if you go back, we have grown the business in 2024, in 2025, and definitely, we expect to do the same in 2026.
If 50%.
Part of the business is going to be maintained in general over the longer period. So yes, we are very optimistic about the business in the market.
And we're listening to all the announcements that are being mentioned every time the amounts just of the data centers that are going to be set in the next few years is huge youre seeing it. It's hundreds of billions of dollars that are going to be investing and definitely the fabs that will support it will gradually come in.
Our high-performance computing was roughly 50% of our business, and definitely, when you look ahead, this business will continue to grow. The HBM is going to grow, and the cost contribution is going to grow as well. We see the applications growing. You are seeing, also, when you talk about...
Right.
About the applications today the Nvidia applications with the servers you are going to see end of 2627. Also a big growth in the density of the HBA memory that is going to use per the applications.
Perfect. Thanks, guys.
Thanks, Matt.
So, what we are seeing looking for, and we are seeing two things.
Our next question will be from Craig Ellis of B Riley Craig. Please go ahead.
Yeah. Thank you for taking the questions and I.
I appreciate all the color subpar team I wanted to start Rob.
Rami with one for you that just goes a little bit deeper into some of the things that have come up so far so as we think about second half weighted calendar 'twenty six growth can you help us understand how canpotex position for that from a manufacturing Stan manufacturing.
On one hand, you are seeing a lot of growth in the capacity that will come. As this application evolves, the current application is going to require more density of memory, and we will also see new applications.
On the other hand, the move to hbm 4.
City standpoint currently do you have what you need do you need to add and when will you need to start bringing in working capital because I think everything we all see suggest this will be one of the bigger capacity ramps. We've seen in a long time and then since shipping costs have been an issue at times in the past.
Defensive because the bands are getting tighter, they're going to be more bumps the density grow. They will need to do more inspection and Metrology. So if you couple all of these things together, definitely we will continue to see growth. And I believe that the 50%
In the middle of the income statement, how will we manage shipping costs for a potentially significant search and shipments in the back half of the year.
So two general film the manufacturing capacity and I think we discussed in previous meetings, we already about a year ago I did a significant portion of capacity.
Part of the business is going to be maintained in general over the longer period. So yes, we are very optimistic about the business and the market. And, you know, we're listening to all the announcements that are being mentioned. Every time, you know, the amount just of the data centers that are going to be set up in the next few years is huge. You're saying it's hundreds of billions of dollars that are going to be invested, and definitely the Fabs that will support it will gradually come online.
Perfect. Thanks guys.
We are also going to add some capacity in Europe as we discussed in order to have another buffer just in case that we need more capacity.
Thanks Matt.
Our next question will be from Craig LS of B. Riley. Craig, please go ahead.
From a capacity point of view, we have industry room space, we have enough employees.
And therefore from that point of view, we feel very comfortable currently we're running two shifts we can always extending to a third sheet.
That point of view, we feel very comfortable.
For material point of view, we're running as much as I mentioned, we're more efficient about the material flow as a result, we were able to reduce the inventory, but all in all we have enough material on hand to start the ramp.
Yeah, thank you for taking the questions, and I appreciate all the callers so far. Team, I wanted to start, Ramey, with one for you that just goes a little bit deeper into some of the things that have come up so far. So, as we think about second half weighted calendar 2026 growth, can you help us understand how CountX is positioned for that from a manufacturing standpoint?
We have excellent relationships with our subcontractors and other suppliers, if we need to expedite materials, including.
Regarding the shipping cost, yes, we had a surge in the shipping cost in the past year I think we overcame all of these issues in the shipping costs are back to normal and hopefully we will not see any issues regarding that.
Manufacturing capacity, standpoint currently to have what you need. Do you need to add and when will you need to start bringing in working capital? Because I think everything we all see, suggest this will be 1 of the bigger capacity ramps we've seen in a long time. And then since shipping costs have been an issue at times in the past, in the middle of the income statement, how will we manage shipping costs for a potentially significant surge in shipments in the back half of the year.
To answer your question Greg.
Yeah, you did from me. Thank you very much and then I'll ask a follow up to Rob the Rafi.
So so general fund and Manufacturing capacity and I think we discussed in previous meetings, we already about a year ago out of the significant portion of capacity.
You have significantly strengthened your balance sheet with the convert and you mentioned that one of things that can do is enhance inorganic growth options can you talk about areas of the business, where you feel like there is potential to add capability.
We are also going to add some capacity in Europe as we discussed in order to have another buffer. Just in case that we need more capacity.
so from capacity, to point of view, we have enough legal space, we have enough employees and therefore from that point of view, we feel very comfortable
Where do you see opportunity to augment the current portfolio with something that word strengthen it and add further to the growth down the road. Thank you.
Currently we are running a 2 shifts. We can always extend it to a third Chief but from that point if you will feel very comfortable
Okay, you know we.
You know we have our today.
Chairman in Europe, Your ROM, we hired him too.
To spend the 1% of his time only four for M&A activities.
And now we had another person for this purpose.
So so they work like a group and they do a great job the first map the industry.
Um, from Material point of view, we're running. As mushe mentioned, we're more efficient about the material flow. As a result, we were able to reduce the inventory, but only all we have enough material on hand to start the ramp. And we have excellent relationship with our subcontractors and other suppliers. If we need to expedite material of any kind,
And we divided it to I would say two inspection metrology to software to many many type of.
Area that could be integrated the interest come thick.
Regarding the shipping cost. Yes, we had a surge in the shipping cost in the past year. I think we overcame all of these issues shipping costs are back to normal. And hopefully we do not see any issues regarding that.
So I think right now we have about maybe 40 potential customer or companies that we said look this about this amount of company could be very interesting for us and on weekly basis, we do some discussion with them.
Did I answer your question correctly?
Even though we pay a visit to see them to talk to them. So I feel very confident that maybe this year in 2026, we can see much better results with it.
Very helpful. Thank you can I, just add just add a little bit maybe misunderstood. So you know we or the ROM Our executive Chairman is 100% more of as time goes to just the M&A activities.
Yeah you did for me, thank you very much and then I'll ask the follow-up to Rafi, Rafi. Um, you have significantly, strengthened your balance sheet with the convert and you mentioned, that 1 of the things that can do is enhance inorganic growth options. Can you talk about areas of the business where you feel like there's potential to add capability? Uh, where do you see opportunity to augment? The current portfolio with something that would strengthen it and add further to the growth down the road. Thank you.
I think we are very comfortable with the progress that we're making and there are quite a few opportunities, but that's something that we will speak in future calls once we have more material information and we can share it.
Okay, you know, we our today, uh, chairman, the aura Veeram, we hired him.
To spend the 1% of his time, only for for m&a activities.
And now we had another person for, for this purpose.
Thanks, Rami Thanks Rafi.
Okay.
Thanks, Greg. Our next question is going to be from Tom O'malley from Barclays.
Yeah.
Hi, Good morning. This is Matthew Pat on for Tom O'malley, just one.
So so they work like a group and they do a great job. The first map, the industry and we we divided it to. I would say to inspection to methology to software to many, many type of uh of area that could be integrated and interest context.
Follow up on the supply chain in terms of AI announcements any more details you can share on those conversation in the supply chain.
If theres any broadening out in sort of in terms of conversations with the leading etch players I know you mentioned a lot more conversation.
Obviously, Tom there are a lot of conversations with all the relevant manufacturers and customers that are related to the <unk> high performance computing.
This about this amount of of company could be very interested for us. And, and on on weekly basis we do some discussion with them. Uh, even we we pay a visit to see them to talk to them. So I feel very confident that maybe this year in 2026, we can see much better result for that.
Hey.
You know, it's very hard to try and quantify very short times and this is and this is the reason that we feel very close to build the 2026 is going to be a growth year because everybody is positive.
Very helpful. Thank you. Tim. Can I just, uh, just add a little bit maybe misunderstood. So, you know, we all the Rama or executive chairman is 100% motive. This time goes to just the m&a activities.
About the future and what's going to happen. It is really a question now timing how fast the ramp is going to be.
So all in all I think the activities are there I think rafi in his prepared comments talked about the advancement and the process improvements that everybody's making.
And I think we are very comfortable with the progress that we are making and and there are quite a few opportunities, but that's something that we will speak in future calls. Once we have more material information and we can share it.
Thanks rammy. Thanks Robbie.
Okay.
So all in all I think this industry is moving in the right direction.
Thanks Greg. Our next question is going to be from Tom, Ali from Berkeley.
But as we said to turn all of these announcements.
<unk> into something that we need to start to manufacture tomorrow, obviously, there is a slight.
Time delay and I think we will be able to discuss it more in details in about equal.
Hi, good morning. This is Matthew Pan on for Molly. Just one follow-up on the AI announcements. Any more detail you could share on those conversations with the supply chain?
Got it and just one follow up if I'm asking a couple of companies that I'm curious if you've looked into sort of what do you think there'll be USD spend as a percentage of <unk>.
If there's any broadening out and sort of in terms of conversations with the Leading Edge players, I know you mentioned a lot more conversations with oats.
Total AI compute investments would be so I've heard a couple of companies, saying high single digits, maybe closer to double digits percentage, but not sure if you've taken a look into that.
Obviously, Tom, there are a lot of conversations with all irrelevant manufacturers and customers that are related to high-performance computing.
and,
And you know obviously, we see these comments and I think it's too early today to say the numbers I see numbers from high single digits to low double digits.
I think it's a little premature now to really.
Comment on the <unk> 2026.
you know, it's it's, it's very hard, you know, to try and and quantify it in in very short time. And this is and at least, this is the reason that we feel very comfortable, the 2026 is going to be a growth year because everybody is positive about the future and what's going to happen, it is really a, a question now of timing how fast the ramp is going to be
Got it thank you.
No.
Thanks.
Next question will be from Blaine.
Object race, Brian. Please go ahead.
Lang you need to EMEA.
Eric.
Yes, yes, we hear you.
Then as you are when you're on for Brian Thanks for taking my questions.
The first one would be.
In Q3, the guide for Q4 and I'm guessing.
Weakness in the beginning of next year can you talk a little bit about the moving pieces between cutoffs in HBM, what's strong what tweak there.
So, all in all, I think the activities are there, I think wrapping is prepared. Comments. Talked about the, the advancement and and the process improvements that everybody is making. And so, all in all I think this industry is moving in the right direction and but as we said you know, to turn all of these announcements um into something that we need to start to manufacture tomorrow. Obviously there is a slight a time delay and I think we will be able to discuss it more in details in about a quote.
Yes.
Yeah.
We bundle it all together as we call it high performance computing because the reason is basically what it is.
Got it. Just one follow-up: we've been asking a couple of companies. This, um, curious if you've looked into sort of what you think WFD spend as a percentage of...
Eight the call US there is the triplet and the triplet is surrounded by stacks of H b.
Total AI compute Investments would be. So we've heard a couple companies saying, you know, High single digits, need to be closer to double digits percentage, but not sure if you've taken a look into that,
So it really is one one business and do you know the orders can shift by quarter here and there there is a different vendor and today, it's a little bit more complex because you get the offsets and those sorts are also participating in the call us and cause like business.
Um, you know, obviously we see these comments and and and I think it's it's too early today to say the numbers, I I see numbers from high single digits to to low double digits.
Um, I think it's a little premature now to really comment on the W3 in 2026.
And therefore, it's a little bit harder to tell you what is stronger versus the cost because we sometimes don't know what the offsets are due.
So it all so again, what I can tell you ways, especially as the HBC continues to be strong. It will be strong also in the fourth quarter. It also will be strong in the range of 50% in 2026, we don't see any change in the pattern.
Thanks, next question, will be from Blaine Curtis of Jeffrey Lane. Please go ahead.
Blank, you need to unmute.
Can you hear me?
Yeah. Yes, we hear you.
Got it and then.
Second question would be you talked about.
An improvement in the Hawk for early next year can you talk about what that means for the applications you can.
This is where we run for Bland. Thanks for taking my questions. Uh, first, 1 would be, uh, in Q3 and the guy for Q4 and I guess him to the weakness in the beginning of next year. Can you talk a little bit about the moving pieces between co-authors and hbm? What's strong, what's weak there?
Dress and pricing.
um,
So you know I want to be very careful because of course more detailed information is confidential what I can tell you what we said in our.
You know, we bundle it all together, as we call it high-performance computing. The reason is basically, what is it?
In our prepared remarks.
After over a year since the introduction of the Hawk.
It's the call-outs. There is the chiplet, and the chiplet is surrounded by stacks of HBM's.
We have identified.
Tension in order to improve the performance and to create even a bigger gap in the market.
So we are going to improve the throughput in general for both the <unk> metrology and inspection, we're going to make these changes very soon.
We're speaking with our customers, obviously very closely and down to Spain, what is going to come when I think the what.
A little bit harder to tell you what is stronger versus the coas? Because we sometimes don't know what they also are doing.
I will say that what is important and the messages I want to say across that we'd hook will be the best equipment. We have in each segment and we're very proud in the.
It's performing very well, it's been well accepted by our customers. It's already in production at multiple places very successful. So we believe that with the improved version of our market position will be even stronger once we implement those improvements and they are going to happen very soon.
So it. So again, what I can tell you is that the business, the HPC continues to be strong. It will be strong. Also in the fourth quarter, it also will be strong in the range of 50% in 2026. We don't see any change in the pattern.
Got it. And then, uh, second question would be, you talked about, uh, an improvement in the Hawk for early next year? Can you talk about what that means for the applications you can, uh, address and pricing?
Got it thank you.
Thanks Ezra.
Our next question will be from Michael <unk> of Bank of America. My call. Please go ahead.
Hi, Thanks, so much for taking our questions.
So, you know, I I want to be very careful because of course, you know in more detail. The information is confidential, what I can tell you what, we said, in our refering, in our prepared remarks, it as after a year since the introduction of the hook,
Could you talk about the utilization of our tools across your main customers, maybe particularly focusing on.
We've identified.
Potential to improve performance and create an even bigger gap in the market.
Some of the HCM customers is there anywhere where you might be seeing a little more idle capacity given.
The amount of shipments over the last couple of years.
So, we are going to improve the throughput in general for both the 3D metrology and the inspection.
Is that a headwind in the near term and partially explaining maybe a softer first half with the outlook.
You know first of all.
We don't really know the utilization of our machines at our customers.
We sometimes see pressure on us to fix the machines, but we don't really know what these numbers they are feeling.
We are going to make these changes very soon and we're speaking with our customers obviously very closely and they understand what is going to come, what I think the what I want to say that what is important. And the message that I want to say across that, we the hook will be the best equipment we have in its segment and we're very proud and
We keep them very close to their chest. So this is something that unfortunately I cannot comment on what I can tell you net all the machines that were shipping are being installed and are being taken into production.
I don't see any machines that are hailed that don't require immediate installation or enough Hughes from.
It's performing very well. It's been well, accepted by our customers. It's already in production at multiple places. Very successful. So, we, we believe that with the improved version our Market Position will be even stronger once we Implement those improvements and they're going to happen very soon.
Got it. Thank you.
From that point of view I think the industry is healthy people are using the equipment and people in service and people are pushing us to do things and deliver our commitments as fast as possible. So from that point of view I don't see any slowdown in the industry.
Thanks, Ezra. Uh, on next question, will be from Michael Manny of Bank of America. My call. Please go ahead.
Great. Thank you and my follow up if you could just give us an idea about how to think about gross margins for for next year. It.
Hi. Thanks so much for taking our questions. Um, to start, could you talk about the utilization of your tools across your main customers, maybe particularly focusing on?
It sounds like maybe it's up.
The first half is at the lower end of the sort of 51% to 52%.
Branch that you've kind of trended along the last couple of quarters and maybe there is an uptick in second half, especially as some of these higher ASP tools kick in but any kind of high level.
Some of the HBM customers, um, is there anywhere where you might be seeing a little more idle capacity, given the amount of shipments over the last couple of years? And is that ahead within the near term and partially explaining maybe the softer first half of the outlook?
Um, you know, first of all.
In terms of gross margin. So think about for next year would be very helpful. Thank you.
Hi, Mike. This is my fifth speaking, yes gross margin should gradually improve over the next few quarters as we ship more and more our products from our new tools, the Hawk and the Gen five which have a higher <unk>.
We we don't really know the utilization of our machines at our customers. You know, we we sometimes see pressure on us there to fix the machines but we we we don't really know these numbers. They feel it, very they they keep them very close to their chest. So this is something that unfortunately I I cannot comment on
Gross margin.
Obviously, if there is a slower quarter. This may have an impact on the overall gross margin, but again in general the gross margin.
Improve over the current methods.
Okay.
Thanks, so much.
Okay.
Thanks, Michael Our next question is from Edward Yang of Oppenheimer. Please go ahead and ask your questions.
What I can tell you is that all the machines we are shipping are being installed and are being taken into production. I don't see any machines that are held that don't require immediate installation or are not in use from that point of view. I think the industry is healthy. People are using their equipment, and people want service. They are pushing us to do things and deliver our commitments as fast as possible. So from that point of view, I don't see any slowdown in the industry.
Hi, good morning.
Can we come back to the just the competitive environment and market share dynamics. It sounds like you had some one some share in <unk> two dee a competitor talked about three D is it is it just fair to say the backdrops relatively stable with some give and take.
Great, thank you. And, uh, my follow-up, if you could just, uh, give us an idea about, uh, how to think about gross margins for next year. Um, you know, sounds like maybe.
So first of all we.
We have not lost any market share to a competitor to our competitors.
Uh, the first stop is at the lower end of this sort of, you know, 51 to 52%, um, Range that you've uh, going to Trend it along. But the last couple quarters uh, and maybe there's an uptick in second half especially as some of these high rates ASP tools kick in but um any kind of high level,
We believe that with our new technologies and new capabilities, we're going to implement will probably enable us to win more to increase our market share.
Trajectory in terms of gross margins to think about for next year would be very helpful. Thank you.
And I want to make it you know as we gain into three D and you sort of hinted maybe something you've gained in the annuity you may have lost something in the food and that's not the case our position in the <unk> is very strong we are the reference to.
Uh, hi Mike. Um this is Mo speaking. Yes, uh gross margin should gradually improve uh over the next few quarters is we ship more and more uh,
Products from our new, uh, tools the hawk, and the Gen 5, which uh, have uh, higher gross margin.
All the three D metrology steps at all of the <unk> vendors and basically across the industry and the offsets that are very very few places where we're not so.
Uh, obviously, if there is a slower quarter, this may have an impact on the overall growth margin, but again, in general, the growth margin should improve over the current levels.
In Italy, we are in a very strong position I think the technology that we're implementing to date the new technologies. The new products that we've introduced a year ago are starting to be very meaningful to our revenues.
Thanks, Michael. Our next question is from Edward Yang of Oppenheimer. Ed, please go ahead and ask your questions.
We are gaining a lot of market share we're gaining in new applications, we're able to do things that we couldn't do a year ago.
I think we the new capabilities, we will do even more applications and my expectation is that we will meet we will win more steps.
Hi, good morning. Um, can we come back to the, uh, just the competitive environment and, um, market share dynamics? Um, sounds like you, uh, had some, uh, want some share in 2D. A competitor talked about 3D. Is it, is it just fair to say the backdrop's relatively stable with some give and take?
At the <unk> level.
<unk>.
<unk> and all the different applications and is definitely our.
Our target is to increase the market share in the three D and <unk>.
So first of all, we have not lost any marketers to our competitors. We believe that with our new technologies and the new capabilities we're going to implement, we will probably be able to win more and increase our market share.
Okay. Thanks for that color Remy and just for my follow up.
Could you talk about the outlook for non HBC advanced packaging that actually outperformed HBC and in 2025 would that still be the case for.
2026, and what's driving that is that mobile or what are the end markets, that's driving that outperformance.
And I'll tell you what they say.
If I look at the advanced packaging in general and advanced packaging for US is around 70%, 50% is <unk> and another 20% is what we call the conventional advanced packaging.
And I want to make it, you know, as we gain in the 3D and you sort of hinted, maybe you love something. You would you gained in the 2D, you may have lost something in the city. That's not the case. Our position in the 3D is very strong. We are the reference tool for all the 3D Metrology steps at all the hbm vendors and basically across the industry in the offset that are very very few places where we are not. So definitely, we are in a very strong position. I think the technology that we are implementing
I think the main application today.
Is fan out.
And you can see now.
<unk>.
Some of it goes to low buying but I think it's Laurie it's it has a variety of applications.
I think today, the new technologies and products that we've introduced a year ago are starting to be very meaningful to our revenues. Um, we are gaining a lot of market share, we're gaining new applications, and we're able to do things that we couldn't do a year ago.
So I would say it's hard for me to tell you, which are the end products, but definitely the application that we see is fan out.
I think with the new capabilities, we'll do even more applications. And my expectations is that we will meet. We will win more steps.
At the hbm level.
at the,
It is taking more and more I would say space, you're seeing today in advanced packaging and I expect this to be similar in 'twenty six.
Thank you.
Thanks, Thanks, Hi, but we have a follow up question from Craig Ellis of B Riley Pike, you May ask your question.
Cos and all the different applications and then definitely we, our Target is to increase the market share in the 3D, and in the 2D.
Yeah. Thanks for sneaking me in there has been a lot of inquiries.
And very helpful color understand up Leon HBM and co aspect minor.
My understanding is with the company is positioned quite well for hybrid bonding and.
<unk> got to be very important as leading edge foundry moves to backside power deliberate can you talk about specific product traction breadth of exposure there and how should how are we how we should think about hybrid, prompting contribute into calendar 'twenty six year on year growth. Thanks team.
Okay. Uh, thanks for that color Ramey and um, just for my follow-up. Um, could you talk about the outlook for non HPC, Advanced packaging uh, that actually outperformed HPC and and 2025, would that still be the case for, uh, 2026 and and what's driving that is that mobile or, you know what are the end markets? That's driving that outperformance. Thank you.
Um, I'll tell you what it's the if I.
If I look at the advanced packaging in general, advanced packaging for us is around 70%. Fifty percent is the HPC, and another 20% is what we call the conventional advanced packaging.
So looking general hybrid bonding and we see it as an additional opportunity.
I think the main application today.
Is is fan out.
I think in 26 from revenue point of view, it's still going to be moderate what we are seeing is more I would say the volumes of steel.
And you see them out.
Aim.
We have a few.
Machines at customer sites major customer sites and are being used for the hybrid bonding I would say for the pilot lines or for the initial reproduction that they are doing.
Some of it goes to mobile, but I think it's more that it has a variety of applications. And so I would say it's hard for me to tell you which are the end products. But definitely the application that we see is expanding, and it's taking more and more, I would say, space. You think today in advanced packaging, and I expect this to be similar in 2026.
So definitely there is a very nice opportunity there on the two D inspection side.
Thank you.
We see a lot of potential also on the metrology side and this is something that we've been working on developing capabilities and I believe this will contribute also in the long run I think the volumes from hybrid bonding will come more into 'twenty, we'll start to see them higher in 'twenty Sidney I thinking.
Thanks. Thanks, Edward. We have a follow-on question from Craig Ellis of B. Riley. Craig, you may go ahead and ask your question.
26, it's not going to reach some significant.
Thank you very much rami.
Thanks, Thanks, Craig.
So that ends our question and answer session before I hand over back to Raffi for his closing statements in the coming hours without led the recording of this call to the IR section of Capex website.
Yeah, thanks for sneaking me in. There's been a lot of, uh, inquiry and and very helpful color understandably on hbm and co-ops. But, my understanding is that the company's positioned quite well for hybrid bonding, and we do expect that to be very important as Leading Edge. Boundary moves to Backside power delivery. Can you talk about specific product traction, breadth of exposure there and how should how we how we should think about hybrid branding can.
Contributing to calendar 26 here on your growth. Thanks team.
I'd like to thank everybody for joining this call and hand back. So I think they are passing statement I think Blake.
Still looking at general hybrid bonding, we see it as an additional opportunity.
Hey, I would like to sincerely thinks all of you for your continued interest income.
I think in Q3 2025, from a revenue point of view, it's still going to be moderate. What we are seeing is more, um, I would say the volumes are still...
It kind of tick up.
Especially in north of application goes to our dedicated employees and exceptional management team for the outstanding performance and commitment.
and,
we have a few, um,
Total investor I am truly grateful for your trust and long term support I look forward.
Machines at the customer side. Major customer-side machines that are being used for the hybrid bonding, I would say, for the pilot lines or for the initial pre-production that they are doing.
Dating you on our continued progress in the next quarter. Thank you very much goodbye.
A very nice opportunity there on the 2D inspection side.
Thanks to everyone. You May go ahead and disconnect.
We see a lot of potential also on the Metrology side and then, and this is something that we've been working on developing capabilities and I believe this will contribute also in the long run.
I think the volumes from hybrid bonding will come more into 20 will start to see them higher in 27. I I think in in 26 it's not going to be so significant.
Thank you very much Ramey.
Thanks. Thanks Craig.
So that ends our question and answer session, uh, before I hand over back to Raffi for closing statements in the coming hours, we'll upload the recording of this call to the IR section of context website.
Um, I'd like to thank everybody for joining this call and hand back to Raffi for your closing statement Raffi, please. Okay, I would like to sincerely. Thank all of you for your continued interest in our income. Take
Special note of application goes to our dedicated employees and exceptional management team for their outstanding performance and commitment.
To our investor, I am truly grateful for your trust and long-term support. I look forward.
Updating you on our continued progress in the next quarter. Thank you very much. Goodbye.
Thanks, everyone. You may go ahead and disconnect.