Q4 2025 Onto Innovation Inc Earnings Call

February 19, 2026

Operator 2: Good day, and welcome to the Onto Innovation fourth quarter earnings release conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sidney Ho. Please go ahead.

Operator: Good day, and welcome to the Onto Innovation fourth quarter earnings release conference call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Sidney Ho. Please go ahead.

Speaker #3: Please go ahead.

Speaker #2: Thank you, Lisa, and good afternoon, everyone. Onto Innovation issued its Q4 2025 financial results this afternoon, shortly after the market closed. If you did not receive a copy of the release, please refer to the company's website, where a copy of the release is posted.

Sidney Ho: Thank you, Lisa, and good afternoon, everyone. Onto Innovation issued its 2025 Q4 financial results this afternoon, shortly after the market closed. If you did not receive a copy of the release, please refer to the company's website, where a copy of the release is posted. Joining us on the call today are Michael Plisinski, Chief Executive Officer, and Brian Roberts, Chief Financial Officer. I'd like to remind you that the statements made by management on this call will contain forward-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 the risk factors that may impact Onto Innovation's results, I would encourage you to review our earnings release and our SEC filings.

Speaker #2: Joining us on the call today are Michael Plisinski, Chief Executive Officer; and Brian Roberts, Chief Financial Officer. I'd like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of the Federal Securities Laws.

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 the risk factors that may impact Onto Innovation's results, I would encourage you to review our earnings release and our SEC filings.

Speaker #2: Onto Innovation does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified.

Sidney Ho: Onto Innovation does not undertake the obligation to update these forward-looking statements in light of new information or future events. Today's 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 results can be found in today's earnings release. Let me now turn the call over to our CEO, Mike Plisinski. Mike?

Speaker #2: As a reminder, a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release. Let me now turn the call over to our CEO, Mike Plisinski.

Speaker #2: Mike?

Speaker #3: Thank you, Sydney. Good afternoon, everyone, and thank you for joining us on our call today. We ended 2025 on a high note, with orders from 2.5D packaging for AI devices more than doubling in the quarter, contributing to a record revenue of $267 million.

Michael Plisinski: Thank you, Sidney. Good afternoon, everyone, and thank you for joining us on our call today. We ended 2025 on a high note, with orders from 2.5D packaging for AI devices more than doubling in the quarter, contributing to a record revenue of $267 million. Financially, gross and operating margins both improved sequentially, and we set a record for cash generation of $95 million in the quarter. Overall, great momentum as we look ahead to the new year, where across the industry, the surge in AI investments is projected to drive a powerful upcycle in the semiconductor capital equipment spending. For example, NVIDIA forecasts that global AI infrastructure will grow at a 40% CAGR over the next 5 years, while capital expenditures from hyperscalers are forecasted to exceed $600 billion in 2026.

Speaker #3: Financially, gross and operating margins both improved sequentially, and we set a record for cash generation of $95 million in the quarter. Overall, great momentum as we look ahead to the new year, where across the industry the surge in AI investments is projected to drive a powerful upcycle in semiconductor capital equipment spending.

Speaker #3: For example, NVIDIA forecasts that global AI infrastructure will grow at a 40% CAGR over the next five years while capital expenditures from hyperscalers are forecasted to exceed $600 billion in 2026.

Speaker #3: To meet this demand, industry leaders such as TSMC have signaled a multi-year expansion in CAPEX, with 2026 spending increasing by more than 30%, mostly to support the addition of new factories.

Michael Plisinski: To meet this demand, industry leaders such as TSMC have signaled a multi-year expansion in CapEx, with 2026 spending increasing by more than 30%, mostly to support the addition of new factories. As a result, analysts project strong WFE growth in the range of 10% to 20% in 2026, with the pace hinging on how quickly new clean room space becomes available. For Onto Innovation, these dynamics are incredibly positive. Recent discussions with customers are increasingly more constructive and include views into longer-term forecasts, with several extending into 2027. In fact, we are quite happy to announce a volume purchase agreement from one of our HBM customers covering Dragonfly 2D and 3D bump metrology demand through 2027. This agreement is valued at over $240 million, including over $60 million in systems for 3D bump metrology.

Speaker #3: As a result, analysts project strong WFE growth in the range of 10% to 20% in 2026, with the pace hinging on how quickly new clean room space becomes available.

Speaker #3: For ONTO INNOVATION, these dynamics are incredibly positive. Recent discussions with customers are increasingly more constructive and include views into longer-term forecasts with several extending into 2027.

Speaker #3: In fact, we are quite happy to announce a volume purchase agreement from one of our HBM customers covering Dragonfly 2D and 3D bump metrology demand through 2027.

Speaker #3: This agreement is valued at over $240 million including over $60 million in systems for 3D bump metrology. This is an example of where our expanding portfolio of technology is putting us in a position to increase the value we deliver to our customers serving this seemingly insatiable demand for AI.

Michael Plisinski: This is an example of where our expanding portfolio of technology is putting us in a position to increase the value we deliver to our customers, serving this seemingly insatiable demand for AI. So let's continue with a deeper look into our advanced packaging business, which grew over 25% sequentially, driven by demand for Dragonfly inspection and Iris films metrology in established 2.5D applications. For new and emerging applications, we're supporting four separate customer evaluations of our next generation inspection systems at the customer's facilities. While still early, preliminary feedback on system performance has been positive, with customers acknowledging significant improvement in optical performance and higher throughput.

Speaker #3: So let's continue with a deeper look into our advanced packaging business, which grew over 25% sequentially, driven by demand for Dragonfly inspection and iris films metrology in established to an FD applications.

Speaker #3: For new and emerging applications, we're supporting four separate customer evaluations of our next-generation inspection systems at the customers' facilities. While still early, preliminary feedback on system performance has been positive, with customers acknowledging significant improvement in optical performance and higher throughput.

Speaker #3: The qualification efforts are in preparation to support our customers in 2.5D packaging and high-bandwidth memory including next-generation hybrid bonding applications where our current generation tools are already being adopted for process control and R&D.

Michael Plisinski: The qualification efforts are in preparation to support our customers in 2.5D packaging and high bandwidth memory, including next generation hybrid bonding applications, where our current generation tools are already being adopted for process control and R&D. In addition to 2D inspection, 3D metrology is becoming more crucial as smaller, denser interconnects used in die stacking and fan-out packaging applications require more precision to ensure coplanarity across die and wafer. Our pipeline for 3D OCD metrology is expanding beyond HBM, and in the quarter, we received additional purchase orders from multiple advanced packaging customers, including an OEM, requiring precise metrology for new panel-level process development. In fact, we see investment in panel-level packaging growing as enterprise server and AI device designers look for packaging solutions with greater economies of scale through large format panels.

Speaker #3: In addition to 2D inspection, 3D metrology is becoming more crucial as smaller, denser interconnects used in die stacking and fan-out packaging applications require more precision to ensure coplanarity across die and wafer.

Speaker #3: Our pipeline for 3DI metrology is expanding beyond HBM, and in the quarter we received additional purchase orders from multiple advanced packaging customers, including an OEM requiring precise metrology for new panel-level process development.

Speaker #3: In fact, we see investment in panel-level packaging growing, as enterprise server and AI device designers look for packaging solutions with greater economies of scale through large-format panels.

Speaker #3: Our JetStep systems are well positioned for the transition to panels, delivering the ability to print large packages without stitching at throughputs that customers need for reliable and repeatable high-volume applications.

Michael Plisinski: Our JetStep systems are well positioned for the transition to panels, delivering the ability to print large packages without stitching at throughputs that customers need for reliable and repeatable high-volume applications. Customers are also adopting Firefly process control for applications in glass and panel fan-out, where yields can be improved by feeding process metrology into the stepper for shot-by-shot adjustments. As a proof point, we are proud to have been awarded orders for JetStep and eight Firefly systems in the quarter to support an exciting new large panel packaging facility. These orders represent the first of several potential phases of expansion to support planned demand. Finally, as large format heterogeneous packaging becomes more prevalent, concerns continue to increase about residual charge on die, causing yield issues when connected to another die.

Speaker #3: Customers are also adopting Firefly process control for applications in glass and panel fan-out where yields can be improved by feeding process metrology into the stepper for shot-by-shot adjustments.

Speaker #3: As a proof point, we are proud to have been awarded orders for jet step and eight Firefly systems in the quarter to support an exciting new large panel packaging facility.

Speaker #3: These orders represent the first of several potential phases of expansion to support planned demand. Finally, as large format heterogeneous packaging becomes more prevalent, concerns continue to increase about residual charge on die causing yield issues when connected to another die.

Speaker #3: The surface charge metrology technology acquired from Semilab is a powerful solution to this emerging challenge, and we are pleased to have received our first orders for this evolving market need.

Michael Plisinski: The surface charge metrology technology acquired from Semilab is a powerful solution to this emerging challenge, and we are pleased to have received our first orders for this evolving market need. With this positive momentum across a broad range of our products in support of AI device fabrication, we estimate advanced packaging revenue to grow over 30% in 2026, resulting in a new revenue record for this market. Rounding out our specialty devices in advanced packaging markets, power semiconductor revenue was strong in Q4, but is expected to decline seasonally in Q1. For 2026, we expect power semi revenue to decline around 10% based on weakening demand for EVs and slowing infrastructure spending. Semilab will likely experience a similar decrease from our original planning as we work to pivot from opportunistic sales to longer-term market opportunities across our broader customer base.

Speaker #3: With this positive momentum across a broad range of our products in support of AI device fabrication, we estimate advanced packaging revenue to grow over 30% in 2026 resulting in a new revenue record for this market.

Speaker #3: Rounding out our specialty devices in advanced packaging markets, Power Semiconductor revenue was strong in the fourth quarter but is expected to decline seasonally in the first quarter.

Speaker #3: For 2026, we expect Power Semi revenue to decline around 10% based on weakening demand for EVs and slowing infrastructure spending. Semilab will likely experience a similar decrease from our original planning as we work to pivot from opportunistic sales to longer-term market opportunities across our broader customer base.

Speaker #3: Now turning to advanced nodes, our revenue in 2025 more than doubled from a year ago. With less than 3% of revenue coming from China, this growth was driven by our strong position in OCD at leading global manufacturers in both logic and memory.

Michael Plisinski: Now turning to advanced nodes. Our revenue in 2025 more than doubled from a year ago, with less than 3% of revenue coming from China. This growth was driven by our strong position in OCD at leading global manufacturers in both logic and memory. Expanding on this position, our recently announced Atlas G6 is being adopted for new critical applications in both Gate All Around and HBM for DRAM, which we expect will add to growth in 2026. Complementing our OCD technology, our films metrology and integrated metrology both achieved record revenue in 2025. Adding to this momentum in integrated metrology, we are expanding beyond the strong position in memory to now include two logic customers to support leading-edge processes expected to ramp in 2026.

Speaker #3: Expanding on this position, our recently announced Atlas G6 is being adopted for new critical applications in both gate all-around and HBM 4D RAM which we expect will add to growth in 2026.

Speaker #3: Complementing our OCD technology, our films metrology and integrated metrology both achieved record revenue in 2025. Adding to this momentum in integrated metrology, we are expanding beyond the strong position in memory to now include two logic customers to support leading-edge processes expected to ramp in 2026.

Speaker #3: To summarize, with both advanced packaging and our advanced nodes businesses strengthening, revenue for the first quarter is now expected to be in the range of $275 million to $285 million.

Michael Plisinski: To summarize, with both advanced packaging and our advanced nodes businesses strengthening, revenue for the first quarter is now expected to be in the range of $275 million to $285 million. We expect demand to continue to increase in the second quarter, with revenue exceeding $300 million. This represents a further acceleration in the core business for the first half of 2026 to 12% to 14% as compared to the second half of 2025. Our backlog has nearly doubled over the last 3 months to a new record level of approximately 2 quarters, adding support for this strong growth. We expect continued growth in the second half, and we are working closely with both customers and suppliers to manage tightening capacity and the gradual extension of lead times.

Speaker #3: We expect demand to continue to increase in the second quarter with revenue exceeding $300 million. This represents a further acceleration in the core business for the first half of 2026 to 12 to 14% as compared to the second half of 2025.

Speaker #3: Our backlog has nearly doubled over the last three months to a new record level of approximately two quarters. Supporting this strong growth, we expect continued growth in the second half, and we are working closely with both customers and suppliers to manage tightening capacity and the gradual extension of lead times.

Speaker #3: With that, now let me turn the call to Brian to review our financial highlights and provide first quarter guidance. Brian?

Michael Plisinski: With that, well, now let me turn the call to Brian to review our financial highlights and provide Q1 guidance. Brian?

Speaker #4: Thanks, Mike. Good afternoon, everyone. We delivered a strong fourth quarter as revenue, gross margin, and operating margin all met or exceeded expectations. We reported record revenue of $267 million, representing a 22% increase from Q3.

Brian Roberts: Thanks, Mike. Good afternoon, everyone. We delivered a strong fourth quarter as revenue, gross margin, and operating margin all met or exceeded expectations. We reported record revenue of $267 million, representing a 22% increase from Q3. For the full year, revenue finished at $1.005 billion, also a record for Onto Innovation. Gross margin for Q4 improved by about 50 basis points to 54.6% from Q3. Operating margins improved to 25.2% in the fourth quarter, an increase of 410 basis points from the third quarter. Adjusted diluted earnings per share in Q4 were $1.26.

Speaker #4: For the full year, revenue finished at $1,005,000,000, also a record for Onto Innovation. Gross margin for Q4 improved by about 50 basis points to 54.6% from Q3.

Speaker #4: Operating margins improved to 25.2% in the fourth quarter, an increase of $410 basis points from the third quarter. Adjusted diluted earnings per share in Q4 were $1.26.

Speaker #4: Overall, the team is executing well as we delivered more than 50% of our tools in Q4 from our extended factories, completed the acquisition of Semilab in mid-November, and implemented a more robust forecasting and spending control process as part of our annual planning exercises.

Brian Roberts: Overall, the team is executing well as we delivered more than 50% of our tools in Q4 from our extended factories, completed the acquisition of Semilab in mid-November, and implemented a more robust forecasting and spending control process as part of our annual planning exercises. Let me dive a little deeper into Q4 and full year 2025 revenue. Advanced packaging and specialty devices in the fourth quarter of approximately $145 million represented slightly more than half of our revenue, as sales from our 2.5D packaging business doubled as compared to Q3. Additionally, approximately $9 million of revenue related to the Semilab acquisition is included in this category. For the full year, advanced packaging and specialty devices together totaled $504 million of revenue.

Speaker #4: Let me dive a little deeper into Q4 and full year 2025 revenue. Advanced packaging and specialty devices in the fourth quarter of approximately $145 million represented slightly more than half of our revenue, as sales from our $2.5D packaging business doubled compared to Q3.

Speaker #4: Additionally, approximately $9 million of revenue related to the Semilab acquisition is included in this category. For the full year, advanced packaging and specialty devices together totaled $504 million of revenue.

Speaker #4: Advanced nodes more than doubled in 2025 to $308 million, driven by growth in both DRAM and logic, which together represent about 75% of the total.

Brian Roberts: Advanced nodes more than doubled in 2025 to $308 million, driven by growth in both DRAM and logic, which together represent about 75% of the total. Advanced nodes revenue grew sequentially by slightly over 30% to $72 million in Q4, primarily due to pilot line sales related to a new Gate All Around customer. We generated a record level of $95 million of cash in the quarter, for a cash conversion of approximately 150% of non-GAAP net income. In the fourth quarter, we adopted the One Big Beautiful Bill Tax Act, which allowed us to accelerate the expensing of certain R&D costs from a tax perspective. The adoption of the new tax act results in cash tax savings of $19 million in 2025, and an additional estimated $14 million in cash savings in 2026.

Speaker #4: Advanced nodes revenue grew sequentially by slightly over 30% to $72 million in Q4, primarily due to pilot line sales related to a new gate all-around customer.

Speaker #4: We generated a record level of $95 million of cash in the quarter for our cash conversion of approximately 150% of non-GAAP net income. In the fourth quarter, we adopted the One Big Beautiful Bill Tax Act, which allowed us to accelerate the expensing of certain R&D costs from a tax perspective.

Speaker #4: The adoption of the new tax act resulted in cash tax savings of $19 million in 2025 and an additional estimated $14 million in cash savings in 2026.

Speaker #4: Finally, upon the close of Semilab on November 17th, we paid $445 million in cash and issued 641,771 shares of our common stock. Now, turning to our outlook for the first quarter.

Brian Roberts: Finally, upon the close of Semilab on 17 November, we paid $445 million in cash and issued 641,771 shares of our common stock. Now turning to our outlook for the first quarter. We currently expect revenue of $275 to 285 million as demand continues to strengthen across advanced packaging and advanced nodes. As Mike noted, revenue in Q2 is expected to surpass $300 million, which will result in 12% to 14% core growth in the first half of 2026, as compared to the second half of 2025. While too early to provide more specific numbers, our current levels of backlog, continued customer confidence, and the recently signed VPA lead us to expect higher revenue in the second half of 2026 over the first half of this year.

Speaker #4: We currently expect revenue of $275 to $285 million as demand continues to strengthen across advanced packaging and advanced nodes. As Mike noted, revenue in Q2 is expected to surpass $300 million, which will result in 12 to 14% core growth in the first half of 2026 as compared to the second half of 2025.

Speaker #4: While it is too early to provide more specific numbers, our current levels of backlog, continued customer confidence, and the recently signed VPA lead us to expect higher revenue in the second half of '26 over the first half of this year.

Speaker #4: We remain focused on converting higher levels of revenue into meaningful improvement in both our gross and operating margins in 2026, with an expectation for continued margin expansion each quarter this year.

Brian Roberts: We remain focused on converting higher levels of revenue into meaningful improvement in both our gross and operating margins in 2026, with an expectation for continued margin expansion each quarter this year. At the Q1 revenue midpoint, we would expect approximately 50 basis points of gross margin improvement from Q4 levels as we mitigate tariffs and incrementally ship more from our extended factories.... Operating expenses in Q1 should approximate $80 million as we realize a full quarter of Semilab costs. Operating margins are expected to improve to approximately 25.5% to 26.5% in the first quarter. Earnings per share for the quarter is expected to be in the range of $1.26 to $1.36 per share, assuming an estimated tax rate of approximately 16% and about 49.9 million shares outstanding.

Speaker #4: At the Q1 revenue midpoint, we would expect approximately 50 basis points of gross margin improvement from Q4 levels as we mitigate tariffs and incrementally ship more from our extended factories.

Speaker #4: Operating expenses in Q1 should approximate $80 million, as we realize a full quarter of Semilab costs. Operating margins are expected to improve to approximately 25.5 to 26.5% in the first quarter.

Speaker #4: Earnings per share for the quarter are expected to be in the range of $1.26 to $1.36 per share, assuming an estimated tax rate of approximately 16% and about 49.9 million shares outstanding.

Speaker #4: And as a reminder, beginning here in Q1, we are moving to a calendar quarter and fiscal year end of March 31, June 30, September 30, and December 31st.

Brian Roberts: As a reminder, beginning here in Q1, we are moving to a calendar quarter and fiscal year end of 31 March, 30 June, 30 September, and 31 December. With that, let me turn it back to Mike for some closing thoughts before we take your questions. Mike?

Speaker #4: And with that, let me turn it back to Mike for some closing thoughts before we take your questions. Mike?

Speaker #5: Thank you, Brian. In summary, this quarter underscores the strength and breadth of our execution across the company. We delivered record quarterly revenue advanced our product roadmaps, and expanded our position in both advanced nodes and advanced packaging.

Michael Plisinski: Thank you, Brian. In summary, this quarter underscores the strength and breadth of our execution across the company. We delivered record quarterly revenue, advanced our product roadmaps, and expanded our position in both advanced nodes and advanced packaging. At the same time, our operational discipline is creating meaningful shareholder value from accelerated offshore, offshoring activities that improve scalability and profitability, the smooth integration of Semilab, and more disciplined forecasting and spending controls, which together will provide consistent gross and operating margin expansion through 2026. As evidenced by our backlog doubling over the last 3 months, visibility for 2026 has dramatically improved as customers plan for sustained investments in advanced nodes and advanced packaging capacity to support the rapid expansion of AI.

Speaker #5: At the same time, our operational discipline is creating meaningful shareholder value from accelerated offshoring activities that improve scalability and profitability, the smooth integration of Semilab, and more disciplined forecasting and spending controls, which together will provide consistent gross and operating margin expansion through 2026.

Speaker #5: As evidenced by our backlog doubling over the last three months, visibility for 2026 has dramatically improved as customers plan for sustained investments in advanced nodes and advanced packaging capacity to support the rapid expansion of AI.

Speaker #5: Our team is playing a pivotal role across this ecosystem as we work to scale and bring new, innovative solutions to help our customers solve their greatest challenges.

Michael Plisinski: Our team is playing a pivotal role across this ecosystem as we work to scale and bring new innovative solutions to help our customers solve their greatest challenges. Our multiple new product platforms, highlighted by our next generation inspection tools, which we believe will set the bar around combined high-resolution optics and faster throughput, are examples of how we are setting the pace of innovation for this rapidly evolving and scaling industry. This gives me great confidence that Onto Innovation is well positioned to outperform in 2026 and beyond. And now, Lisa, let's open the call for questions from our covering analysts.

Speaker #5: Our multiple new product platforms, highlighted by our next-generation inspection tools—which we believe will set the bar around combined high-resolution optics and faster throughput—are examples of how we are setting the pace of innovation for this rapidly evolving and scaling industry.

Speaker #5: This gives me great confidence that onto innovation is well-positioned to outperform in 2026 and beyond. And now, Lisa, let's open the call for questions from our covering analysts.

Speaker #6: Thank you, sir. If you've dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad.

Operator 2: Thank you, sir. If you've dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you limit yourself to one question and one follow-up question. Again, it is star one to ask a question. We'll take our first question from Blaine Curtis with Jefferies.

Michael Plisinski: Thank you, sir. If you've dialed in via the telephone and would like to ask a question, please signal by pressing star one on your telephone keypad. If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you limit yourself to one question and one follow-up question. Again, it is star one to ask a question. We'll take our first question from Blaine Curtis with Jefferies.

Speaker #6: If you're using a speakerphone, please make sure your mute function is turned off to allow your signal to reach our equipment. We ask that you limit yourself to one question and one follow-up question.

Speaker #6: Again, it is star one to ask a question. And we'll take our first question from Blaine Curtis with Jefferies.

Ezra Weener: Hi, Ezra Reener on for Blaine. Thanks for taking my questions. Just the first, can you talk a little bit about what you see for the market outlook for the year? You've had some peers talk about packaging up to 40% growth, but there's been a pretty large range. Can you talk about what you're seeing for the year?

Speaker #7: Hi. Ezra Wiener on for Blaine. Thanks for taking my questions. Just the first, can you talk a little bit about what you see for the market outlook for the year?

Speaker #7: You've had some peers talk about packaging up to 40% growth, but there's been a pretty large range. Can you talk about what you're seeing for the year?

Speaker #5: We mentioned we would expect to see our advanced packaging grow over 30% this year.

Michael Plisinski: We mentioned we would expect to see our advanced packaging grow over 30% this year.

Speaker #7: And then for WFE as well? Sorry.

Ezra Weener: And then for WFE as well? Sorry.

Michael Plisinski: WFE is harder to track, because first, advanced packaging is only now just starting to be added to some WFE numbers, some not. And then you have all the construction costs also in there. So I think we're seeing certainly broad-based demand, broad-based expansions across both IDMs, you know, the large device manufacturers, as well as OSATs, as well as other smaller players looking to provide new innovative solutions, such as the customer we mentioned in panel, that are providing alternatives to some of the more traditional advanced packaging solutions being used today. So given all this growth, I think the end customers, the AMDs, the et cetera, are looking for alternatives as well to make sure they can scale and grow.

Speaker #5: WFE is harder to track because, first, advanced packaging is only now just starting to be added to some WFE numbers—some, not. And then you have all the construction costs also in there.

Speaker #5: So I think we're seeing certainly broad-based demand, broad-based expansions across both IDMs—the large device manufacturers—as well as OSATs, as well as other smaller players looking to provide new, innovative solutions, such as the customer we mentioned in panel that are providing alternatives to some of the more traditional advanced packaging solutions being used today.

Speaker #5: So, given all this growth, I think the end customers—the AMDs, the etc.—are looking for alternatives as well, to make sure they can scale and grow.

Speaker #7: Got it. And then, in terms of follow-up, you talked about expanding lead times and increasing visibility. Can you talk a little bit about what that backlog looks like, and in the best-case scenario, what your capacity is in terms of growth?

Ezra Weener: Got it. And then in terms of follow-up, you talked about expanding lead times, and increasing visibility. Can you talk a little bit about what that backlog looks like and, in the best case scenario, what your capacity is, in terms of growth?

Speaker #5: So, we've said historically our capacity—we're set up to be able to serve a $2 billion run rate. That's only improved as we bring up the extended factories.

Michael Plisinski: So we've said historically, our capacity. We're set up to be able to serve a $2 billion run rate. That's only improved as we bring up the extended factories. That was with our existing factories, which are, of course, still here. So I think when you look at multiple shifts, the extended factories, you know, $2 billion number is certainly no issue for us right now. Now, we are in the middle of ramping up the extended factories, so of course, there's a transition period that we're working through, you know, over the next couple of quarters. But I don't see capacity being a big issue for us. It's more on the supply chain side.

Speaker #5: That was with our existing factories, which are, of course, still here. So I think when you look at multiple shifts, the extended factories $2 billion number is certainly no issue for us right now.

Speaker #5: We are in the middle of ramping up the extended factories. So, of course, there's a transition period that we're working through over the next couple of quarters.

Speaker #5: But I don't see capacity being a big issue for us. It's more on the supply chain side. The rapid development, the rapid increase in orders, the customers wanting to pull things in, that's putting a strain on some of our suppliers, especially in the area of precision optics and things like this where lead times are relatively fixed.

Michael Plisinski: The rapid development, the rapid increase in orders, the customers wanting to pull things in, that's putting a strain on some of our suppliers, especially in the area of precision optics and things like this, where, you know, lead times are relatively fixed. So we're working very closely with our supply chains and our customers to make sure we're getting the forecasted demand they require, and we're working with our suppliers to make sure we can deliver.

Speaker #5: So we're working very closely with our supply chains and our customers to make sure we're getting the forecasted demand they require, and we're working with our suppliers to make sure we can deliver.

Speaker #7: Got it. Thank you.

Ezra Weener: Got it. Thank you.

Speaker #6: If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll go next to Craig Ellis with B. Riley Securities.

Operator 2: If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll go next to Craig Ellis with B. Riley Securities.

Ezra Weener: If you find that your question has been answered, you may remove yourself from the queue by pressing star two. We'll go next to Craig Ellis with B. Riley Securities.

Speaker #8: Yeah. Thanks for taking the question. I'm Mike congratulations on the good execution in the quarter. I wanted to follow up on the view for 30% year-on-year advanced packaging growth.

Craig Ellis: ... Yeah, thanks for taking the question. I'm Mike, congratulations on the good execution in the quarter. I wanted to follow up on the view for 30% year-on-year advanced packaging growth. Can you just talk about some of the expectations you have around the contour of that growth through the year? And then, in addition to that, just some of the more notable programmatic wins that may be included or that would be additive to that if they were secured later this year.

Craig Ellis (B. Riley S: ... Yeah, thanks for taking the question. I'm Mike, congratulations on the good execution in the quarter. I wanted to follow up on the view for 30% year-on-year advanced packaging growth. Can you just talk about some of the expectations you have around the contour of that growth through the year? And then, in addition to that, just some of the more notable programmatic wins that may be included or that would be additive to that if they were secured later this year.

Speaker #8: Can you just talk about some of the expectations you have around the contour of that growth through the year and then in addition to that, just some of the more notable programmatic wins that may be included or that would be additive to that if they were secured later this year?

Speaker #5: Good question, Craig. In fact, we expect our advanced packaging revenue to be relatively stable throughout the between the first half, second half. So it's pretty strong.

Michael Plisinski: Good question, Craig. In fact, we expect our advanced packaging revenue to be relatively stable throughout, between the first half, second half. So it's pretty strong demand, strong. It shifts from different customers, of course, but overall, it's relatively stable. Now, you asked also about, you know, what kind of puts and takes are upside. I think the adoption of G5 and how strong that adoption is, or the rate of adoption, that could certainly add even stronger upside for the second half, which might, you know, change some of that trajectory. But in the 30%, we're not expecting a tremendously large adoption of G5. We've taken a conservative approach there, which is why we said over 30% growth in the second, for the year in advanced packaging.

Speaker #5: Demand's strong. It shifts from different customers. Of course, but overall, it's relatively stable. Now, you asked also about what kind of puts and takes or upside.

Speaker #5: I think the adoption of G5 and how strongly how strong that adoption is or the rate of adoption that could certainly add even stronger upside for the second half, which might change some of that trajectory.

Speaker #5: But in the 30%, we're not expecting a tremendously large adoption of G5. We've taken a conservative approach there, which is why we said over 30% growth in the second half of the year in advanced packaging.

Speaker #8: And then the follow-up question is related to advanced nodes. So we're being specific with upside on advanced packaging; we're not being specific yet on advanced nodes.

Craig Ellis: And then the follow-up question is related to advanced nodes. So we're being specific with upside on advanced packaging. We're not being specific yet on advanced nodes. Can you talk about, from that nice $300 million Q2 number, what visibility you do have in the back half of the year in advanced nodes? And, and what are you expecting to kind of affirm over the next couple of quarters to lock in, advanced nodes this year? And sounds like good Gate All Around in memory growth, but I'll let you fill that in. Thanks, Mike.

Craig Ellis (B. Riley S: And then the follow-up question is related to advanced nodes. So we're being specific with upside on advanced packaging. We're not being specific yet on advanced nodes. Can you talk about, from that nice $300 million Q2 number, what visibility you do have in the back half of the year in advanced nodes? And, and what are you expecting to kind of affirm over the next couple of quarters to lock in, advanced nodes this year? And sounds like good Gate All Around in memory growth, but I'll let you fill that in. Thanks, Mike.

Speaker #8: Can you talk about from that nice 300 million second quarter number, what visibility you do have in the back half of the year in advanced nodes and what do you expecting to kind of affirm over the next couple of quarters to lock in advanced nodes this year and sounds like good gate all-around of memory growth, but I'll let you fill that in.

Speaker #8: Thanks, Mike.

Speaker #5: Yep. Thank you. So I think, in broad strokes, advanced nodes are expanding, and we can see customer discussions concerned with how quickly you can support our ramp and the demand, and being able to meet that demand.

Michael Plisinski: Yep, thank you. So I think broad strokes, advanced nodes is expanding, and we can see customer discussions concerned with, you know, how quickly can you support our ramp and that, you know, the demand and being able to meet that demand. So that's a positive sorta sentiment. Now, the question becomes timing. So that's where we're having more of a little bit of uncertainty and where we're hedging ourselves a little bit. There's several factories that are expected to open up. Many we're getting some of the orders now in that help drive some of our business and that we're expecting for Q1.

Speaker #5: So, that's a positive sort of sentiment. Now, the question becomes timing. So that's where we're having a little bit more uncertainty, and where we're hedging ourselves a little bit.

Speaker #5: There's several factories that are expected to open up. Many were getting some of the orders now in. That helped drive some of our business and that we're expecting for the first quarter.

Michael Plisinski: But overall, I would say, and then there's the timing for DRAM in the second half, and several of the discussions we're having with customers are tied around VPAs right now, which will give us better insight as those get more solidified into what the, what the magnitude of the advanced nodes growth will be. That said, I would expect us to at least perform in that range of 10% to 20%, so 15+, you know, in that range for advanced nodes. And, you know, hopefully, as we close some of these additional VPAs, we'll be able to refine that number.

Speaker #5: But overall, I would say and then there's a timing for a DRAM in the second half. And several of the discussions we're having with customers are tied around VPAs right now, which will give us better insight as those get more solidified into what the magnitude of the advanced nodes growth will be.

Speaker #5: That said, I would expect us to at least perform in that range of the 10% to 20%, so 15-plus in that range. For advanced nodes, and hopefully as we close some of these additional VPAs, we'll be able to refine that number.

Craig Ellis: That's helpful. Thanks, Mike. Good luck with it.

Craig Ellis (B. Riley S: That's helpful. Thanks, Mike. Good luck with it.

Speaker #8: That's helpful. Thanks, Mike. Good luck with it.

Speaker #5: Thanks.

Michael Plisinski: Thanks.

Speaker #6: Once again, if you'd like to ask a question, please press star one. We'll take our next question from Edward Yang with Oppenheimer.

Operator 2: Once again, if you'd like to ask a question, please press star one. We'll now take our next question from Edward Yang with Oppenheimer.

Michael Plisinski: Once again, if you'd like to ask a question, please press star one. We'll now take our next question from Edward Yang with Oppenheimer.

Speaker #7: Hi, Mike. Thanks for the time. I just want to focus on this 240 million VPA that you mentioned for HBM. I'm just a little shocked, I guess, in a good way.

Edward Yang: Hi, Mike. Thanks for the time. I just want to focus on this $240 million VPA that you mentioned for HBM. You know, I'm just a little shocked, I guess, in a good way. In order to just properly size this, again, it seems like a big number, because from what I would gather, your total AI packaging revenue for 2025 is around that $240 million, but that includes, you know, the three HBM customers and the big foundry customers as well. So, you know, is that the right way to think about it?

Speaker #7: In order to just properly size this, again, it seems like a big number because from what I would gather, your total AI packaging revenue for 2025 is around that 240 million, but that includes the three HBM customers and the big foundry customers as well.

Speaker #7: So is that the right way to think about it in that you have one customer coming in with the equivalent of what you made from four customers in 2025 and the timing of and the cadence of how you would recognize that VPA?

Edward Yang: In that, you know, you have one customer coming in with the equivalent of, you know, what you made from 4 customers in 2025, and, you know, the timing of and the cadence of how you would recognize that VPA. And would you expect additional VPAs from the other customers as well?

Speaker #7: And would you expect additional VPAs from the other customers as well?

Speaker #5: For sure, we expect additional VPAs. So we are in discussions with other customers. That particular customer, remember, it's a two-year so it's extending into two years.

Michael Plisinski: For sure, we expect additional VPAs, so we are in discussions with other customers. That particular customer, you remember, it's a two-year, so it's extending into two years. It was more 2027 weighted, so maybe 2/3, 1/3. However, we see some acceleration of the demand, and so we're starting to see this move towards this 50/50 kind of a range.

Speaker #5: It was more 2027 weighted, so maybe two-thirds, one-third. However, we see some acceleration of the demand and so we're starting to see this move towards this 50/50 kind of a range.

Speaker #7: Okay. And you touched on this a little bit, but G5, your new high-resolution Dragonfly platform—can you discuss or update us on the tone of the conversations that you're having with that big foundry customer?

Edward Yang: Okay. And, you touched on this a little bit, but, you know, G5, your new high-resolution Dragonfly platform, you know, with, can you discuss or update us on the tone of the conversations that you're having with that big foundry customer? You know, the qualification discussions, better sense on timing, pricing, and et cetera.

Speaker #7: The qualification discussions—do you have a better sense on timing, pricing, etc.? Any color?

Michael Plisinski: Mm-hmm.

Edward Yang: Any color?

Michael Plisinski: Yeah, I won't, I won't speak specifically to a specific customer, but generally, the tones have been, the tone from many customers has been positive. Yeah, I won't, I won't go into specifics, but I will say that things are progressing either ahead or according to what we expected. The changes, or let's say, there is no change to the timelines we've provided in the past, where we expect these accelerated evaluations to end in the, you know, Q1, Q2 time, so Q2, the first half of the year, with hopefully, you know, starting to catch ramps in the second half of the year.

Speaker #5: Yeah, I won't speak specifically to a specific customer, but generally, the tone from many customers has been positive. Yeah, I won't go into specifics.

Speaker #5: But I will say that things are progressing either ahead or according to what we expected. The changes or let's say there is no change to the timelines we've provided in the past where we expect these accelerated evaluations to end in the Q1, Q2 time so Q2, the first half of the year.

Speaker #5: With hopefully starting to catch ramps in the second half of the year.

Speaker #7: Thank you.

Vidvati Srotre: Thank you.

Vedvati Shrotre: Thank you.

Speaker #6: And we'll go next to Charles Xie with Needham.

Operator 2: We'll go next to Charles Shi with Needham.

Vedvati Shrotre: We'll go next to Charles Shi with Needham.

Speaker #9: Hey, thanks for taking my question. So, Mike, I think previously when you talk about packaging, you're more talking, I mean, on a more narrowly defined part of your packaging business, being the advanced packaging—AI packaging—20% more opportunity in '26 versus '25.

Charles Shi: Hey, thanks for taking my question. So Mike, I think, previously when you talked about packaging, you were more talking, I mean, on a more narrowly defined part of your packaging business, being the AI packaging, 20% more opportunity in 2026 versus 2025. This time, you're talking about overall packaging, 30% higher than last year. I wonder if you can give some color on the narrowly defined AI packaging. What's the expected number for this year? And, I have, maybe 1 more follow-up. Thank you.

Speaker #9: This time you're talking about overall packaging 30% higher. Then last year, if you can give some color on the narrowly defined AI packaging, what's the expected number for this year?

Speaker #9: And I have maybe one more follow-up. Thank you.

Michael Plisinski: So it's getting very difficult to keep those separations as the market has expanded and the number of customers serving, let's say, the AI device manufacturer, is increasing. For instance, I believe I mentioned in my prepared remarks that the panel customer is serving AI applications, so traditionally that wouldn't have been included in what we call AI packaging. So now we see many OSATs, several other, you know, specialty packaging customers all getting into this supply chain. So we're not-- we're no longer really separating it. It's quite difficult to do at this point. So the 30%, I would say the vast majority of that 30% growth is all tied to supporting the strong demand in AI.

Speaker #5: So it's getting very difficult to keep those separations as the market has expanded and the number of customers serving let's say the AI device manufacturers increasing.

Speaker #5: For instance, I believe I mentioned in my prepared remarks that the panel customer is serving AI applications. So traditionally, that wouldn't have been included in what we call AI packaging.

Speaker #5: So now we see many OSATs, several other specialty packaging customers all getting into this supply chain. So we're not we're no longer really separating it.

Speaker #5: It's quite difficult to do at this point. So the 30%—I would say the vast majority of that 30% growth is all tied to supporting the strong demand in AI.

Charles Shi: Thanks, Mike. Maybe to follow up, since you actually mentioned about panel, it has been a while since I think, Jeff, that being mentioned on earnings calls. Glad to hear that, and hope to hear that more often going forward. So it sounds like what the litho business has maybe have turned a corner. Sounds like that's what's happening. And can you give a little bit color on what's happening right now? And is there some competitive displacement, displacement going on? Maybe, if you will, because we-- I believe a lot of us have basically modeled the zero for your litho revenue for quite a while, but what's the expectation for this year? Thank you.

Speaker #9: Thanks, Mike. Maybe as a follow-up, since you actually mentioned the panel, it has been a while since I think Jetstack was mentioned on earnings calls.

Speaker #9: Glad to hear that. And I hope to hear that more often going forward. So it sounds like the lethal business has maybe turned a corner.

Speaker #9: Sounds like that's what's happening. And can you give a little bit of color on what's happening right now, and is there some competitive displacement going on?

Speaker #9: Maybe if you will, because I believe a lot of us have basically modeled the zero for your lethal revenue for quite a while, but what's the expectation for this year?

Speaker #9: Thank you.

Michael Plisinski: Not zero. Fair question. I don't know that we're going to break out the litho business at this point. I think we can later, as the year progresses and we get a little more color. There's a lot going on in litho right now or in the panel market. We've talked over the last, I don't know, year, about the increased engagement with our pace lab, the number of customers we're running samples through for our pace lab, and that the industry, which had a tremendous amount of overcapacity, was starting to see utilizations pick up and that kind of thing. So we still think that's the case, that's the trend we're on. We're now starting to see proof of that, with customers beginning to resume orders.

Speaker #5: Not zero. Fair question. I don't know that we're going to break out the lethal business at this point. I think we can later. As the year progresses and we get a little more color, there's a lot going on in lethal right now or in the panel market.

Speaker #5: We've talked over the last, I don't know, year, about the increased engagement with our PACE Lab, the number of customers we're running samples through for our PACE Lab, and that the industry, which had a tremendous amount of overcap capacity, was starting to see utilizations pick up and that kind of thing.

Speaker #5: So we still think that's the case. That's the trend we're on. We're now starting to see proof of that with customers beginning to resume orders.

Speaker #5: We expect that's going to increase into 2027. And the forecast starts to at least the data that we've seen suggests that 2027 will be in supply-demand where there's just not enough supply to meet the demand.

Michael Plisinski: We expect that's going to increase into 2027, and the forecast starts to, at least the data that we've seen, suggests that 2027 will be in a, you know, a supply-demand, where there's just not enough supply to meet the demand, which is a good thing.

Speaker #5: Which is a good thing.

Speaker #6: We'll go to our next question from David Dooley with Steelhead Securities.

Operator 2: We'll go to our next question from David Dooley with Steelhead Securities.

Michael Plisinski: We'll go to our next question from David Dooley with Steelhead Securities.

Speaker #10: Yeah. Thanks for taking my question. I was wondering when you look at your co-auth inspection business and your HBM inspection business, maybe you could help us understand what the what your relative guess is for the growth rates of the two segments.

David Duley: Yeah, thanks for taking my question. I was wondering, when you look at your CoWoS inspection business and your HBM inspection business, maybe you could help us understand what your relative guess is for the growth rates of the two segments are in 2026.

Speaker #10: Are in 2026?

Michael Plisinski: I would say, you know, they're, they're relatively similar, to be honest. When I looked at some of the data here, you know, from an amount of capacity being added, it's relatively similar. So I think that the complexities, of course, of the CoWoS are higher, so the capital intensity is higher. But we have to also see how much more of the applications we gain with the Dragonfly G5, which is a variable that we didn't bake much into our number. We took a conservative approach there. So that could drive some upside and swing the answer to be more on the CoWoS side. But right now, I'd say they're, they're relatively similar. And you can tell with the large VPA we just announced.

Speaker #5: I would say they're relatively similar, to be honest. When I looked at some of the data here, from the amount of capacity being added, it's relatively similar.

Speaker #5: So I think that the and the complexities, of course, of the co-auths are higher. So the capital intensity is higher. But we have to also see how much more of the applications we gain with the Dragonfly G5, which is a variable that we didn't bake into much into our number.

Speaker #5: We took a conservative approach there, so that could drive some upside and swing the answer to be more on the co-auth side. But right now, I'd say they're relatively similar.

Speaker #5: And you can tell with the large VPA, we just announced, memory is definitely expanding. And we have a good position in memory.

Michael Plisinski: Memory is definitely expanding, and we have a good position in memory.

Speaker #10: Okay. And then just as a clarification, and I think Charles was referring to it on his previous question, the whole I think you mentioned the advanced packaging business was 504 million for the year.

David Duley: Okay. Then just as a clarification, I think Charles was referring to it on his previous question. I think he mentioned the advanced packaging business was $504 million for the year. Is that the base level that you think is going to grow 30% or higher in 2026, or is it just part of that number? I just wanted clarification.

Speaker #10: Is that the base level that you think is going to grow 30%, or higher, in 2026? Or is it just part of that number?

Speaker #10: I just wanted clarification.

Brian Roberts: ... It's part of that number. To be clear, you know, the advanced packaging and specialty devices was the $500 million for 2025.

Speaker #5: Yeah. It's part of that number. To be clear, the advanced packaging and specialty devices was the 500 million for 2025.

Speaker #10: Okay. So it's just the co-auth and HBM inspection business that you expect to go greater than 30% in 2026?

David Duley: Okay. So, it's just the, it's the CoWoS and HBM inspection business that you expect to go greater than 30% in 2026?

Speaker #5: It's OSATs. It's panel. It's all of advanced packaging. We expect to grow greater than 30% for the year.

Michael Plisinski: It's OSATs, it's panel, it's all of advanced packaging. We expect to grow greater than 30% for the year.

Speaker #10: Okay. Thank you.

David Duley: Okay, thank you.

Speaker #5: Yep. You're welcome.

Michael Plisinski: Yep, you're welcome.

Speaker #6: And we'll go next to Vidvati Srotre from Evercore ISI.

Operator 2: And we'll go next to Vidvati Srotre from Evercore ISI.

Michael Plisinski: And we'll go next to Vidvati Srotre from Evercore ISI.

Vidvati Srotre: Hi, thanks for taking my question. The first one I had was, could you remind us, like, where the Semilab contributions come in for, like, 2026? Like, what your expectations are for revenue there. And then excluding that contribution, like, in terms of organic growth, do you expect to outperform that WFE growth of 20%?

Vedvati Shrotre: Hi, thanks for taking my question. The first one I had was, could you remind us, like, where the Semilab contributions come in for, like, 2026? Like, what your expectations are for revenue there. And then excluding that contribution, like, in terms of organic growth, do you expect to outperform that WFE growth of 20%?

Speaker #11: Hi, thanks for taking my question. The first one I had was, could you remind us where the semi-lab contributions come in for 2026, and what your expectations are for revenue there?

Speaker #11: And then excluding that contribution, in terms of organic growth, do you expect to outperform that WFE growth of 20%?

Speaker #10: Yeah. I'll take the first part and for semi-lab, we've talked about since the close, they did about 9 million of revenue contribution in Q4 after the close in mid-November.

Brian Roberts: Yeah, I'll take the first part. I mean, for Semilab, you know, we've talked about since the close. They did about $9 million of revenue contribution in Q4 after the close in mid-November. For 2026, as Mike noted, you know, we've initially said somewhere, you know, low hundreds to 110 was kind of the revenue. You know, we do expect that power semi, which is a significant portion of their business, may, given the market cycle, be a little bit more challenging in 2026 than we originally thought. But, you know, certainly have high expectations for that business.

Speaker #10: For 2026, as Mike noted, we've initially said somewhere low hundreds to 110 was kind of the revenue. We do expect that power semi, which is a significant portion of their business, may given the market cycle, be a little bit more challenged in 2026 than we originally thought.

Speaker #10: But we certainly have high expectations for that business.

Vidvati Srotre: And then for the growth rate, maybe without Semilab, do you think you'll outperform the WFE growth of 20% for 2026 as total revenues, like-?

Speaker #11: And then for the growth rate, maybe without semi-lab, do you think you outperform the WFE growth of 20% for 2026 as total revenues? But including semi-lab contributions.

Vedvati Shrotre: And then for the growth rate, maybe without Semilab, do you think you'll outperform the WFE growth of 20% for 2026 as total revenues, like-?

Brian Roberts: I mean-

Vidvati Srotre: Excluding semi contributions?

Vedvati Shrotre: Excluding semi contributions?

Speaker #10: Yeah. I mean, Mike's prepared remarks. We talked about WFE and the 10 to 20 percent. Certainly, there's a lot of different estimates that are out there.

Brian Roberts: Yeah, I mean, in Mike's, Mike's prepared remarks, you know, we talked about WFE and, you know, the 10 to 20%. Certainly, there's a lot of different estimates that are out there. I think, you know, we'll go back to the comments we made around, as we said, advanced packaging, looking at, you know, 30%+ growth, and as Mike said, advanced nodes, probably somewhere mid-teens, you know, as those orders, you know, kind of firm up over the course of time and let you guys kind of do the rest of the math.

Speaker #10: I think we'll go back to the comments we made around, as we said, advanced packaging, looking at 30% plus growth. And as Mike said, advanced nodes, probably somewhere mid-teens.

Speaker #10: As those orders kind of firm up over the course of time and let you guys kind of do the rest of the math.

Speaker #11: Understood. That's very helpful. Thank you.

Vidvati Srotre: Understood. That's, that's very helpful. Thank you.

Vedvati Shrotre: Understood. That's, that's very helpful. Thank you.

Speaker #6: And we'll go next to Brian Chen with Stifel.

Operator 2: We'll go next to Brian Chin with Stifel.

Vedvati Shrotre: We'll go next to Brian Chin with Stifel.

Brian Chin: Hi there. Good evening. Thanks for letting us ask a few questions. Maybe circling back to the VPA that you announced. I guess, is there a reason, maybe it's just a timing thing in terms of, you know, the timing of, of back-end versus front-end investments, but is there a reason it doesn't include both front-end and back-end? And, and maybe what kind of toggle or optionality exists within the VPA to ship Gen Five as opposed to Gen Three, or is the expectation that most of this will be Gen three?

Speaker #12: Hi there. Good evening. Thanks for letting us ask a few questions. Maybe circling back to the VPA that you announced, I guess, is there a reason—maybe it's just a timing thing—in terms of the timing of backend versus frontend investments?

Speaker #12: But is there a reason it doesn't include both front-end and back-end? And maybe, what kind of toggle or optionality exists within the VPA to ship Gen 5 as opposed to Gen 3, or is the expectation that most of this will be Gen 3?

Michael Plisinski: You're talking about Dragonflies?

Speaker #12: You're talking about Dragonflies? I was thinking HBM4 or 3. Yes, I was getting confused. Yeah, there are a lot of options built into the VPA.

Michael Plisinski: You're talking about Dragonflies?

Brian Chin: Yeah.

Michael Plisinski: I was thinking HBM 4, 3. Yeah, so I was getting confused. There's a lot of options built into the VPA. It's Dragonfly inspection for sure. We're ramping now, so it's G3s now. There could be some upgrade options that the customer may choose to take, may not. They're being offered, but it's primarily the current products that have been qualified now for their aggressive ramp.

Speaker #12: It's Dragonfly inspection for sure. We're ramping now. So it's G3s now. There could be some upgrade options that the customer may choose to take, may not.

Speaker #12: They're being offered. But that's primarily the current products. That have been qualified now for their aggressive ramp. Got it. Mike, maybe I didn't hear a lot of discussion of some of the new products and applications 3DI, critical films.

Brian Chin: Got it. And then, Mike, maybe didn't hear a lot of discussion of some of the new products and applications, 3Di, critical films. Those are probably also tailwinds for you in advanced nodes and maybe elsewhere, but maybe ballpark, how much do you see that contributing to the growth rates on an annual basis this year?

Speaker #12: Those are probably also tailwinds for you in advanced nodes and maybe elsewhere. But maybe ballpark, how much do you see that contributing to the growth rates on an annual basis this year?

Speaker #5: For this year, the new products—as far as their contribution to growth rate this year?

Michael Plisinski: For this year, the new products, as far as their contribution to growth rate this year?

Speaker #12: Yes.

Brian Chin: Y- yeah.

Michael Plisinski: Yeah. So, yeah. I think you asked in total, so I would say, you know, we've got the HSIR, we've got some of the Atlas G6 that's coming in. I'd say on a relative basis, you know, these are early penetrations, so you're talking maybe 10% of the business, maybe a little less, but certainly growing into 2027. So when you look at just the adoption cycle, we're gonna get insertions, we're gonna get some initial ramps this year, and that, which we're already seeing. You can see that with the 3D business. And then as the customers continue to expand, that gets much bigger in 2027. And many of these are opening up new applications for us, so they're actually expanding our SAM and expanding our growth opportunities into 2027 as well.

Speaker #5: Yeah, so, yeah. I think you asked in total. So, I would say we've got the HSIR, we've got some of the Atlas G6 that's coming in.

Speaker #5: I'd say, on a relative basis, these are early penetrations. So you're talking maybe 10% of the business, maybe a little less, but certainly growing into 2027.

Speaker #5: So, when you look at just the adoption cycle, we're going to get insertions. We're going to get some initial ramps this year, which we're already seeing.

Speaker #5: You can see that with the 3D. Business. And then as the customers continue to expand, that gets much bigger in 2027. And many of these are opening up new applications for us.

Speaker #5: So they're actually expanding our SAM. And expanding our growth opportunities into 2027 as well.

Brian Chin: Okay, got it. Maybe just sneak in just one quick last one. There's been discussion that there's a fair bit of FinFET spending mixing in with kind of Gate-All-Around this year, maybe, off of more than one customer. Just how are you thinking about that in terms of your revenue this year versus last year in advanced nodes, foundry logic? And do you view maybe more Gate-All-Around spending in 2027 as kind of more of a tailwind for your business?

Speaker #12: Got it. Maybe just sneak in just one quick last one. There's been discussion that there's a fair bit of FinFET spending mixing in with kind of get all around this year.

Speaker #12: Maybe off of more than one customer. Just how are you thinking about that in terms of your revenue this year versus last year in advanced nodes, foundry logic?

Speaker #12: And do you view maybe more get all around spending in '27 as kind of more of a tailwind for your business?

Michael Plisinski: Well, I think our business is really driven by the hardest, most difficult challenges, and that'll be in the Gate-All-Around nodes, and that's where we're seeing the strongest demand and nearly all the demand. So, you know, if you go 5 nanometer and above, the attach rate for OCD was much less. Films was. We didn't need, and we maybe we're just introducing films at that time. So no, it's really all around Gate-All-Around. It's really all driven by Gate-All-Around.

Speaker #5: Well, I think that our business is really driven by the hardest, most difficult challenges. And that'll be in the get all around nodes. And that's where we're seeing the strongest demand in nearly all the demand.

Speaker #5: So if you go 5 nanometer and above, the attach rate for OCD was much less. Films was we didn't I don't and maybe we were just introducing films at that time.

Speaker #5: So no, it's really all around get all around. It's really all driven by get all around.

Speaker #12: All right. Thank you.

Brian Chin: All right. Thank you.

Speaker #5: You're welcome.

Michael Plisinski: You're welcome.

Speaker #6: And there are no further questions in queue at this time. I'll turn the conference back to the speakers for any closing or additional comments.

Operator 2: There are no further questions in queue at this time. I'll turn the conference back to the speakers for any closing or additional comments.

Michael Plisinski: There are no further questions in queue at this time. I'll turn the conference back to the speakers for any closing or additional comments.

Speaker #1: Thanks, Lisa. We will be participating in a number of investor conferences throughout this quarter. We look forward to seeing many of you there. The replay of the call today will be available on our website at approximately 7:30 Eastern Time this evening.

Brian Roberts: Thanks, Lisa. We will be participating in a number of investor conferences throughout this quarter. We look forward to seeing many of you there. The replay of the call today will be available on our website at approximately 7:30 Eastern Time this evening. We would like to thank you for your continual interest in Onto Innovation. Lisa, please conclude the call.

Speaker #1: We would like to thank you for your continual interest in ONTO Innovation. Lisa, please conclude the call.

Operator 2: Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Brian Roberts: Ladies and gentlemen, this concludes today's call. Thank you for your participation. You may now disconnect.

Q4 2025 Onto Innovation Inc Earnings Call

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