Camtek Q2 2023 Earnings Call Transcript

Quartr
Provided by Quartr
July 31, 2023

There are 11 speakers on the call.

Operator

Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's results Zoom webinar. My name is Kenny Green, and I'm part of the Investor Relations team at Camtek. All participants, other than the presenters, are currently muted. Following the formal presentation, I'll provide some instructions for participating in the live question and answer session.

Operator

I would like to remind everyone that this conference Call is being recorded, and the recording will be available on Camtek's website from tomorrow. 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, Camtek's CEO Mr.

Operator

Moshe Eisenberg, Camtek's CFO and Mr. Rami Langer, Camtek's COO. 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. Following that, Rafi, Moshe and Rami will be available to take your questions.

Operator

Before we begin, I'd like to remind everyone that certain information provided on this call are internal company estimates unless otherwise specified. This call also may contain forward looking statements. These statements are only predictions and may change as time passes. Statements on this call are made as of today, and the company undertakes no obligation to update any of the forward looking statements contained whether as a result of new information, future events, changes, expectations or otherwise. Investors are reminded that these forward looking statements are subject Risks and uncertainties that may cause actual events or results to differ materially from those projected, including as a result of the effects of general economic conditions Risks related to the concentration of a significant portion of Camtek's expected business in certain countries, particularly China, from which Camtek expects to generate a significant portion of its revenues for the foreseeable future, but also Taiwan and Korea, including risks of deviations from our expectations regarding timing and the size of orders from customers in these countries.

Operator

Changing industry and market trends reduced demand for services and products, the timely development of new services and products and their adoption by the market, Increased competition in the industry and price reductions as well is due to other risks identified in the company's filings with the SEC. Please note that the Safe Harbor statement in today's press release also covers the contents of this conference call. In addition, during this call, Certain non GAAP financial measures will be discussed. These are used by management to make strategic decisions, forecast future results and evaluate the company's current performance. Management believes that the presentation of non GAAP financial measures are useful to investors' understanding and assessment of the company's ongoing core operations and prospects for the future.

Operator

A full reconciliation of GAAP to non GAAP, non GAAP to GAAP financial measures are included in today's earnings release, And I'd now like to hand the call over to Rafi Amit, Camtek's CEO. Rafi, please go ahead. Thanks,

Speaker 1

Kenny. Good morning or good afternoon to everyone. Camtek closed 2nd quarter with revenue of $73,800,000 Gross margin came in at 48%, Which is an improvement over Q1, and we expect further improvement in the coming quarters. Operating margin was 25%. Approximately 60% of our revenues Cam from Advanced Interconnect Packaging Applications.

Speaker 1

The remaining 40% is divided between compound semiconductor For power device, CIS and process control applications, I would like to clarify That under the term advanced interconnect packaging, we include chip led modules, HPM, At Progenius Integration, WLP. Our revenue guidance for Q3 It's $77,000,000 to $79,000,000 with expected continued growth In the Q4, exceeding $300,000,000 in 2023. This year started with a lot of uncertainty. But as we progress into the second half, It is shaping up to be stronger than originally expected. The positive trend in the industry And the flow of orders that we are witnessing now elevate our confidence that 2024 Will be an important milestone in reaching a $500,000,000 company.

Speaker 1

There has been consensus in the semiconductor industry that the effective way To significantly increase computing power more than more is through new packaging technologies such as heterogeneous integration, HI in short, including chiplet modules and High bandwidth memory, HBM insured. We have mentioned That we are involved in the development of this technology with the leading manufacturers. In the last year, we have already shipped systems to the HI segment, but the growth Seem to be starting to accelerate now. It is quite clear that growth in demand For data server and HI applications increases the need for high performance computer or HPC in short, based on HI Technologies. We have recently announced Receiving orders for 42 systems.

Speaker 1

A significant portion of the systems It's for chiplet modules and HBM for HI, and we expect to receive more orders of the same kind. The technological roadmap of the HI is aggressive in aiming to reach 5 to 10 times higher density than today technology, which in itself is very challenging. HI technology requires uncompromising inspection and metrology in many stages of the process to achieve a high yield. Manufacturers will not move to high volume production Without maintaining high yield, we have invested considerable effort in R and D To comply with the technological roadmaps of the HI technology and we are confident that we will be ready to meet the customer's requirements on time. This state of the art technology It's a great opportunity for Camtek to grow significantly in larger market with fewer competitors.

Speaker 1

As I have mentioned earlier, AI applications depend on HPC, which is based on Chipet modules and HBM Technologies. The production process require many steps of inspection and metrology. CapTech is a key equipment supplier to the players in this market segments, Exposing us to significant technology trends and business momentum in this area, We are very encouraged to see that as we predicted in the beginning of the year, The second half of twenty twenty three is shaping up to be better than the first half. This is fueled by major investment around AI. Furthermore, in the last few days, We have received an additional multiple systems order from a Tier 1 HBM manufacturer for a total of 10 systems, And we expect to receive more orders.

Speaker 1

We are also seeing customers starting to place orders Another growth engine for Camtek is the electrification of cars using power devices Based on silicon carbide, which is also expected to grow over 20% CAGR in the next few years. To summarize, we are very positive about 2024, which expected to be a record year for Camtek and an important milestone in reaching our next goal of a $500,000,000 company. And now Moshe will review the financial results. Moshe?

Speaker 2

Thank you, Raffi. In my financial summary ahead, I will provide the results on a non GAAP basis. The reconciliation between the GAAP results and the non GAAP results appear in the tables at the end of the press release issued earlier today. 2nd quarter revenues were $73,800,000 Marking an upturn from the lower revenue reported in the Q1 of 2023. The geographic revenue split for the quarter was as follows: Asia, 83 percent and U.

Speaker 2

S. And Europe accounted for 17%. Gross profit for the quarter was $35,400,000 The gross margin for the quarter was 48%, an improvement over the 47.3% Last quarter. As mentioned before, we have been taking measures to improve the gross margin. We are now seeing the initial impact And we expect to see continued gradual improvement in the coming quarters.

Speaker 2

Operating expenses in the quarter were $17,100,000 An increase from the $16,700,000 reported in the Q2 of last year and a similar level to the previous quarter. The increase is in the R and D level as we continue to invest in future programs. Operating profit in the quarter was $18,300,000 compared to the $17,400,000 reported in the previous quarter. Operating margin was 24.8% compared to 24% in the previous quarter. Financial income for the quarter was $5,800,000 compared with $5,100,000 in Q1 $200,000 last year.

Speaker 2

The majority of the increase relates to the significantly higher interest rates on an increased cash balance. Net income for the Q2 of 2023 was $21,900,000 or $0.45 per diluted share. This is compared to a net income of $22,100,000 or $0.46 per share In the Q2 of last year and $20,400,000 or $0.42 per share in the previous quarter. Total diluted number of shares as of the end of Q2 was 48,600,000. Turning to some high level balance sheet and cash flow metrics.

Speaker 2

So cash and cash equivalents, including short- And long term deposits as of June 30, 2023, were DKK506.3 million. This is compared with $492,700,000 at the end of the first quarter. We generated 15.6 $1,000,000 in cash from operations in the quarter. Inventory level went down by $2,700,000 over the quarter. In the last few quarters, We adjusted the inventory to the reduced business volume.

Speaker 2

We are now at the point that we will start to increase The inventory level again to support the business growth. Accounts receivables were $79,000,000 Up from $66,300,000 in the previous quarter due to the timing of collection. As for guidance, as Rafi said before, with the current business momentum, we expect revenues of $77,000,000 to $79,000,000 in the 3rd quarter We've continued growth into the Q4 and in 2024. And with that, Rafi, Rami and I will be open to

Operator

I'll introduce you and ask you to unmute, after which you may ask your question. As we have a lot of people on the call, we will take a few moments now to poll for your questions. Our first question will be from Brian Chin from Stifel. Ryan, you may go ahead and ask your question.

Speaker 3

Hi, there. Good morning. Can you hear me okay?

Operator

Yes, we can.

Speaker 3

Great. Good afternoon. Thanks for letting us ask a few questions and congratulations on the results. Maybe to start with the sort of the visibility into calendar 2024. Again, I think you mentioned 30% plus of revenue Next year could be HBM and chiplet packaging related.

Speaker 3

I guess I could suggest something or approximately $100,000,000 in revenue. So for comparison, can you provide what the base revenue from HBM and chiplets is expected to be in calendar 'twenty three? And also in terms of that timing on the revenue next year, do you think it's more heavily first half weighted?

Speaker 1

Yes, Ravi, could you share this detail with you?

Speaker 4

Yes, I will respond to Brian. So hi, Brian. So first of all, let me start with the high bandwidth memory and chip. So this business over the next 12 months will double If we compare it to the previous 12 months and if we go even further down, it was even smaller. So definitely, it's a big step upward as we discuss this business.

Speaker 4

Now as we speak about our visibility for 2024. So I think Rafi said it in the prepared notes, We're definitely seeing customers are more ready to place orders. We're seeing a much higher conversion From the pipeline into the backlog and if we look at the overall backlog, 4.24 plus the pipelines, so we think we have a good visibility moving forward, And this goes to our expectation towards 2024.

Speaker 3

Okay, got it. When you say that the order the orders that you're receiving are for like a 2 quarter out Shipment at this point to some degree or is it maybe closer than that?

Speaker 4

H2 even plus 1. It's even 3 quarters ahead.

Speaker 3

Got it. Got it. Okay. And then maybe from thanks for my follow-up. Just on China as well, Maybe in second half relative to first half and also this year relative to last year, I guess, how is business in China?

Speaker 3

Understandably, it seemed more spotty this year relative to last, but are you starting to get better visibility there as well? Is that also part of your improved outlook for next And then also just for comparison, can you maybe provide what China represented in 2Q and first half?

Speaker 4

So let's talk in general. First of all, I think the business in China is solid. It has been solid, And we are seeing continued investments in China in the current OSATs, new OSATs are coming, a lot of start up companies. And the maybe you want to say a word about it, Michel?

Speaker 2

Yes. In terms of the numbers, we See China coming up pretty much like in the same level as 2022. So we don't see any decline in the business In China. Okay. Got it.

Operator

All

Speaker 3

right. I'll hop out. Thanks a lot for the help.

Speaker 4

Thank you, Brian.

Speaker 5

Thank you, Brian. Thank you, Brian.

Operator

Our next question is going to be from Charles Hsieh from Needham. Charles, please go ahead.

Speaker 6

Hey, good afternoon. Thanks. Congrats on the strong results and strong guidance. I want to ask a little bit more about HVM. Knowing that HVM historically, it was Strong for a couple of years and then it went back down for a couple of years and now it's strong again.

Speaker 6

Obviously, I just See, you've quoted about the AI chips, how very strong double digit growth going into the next few years. Maybe this time, There are stronger secular tailwind behind that, but how much do you think the current strength is a cyclical recovery of HBM? And How much do you think the secular tailwind is going to be? How long it's going to last? And that's Probably the first question.

Speaker 6

I look at the high level, but appreciate your thoughts. Thank you.

Speaker 4

So Charles, first of all, yes, I agree with you. If we talk about the cyclicality, if we go 2 or 3 years backwards, then It started and didn't really run. I think that the applications, and we talk about the AI today, Most of these components are coming with HBM. So as Raffi said in the prepared notes, the high performance computing Requires the chiplets or the CPU, the strong CPU, and this is coming with something like 6 to 8 HBM's On each component, on each system. So definitely, I think the difference of the HBM today and if we want to compare it To the past that the application is there, something that it wasn't.

Speaker 4

I think the main application back a few couple of years ago was primarily A gaming application was a graphics card. Today, I think the story is different. I think with the GPT and other applications coming along The number of AI component systems that are sold is much higher. And therefore, I think the demand It's definitely here, I would say, for the I don't want to say I don't know what is foreseeable future, But I don't see this becoming cyclical very quickly.

Speaker 6

Thank you, Rami, for the color. Maybe I want to ask you about competition for the HVM related inspection How do you see the competitive landscape? Is it fair to say Camtek Probably post the majority here. And do you expect competitor to catch up? And given how strong this market is, I mean, it's mean, a lot more attractive.

Speaker 4

So first of all, yes, you're right. It's a lot more attractive and as the volume grows up. Definitely, we are a very strong market leader. I think today, with our market position, Our understanding of the customer requirements, I think the barrier for entry is much higher than it used to be previously. So yes, there is going to be competitors, but I think that we understand the market.

Speaker 4

And moving forward, I think we will continue to hold a major market share in the future as well.

Speaker 6

Thanks, Rami. Maybe just one last clarification. Why do you think the barriers to entry is higher today? Thank you. That's my last question.

Speaker 4

Because I think we have learned a lot of things What the application requires, we have very close relationship with the customers. We provide a very good customer support And we're really entrenched in the processes, how to inspect things, how to measure things. And I think this to replace Camtek today, with all the understanding and the experience that we have accumulated over the last few years, I think it's not an easy task.

Speaker 1

Yes. I would like to add another issue very typically to the semiconductor industry. I think that the key one of the major issue is maintaining high yield in general In this industry, if you cannot do it, you're out of the business. Now when customers using Equipment and they get good result, high yield, very good support. They have no good reason to replace it with other Competitors.

Speaker 1

So we work very hard, number 1, to be all the time very competitive in performance Number 2, to give an excellent support to customer and support is not just to fix machine and application It's a lot of special feature, new R and D, whatever is needed and do it quickly. So when you provide to a customer such services, We really has no any good reason to go and to look for another competitor. This is very obvious in this industry.

Speaker 6

Yes. Thanks for the insights. Understood. I appreciate the answers. Thank you.

Speaker 4

Thank you,

Operator

Charles. Thanks, Charles. Our next question is going to be from Tom O'Malley from Barclays. Tom, please go ahead.

Speaker 7

Good morning. Good afternoon, guys. Thanks for taking the question. My first one was just on the supply chain. You're seeing Some real acceleration in terms of orders on the HBM side.

Speaker 7

Could you talk about where specifically to the supply chain you're selling? Is that to The end device maker, is that to the memory guy? And that's the first part of the question. The second part is just given the acceleration, Are you seeing the potential to have a 10% customer? Is this a singular customer you're selling to or are there multiple customers that you're selling to

Speaker 4

in the space? Hi, Tom. So first of all, we are selling here the HBM, we're selling to the DRAM manufacturers. Now we are selling to all of them, all the leading ones. Obviously, I don't want to mention name, but I think you can understand Those vendors that I'm talking about.

Speaker 4

So in that respect, I am not sure that we will see here a 10% customer.

Speaker 7

Okay. And then traditionally, you guys break out Asia Pacific and Rest of World as a percentage of revenue. What was that in this past quarter?

Speaker 2

Last quarter, it was 90% Asia and 10% U. S. And Europe. This quarter, It shifted a little bit more towards U. S.

Speaker 2

And Europe, 17% and 83% for Asia.

Speaker 7

Great. And then just one more quickly. On the prepared remarks, you guys talked about the year being over $300,000,000 I don't know if you were being Very specific about that, but if you look at December, even just a slight amount of sequential growth and even flat gets you above 300,000,000 Are you guys being specific or could it easily be a lot greater than $300,000,000 Can you just talk about how specific you were being with that guidance into Q4?

Speaker 2

What we said is basically we provided guidance for Q3 of 77% to 79%, and we also Mentioned we expect a sequential growth in the Q4 as well. We did not mention at this point How significant the growth will be in the Q4 versus Q3?

Speaker 1

By the way, most of the demand that we can see Actually, it starts to 2024 and the beginning of 2024, just to put things in proportion. Helpful. Thank you.

Operator

Thank you, Tom. Our next Next question will be from Craig Ellis from B. Riley. Craig, you may go ahead.

Speaker 8

Yes. Good afternoon, team, and congratulations on the momentum in the business. I wanted to start shifting away a little bit from high bandwidth memory where there's been a lot of really good color And check on the visibility that you have in calendar 2024 and other areas. So can you comment on The visibility in CIS and front end macro inspection as you look out to next year?

Speaker 4

Hi, Craig. So I think when we look at 24%, so yes, We covered 30%. We said it's going to be the triplets and the HBM. When we talk about The other segments. So first of all, the front end macro, this is roughly about 15%, 1 5% of the business.

Speaker 4

And I think it will be a similar number or maybe even a little bit larger next year. Similar number is the silicon carbide portion. So I think these together We're also now to something like about 30%. CMOS image sales force is a little lower this year. It's in the range of about 8%.

Speaker 4

I think it will be a little stronger next year. So here, I've already discussed about 70%. Now the other portion, and we're talking here just the chiplets and the HBM, but definitely there is what we call the wafer level packaging fan in fan out, this is a significant portion of the business in the range of about 25% to 30%. So also this segment continues to be strong. So overall, when we look at 2024, I think what we are enjoying is the fact that it's SMG.

Speaker 4

And today, we are inspecting the wafers In a lot more steps than historically we used to do. This is in many parts, it's related to the chiplet business. We are there. We are involved in multiple steps, but it's also correct also in the front end business as well. So coupled with that, a healthy Backlog and pipeline, so all of these together, all of the things that I have just discussed, This is the reason for our optimistic view on 2024.

Speaker 8

That's very helpful color, Ramy. Thank you. Moshe, if I could turn it over to you and just dig in further on the gross margin implications Of the color we're getting as we look into 2024, clearly, you've messaged that we're going to have continued gross margin gains. The question is this, As we think about the magnitude of gains, are there any items, whether it would be Higher cost inventory or things that are happening with manufacturing that would lead to More substantial decreases at certain points as revenues Ram, or should it be fairly steady and linear in association with the revenue ramp up?

Speaker 2

Hi, Craig. So generally speaking, what we have done in the last few months is we have Taking different steps in different directions on the costing side, supply chain issues, engineering Changes into the product and also we've looked into the ASP and the marketing efforts around customers. And all in all, we believe that all these major initiatives will result in improved gross margin over the course of the next Obviously, product mix is a factor here. So I cannot predict The impact but in general, I think the trend will be a positive trend of improving gross margin To around the 50% gross margin level that we've been operating in a year ago.

Speaker 8

That's really helpful. And then lastly, if I could, a more strategic question for Rafi. Rafi, in the past, you've Express, excuse me, strong ambition for M and A. Can you talk about some of the gives and takes Executing on M and A in the current environment, for example, previously, COVID issues made Person to person interaction difficult. That would have seemed to have gone away now.

Speaker 8

But on the other hand, you've also got a Rapidly growing business and perhaps that directs attention just towards organic growth. Can you just walk us through the puts and takes to how you're thinking about

Speaker 1

Okay. 1st of all, we're growing very nice, but We invest a lot of efforts of executing M and A, okay? We search companies. We had A lot of meetings with companies, but there are some things that this industry, the semiconductor, are very optimistic industry. And most of the investor really believe in their companies, and they're not so running to sell the company.

Speaker 1

So we do a lot of effort, and hopefully, we can maybe do something not so far. But what I try to tell, we put a lot of attention. Most of my time, I think, now is for executing M and A. So definitely, we continue investing efforts, and I believe that we will see the fruits Soon.

Speaker 8

That's really helpful, Ravi. Thank you.

Operator

Okay. Thank you, Craig. Our next question is from Gus Richard of Northland. Gus, your line is open.

Speaker 9

Yes. Thank you so much for letting me ask a couple of questions. Could you give us a sense of what you think compounded annual growth rate of HBM plus AI will be over the next couple of years?

Speaker 4

Well, the CAGR is above 20%. Now you need to look at it depends on, I would say the number of wayfares or what is related more related to our business is above 20% if you look at the next 5 years, Gus. Okay.

Speaker 9

Okay. And then in terms of heterogeneous integration, Are you primarily selling what's the mix between OSAT and foundry IDM?

Speaker 4

Well, I don't have the numbers in front of me, but I think, as you know, the business, When the world there is the we sell to all of them today. But if you talk about the more advanced applications, which are related to the chiplets and HBM, which are packaged On in the heterogeneous integration, this is more today the foundries or a foundry and the leading IDNs. This business is starting to proliferate also to the main OSATs, But they are the smaller portion of this business.

Operator

But

Speaker 4

definitely, over time, this will become more of a more business of offsets as well.

Speaker 9

Got it. Got it. Thank you. That's very helpful. And then, last one for me.

Speaker 9

When you think about your wafer level packaging portion of your business, what is the driver of that business? Is it Mobile phones, is it something else? Could you just give a little color on the end market dynamics there?

Speaker 4

I think this is a very broad market. Definitely, phones, IoT, everything today that is redesigned Is utilizing the wafer level packaging? Now you see a very loud growth in the fan out segment Because as people start to make those ties smaller and smaller, they just don't have enough room For the, bumps, and therefore, they're using the fan out. Fan out is also cheaper. It doesn't require the substrate.

Speaker 4

And it has some advantages from the electrical performance as well. So overall, fan out It's a significant driver in this business and definitely quite a few machines are sold.

Speaker 9

Got it. And then what do you think the growth rate of that segment could be for the next couple of years?

Speaker 4

Oh, it will be. It's anywhere between, I would say, it's more than 10% for sure. And it depends, it's Significantly more than 10%.

Speaker 9

Okay. Got it. That's it for me. Thank you so much.

Operator

Thanks, Gus. Our next question is from Vedmati Srotri from Jefferies. Please go ahead.

Speaker 10

Do you hear me okay?

Speaker 3

Yes. Okay.

Speaker 10

Thanks for taking my question. So I wanted to Kate, on the gross margin side of things, so your revenues, it looks like in 2024, your revenues start to Grow beyond that 300 mark, which would be sort of a record year for Camtek, and that gets you closer to the high end of your target model. So What does that mean for gross margins? Like do you think going to that 52% is a possibility into 2024?

Speaker 2

As I said, hi, everybody. As I've mentioned before, We are in an improvement trend in the gross margin level. We've been operating in the last 2 or 3 years around the 50% to 52%, and I don't see a reason that we cannot go back to this range. The difference between 50% 52% is mainly a product mix. And this, I cannot predict, but in general, we our target is to exceed the 50% Gross margin, as we are increasing our revenue levels.

Speaker 10

Right. And so to follow-up on that, so when you see product mix, are there any specific segments that could be Sort of margin dilutive. So how does the mix affect it? Is it the application? Is it CIS versus HBM kind of a story?

Speaker 10

If you could give any color on what impacts the product mix.

Speaker 2

Yes. As a matter of fact, it's not geography specific or an application specific. It's more like a deal mix. So it depends on the deal level. Size of the deal obviously has its own impact.

Speaker 2

But not only that, just different dynamic around the deal and also The machine configuration, some machines have a very basic configuration and these machines come with relatively lower gross margin.

Speaker 10

I think that's all for me. Thank you.

Speaker 2

Thank

Operator

you. Thanks, Fidade. Our next question is from Alon Last of Metav. Alon, please go ahead and ask your questions. Alon, please unmute as well.

Speaker 5

Yes. Sorry for that. Can you hear me?

Operator

Yes. Can you

Speaker 4

hear me?

Speaker 5

Yes. Yes. Thanks for taking my questions. My first one is about the 500,000,000 Doro's target, given your current visibility, when do you aim to Hit the target, what kind how many years do you think will take you to reach that? And what kind of embedded assumption do you put

Speaker 1

Okay. Maybe I will answer to you. Look, First of all, everything is under the assumption that semiconductor industry continue to grow. All the analysts, everyone predict that By the end of this decade, we come to maybe close to $1,000,000,000,000 $1,000,000,000,000 Revenue and definitely, it means that the semiconductor industry is going to grow roughly 2 digits from year to year. And we always say that we believe that we can grow faster than the industry because we are focusing on Specific segment that the growth rate is higher than the average industry.

Speaker 1

This is the first assumption. Now The second one that we definitely feel comfortable that we continue to be a leading supplier. We continue to provide superior support to our customer. And if we continue doing it And don't miss anything. Customer, as I mentioned before, are not going to replace vendor.

Speaker 1

This is the culture in our industry. So if we take this, the first one, and the second one, and definitely, we feel confident that we can

Operator

Deliver it so then we

Speaker 1

can do it. Now when I said we can do it, the question if it's take 2 years or 3 years Also depends if we make an M and A in between, if it's only organic. So this is could be roughly if you take out the M and A, It can be about 3 years. If you go with M and A, it could be maybe 2 years. But we talk about roughly this level of targets.

Speaker 5

Okay. Thanks very much. My second question is about the orders that You've got an could you speak about the value of them and what's the schedule of delivery for them?

Speaker 1

Rami, do you want to get the head forward?

Speaker 4

Look, so first, from the average ASP, Those orders are anywhere from $900,000 to $1,000,000

Speaker 2

So this would Per machine.

Speaker 4

Per machine. So this would give you the more or less And so and from the shipments point of view, most of the machines in what we have discussed, about 80% of them will be shipped this year In the 3rd and the 4th quarter, about 20% will be shipped in the Q1 of next year.

Speaker 5

That you speak about the 42 machines or also for the 10 that were Or in the last couple of years?

Speaker 4

I included the 10 as well.

Speaker 5

Okay. So basically, The question is the extent of the growth that we may see in 2024. It's obvious that there is a sense that we have reached a bottom and From here, things will get improved. The question is, to what is the extent of improvement? Is it something that will get you To similar levels like 2022?

Speaker 5

Or is it something that will bring you much to much higher levels? What's the range of possibilities that you foresee from now about the revenues in 2024?

Speaker 4

Look, Alon, what we can say at this stage, and I think we said it in our prepared notes, that it will be a record year. It will be better in the record that we achieved in 2022. At this stage, I think we explained exactly how we see and we Shared a lot of color into the business of 2024. I think at this stage, we cannot predict any more than we've just said. Definitely, as we'll continue and get closer to 2024, We'll be in a much better position to give a better assessment, a more accurate assessment of what will be the final revenues.

Speaker 5

Okay. Thank you very much. Thank you.

Operator

Thanks, Davon. Our next question is from Brian Chin from Stifel. Brian, you may go ahead.

Speaker 3

Hi, there. Just one quick follow-up. Just Going back to the 42 system order that you press released a few weeks ago, Was the HBM portion of that order a lot bigger than the 10 additional systems that you discussed today from a different customer, Number 1. And 2, like more broadly, I think many of us expect strong industry expansion for HBM. But can you help us understand, When you ship 10 systems, what is sort of the equivalent increase in HBM capacity?

Speaker 4

Hi, Brian. So first of all, In the 42, I don't want to go into numbers, but it's not a much bigger number than the second order. But obviously, I think we said that we will see more orders in the near future. So I think this is all we can say at this stage I don't have in front of me, we can have a follow on call And give you if we can find it an indication of the capacity versus those machines, I'm definitely, I'm not in position to answer now because I don't know the number, But I can see if we can provide this number.

Speaker 3

Okay. That's fair. That'd be really helpful. I appreciate that. That's it for me.

Speaker 4

Okay.

Operator

I think that ends our Q and A session. Before I hand over To Raffy, I'd like to let you all know that in the coming hours, we will upload the recording of the conference call to the Investor Relations section of Camtek's website at www.camtek.com. And I would like to thank everybody for joining this call. Rafi, please go ahead with your closing statements.

Speaker 1

Okay. I would like to thank you all for your continued interest in our business. I want to especially thanks the employees and my management team for their tremendous performance. To our investor, I thank you for your long term support. I look forward to talking with you again next quarter.

Speaker 1

Thank you and goodbye.

Operator

Thank you. That ends our conference call. You may go ahead and disconnect.

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Key Takeaways

  • Camtek reported Q2 revenue of $73.8 million, a gross margin of 48% and an operating margin of 25%, with ~60% of sales in Advanced Interconnect Packaging and 40% across compound semiconductors, CIS and process control.
  • For Q3, management guides revenue of $77–79 million and anticipates sequential growth in Q4 to exceed $300 million in full‐year 2023, setting the stage for 2024 to be a record year en route to a $500 million revenue target.
  • Demand for heterogeneous integration (HI)—notably chiplet modules and high‐bandwidth memory (HBM)—is accelerating, evidenced by orders for 42 inspection systems plus 10 additional units, positioning Camtek as a key supplier for AI/HPC packaging.
  • Significant R&D investment in inspection and metrology for next‐generation HI roadmaps aims to meet rigorous yield requirements and drives an expected improvement toward >50% gross margins.
  • Additional growth engines include wafer‐level packaging (especially fan‐out FOWLP), and silicon carbide power device inspection for automotive electrification, supporting a long‐term CAGR above 20%.
AI Generated. May Contain Errors.
Earnings Conference Call
Camtek Q2 2023
00:00 / 00:00