Camtek Q2 2025 Earnings Call Transcript

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Provided by Quartr
August 5, 2025

Key Takeaways

  • Positive Sentiment: Record Q2 performance: Revenues rose 20% YoY to $123.3 M, gross margin held at ~52%, and operating income reached a record $37.4 M, with Q3 guidance of ~$125 M implying a $500 M run rate.
  • Positive Sentiment: Strong AI-driven packaging momentum: High-performance computing and advanced packaging now represent ~45–50% of revenue, and Camtek’s new AUK and Eagle 5 systems plus AI-based ADC tools are expected to drive ~30% of this year’s sales.
  • Neutral Sentiment: Robust balance sheet: Cash and cash equivalents rose to $544 M and operating cash flow was $23 M in Q2, while accounts receivable ($112 M) and inventory ($149 M) increased to support new product ramps.
  • Negative Sentiment: Operating expenses climbed to $26.6 M (from $21.6 M YoY), driven by exceptionally high shipping costs related to the Iran conflict, though those costs have since normalized.
  • Neutral Sentiment: China exposure: China accounts for roughly 30–40% of revenue, slightly above last year’s 30%, but management has yet to provide a full-year breakdown.
AI Generated. May Contain Errors.
Earnings Conference Call
Camtek Q2 2025
00:00 / 00:00

Transcript Sections

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Kenny Green
Partner at EK Global Investor Relations

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 presenters are currently muted.

Kenny Green
Partner at EK Global Investor Relations

Following the formal presentation, I will provide some instructions for participating in the live question and answer session. I would like to remind everyone that this conference call is being recorded and the recording will be available from the link in the earnings press release and on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please review it on the company's website. With me today on the call, we have Mr. Rafi Amit, Camtek's CEO mister Moshe Eisenberg, Camtek's CFO and mister 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, Raffin Moshe and Rami will be available to take your questions. Before we begin, I'd like to remind everyone that the statements made by management on this call will contain forward looking statements within the meaning of the federal securities laws.

Kenny Green
Partner at EK Global Investor Relations

Those statements are subject to a range of changes, risks and uncertainties that may cause actual results to differ and vary materially. For more information regarding the risk factors that may impact Camtek's results, please review Camtek's earnings release and SEC filings and specifically the forward looking statements and risk factors identified in the results press release issued earlier today and other risk factors as discussed in Camtek's most recent annual report on SEC Form 20 F. Camtek does not undertake the obligation to update these forward looking statements in light of new information or future events. Today's discussion of the financial results will be presented on 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.

Kenny Green
Partner at EK Global Investor Relations

And now I'd like to hand the call over to Mr. Rafi Amir Rafi's Camtek CEO. Rafi, please go ahead.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

Thanks, Kenny. Hello, everyone. Camtek concluded the second quarter with a record performance. Q two revenues reached $123,300,000.0, reflecting over 20% growth year over year. We also maintained our gross margin at around 52% contributing a record operating income of over $37,000,000.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

Revenue distribution remained in the in line with our expectations and closely matched last quarter results. High performance computing applications contributed approximately 45 to 50% of total revenue, while other advanced packaging applications accounted for about 20%. The balance came from CMOS image sensor, compound semiconductor, front end applications, and other general applications. We continue to observe a shift in coax like production towards OSAT, a trend that plays to our advantages given Camtek's strong market position in this segment. We continue to see strong momentum heading into the third quarter.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

Based on the current orders, our sales pipeline, and ongoing customer engagement, we expect q three twenty twenty five revenue to be approximately $125,000,000, representing an annualized run rate of half billion dollars, a significant milestone for the company. In addition, we have healthy orders flow and pipeline into the fourth quarter. The advanced packaging segment is rapidly evolving with technological changes to support the fast paced evolution of high performance computers for AI applications. Based on analyst research on the semiconductor industry, the advanced packaging market that support AI related application is expected to grow at an exceptionally rapid rate over the next few years. This growth is being driven by the adoption of new packaging technologies such as hybrid bonding, micro copper bumps with densities below 10 microns, RDL with line width of two micron and below and more.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

This advancement requires state of the art inspection and metrology capabilities combined with AI based algorithms to detect defects, filter out noncritical issues, and classify defects. Hence, ensure that only high quality components enter the HPC module assembly line. By integrating advanced inspection and metrology tools, manufacturers can significantly increase yield and gain valuable insight into different types, empowering continuous process refinement and production optimization. Camtek anticipated the upcoming technological shift several years in advance and made significant strategic investment to develop innovative solution addressing these emerging opportunities. We have invested heavily heavily in developing cutting edge platform that combine exceptional mechanical precision with state of the art optical technologies.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

These efforts have culminated in the launch of the AUK and Eagle five systems, delivering breakthrough performance and significantly higher throughput compared to our existing system. In parallel, we have been developing software solution such as enhanced defect detection, ADC, and automatic defect classification, ADC, technologies that will strengthen our competitive edge in the market. The ARC and the Eagle g five have been exceptionally well received by our customers and are expected to generate approximately 30% of total revenue this year with an even larger contribution projected for the next year. In addition, our micro proof metrology system originated from the FRT acquisition has been successfully adopted and accepted by a tier one customer for multiple metrology applications. Over 30 system have already been installed and are now operating seamlessly in full scale production environments.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

In summary, Camtek has solidified itself position for a market leader in its domain. We believe the packaging technologies highlighted today represent significant growth opportunities for us in the coming year. And now Moshe will review the financial result. Moshe?

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Thanks, Rafi. Revenue for the second quarter came in at a record $123,300,000, an increase of 20% compared with the 2024. The geographic revenue split for the quarter was similar to last quarter as follows. Asia, 90%, and the rest of the world accounted for 10%. Gross profit for the quarter was $64,000,000.

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

The gross margin for the quarter was 51.9% similar to the previous quarter and an improvement from the second quarter of last year. Operating expenses in the quarter were $26,600,000 compared to $21,600,000 in the second quarter of last year and $24,400,000 in the previous quarter. Operating profit in the quarter was $37,400,000 compared to the $30,800,000 reported in the second quarter of last year and $37,300,000 in the first quarter. These record results results were achieved despite an increase in the operating expenses, which were mainly due to the exceptionally high shipping expenses related to the conflict with Iran. Operating margin was 30.3% compared to 3031.5% respectively.

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Financial income for the quarter was $4,900,000 similar to the $5,000,000 reported last year and a decrease from the $5,400,000 in the previous quarter. The decrease from the previous quarter was mainly an impact of the weakness of the US dollars on reevaluation of certain balance sheet items. Net income for the 2025 was $38,800,000 or 79¢ per diluted share. This is compared to a net income of $32,600,000 or $0.66 per share in the second quarter of last year. Total diluted number of shares as of the end of the second quarter was 49,300,000.

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Turning now to some high level balance sheet and and cash flow metrics. So cash, cash equivalents, including short and long term deposits and marketable securities as of 06/30/2025 were $544,000,000. This compared with $523,000,000 at the end of the first quarter. We generated over $23,000,000 in cash from operations in the quarter. Accounts receivable increased to $112,000,000 from $100,000,000 in the previous quarter, mainly due to timing of collection.

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Inventory level increased to $149,000,000 from 142. The increase over the quarter is primarily to support the anticipated sales growth of our new Eagle Gen five and hub products in the coming quarters. As Rafi said before, we expect revenue revenues of around $125,000,000 in the third quarter. And with that, Rafi, Ravi and I will be open to take your questions. Kenny?

Kenny Green
Partner at EK Global Investor Relations

Thank you, Moshe. At this time, we'll begin the question and answer session. If you have a question, please raise your hand via the Zoom platform. I will introduce you and ask you to unmute after which you may ask your question. So we'll give a few moments for everyone to put themselves in the queue.

Kenny Green
Partner at EK Global Investor Relations

Our first question will be from Charles Hsieh from Needham. Charles, you may go ahead and ask your question.

Charles Shi
MD - Senior Analyst at Needham & Company

Thanks for taking my question. Maybe the first question, I wanna get a little bit of updated thoughts about the composition of the business, maybe for the second half of the year or or maybe for the full year, whichever time frame you you guys prefer to discuss. So wanna ask HPC, what's the expectation for the second half of the year may maybe from a mix perspective? Clearly, first half, it has been around that 45 to 50% level. Is it a similar level into second half or for the full year?

Charles Shi
MD - Senior Analyst at Needham & Company

And, on a related question, do wanna ask, what's the current expectation for China, contribution to the total revenue for the year? Last time, I think you guys, were more looking at the 35 to 40% of the total revenue. Has any of that those numbers changed? Thank you.

Ramy Langer
Ramy Langer
COO at Camtek

So thank you, Charles. So let's talk a little bit. We'll start with your first question. We we see a positive momentum in the second half. And as we discussed in the pre in the in the in in Rafi's discussion, we have a healthy order flow and pipeline.

Ramy Langer
Ramy Langer
COO at Camtek

We provided a positive guidance for q three, and we'll provide the guidance for q three q four in the next earning call. Regarding the HPC, so we expect the HPC contribution to our revenues in the second half to be not much different than the first half. And regarding China

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Charles, hi. Regarding the the China contribution to the business, altogether, China is is obviously significant to Camtek, has been so for many years. Last year, the number the contribution was around 30%. We expect that this year, the contribution will be a little bit higher than than that. Still early to say how much will be the contribution for the second half, but we expect it to be a little bit higher.

Charles Shi
MD - Senior Analyst at Needham & Company

Thanks. Okay. Specific on China, no no additional quantitative view for the year. Maybe a second question a little bit more at a higher level, and maybe this is more about product and technology. KLA has been making a good amount of inroads in 2.5 d, especially at the leading foundry, and looks like they are looking at the HBM opportunity as well.

Charles Shi
MD - Senior Analyst at Needham & Company

But so far, it looks like it's more around hybrid bonding related to HBM opportunity. Maybe a little bit concentrated at one customer that is focusing on hybrid bonding. Wanna get your general thoughts Camtek's position versus potential entry of KOA in your existing HPC markets, and what what what's management thought on how to compete effectively versus KOA. And, yeah, let's go from there.

Ramy Langer
Ramy Langer
COO at Camtek

So so let me start with the hybrid bonding. So we we see the hybrid bonding as a great opportunity for us. This field is still in the early stages, and we're running our tools today at strategic customers, and we believe that we have the necessary capabilities in inspection and metrology to address the hybrid bonding opportunity. Now, you know, we discussed the KLA penetration in trying to get in some of the into this market. I think we discussed it also in the last call.

Ramy Langer
Ramy Langer
COO at Camtek

And and we've already been engaged in competition with KLA on multiple occasions, different customers, I would say, for the last couple of years, and we demonstrated that our equipment is highly competitive. I think we are very well positioned to meet the specific requirements of this unique market. And with our latest products, the Hawk and the the Eagle five, even more than in the past, move looking into the future, we offer a very competitive market. Now in general, the advanced packaging is our market. We are well known.

Ramy Langer
Ramy Langer
COO at Camtek

We have excellent relationship with our customers, and we understand exactly their requirements moving into the future. But I I and therefore, I think if I would like to summarize, I think the unique combination of our technology scale, which is important here, and flexibility are key reasons why many customers choose to work with us over larger competitors who often are slower to respond.

Charles Shi
MD - Senior Analyst at Needham & Company

Okay. That's all for me.

Kenny Green
Partner at EK Global Investor Relations

Thank you. Thank you. Thanks, Charles. Our next question is from Matt Briscoe of Cantor. Matt, you may go ahead and ask.

Matthew Prisco
Director at Cantor Fitzgerald

Yes. Thanks for taking the question. So I guess, first, for your product ramps, can you go over where you're seeing the greatest traction today for both the Eagle g five and the Hawk in terms of applications and kinda what are the primary drivers beyond the behind the strong customer reception here?

Ramy Langer
Ramy Langer
COO at Camtek

So so I think it's a few a few things to drive the new products. So let me start with the Hawk. I think the Hawk provides two very important capabilities that are, first of all, very high throughput, that is very important, where people are very sensitive to the footprint in the fabs. And on the other side, it provide the path to very, very, I would say, difficult applications that people will need now or into the future. And I think people that are looking into this changing market that the products are changing, and people are not sure what they will need in a year or two, the hope provides a path to address those challenges with the capabilities it has today.

Ramy Langer
Ramy Langer
COO at Camtek

And this obviously relates to the microbumps, you know, with the pitches coming very small, very high number of bumps, hybrid bonding, a lot of challenges in the inspection market. All of these challenges, the hope provides a very, very good solution moving forward. On the g five, I I think compared to the Eagle, it's much faster, And I think it addressed it again from the optics point of view, the ability to detect, I would say, defects that we couldn't previously address with the current products and and other capabilities. So for the, I would say, for the price tag of million plus, no doubt today the Eagle provides the best in class solution into the market. So I would say it's two different reasons.

Ramy Langer
Ramy Langer
COO at Camtek

It's two different product lines, and and I think what I've discussed, these are the reasons for the very high traction by our customers. And I think as we said in our prepared notes, we were able to achieve 30% of our revenues this year with with two product lines, which is exceptionally well, and I expect that we will see more next year. Maybe a few words about the applications. So as I said, and I will I said it may be not clear enough. I just wanna make sure that it's well understood.

Ramy Langer
Ramy Langer
COO at Camtek

So first of all, the applications are, I would say, large number of pumps. That's very important. Very small defects. The hook will address defects down to a 150 nanometers, And this is very this is challenging, and this is very important for hybrid bonding and other two d inspection requirements. And, of course, the throughput and similarly the Eagle g five on a on a different, I would say, not to the extent of the capabilities of the hub, but definitely a very good solution in the price range that is being offered. Have I answered your question?

Matthew Prisco
Director at Cantor Fitzgerald

Perfectly. Thank you. And then as as a follow-up, given given the success you're seeing in these new product ramps and the continued success into next year, can you maybe offer some some early thoughts based on your visibility and customer conversations and how you're thinking about Camtek's growth prospects overall for the company into 2026? Thank you.

Ramy Langer
Ramy Langer
COO at Camtek

When is that '26? '26. '26. So, look, regarding '26, I think our market and specifically the high performance computing are expected to grow rapidly in the coming years. This market also technologically changes, and the HPC is undergoing a lot of changes that we believe will create a lot of opportunities for us.

Ramy Langer
Ramy Langer
COO at Camtek

For example, and I think Rafi mentioned it in his in his prepared notes, fine pitch microbumps, hybrid bonding, h b m four, and and many others. So if I look at these opportunities at our market position, assuming a positive market environment in 2026, will no doubt support another growth year for Comtech.

Matthew Prisco
Director at Cantor Fitzgerald

Thank you, guys.

Kenny Green
Partner at EK Global Investor Relations

Thanks, Matt. Our next question will be from Ezra Wiener of Jefferies. Ezra, please go ahead and ask your question.

Ezra Weener
VP - Equity Research at Jefferies LLC

Yeah. Thanks for taking my question. I guess it's a two parter. First, can you talk a little bit about the content up lift from HPM three slash 3e to HPM four for you guys? I know there's a couple different paths people are going with it.

Ezra Weener
VP - Equity Research at Jefferies LLC

So what you're seeing there? And then second part of that question would be from a CapEx perspective, what you're seeing at your customers and what you're seeing for HPM specifically as we wait for potential qualification. Thank you.

Ramy Langer
Ramy Langer
COO at Camtek

So so, obviously, the 8PM market from capacity point of view continues to grow, and and we're seeing customers adding capacity. Now in general, the uplift and then, you know, it's it goes in a few ways. First of all, there are more HBMs per product. We see the the density is growing, not drastically. I think the the the major jump in density from the HBM will come probably late twenty six, early twenty seven.

Ramy Langer
Ramy Langer
COO at Camtek

But, definitely, on the on the four, it's moving to more layers, and, eventually, this means that we will scan more wafers. There is some change in the in the number of of pumps, some pitch differences, but all in all, we've already been qualified at some customers for the h b n four. So all in all, it's a very positive path. We're getting very good, I would say, inputs from our customers, so expect that definitely h b n four will be a positive opportunity for us.

Ezra Weener
VP - Equity Research at Jefferies LLC

Got it. Then if you could just talk a little bit about what you're seeing in terms of timing for customer spending and kind of the shape of that spend. In terms of H B M 4 specifically?

Ramy Langer
Ramy Langer
COO at Camtek

In in H B M 4 specifically, I would say that customers are talking to us, H B M 4. We are starting to see initial forecasts to support the uplift of the H B M four. I think more than that, I will not be able to to discuss during this call.

Ezra Weener
VP - Equity Research at Jefferies LLC

Understood. Thank you very much.

Kenny Green
Partner at EK Global Investor Relations

Thanks, Ezra. Our next question will be from Craig Ellis of B. Riley. Craig, you may go ahead and ask your question.

Craig Ellis
Director - Research at B Riley Financial

Yeah. Thanks for taking the question. I wanted to follow-up a little bit on HBM for to start. So it sounds like it it's a very immaterial part of revenues today, and and the visibility may not, be clear on when you'd get the crossover from h b m three to h b m four related revenues. But if you have some idea of that sounding like 2026, it would be helpful.

Craig Ellis
Director - Research at B Riley Financial

The question is more this. When when you look at the specific feature enhancements in either g five or Hawk, what are they that are very advantageous for h b m four? And what does that mean for their trajectory of gross margin as we move through the h b m four ramp up period?

Ramy Langer
Ramy Langer
COO at Camtek

Okay. So thank you, Greg, for the question. Now first of all, the equipment that we sold most of the equipment that we sold to h b m three will be used for HBM four as well. So it's not that the you know, that what we sold in '25 or '24, this is immaterial for the additional growth. So this some of these equipment has already been qualified to address the h four.

Ramy Langer
Ramy Langer
COO at Camtek

So specific this is in in general. However, there is an uplift. There is going to be an increase in capacity for the h b n four. And what I indicated in my previous answer is that we are already in the process of talking to customers about the forecast for H B M 4. Definitely, this will start to happen early in '26, wherein this, we will ship equipment to support the H B N 4.

Ramy Langer
Ramy Langer
COO at Camtek

More than that, I will not be able to give you any details. Now going to the Hawk versus the the Eagle. The advantage of the Hawk, as I discussed in the in one of the previous questions, are two things. First of all, it's the throughput, which means immediately much better footprint in the fab. It's the ability to address large number of bumps, and the HBM is going into this direction.

Ramy Langer
Ramy Langer
COO at Camtek

Its inspection capabilities today already down to a 150 nanometers. Already, we are demonstrating it at customers. This capability will be able to support also the HVM, the the hybrid the hybrid bonding requirements. So, definitely, all in all, when a customer is looking today, whether he wants, you know, an eagle versus he wants a hawk, those that are thinking about the future and want to ensure that they will be able to support their products in two or three years, Some of them lean towards making a higher investment today and buying the Hawk. From gross margin, in general, the Hawk is more expensive, and it will have a positive contribution to our gross margins. Did I answer your question, Greg?

Craig Ellis
Director - Research at B Riley Financial

Yes. It does, Rami. Thank you very much. And the next question is a somewhat intermediate to long term question, and I'll start with congratulating the team on being just inches from driving the business to its 500,000,000 run rate target. So so good for you for getting so close to that target.

Craig Ellis
Director - Research at B Riley Financial

But the question is this, if we look at the list of incremental growth drivers, We spent a lot of time on h b m four, and it sounds like that would be at the top of the list. But as we think about growth through 2026, what are the next couple of applications that we should be focused on as your bigger incremental growth drivers over the next eighteen months? Thank you, team.

Ramy Langer
Ramy Langer
COO at Camtek

So I think, first of all, no doubt, the high performance computing is going to be a main driver for our business. This goes to metrology in general, three d metrology. It's also in the metrology. And Rafi, in his prepared remarks, talk about the, I would say, phenomenal success we have seen at the tier one customer with our metrology line, and that's a line that's also going to contribute. I think it's a a very good growth engine, metrology in general, for our business.

Ramy Langer
Ramy Langer
COO at Camtek

And so I would say that the high performance computing and getting into more and more applications, we're gaining more and more traction on the inspection part, and definitely that's a big market with our capabilities on the g five and on the hawk specifically, ability to go and detect very small defects in the range of a 150 nanometers. We'll definitely try a lot more applications outside also the high performance computing. I think we are going to gain some traction with our new software capabilities, which we discussed in the pre prepared remarks. The EDC and the ADC, I won't go into all of the details. Definitely, these are technologies that are going to push us much I would say, would gain to give us a lot of strength on the inspection side.

Ramy Langer
Ramy Langer
COO at Camtek

But all in all, no doubt, we are in a market that's going to grow at the run run rate with what I hear from all the different analysts over 25% growth in the next few years. So, definitely, I think this is the main driver. Of course, our task is to gain more and more applications in this market. Now we haven't forgotten the other markets. The, I would say, the conventional advanced packaging fan out and other applications still have a a very nice momentum.

Ramy Langer
Ramy Langer
COO at Camtek

And last but not least, today, I think still we see a lot of opportunities in the front end. Compound semi is comparatively depressed in the last couple of years, but, definitely, this is an opportunity looking into the future. And and don't forget, we have, I think, about 350 customers, 200 active every year. A lot of ones and twos that all of them will definitely provide additional opportunities in the foreseeable future.

Craig Ellis
Director - Research at B Riley Financial

Thank you, Rami.

Kenny Green
Partner at EK Global Investor Relations

Thanks, Craig. Our next question is gonna be from Gus Richard of Northland. Gus, please go ahead.

Gus Richard
Managing Director at Northland Capital Markets

Yes. Thanks for taking the question. Just

Ramy Langer
Ramy Langer
COO at Camtek

in terms of the OSATs, can you talk a little bit about, what you're seeing in terms of applications, how that compares to, you know, the traditional foundries that do, advanced packaging for HPC? Hi, Gus. It's it's it's a very interesting, you know, process that we are seeing because I think we started to talk about it a year ago that we expected the OSATs to start to take, I would say, a position in the high performance computing, and this is definitely what we are seeing. They used to do they started to go into the heterogeneous integration a couple of years ago, started with these applications. We are seeing major offsets today.

Ramy Langer
Ramy Langer
COO at Camtek

Some of them just do the COAS, and I think that the TSMC made some remarks about it, about specific names. But, definitely, we're seeing all the major OSATs going into COAS or what we call COAS like. It's something similar. It's becoming a significant business, and then we're definitely you know, it's a significant number of orders that we're seeing for these applications from the major OSATs.

Kenny Green
Partner at EK Global Investor Relations

Gus? Gus?

Gus Richard
Managing Director at Northland Capital Markets

Yeah. Can you hear me?

Ramy Langer
Ramy Langer
COO at Camtek

Yeah. We can you. Did you hear my answer?

Gus Richard
Managing Director at Northland Capital Markets

No. But I can follow-up later. I don't want people to ask us.

Ramy Langer
Ramy Langer
COO at Camtek

Alright. So we'll have a follow-up later. Thank you, Gus. Yeah.

Gus Richard
Managing Director at Northland Capital Markets

Follow-up is how how do you see the opportunities for, like, chiplets and advanced packaging?

Ramy Langer
Ramy Langer
COO at Camtek

Well, look. The chiplets, we look at the chiplets in general as part of the high performance computing. You know? Eventually, it's it's a chiplet, which is either the GPU or CPU depends on on the actual, I would say, design of the the high performance computer. And with it, you know, it's surrounded by the high bandwidth memories.

Ramy Langer
Ramy Langer
COO at Camtek

So from that point of view, when we talk about HPC, we specifically talk about chiplets, the high end chiplets. But in general, no doubt, this market is is picking up as part of all the changes in the market. And I think from all the numbers that I'm seeing, it will continue to grow very in a very healthy way in the foreseeable future.

Gus Richard
Managing Director at Northland Capital Markets

Got it. Thanks.

Kenny Green
Partner at EK Global Investor Relations

Thanks, Gus. Our next question is from Tom O'Malley of Barclays. Tom, you may go ahead and ask your question.

Thomas O'Malley
Thomas O'Malley
Director - Equity Research at Barclays

Hey, guys. Thanks for taking my question, and apologies if this got asked already. I just hopped on from another one. But, I think you guys gave advanced packaging is about 20% of the the revenue mix in the quarter. Can you talk about how much of that is HBM today versus a year ago?

Thomas O'Malley
Thomas O'Malley
Director - Equity Research at Barclays

Has the percentage within advanced packaging grown pretty materially? And maybe give us an update of how much of that is HBM today.

Ramy Langer
Ramy Langer
COO at Camtek

Okay. So so let me Tom, let me get the numbers correct. So 70% of our business goes to what we call advanced package. High performance computing or HPC, whichever name you go, is part of our advanced packaging. So out of this 70%, 50% goes to HPC, and 20% goes to what we call conventional advanced packaging such as Fan Out.

Ramy Langer
Ramy Langer
COO at Camtek

In the HPC and because of the we we do not specify what goes to chiplets and what goes to the high bandwidth memory. And the reason for it that there is changes, and it depends when the orders are coming, and it's too complicated. And, therefore, we've been just talking about high performance computing. And for the last few quarters, we've been at the run rate where 50% of our total revenues went to high performance computing, which includes HBM and chiplets.

Thomas O'Malley
Thomas O'Malley
Director - Equity Research at Barclays

Gotcha. Thank you for that. I, I wanted to ask a little bit of a strange one, so so bear with me. In a world right now where you have two major memory suppliers that are qualified on HBM for the largest guy in the world, and there's a third that's attempting to do that pretty aggressively. Which world suits you the best into next year?

Thomas O'Malley
Thomas O'Malley
Director - Equity Research at Barclays

A world in which it is still two guys that are qualified that need to add more capacity or a world in which there are three qualified qualified guys all who are serving the market? If you could walk through that, that'd be super helpful. Thank you.

Ramy Langer
Ramy Langer
COO at Camtek

So, you know, we don't have any preference. Whether it will be two or three, All of the players today are very good customers to us. And if one of them that is not qualified will be qualified, we will enjoy it with additional application and steps, and we're working very closely with all of them. So we're fine with two, and we will be very fine also with three.

Kenny Green
Partner at EK Global Investor Relations

Tom? Tom, you're on mute.

Thomas O'Malley
Thomas O'Malley
Director - Equity Research at Barclays

I'm all good with those two. Thank you, guys.

Kenny Green
Partner at EK Global Investor Relations

Thanks, Our next question will be from Edward Yang of Oppenheimer. Ed, you may go ahead and ask.

Edward Yang
Stock Analyst at Oppenheimer & Co. Inc.

Hi. Thanks for the time. Moshe mentioned high shipping costs that may have elevated your OpEx. Is that moderated now?

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

Yes. This has been kind of an exceptionally high level of shipping expenses due to the conflict with Iran. Now that the conflict is muted to some to some degree, the shipping expenses went back to normal rates, and we don't expect anything like that in the in the third quarter if the situation remains as is.

Edward Yang
Stock Analyst at Oppenheimer & Co. Inc.

And can you quantify what the impact was in the second quarter?

Moshe Eisenberg
Moshe Eisenberg
CFO at Camtek

It it it was over half a million dollar. Yes.

Edward Yang
Stock Analyst at Oppenheimer & Co. Inc.

Got it. And just to clarify on the positive momentum that Rami was talking about then you're seeing in the second half of the year. Are there any seasonal puts and takes that could impact fourth quarter? Or should we also expect that to grow revenue sequentially? And for the 2026 expected growth, the Street is modeling about 7% total revenue growth, but that's that's slower than what's typical for you.

Edward Yang
Stock Analyst at Oppenheimer & Co. Inc.

So, maybe you could help us reconcile, you know, any divergence there or any reason why we shouldn't see another year of, double digit growth for Camtek Thank you. So,

Ramy Langer
Ramy Langer
COO at Camtek

you know, I I it's too early definitely to talk about q four, and we will, discuss it in the in the next earning call. But as I said before, there is a positive momentum in the second half, and this is based on orders on hand, on orders that are in the pipeline. And as we said, we didn't provide a guidance for q three that is positive. And and, therefore, I think the overall second half is is definitely as as as we said, we are we are it's a positive momentum. Now I'm going back to '26, and, you know, there are lots of discussion today how '26 will look like.

Ramy Langer
Ramy Langer
COO at Camtek

But, again, I think, really, this is much too early to to discuss it, and this is a very dynamic market. Things are changing so fast here. This is true with the technology. This is also true with everything that we do. But but as I said, the high performance computing is growing rapidly and would continue to grow in the foreseeable future.

Ramy Langer
Ramy Langer
COO at Camtek

And with the technical changes and everything that is happening in the market, it's we assuming a positive environment in '26 definitely will lead to another growth year for Camtek. What will be the percentage? It's really too early. Unfortunately, it is too early today, but we'll talk it in in future calls.

Edward Yang
Stock Analyst at Oppenheimer & Co. Inc.

Fair enough. Thank you very much.

Ramy Langer
Ramy Langer
COO at Camtek

You're welcome. Thank you. Thanks, Edward.

Kenny Green
Partner at EK Global Investor Relations

Our next question will be from Dennis Piachanin of Stifel. Dennis, please go ahead and ask your question.

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Hi. Thank you. This is Dennis on for Brian at Stifel. So for my first question, maybe you could discuss that for HBM four. What is the expected ratio of Hawk versus Eagle shipments?

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Would would you expect it to be roughly even, or do you think for HBM four that customers would require more of the newer system?

Ramy Langer
Ramy Langer
COO at Camtek

So first of all, this is very customer dependent, and so and we we don't really give these numbers of Eagle versus the Hawk per applications. As I said, the the Hawk has specific advantages in term of capabilities in throughput, accuracy, and and other aspects that for certain applications and specifically in for those that want very high volumes in the h b n four may take some of the capacity will move into Hawx. But then again, this is very customer specific. And as we said, both products are very successful in the market. And, definitely, there is and don't forget it's not just HBM.

Ramy Langer
Ramy Langer
COO at Camtek

A lot of the business goes to the conventional advanced packaging, and there are many other applications where the Eagle Line, I think, is the best product for the price it is offered today in the marketplace. But then again, we'll probably, as time goes by, we'll be able to give you a much more, I would say, clearer estimations and and discuss this a little bit more accurately, but that's more or less what we see today. Great. Thank you.

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Yes. Can you hear me?

Ramy Langer
Ramy Langer
COO at Camtek

Yeah. Yeah.

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Okay. Great. And then for my follow-up, maybe you can tell us a little bit more about the OSATs. So do the OSATs continue to exhibit more signs of strengthening? And maybe you can tell us, you know, what's driving this.

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Is it just purely cost or something else? And, you know, do you have any view of found your OSAT logic expansion plans for 2025 and into 2026?

Ramy Langer
Ramy Langer
COO at Camtek

Well, definitely, 2026 is is is too early to discuss the the OSATs. And don't forget, a lot of these, players are still planning '26 and are still not in a position to release orders to give us the the actual forecast. But I think for OSATs today, where we see a lot of the growth is coming, first of all, from the HPC as we discussed before. The major offsets are starting to produce the COWAS and COWAS slice applications, and this is definitely a very high growth area. And I think this trend started a year ago.

Ramy Langer
Ramy Langer
COO at Camtek

We see it undergoing today and will continue into the foreseeable future. But don't forget there is a lot of regular advanced packaging, some fan out, and other applications. We see a lot of this business still strong in the OSATs, and we're shipping equipment to address those applications as we speak in in each of the quarters that some of the application that all sorts are buying equipment from us. So I would say from the all sorts, the the the major, I would say, two applications are the ones I discussed.

Denis Pyatchanin
Denis Pyatchanin
Equity Research Associate at Stifel Financial

Wonderful. That's it for me. Thank you.

Ramy Langer
Ramy Langer
COO at Camtek

Thank you, Dennis. Thanks, Dennis.

Kenny Green
Partner at EK Global Investor Relations

Our next question will be from Vivek Arya from Bank of America. Vivek, please go ahead.

Michael Mani
Michael Mani
Equity Research Associate at Bank of America

This is Michael Lani on for Vivek Arya. Thanks so much for taking our questions. To start, I just wanted to ask about one of your major chiplet customers, which is, you know, covering some challenges currently. They recently revised their outlook for their CapEx in 2026 pretty meaningfully. So the question is, have you seen any major changes to, you know, the investment plans at any for ship with customers?

Michael Mani
Michael Mani
Equity Research Associate at Bank of America

And to what extent, you know, could this already be reflected in your backlog? And, you know, could we see this demand be made up by by some of your other customers over time as well?

Ramy Langer
Ramy Langer
COO at Camtek

Well, you know, these are there there are discussions about, you know and and the forecast may move by by quarter here and there. And and and this happens, you know, on a regular basis that people move around, you know, their their forecast. We have not seen anything significant in in terms of changes in the focus to our shipments, so I can't comment on anything more than I've just said.

Michael Mani
Michael Mani
Equity Research Associate at Bank of America

Got it. Understood. Thank you. And just, on your newer products, you said that 30% of sales this year would come from Hawken g five. So could you give us an idea of how much of that is weighted in the second half?

Michael Mani
Michael Mani
Equity Research Associate at Bank of America

And then I I guess my main question, kind of the spirit of, like, of other questions that people have asked, earlier in the call, I mean, how much incremental growth are these new tools driving for you? Would you say that they're mainly replacing, for now, mainly replacing demand that you would normally see for your older systems? And is it possible that we won't see the incremental growth from new applications, new customers really until we get to something close to HPM four? Just how would you frame incremental growth opportunity over the near term from these new tools?

Ramy Langer
Ramy Langer
COO at Camtek

So let me answer your first question. So first of all, the the g five was actually introduced in the market a little earlier than the Hawk. So we started to ship it in larger quantities already at the beginning of the year. Actually, if I recall correctly, the first shipments were done in '24, and then we gradually increased it. So it was really loaded very nicely already in the first half, and we continue to see the growth into the second half as well.

Ramy Langer
Ramy Langer
COO at Camtek

The the Hawk, the the shipments actually started a little later, and it's more, I would say, the load well, maybe I would say we started more in the second quarter, and and we'll probably most of the shipments will be divided on on three quarters. And, obviously, we will see more shipments and the I would say the percentage will definitely be higher in '26. Now going into applications, definitely, we are seeing more application, but I will put it in a different way. I think that our product lines today, when we talk about the g five, is more competitive than the Eagle, and it's definitely more competitive today compared with our competition. So I think, definitely, this will mean for us potentially to take market share as we move into the future and gaining some applications.

Ramy Langer
Ramy Langer
COO at Camtek

And this is these application that require, I would say, more performance, and it's always throughput, and it's always better detection. So this is in in general. When we talk about the hook, definitely, these are capabilities that we didn't have before. So, definitely, this will open a lot of opportunities for us as we move along and but still it's too early to to quantify it.

Michael Mani
Michael Mani
Equity Research Associate at Bank of America

Great. Thanks so much.

Kenny Green
Partner at EK Global Investor Relations

You're welcome. Thanks, Vivek. That will end our question and answer session. Before I hand back to Raffi for his closing statements, I'd like to mention that in the coming hours, this call will be available from the Investor Relations section of Camtek's website at camtek.com. And with that, I'd like to thank all of you for joining this call.

Kenny Green
Partner at EK Global Investor Relations

Raffi, please go ahead and make your closing statements. Raffi?

Rafi Amit
Rafi Amit
CEO & Director at Camtek

Okay. I was in mute. Sorry. I would like to sincerely thank all of you for your continued interest Camtek. A special note of appreciation goes to our dedicated employees and exceptional management team for the outstanding performance and commitment.

Rafi Amit
Rafi Amit
CEO & Director at Camtek

To our investor, I am truly grateful for your trust and long term support. I look forward to updating you in our continued progress in the next quarter. Thank you.

Executives
    • Rafi Amit
      Rafi Amit
      CEO & Director
    • Moshe Eisenberg
      Moshe Eisenberg
      CFO
    • Ramy Langer
      Ramy Langer
      COO
Analysts
    • Kenny Green
      Partner at EK Global Investor Relations
    • Charles Shi
      MD - Senior Analyst at Needham & Company
    • Matthew Prisco
      Director at Cantor Fitzgerald
    • Ezra Weener
      VP - Equity Research at Jefferies LLC
    • Craig Ellis
      Director - Research at B Riley Financial
    • Gus Richard
      Managing Director at Northland Capital Markets
    • Thomas O'Malley
      Director - Equity Research at Barclays
    • Edward Yang
      Stock Analyst at Oppenheimer & Co. Inc.
    • Denis Pyatchanin
      Equity Research Associate at Stifel Financial
    • Michael Mani
      Equity Research Associate at Bank of America
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