Onto Innovation CEO Discusses Semi Metrology Mkt Outlook, Product Strat, and M&A at Citi Global TMT Conf 2025

Key Takeaways

TL;DR: Onto CEO Mike Plisinski confident in outgrowing WFE mkt in 2025, positioning for LT strength via rapid new product adoption (esp. G5, 3D/films metrology) and broader opp exposure (AI-related memory, adv. packaging, HBM). Mgmt expects margin trajectory to improve via supply chain actions and higher-margin products; pending Semilab acq. to add tech breadth and margin accretion. Upbeat demand for GAA and next-gen packaging (glass, hybrid bonding) supports positive mid-term outlook, despite timing uncertainty. Focus remains on capital deployment into synergistic M&A and wide mkt access, not just end-mkt cycles.

1. Mkt Outlook & Demand Trends

• 2026 Outlook: “Too early for a very informed view of 2026,” as customer expansion/end demand TBD toward YE.
• End-mkt Focus: Less concerned about overall WFE growth—focus is on underlying growth waves and increasing product attach.
• Growth Segments:
  • AI/GenAI: “AI shows no signs of abatement. Still growing,” driving tech/capex intensity in memory/logic.
  • Adv. Packaging: Q4 AI packaging “now bigger than expected.”
  • HBM/DRAM: Expanded content—“DRAM expansion required for HBM…not just OCD rev. anymore; now films, integrated metrology.”
  • FE/BE Exposure: Increased adoption of new metrology tools at both large/small accts; OSAT/co-packaged optics as new opps.
  • GAA (2nm/3nm): Disagrees w/ view that 2nm will be small—“TSMC sees long, sustained demand for GAA node.”

2. Competitive Position & Share

• Outperformance: Adv. node rev. growing “nearly 2x, nearly +100%” YoY; “No peer is talking about +100% growth.”
• Share Dynamics: Defends share—“Strong mkt share for a long time…tech customers need to maintain share.”
• G5 Tool Adoption: “Please pull in the G5, that's the tool we really want”—demand rising; shipping to several customers.
• Pricing: “With new competitor, opportunity to increase price…advanced inspection needs allow for higher pricing/value.”

3. New Products & Tech Drivers

• G5/Dragonfly: Key driver; “Tool designed for several gens ahead…performance compelling.”
  • New Use Cases: Hybrid bonding, void inspection as high-value, emerging areas.
  • FE Macro Inspection: $400–500mn mkt, only one competitor; expects 2026 “movement,” real rev. in 2027.
• 3D Metrology (3Di):
  • 10 customers adopting, incl. new apps in co-packaged optics; future wave w/ AI/power growth, Tier 1 OSAT for bump.
  • Tier 1 memory qual. “taking time” due to stability/repeatability, but “performance proving out.”
  • Unique process—pre-reflow bumping measurement, “big yield benefit.”
• Films/Critical Films (Iris G2): Progressing well, large mkt exposure ($500mn).

4. Strat M&A & Semilab Acq.

• Semilab Deal:
  • Mkt Target: Surface charge/materials characterization tech, relevant for chiplet arch/exotic materials.
  • Synergies: Onto’s Ai Diffract SW enhances Semilab tools; “techs applicable to wide range of mkts.”
  • Growth Potential: “Surface charge metrology…growing concern as chiplet arch. continue…critical yield loss source.”
  • Margin Impact: “Semilab will be margin accretive.”