CAMTEK LTD

Camtek is a developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry. The semiconductor manufacturing industry produces integrated circuits mainly on silicon wafers and other materials, and its growth has been driven by demand from electronics such as smartphones, the Internet of Things, cloud computing, and emerging technologies such as AI, as well as growth in automotive, electrical and autonomous vehicles and industrial electronics. The effect of market growth trends on demand for inspection and metrology systems is driven by three main factors: growing electronic devices manufacturing volume requiring more equipment, applications such as automotive and mobile phones requiring a higher level of reliability and hence more inspection and metrology, and new packaging technologies such as Chiplets and HBM requiring more inspection and metrology steps.

The markets that Camtek serves are highly competitive and have significant global market participants, some with greater resources than the company. Competitors include local smaller competitors that target the low-end market and may offer products at lower prices. Camtek believes a significant part of its competitive advantage derives from its R&D innovative capabilities which enable it to adapt its technologies to evolving market needs and customers' requirements. In 2025, one customer accounted for 11% of total revenues; in 2024, three customers accounted for 15%, 10% and 10% of total revenues, respectively; and in 2023, one customer accounted for 15% of total revenues.

Camtek generates revenue primarily from the sale of high-end inspection and metrology systems for the semiconductor industry, and additionally from providing maintenance and support services for its products. The company generally provides a one-year warranty with its systems, and service revenues are not earned during the warranty period. For a fee, Camtek offers service and maintenance contracts commencing after the expiration of the warranty period. The company's customers are semiconductor manufacturers, including outsourced semiconductor assembly and test providers (OSATs), integrated device manufacturers (IDMs), and wafer level packaging subcontractors, located throughout Asia, Europe and North America.

Camtek's product lines include the Eagle platform, the Hawk platform, and the MicroProf platform, with all other models phased out. The Hawk, launched in February 2025, is a new cutting-edge platform engineered for advanced packaging including Chiplets, HBM and Hybrid Bonding, supporting detection of 150 nanometer defects size and measurement of 500 million micro bumps at pitches less than 12 micron. The Eagle G5, launched in September 2024, was developed on the Eagle product family and engineered to deliver unmatched speed and efficiency, featuring significantly higher throughput and new optimized optics, providing innovative solutions for Multi-RDL, FOWLP, 2.5D, and CMOS Image Sensors, achieving enhanced detection capabilities down to 1.4µm L/S at twice the throughput. The Eagle-i system family is designed for high volume 2D inspection, delivering superior 2D inspection and 2D metrology capabilities, enabling detection of down to sub-micron defects and measuring two-micron line and space redistribution layer. The Eagle-AP system family addresses the fast-growing advanced packaging market using state of the art technologies that deliver superior 2D and 3D inspection and metrology capabilities on the same platform, including measurement of bumps down to 2µm (microns) and providing high throughput. The FRT MicroProf AP is a fully automated wafer metrology tool for a wide range of applications at different 3D packaging process steps, designed with a modular multi-sensor concept to perform a variety of measuring tasks in advanced packaging. The Golden Eagle is designed mainly for Fanout Panel-Level-Package applications, used for the inspection and metrology of standard panel sizes, addressing the challenges of Fanout Wafer Level Packaging while providing a robust system for high-volume manufacturing requirements.

On November 1, 2023, Camtek announced the closing of the acquisition of FRT for $100 million ¹ in cash. FRT, headquartered in Bergisch Gladbach, Germany, is a leading supplier of high-precision metrology solutions for the Advanced Packaging and Silicon Carbide markets. On September 11, 2025, Camtek closed an offering of $500 million ² aggregate principal amount of 0.00% Convertible Senior Notes due 2030 in a private offering to qualified institutional buyers, which included the full exercise of underwriters' option to purchase an additional $75 million ³ of the notes, raising $486.5 million ⁴ net of underwriting discounts and commissions and other offering expenses, of which about $267.0 million ⁵ was used to repurchase approximately $167.1 million ⁶ principal amount of its existing 2026 Convertible Notes. In November 2021, Camtek closed an offering of $200 million ⁷ aggregate principal amount of 0% Convertible Senior Notes due 2026, which included the full exercise of underwriters' option to purchase an additional $25 million ⁸ of the notes, raising $194.5 million ⁹ net of underwriting discounts and commissions and other offering expenses. In November 2020, Camtek issued 4,025,000 ¹⁰ ordinary shares in a public offering at a price of $17.00 ¹¹ per share, raising $64.3 million ¹² net of underwriting discounts and commissions and other offering expenses.

Revenues increased by 16% to $496.1 million ¹³ in 2025 from $429.2 million ¹⁴ in 2024, due primarily to an increase in the average selling price of the product units sold as a result of the impact of the Hawk and Eagle G5 systems. Gross profit increased to $250.3 million ¹⁵ in 2025 from $210.0 million ¹⁶ in 2024, an increase of $40.4 million ¹⁷, or 19%. Gross margin increased to 50.5% ¹⁸ in 2025 compared to 48.9% ¹⁹ in 2024, mainly as a result of economies of scale from increased sales and mix of products sold, partially offset by negative impact of shekel dominated costs. Net income was $50.7 million ²⁰ in 2025 compared to $118.5 million ²¹ in 2024, due to other expenses of $100.9 million ²² resulting from the repurchase of the 2026 Convertible Notes, offset by the increase in operating income.

Approximately 50% ²³ of Camtek's revenues are generated from products supporting the production of artificial intelligence (AI) applications, and a significant portion of its growth expected in the coming few years is derived from such products. The company has experienced increased demand for inspection and metrology systems as customers invest in equipment supporting the production of AI related products, including high-bandwidth memory (HBM) and advanced packaging. According to SEMI organization, the global total semiconductor equipment sales are forecast to reach a record of $145 billion ²⁴ in 2026, with Wafer Fab Equipment segment sales projected to reach $135.2 billion ²⁵, a 9.0% ²⁶ increase from 2025.

Camtek continues to explore potential acquisition opportunities within its market or as a diversification effort in order to create a growth engine and implement a growth strategy, and also explores acquisition opportunities aimed at obtaining technological improvement of its products, adding new technologies to its products and to diversify its business. The company expects that the two fastest growing segments in advanced packaging will be the Chiplets, which are becoming the standard for high performance computing, and Fan Out Wafer Level Packaging (FOWLP). During 2026, Camtek will offer its AI technology that includes inspection and automatic defects classification.

The strengthening of the Israeli shekel against the US dollar led to higher shekel-denominated expenses, which negatively impacted profitability. During 2025, the value of the U.S. Dollar weakened against the NIS by 13% ²⁷. A decrease in the value of the U.S. dollar relative to the NIS directly increases Camtek's costs when expressed in U.S. dollars, negatively affecting operating margins, profitability, and overall financial results.

Camtek's manufacturing activities at its facilities in Israel and Germany consist primarily of final integration of its products and testing of customer applications, with the tools assembly and power-up done by sub-contractors. The final integration process generally lasts six to twelve weeks. The company relies on single source and limited source suppliers and subcontractors for a number of essential components and subsystems. To meet customers' needs for quick delivery, Camtek pre-orders components and subsystems based on its forecast of future orders rather than on actual orders. As of December 31, 2025, Camtek had 709 ²⁸ employees, compared to 656 ²⁹ in 2024 and 565 ³⁰ in 2023.

Research and development expenses for 2025 were $48.3 million ³¹, representing 9.7% ³² of total revenues, compared to $38.3 million ³³ in 2024 representing 8.9% ³⁴ of total revenues. Capital expenditures during 2025 were approximately $22.5 million ³⁵, mainly to increase production capacity and to support R&D, operations and IT activities. In 2024, Camtek paid a dividend of $1.33 ³⁶ per ordinary share, totaling $60.0 million ³⁷.

The OECD has forecasted world GDP global growth slowing from 3.2% ³⁸ in 2025 to 2.9% ³⁹ in 2026. The semiconductor industry will probably be influenced by weakness or uncertainties in global economic conditions. Camtek's business is subject to risks associated with doing business in China, including trade protection measures, import and export licensing and control requirements, potentially negative consequences from changes in tax laws, difficulties associated with the Chinese legal system, lower protection of intellectual property rights, changes and volatility in currency exchange rates, and unexpected or unfavorable changes in regulatory requirements. The company could face increased competition as a result of China's policies to promote a domestic semiconductor industry and supply chains.

A slowdown or contraction in AI-related semiconductor investment could materially and adversely affect Camtek's business, as approximately 50% ⁴⁰ of revenues are generated from products supporting AI applications and a significant portion of expected growth is derived from such products. The concentration of sales in the Asia Pacific region, which accounted for approximately 91% ⁴¹ of total revenues in 2025 with sales to China being 49% ⁴² of total revenues, subjects the company to additional material risks including political and economic instability, trade restrictions, and changes in local legislation. Fluctuations in currency exchange rates present a material risk, as a significant portion of expenses are incurred in NIS while most revenues are denominated in U.S. dollars; during 2025, the value of the U.S. Dollar weakened against the NIS by 13% ⁴³. Changes in global trade policies, including U.S. export control restrictions on Chinese semiconductor entities, may impact Camtek's ability to sell products and services in China and could reduce demand for semiconductor equipment. The company recorded other expenses of $100.9 million ⁴⁴ in 2025 from the repurchase of the 2026 Convertible Notes, highlighting the financial impact of capital structure decisions.

Management's message emphasizes that Camtek is a developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry, serving leading global IDMs, OSATs, and foundries. The company's systems inspect wafers for the most demanding semiconductor market segments including Advanced Packaging, Chiplets, HBM, Compound Semiconductors, Memory, CMOS Image Sensors, Power, RF and MEMS. Management highlights that approximately 50% ⁴⁵ of revenues are generated from products supporting AI applications, and a significant portion of growth expected in the coming few years is derived from such products. The company has experienced increased demand for inspection and metrology systems as customers invest in equipment supporting AI related products including HBM and advanced packaging. Management notes that the Hawk, launched in February 2025, and the Eagle G5, launched in September 2024, drove an increase in the average selling price of product units sold. The company's strategic priorities include continuing to invest in R&D to maintain and extend technology leadership, exploring acquisition opportunities within its market or as a diversification effort, and expanding its presence in the Back-end-of-Line of the Front End manufacturing process.