CAMTEK LTD

Camtek Ltd. is a developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry, with systems designed to inspect Integrated Circuits (ICs) and measure IC features on wafers throughout the production process, from back-end-of-line (BEOL) of the front-end and mid-end up to the beginning of assembly (Post Dicing) ¹. The company's systems serve demanding semiconductor market segments including Advanced Packaging, Chiplets, High-Bandwidth Memory (HBM), Compound Semiconductors, Memory, CMOS Image Sensors, Power, RF, and MEMS, catering to leading global Integrated Device Manufacturers (IDMs), Outsourced Semiconductor Assembly and Test (OSAT) providers, and foundries ². Approximately 91% of Camtek's total revenues in 2025 were generated from sales in the Asia Pacific region, with China alone accounting for 49% of total revenues ³. The company's business model primarily involves the sale of inspection and metrology systems, complemented by revenues from maintenance and support services ⁴.

Camtek's core business model revolves around generating revenue through the sale of its advanced inspection and metrology systems and providing associated service and maintenance contracts. The company's systems utilize advanced optic heads for 2D inspection and metrology and 3D metrology, coupled with proprietary image processing software and algorithms, to automatically detect and measure good and defective dice, thereby enhancing end-product quality ⁵. Revenue from product sales is recognized when control of the product is transferred to the customer, typically based on shipping terms, and reflects the consideration expected once the product operates according to specifications ⁶. Service revenues from maintenance contracts are recognized ratably over the contract period ⁷. In 2025, sales of products accounted for $468.510 million ⁸, while service fees contributed $27.562 million ⁹ to total revenues.

The company offers several product lines for automated optical inspection and metrology. The Hawk product family, launched in February 2025, is engineered for cutting-edge advanced packaging applications such as Chiplets, HBM, and Hybrid Bonding, supporting detection of 150 nanometer defects and measurement of 500 million micro bumps at pitches less than 12 micron ¹⁰. The Eagle G5, launched in September 2024, is designed for higher throughput and resolution, offering solutions for Multi-RDL, FOWLP, 2.5D, and CMOS Image Sensors, with Clear-Sight Technology (CSI) for Multi-Layer RDL achieving enhanced detection down to 1.4µm L/S at twice the throughput ¹¹. The Eagle-i system family provides superior 2D inspection and metrology, detecting sub-micron defects and measuring two-micron line and space redistribution layers (RDL) ¹². The Eagle-AP system family addresses the advanced packaging market with 2D and 3D inspection and metrology capabilities, supporting various bump types and sizes, including measurements down to 2µm (microns) with high throughput ¹³. The FRT MicroProf® AP, acquired in November 2023, is a fully automated wafer metrology tool for 3D packaging process steps, utilizing a modular multi-sensor concept ¹⁴. The Golden Eagle is designed for Fanout Panel-Level-Package (FO-PLP) applications, providing inspection and metrology for standard panel sizes ¹⁵.

For the fiscal year ended December 31, 2025, Camtek reported total revenues of $496.072 million ¹⁶. Gross profit for the period was $250.317 million ¹⁷, resulting in a gross margin of 50.46% ¹⁸. Operating profit stood at $128.203 million ¹⁹, representing an operating margin of 25.84% ²⁰. Net income for 2025 was $50.722 million ²¹. Basic net earnings per share were $1.11 ²², and diluted net earnings per share were $1.04 ²³. Cash and cash equivalents at December 31, 2025, totaled $177.848 million ²⁴, with short-term deposits of $411.450 million ²⁵ and marketable securities of $261.803 million ²⁶. Total current assets were $896.995 million ²⁷. Total liabilities amounted to $642.830 million ²⁸, including convertible notes of $519.833 million ²⁹. Net cash provided by operating activities was $141.871 million ³⁰.

Comparing 2025 to 2024, total revenues increased by 16% from $429.234 million ³¹ in 2024 to $496.072 million ³² in 2025, primarily due to an increase in the average selling price of product units sold, driven by the introduction of the Hawk and Eagle G5 systems ³³. Gross profit increased by $40.4 million, or 19%, from $209.951 million ³⁴ in 2024 to $250.317 million ³⁵ in 2025, with gross margin expanding from 48.9% ³⁶ to 50.5% ³⁷, mainly due to economies of scale and product mix, partially offset by negative impacts from shekel-denominated costs ³⁸. Research and development expenses increased by $10.1 million to $48.345 million ³⁹ in 2025 from $38.287 million ⁴⁰ in 2024, reflecting higher investment in new products and technologies, increased headcount, and higher shekel-denominated expenses ⁴¹. Selling, general and administrative expenses rose by $10.2 million to $73.769 million ⁴² in 2025 from $63.595 million ⁴³ in 2024, mainly due to increased salary expenses, professional services, and shipping expenses impacted by regional conflicts ⁴⁴. Net financial income increased from $23.169 million ⁴⁵ in 2024 to $25.064 million ⁴⁶ in 2025, driven by interest on higher cash balances, offset by foreign currency expense ⁴⁷. Net income decreased from $118.515 million ⁴⁸ in 2024 to $50.722 million ⁴⁹ in 2025, primarily due to other expenses of $100.932 million ⁵⁰ resulting from the repurchase of 2026 Convertible Notes, partially offset by increased operating income ⁵¹.

During 2025, Camtek launched the Hawk product family in February ⁵² and the Eagle G5 in September 2024 ⁵³, which contributed to the increase in average selling price of product units. The company completed the acquisition of FRT for $100 million in cash in November 2023 ⁵⁴, integrating FRT's high-precision metrology solutions for Advanced Packaging and Silicon Carbide markets ⁵⁵. In September 2025, Camtek closed an offering of $500 million ⁵⁶ aggregate principal amount of 0.00% Convertible Senior Notes due 2030, raising $486.5 million ⁵⁷ net of expenses ⁵⁸. Approximately $267.0 million ⁵⁹ of these proceeds were used to repurchase $167.1 million ⁶⁰ principal amount of the existing 2026 Convertible Notes ⁶¹. The company also increased its capital expenditures to approximately $22.5 million ⁶² in 2025, mainly to boost production capacity and support R&D, operations, and IT activities ⁶³.

Camtek anticipates continued growth in the semiconductor manufacturing industry, driven by enhancements in existing products and the proliferation of emerging technologies such as AI, as well as rapid growth in automotive, electrical, and autonomous vehicles and industrial electronics ⁶⁴. The demand for inspection and metrology systems is expected to be influenced by growing electronic device manufacturing volume, the need for higher reliability in applications like automotive and mobile phones, and new packaging technologies such as Chiplets and HBM, which require more inspection and metrology steps ⁶⁵. The OECD has forecasted world GDP global growth slowing from 3.2% in 2025 to 2.9% in 2026, which may influence the semiconductor industry ⁶⁶. However, the SEMI organization forecasts global total semiconductor equipment sales to reach a record of $145 billion in 2026, with Wafer Fab Equipment segment sales projected to increase by 9.0% from 2025 to $135.2 billion ⁶⁷.

A significant portion of Camtek's expected growth in the coming few years is derived from products supporting the production of AI applications, including high-bandwidth memory (HBM) and advanced packaging ⁶⁸. The company has experienced increased demand for inspection and metrology systems as customers invest in equipment for AI-related products ⁶⁹. Camtek plans to offer its AI technology, including inspection and automatic defect classification, during 2026 ⁷⁰. The company's flexible inspection and metrology systems are designed to address the complex requirements of fast-growing advanced packaging segments like Chiplets and Fan Out Wafer Level Packaging (FOWLP) ⁷¹.

Camtek is focusing its R&D efforts on improving defect detection capabilities, reducing false alarms, simplifying operation, increasing throughput of inspection and metrology systems, providing unique technological solutions, and expanding market segments ⁷². The company's R&D expenses were $48.3 million ⁷³ in 2025, representing 9.7% ⁷⁴ of total revenues, and are expected to continue to be devoted to maintaining and extending its technology leadership position ⁷⁵. Capital expenditures during 2025 were approximately $22.5 million ⁷⁶, primarily aimed at increasing production capacity and supporting R&D, operations, and IT activities ⁷⁷. The company anticipates funding these cash requirements and capital expenditures through a combination of cash flow from operations and existing balances of cash and cash equivalents and short-term deposits, which are expected to be adequate for at least the next 12 months ⁷⁸.

Camtek faces several material risks, including a potential slowdown or contraction in AI-related semiconductor investment, which could materially and adversely affect its business, results of operations, and financial condition, given that approximately 50% of revenues are generated from products supporting AI applications ⁷⁹. Disruptions to the semiconductor industry from economic, geopolitical, legal, and other global or local market changes, including trade barriers and industry downturns, could negatively impact demand for products and services ⁸⁰. The markets served are highly competitive, with significant global participants possessing greater resources, which could lead to lower prices and reduced gross margins ⁸¹. Changes in global trade policies, such as U.S. export control restrictions and tariffs on Chinese entities, may impact the company's ability to sell and deliver systems, especially given that 91% of 2025 sales were in the Asia Pacific region, with China accounting for 49% ⁸². Regional instabilities and continued hostilities in the Middle East, particularly the Israel-Iran conflict and attacks by terrorist groups, could impede operations, delay shipments, and harm facilities ⁸³. Supply chain constraints due to increased demand for electronic components or geopolitical disruptions could adversely affect lead times and increase prices ⁸⁴. The company maintains high levels of cash, exposing it to risks such as inflation erosion, concentration in few financial institutions, currency fluctuations, and varying tax rates on interest income ⁸⁵. Developing and introducing new products involves significant technical, operational, regulatory, and financial challenges, and failure to gain market acceptance could lead to revenue loss and inventory write-downs ⁸⁶. Fluctuations in currency exchange rates, particularly a decrease in the U.S. dollar relative to the NIS, directly increase costs and can make products less competitive ⁸⁷. Increased cyber-attacks, data breaches, and evolving privacy and data protection laws, especially heightened due to regional conflicts, could disrupt systems, operations, and lead to legal liabilities ⁸⁸. The use of new technologies like AI may increase operational risks due to flawed algorithms, insufficient data, or enhanced compliance requirements ⁸⁹.

Management's message to shareholders emphasizes the company's position as a developer and manufacturer of high-end inspection and metrology equipment for the semiconductor industry, with a focus on enhancing production processes and yield for advanced applications ⁹⁰. They highlight the significant role of AI-related semiconductor investment, noting that approximately 50% of revenues are generated from products supporting AI applications, and a substantial portion of future growth is expected from these products ⁹¹. Management is committed to continuous investment in research and development to adapt technologies to evolving market needs and customer requirements, as evidenced by R&D expenses of $48.3 million ⁹² in 2025. Strategic priorities include leveraging advanced technologies in Advanced Packaging and Silicon Carbide markets, as demonstrated by the acquisition of FRT, and expanding product lines such as the Hawk and Eagle G5 systems to address complex requirements in fast-growing segments like Chiplets and HBM ⁹³. They also emphasize maintaining a global distribution and support network, particularly in the Asia Pacific region, to provide essential pre- and post-sales support to customers ⁹⁴.