Camtek's Q3 2025: Contradictions Emerge on Market Predictability, China's Revenue Share, and New Product Competitive Impact

Date of Call: November 10, 2025

Financials Results

• Revenue: $126.0M, record quarter, up ~12% year-over-year
• EPS: $0.75 in Q3 2024
• Gross Margin: 51.5%, similar to the previous quarter and improved versus Q3 2024A detailed, vivid English description of an image that visually represents the article's key theme or data point
• Operating Margin: 30%, similar to the prior year and prior quarter

Guidance:

• Q4 2025 revenue expected around $125–$127M; full-year 2025 revenue expected ~ $495M (~15% growth vs 2024).
• Preliminary outlook: 2026 expected to be a growth year with revenue weighted to the second half and a somewhat slower start in H1.
• Diluted share count expected to rise to ~51M next quarter as convertible notes take full-quarter effect.

Business Commentary:

* Record Revenue and Growth: - Camtek reported record revenue of $126 million for Q3 2025, reflecting over 12% year-over-year growth. - This growth was driven by strong performance in high-performance computing applications and other advanced packaging applications.

• Strong Cash Position and Financial Flexibility:
• Camtek's cash position reached approximately $800 million, including the successful $500 million convertible notes offering in Q3.

• This financial flexibility enables Camtek to drive growth organically and explore potential opportunities for inorganic growth.

• Market Trends and Positioning:

• Camtek maintains its leadership in HBM applications, with its tools qualified as reference tools for 3D metrology steps at all HBM manufacturers.

• The company anticipates a significant expansion in manufacturing capacity for high-performance computing applications due to accelerated adoption of AI and increased data center investments.

• Operating Income and Margin Stability:

• Record operating income of over $37.6 million was achieved, with a solid gross margin of 51.5%.
• The stability in margins is supported by strong order backlogs and ongoing customer engagements, contributing to consistent performance.
  

  Sentiment Analysis:

  Overall Tone: Positive

  • Management reported record Q3 revenue of $126M (up ~12% YoY), net income $40.9M ($0.82/share), gross margin 51.5%, cash ~ $794M including $500M convertible notes, provided Q4 revenue guidance for a record 2025 and a preliminary outlook calling for 2026 growth weighted to H2.

Q&A:

• Question from Yu Shi (Needham & Company, LLC): Timing lag between announcements and implementation; difference between DRAM front-end vs packaging; moderation in H1 and how big could H2 be?
  Response: Company is confident 2026 will be a growth year and expects revenue to be weighted to H2 due to timing/visibility limits; cannot provide precise Q1 guidance now.

• Question from Yu Shi (Needham & Company, LLC): Q3 OpEx rose due to R&D; will elevated R&D continue into Q4 and beyond?
  Response: R&D will remain elevated as an investment in future growth, may vary quarter-to-quarter, and should increase as a percentage of revenue as the business grows.

• Question from Brian Chin (Stifel, Nicolaus & Company, Incorporated): China has been strong — what drove the strength and do you expect China to stay up in 2026 and be H2 weighted?
  Response: Strength is driven by OSAT investments; company expects China to remain healthy in 2026 and continue contributing meaningfully.

• Question from Brian Chin (Stifel, Nicolaus & Company, Incorporated): Does preliminary outlook imply Q1 revenue decline vs Q4 and will Q1 still be up year-over-year?
  Response: Too early to quantify quarter-to-quarter; overall view is 2026 growth driven by HPC/HBM demand, with timing of ramps uncertain.

• Question from Brian Chin (Stifel, Nicolaus & Company, Incorporated): When you say tool of record at HBM4, are you referring to 3D metrology?
  Response: Yes — Camtek is the tool of record for all 3D metrology steps at HBM4 and is also the reference for several 2D inspection steps.

• Question from Matthew Prisco (Cantor Fitzgerald & Co.): More detail on H1 vs H2 weighting — which end markets show this dynamic and is it driven by booked orders or market discussions?
  Response: Customer-level pipeline and market discussions indicate H2 strength; the timing lag is short but specifics will be clearer in about three months.

• Question from Matthew Prisco (Cantor Fitzgerald & Co.): Will HPC grow as a percentage of revenue in 2026 versus today and any H1/H2 differences?
  Response: HPC was roughly 50% of revenue and is expected to be maintained and grow, with HBM and CoWoS contributions increasing over time.

• Question from Craig Ellis (B. Riley Securities, Inc.): Is Camtek positioned for a potential large ramp from a manufacturing capacity standpoint and how will shipping costs be managed?
  Response: Capacity was expanded (additional clean room space, staff), currently running two shifts with ability to add a third; material supply and subcontractor relationships support a ramp and shipping costs have normalized.

• Question from Craig Ellis (B. Riley Securities, Inc.): With a stronger balance sheet from the convert, where do you see inorganic M&A adding capability?
  Response: Actively pursuing M&A in inspection, metrology and software categories with a dedicated team and ~40 potential targets under discussion.

• Question from Matthew Pan (on for Tom O'Malley, Barclays): Any color from supply-chain conversations and widening engagement with leading-edge players beyond OSATs?
  Response: Broad conversations are ongoing across relevant manufacturers; activity supports the 2026 growth view but timing remains the key variable.

• Question from Matthew Pan (Barclays): Have you modeled WFE spend as a percentage of total AI compute investments?
  Response: Too early to be definitive; available estimates range from high single digits to low double digits.

• Question from Ezra Weener (Jefferies LLC): Within HPC, how are CoWoS and HBM trends moving — what's stronger or weaker?
  Response: Company treats CoWoS and HBM as one HPC category; both remain strong, orders can shift quarter-to-quarter but the overall pattern is unchanged.

• Question from Ezra Weener (Jefferies LLC): Improvements to the Hawk early next year — what does that change for applications and pricing?
  Response: Enhanced Hawk will raise throughput and accuracy for 3D metrology and 2D inspection, strengthening market leadership; specific technical/pricing details are confidential.

• Question from Michael Mani (BofA Securities): Any signs of idle capacity at customers for your tools that could be a near-term headwind?
  Response: Company does not have customers' utilization data but observes shipped units are being installed and used; no evidence of idle installs or industry slowdown.

• Question from Michael Mani (BofA Securities): How should we think about gross margin trajectory for next year?
  Response: Gross margin should gradually improve as higher-ASP, higher-margin tools (Hawk, Gen5) ramp, though isolated slower quarters could temper margins.

• Question from Edward Yang (Oppenheimer & Co.): Competitive environment and market-share dynamics — is the backdrop stable with give and take?
  Response: Camtek has not lost market share; new technologies are driving share gains across both 2D and 3D, and the company maintains a strong 3D reference position.

• Question from Edward Yang (Oppenheimer & Co.): Outlook for non-HPC advanced packaging that outperformed in 2025 — will that continue and what's driving it?
  Response: Advanced packaging represents ~70% of revenue (roughly 50% HPC + ~20% conventional advanced packaging); fan-out is a major application and is expected to remain meaningful in 2026.

• Question from Craig Ellis (B. Riley Securities, Inc.): How is Camtek positioned for hybrid bonding and how material will that be for 2026 growth?
  Response: Hybrid bonding is an additional opportunity with pilot/preproduction deployments at major customers; revenue impact in 2026 is expected to be moderate with larger volumes anticipated in 2027.

Contradiction Point 1

Predictability of Market Dynamics and Customer Behavior

It involves differing views on the predictability of market dynamics and customer behavior, which impacts expectations for future growth and strategic planning.

What is the timing lag between DRAM front-end equipment investment and packaging, and how should we assess the level of moderation in H1 versus H2 2026? - Yu Shi(Needham & Company, LLC, Research Division)

2025Q3: Delivery times of our tools take about 3-4 months maximum, making it difficult to predict beyond this period. - Rafi Amit(CEO)

Can you share early insights into Camtek's 2026 growth prospects based on customer feedback and visibility? - Matthew Patrick Prisco(Cantor Fitzgerald & Co., Research Division)

2025Q2: Our market, including high-performance computing, is expected to grow rapidly in 2026. - Ramy Langer(COO)

Contradiction Point 2

Contribution of China to Total Revenue

It involves differing expectations for the contribution of China to total revenue, which is a significant market for the company and impacts regional growth strategies.

Can you update the business composition outlook for H2 or FY and clarify expectations for HPC and China's revenue contribution? - Yu Shi(Needham & Company, LLC, Research Division)

2025Q3: Regarding China, while it remains significant, we expect a slight increase in contribution this year compared to last year, but it is still early to specify the second-half contribution. - Ramy Langer(COO)

Could you update us on the business composition for H2 or FY24, particularly expectations for HPC and China's revenue contribution? - Yu Shi(Needham & Company, LLC, Research Division)

2025Q2: China remains a significant contributor, with an expectation of a slightly higher contribution this year than the 30% from last year. - Moshe Eisenberg(CFO)

Contradiction Point 3

Impact of New Product Introductions on Market Share

It involves differing expectations for the impact of new product introductions on market share, which affects the company's competitive positioning and growth potential.

Can you discuss the competitive environment and market share dynamics between 2D and 3D applications? - Edward Yang(Oppenheimer & Co. Inc., Research Division)

2025Q3: Camtek has not lost market share to competitors and maintains strong positions in 3D metrology, being the reference tool for all 3D metrology steps at HBM vendors. The introduction of new technologies and products is expected to enhance market share in both 2D and 3D domains. - Ramy Langer(COO)

How does Camtek's position compare to KLA's entry in your HPC markets, and how will you compete effectively? - Yu Shi(Needham & Company, LLC, Research Division)

2025Q2: Hybrid bonding is a great opportunity, and we are well-positioned to meet its unique market requirements. We have been competing with KLA for years and demonstrated competitive performance. - Ramy Langer(COO)

Contradiction Point 4

Market Share and Competitive Position

It involves Camtek's market share position and competitive dynamics, which are crucial for understanding the company's market leadership and growth potential.

Can you explain the competitive landscape and market share trends for 2D versus 3D applications? - Edward Yang (Oppenheimer & Co. Inc., Research Division)

2025Q3: Camtek has not lost market share to competitors and maintains strong positions in 3D metrology, being the reference tool for all 3D metrology steps at HBM vendors. - Ramy Langer(COO)

Are you concerned about larger competitors like KLA targeting your market in 3D metrology? - Charles Shi (Needham)

2025Q1: In the HBM, I think we made a comment, which I think is important. I think we maintain our market share. We've actually -- I should say we maintain our market share or we actually increase it slightly on HBM on 2D and 3D. - Ramy Langer(COO)

Contradiction Point 5

New Product Impact on Revenue

It affects expectations regarding the revenue contribution from new products, impacting financial forecasts and growth projections.

How does the first-half versus second-half weighting in your business and end markets compare, and what gives you confidence in H2 2026? - Matthew Prisco (Cantor Fitzgerald & Co., Research Division)

2025Q3: Significant revenues are expected this year. - Rafi Amit(CEO)

Can you update us on new products and their revenue impact? - Cantor Fitzgerald Matt Prisco

2025Q1: Both new products are performing well, exceeding expectations. Customers are ordering more, and we're shipping products. - Rafi Amit(CEO)