Contradictions Unveiled: Onto Innovation's Q2 2025 Earnings Call Highlights HBM Dynamics, Tariffs, and Growth Challenges

HBM revenue and market dynamics, impact of reciprocal tariffs, AI packaging revenue growth, HBM demand and capacity additions, HBM spend and capacity expansion are the key contradictions discussed in Onto Innovation's latest 2025Q2 earnings call.



Revenue and Operating Margin Growth:
- Onto Innovation reported revenue of $253.6 million for Q2 2025, up 5% year-over-year, with an operating margin of 25.9%.
- The growth was driven by strong customer demand and new product adoption, particularly in AI packaging and advanced nodes markets.

Strategic Acquisition and Revenue Impact:
- The acquisition of certain product lines from Semilab International is projected to add over $130 million in annual revenue, making it immediately accretive to both gross and operating margins.
- The acquisition is expected to increase first-year earnings per share by more than 10%, enhancing shareholder value with an implied price to EBITDA ratio of 10x.

AI Packaging and Advanced Node Market Outlook:
- Onto Innovation anticipates a 50% quarter-over-quarter increase in AI packaging revenue in Q4, contributing to specialty devices and advanced packaging revenue approaching peak levels seen in 2024.
- The positive outlook is driven by strong customer demand and new opportunities in advanced packaging, particularly in 3D interconnects and gate metrology.

Product Innovations and Market Expansion:
- The next-generation Dragonfly platform successfully validated its performance, passing customer tests and demonstrating strong demand from various applications.
- The platform's capabilities are expected to drive growth in high-resolution inspection, subsurface defect inspection, and new applications in AI packaging, which will further expand the company's market presence.