Onto Innovation Inc.'s Position in the Semiconductor Equipment Sector Amid Rising Tech Demand

The semiconductor industry is undergoing a transformative phase, driven by surging demand for artificial intelligence (AI), 5G infrastructure, and advanced packaging technologies. At the forefront of this evolution is Onto Innovation Inc. (ONTO), a company strategically leveraging acquisitions, R&D investments, and operational agility to solidify its position in the equipment sector. As the global semiconductor market braces for a $150 billion revenue boost from generative AI chips in 2025, according to Deloitte’s industry outlook [4], Onto’s recent moves signal a calculated alignment with these tailwinds.

Strategic Acquisitions and R&D-Driven Innovation

Onto’s acquisition of Semilab USA LLC for $545 million, expected to close in the second half of 2025, underscores its commitment to expanding its technological footprint. This deal, which adds over $130 million in annual revenue, bolsters Onto’s capabilities in electrical and surface metrology—critical for addressing challenges in advanced nodes and exotic materials used in 3D architectures [1]. By integrating Semilab’s inline contamination monitoring and materials analysis tools, Onto is positioning itself to offer end-to-end process control solutions, a necessity as chipmakers grapple with increasingly complex manufacturing processes [2].

Complementing this acquisition is Onto’s aggressive R&D strategy. In Q2 2025, the company allocated $35.3 million to research, focusing on AI packaging, subsurface inspection, and next-generation metrology tools like the Dragonfly® platform [1]. The Dragonfly, designed for high-resolution inspection of 2.5D and 3D packaging, is already seeing demand surge, with shipments expected to double in H2 2025. This aligns with industry trends such as TSMC’s CoWoS capacity expansion, which is projected to grow significantly in 2025 [4]. Onto’s Packaging Applications Center of Excellence (PACE) further reinforces its role as a collaborator in heterogeneous integration, a key enabler for AI-driven data centers [3].

Financial Resilience and Operational Efficiency

Onto’s financials reflect its strategic focus. In Q2 2025, the company reported revenue of $253.6 million, a 5% year-over-year increase, with gross margins at 48.2% and non-GAAP margins at 54.5% [5]. Despite a dip in earnings per share (EPS) to $0.69 from $1.07 in Q2 2024, Onto’s cash reserves of $895 million provide flexibility for further investments. The company’s “region-for-region” strategy—establishing manufacturing hubs in Asia to mitigate tariffs and enhance supply chain resilience—positions it to capitalize on nearshoring trends while maintaining cost efficiency [1].

Industry Alignment and Conference Participation

Onto’s participation in the Citi 2025 Global TMT Conference on September 4, 2025, further highlights its alignment with industry dynamics. CEO Michael Plisinski’s fireside chat at the event offers a platform to articulate the company’s vision for navigating the AI and advanced packaging boom. This engagement, alongside the conference’s focus on semiconductor innovation, underscores Onto’s readiness to engage with investors and peers in shaping the next phase of the industry [2].

Conclusion

Onto Innovation’s strategic acquisitions, R&D focus, and operational adaptability position it as a key player in the semiconductor equipment sector. As demand for AI chips and advanced packaging accelerates, the company’s investments in tools like the Dragonfly and its expansion into high-margin segments—such as materials analysis and inline metrology—offer a compelling value proposition. With a robust balance sheet and a clear roadmap for innovation, Onto is well-equipped to capitalize on the industry’s next wave of growth.

Source:
[1] Onto Innovation Inc. [https://www.datainsightsmarket.com/companies/ONTO]
[2] Onto Innovation to Participate in Upcoming Investor Events [https://investors.ontoinnovation.com/news/news-details/2025/Onto-Innovation-to-Participate-in-Upcoming-Investor-Events-cef6da668/default.aspx]
[3] Semiconductor Equipment in Focus: Why Onto Innovation [https://www.ino.com/blog/2025/01/semiconductor-equipment-in-focus-why-onto-innovation-onto-is-gaining-momentum/]
[4] 2025 Global Semiconductor Industry Outlook [https://www.deloitte.com/us/en/insights/industry/technology/technology-media-telecom-outlooks/semiconductor-industry-outlook.html]
[5] Onto Innovation Reports 2025 Second Quarter Results [https://investors.ontoinnovation.com/news/news-details/2025/Onto-Innovation-Reports-2025-Second-Quarter-Results/default.aspx]