Camtek (CAMT) Q2 2025: New Systems Drive 30% of Sales, Positioning for Advanced Packaging Surge
Camtek’s Q2 marked a structural shift as new Hawk and Eagle G5 systems drove 30% of total sales, signaling rapid adoption in advanced packaging inspection. Management’s tone and customer traction reinforce Camtek’s positioning as a critical enabler for the ramp in high-performance computing (HPC) and hybrid bonding, both essential for AI and next-gen memory applications. With a robust order pipeline and rising contributions from OSATs, Camtek’s visibility into the second half and 2026 is underpinned by both product and market expansion, despite competitive and macro uncertainties.
Summary
- Product Mix Inflection: New Hawk and Eagle G5 platforms now comprise nearly a third of revenue, accelerating market share gains in advanced packaging.
- HPC and Hybrid Bonding Tailwinds: Rapid adoption of advanced packaging for AI and memory drives sustained demand, with OSATs emerging as key growth customers.
- Forward Visibility Builds: Strong pipeline and customer engagement support management’s confidence in continued growth through 2026.
Performance Analysis
Camtek reported record quarterly revenue and operating income, driven by high demand for advanced inspection and metrology tools in semiconductor packaging. The business remains highly concentrated in Asia (90% of sales), reflecting the regional dominance of semiconductor manufacturing and packaging. Gross margin held steady near 52%, despite a temporary uptick in shipping costs tied to geopolitical disruptions, highlighting operational resilience.
High-performance computing (HPC) applications contributed 45% to 50% of total revenue, with advanced packaging overall representing about 70% of the business. The new Hawk and Eagle G5 platforms were significant contributors, already delivering 30% of total sales and expected to grow further next year. Operating expenses rose, largely due to one-off shipping costs, but were offset by revenue growth and product mix improvement. Cash generation remained robust, with cash and equivalents increasing to $544 million, supporting future investment and R&D.
- Advanced Packaging Momentum: The rapid adoption of AI and memory-intensive applications is fueling demand for Camtek’s inspection tools, especially for hybrid bonding and fine-pitch micro bump processes.
- Product Cycle Leverage: The Hawk and Eagle G5 systems are enabling Camtek to capture new applications and higher-margin business, as evidenced by their outsized revenue share.
- Operational Flexibility: Inventory build reflects anticipation of continued strong demand, particularly for new product ramps and customer qualification cycles.
The quarter’s results underscore Camtek’s position as a technology leader in a market undergoing rapid transformation, with the product cycle and end-market tailwinds reinforcing future growth visibility.
Executive Commentary
"The advanced packaging segment is rapidly evolving with technological changes to support the fast-paced evolution of high-performance computers for AI applications... The AUK and Eagle G5 have been exceptionally well received by our customers and are expected to generate approximately 30% of total revenue this year, with an even larger contribution projected for the next year."
Rafi Amit, CEO
"These record results were achieved despite an increase in the operating expenses, which were mainly due to the exceptionally high shipping expenses related to the conflict with Iran... Inventory level increased to $149 million from $142 million. The increase over the quarter is primarily to support the anticipated sales growth of our new Eagle Gen 5 and Hawk products in the coming quarters."
Moshe Eisenberg, CFO
Strategic Positioning
1. Advanced Packaging Leadership
Camtek’s core business is inspection and metrology systems for semiconductor packaging, with a focus on advanced applications like HPC, hybrid bonding, and micro bump inspection. The company’s investments in mechanical precision and optical technology, especially in the Hawk and Eagle G5 systems, have enabled it to address the industry’s most demanding requirements for defect detection and process control. This strategic focus positions Camtek as a partner of choice as AI and memory applications drive packaging complexity.
2. OSAT Channel Expansion
OSATs (outsourced semiconductor assembly and test providers) are increasingly shifting into advanced packaging roles, particularly for HPC and chiplet integration. Camtek’s established relationships and technical leadership have allowed it to capitalize on this shift, with major OSATs now contributing significant order flow for COAS-like (chip-on-substrate) applications. This diversification beyond traditional foundries broadens Camtek’s addressable market and customer base.
3. Product Cycle and Application Reach
The Hawk and Eagle G5 launches are expanding Camtek’s application footprint, especially in fine-pitch, high-density, and hybrid bonding processes. Hawk’s high throughput and sub-200 nanometer defect detection capabilities open doors to next-generation memory (such as HBM4) and hybrid bonding, while Eagle G5’s speed and optics improvements allow Camtek to address a wider range of conventional and advanced packaging needs. These platforms are also expected to drive incremental market share gains against slower-moving competitors.
4. Software and Metrology Integration
Investments in AI-driven defect classification (EDC, ADC) and metrology (via the FRT acquisition) are enhancing Camtek’s competitive moat. These tools not only improve yield and process optimization for customers but also create stickier, higher-value relationships, supporting both revenue growth and margin expansion.
5. Geographic and Customer Concentration
Asia remains the dominant revenue source, with China’s share expected to rise modestly from last year’s 30% level. While this concentration provides scale, it also exposes Camtek to regional and geopolitical risk, requiring ongoing vigilance in customer and channel management.
Key Considerations
This quarter’s results highlight Camtek’s ability to execute on both product innovation and market expansion as the semiconductor packaging landscape evolves rapidly. The company’s strategic priorities are tightly aligned with industry growth drivers, but execution, competitive dynamics, and customer concentration warrant careful monitoring.
Key Considerations:
- Product Cycle Acceleration: Rapid adoption of Hawk and Eagle G5 is enabling Camtek to outpace legacy competitors and capture new applications.
- HPC/AI Demand Pull: Sustained investment in AI, memory, and chiplet architectures is driving secular demand for advanced inspection and metrology.
- OSAT Channel Growth: OSATs are becoming increasingly important, providing diversification and additional growth levers for Camtek.
- Margin and Mix Tailwinds: Higher ASPs (average selling prices) and improved gross margins are expected as customers opt for more advanced systems, though this is customer-dependent.
- Geopolitical Exposure: Asia-centric revenue and episodic shipping disruptions highlight the need for ongoing risk management and operational flexibility.
Risks
Camtek’s growth is tightly linked to the pace of advanced packaging adoption, customer capex cycles, and competitive responses from larger players like KLA. Geopolitical risk, especially in Asia and China, remains a material factor, as does potential volatility in memory and HPC demand. The company’s high customer concentration and reliance on new product cycles could amplify volatility if adoption rates slow or customer priorities shift.
Forward Outlook
For Q3 2025, Camtek guided to:
- Revenue of approximately $125 million (annualized run rate of $500 million)
For full-year 2025, management signaled continued momentum:
- Healthy order flow and pipeline into Q4, with expectations for further growth in 2026, subject to market environment
Management highlighted several factors that support this outlook:
- Strong customer engagement for new product platforms
- Positive momentum in HPC and advanced packaging applications, including hybrid bonding and HBM4 ramps
Takeaways
Camtek’s Q2 results demonstrate the power of product cycle leverage in a fast-evolving semiconductor packaging market. The combination of new product adoption, channel expansion, and end-market growth provides a compelling setup for continued outperformance—though execution and external risks should not be underestimated.
- Product Leadership: Hawk and Eagle G5 are expanding Camtek’s market reach and margin potential, positioning the company to benefit from the next wave of AI and memory-driven demand.
- Strategic Diversification: Growth in OSAT channels and new applications is reducing reliance on any single customer or segment, but geographic and customer concentration risks persist.
- Watch for Execution and Adoption: The pace of customer qualification, competitive responses, and macro/capex cycles will determine the durability of Camtek’s current momentum as 2026 approaches.
Conclusion
Camtek’s Q2 2025 marked a key inflection, with new products driving a larger share of revenue and positioning the company for sustained growth in advanced packaging. While execution and external risks remain, Camtek’s alignment with secular trends in AI and memory provides a strong foundation for continued outperformance.
Industry Read-Through
Camtek’s results and commentary highlight the accelerating shift toward advanced packaging and hybrid bonding across the semiconductor industry. OSATs are emerging as critical players, and inspection/metrology is becoming a bottleneck and differentiator for yield and quality in AI and memory applications. Rivals like KLA are targeting the same growth vectors, but Camtek’s nimbleness and product innovation offer a template for mid-cap players seeking to win in specialized, high-growth niches. For the broader industry, the secular ramp in advanced packaging and the growing complexity of inspection requirements signal a multi-year tailwind for toolmakers with differentiated capabilities.