Camtek (CAMT) Q2 2025: New Systems Drive 30% of Sales as Advanced Packaging Demand Accelerates
Camtek’s record quarter was powered by surging demand in high-performance computing and rapid adoption of its Hawk and Eagle G5 platforms, which now comprise 30% of sales. New product traction and a robust pipeline position the company for continued outperformance as advanced packaging complexity rises and OSAT customers ramp up investments. Management signals confidence in multi-year growth, underpinned by secular tailwinds in AI and HBM markets, though competitive intensity and customer capex cycles warrant close monitoring.
Summary
- Product Mix Shift: Hawk and Eagle G5 platforms now drive a material share of revenue, signaling customer preference for next-generation inspection capabilities.
- OSAT Channel Expansion: Outsourced assembly and test providers are accelerating adoption of Camtek’s solutions, broadening the customer base beyond traditional foundries.
- AI Packaging Demand: Advanced packaging for AI and HBM applications is fueling sustained order momentum and multi-year growth visibility.
Performance Analysis
Camtek delivered record Q2 results, with revenue growth exceeding 20% year over year and operating margins holding above 30%. Gross margin remained robust at nearly 52%, reflecting both strong product mix and operational execution despite elevated shipping expenses tied to regional conflict. Asia remained the dominant geography, accounting for 90% of revenue, underscoring Camtek’s core exposure to leading-edge semiconductor manufacturing hubs.
High-performance computing (HPC) applications contributed close to half of total revenue, while advanced packaging represented another 20%. The remaining sales were distributed across CMOS image sensors, compound semiconductors, and front-end applications. Notably, the Hawk and Eagle G5 systems collectively generated 30% of total revenue this year—a sharp ramp for new platforms, indicating rapid market acceptance and a rising barrier to entry for competitors.
- Cash Generation Strength: Over $23 million in operating cash flow was produced, with cash and equivalents reaching $544 million, supporting future R&D and expansion.
- Inventory Build for Growth: Inventory rose to $149 million, largely to support anticipated demand for new product lines, reflecting management’s confidence in sustained order flow.
- Shipping Cost Headwind: Operating expenses were elevated by over $0.5 million due to conflict-driven shipping costs, but these pressures are expected to ease in Q3.
Management guided to another sequential revenue increase for Q3, projecting an annualized run-rate of $500 million, a milestone that reflects both current execution and strong forward visibility from the sales pipeline.
Executive Commentary
"We continue to observe a shift in COAS-like production towards OSAT, a trend that plays to our advantages, given Camtek's strong market position in this segment. We continue to see strong momentum heading into the third quarter."
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."
Moshe Eisenberg, CFO
Strategic Positioning
1. Next-Gen Product Adoption
The Hawk and Eagle G5 platforms, Camtek’s newest inspection and metrology systems, have quickly become essential tools for customers facing tighter process windows and higher defect sensitivity in AI and HBM (high bandwidth memory) packaging. Their ability to detect defects down to 150 nanometers and deliver high throughput is directly aligned with customer needs for both current and future technology nodes. Management expects these systems to contribute an even larger portion of revenue next year, reflecting both replacement demand and incremental share gains.
2. OSAT Channel Momentum
Outsourced semiconductor assembly and test (OSAT) providers are increasingly shifting into advanced packaging for high-performance computing, creating a new, fast-growing customer segment for Camtek. The company is seeing major OSATs ramp up capacity for COAS and COAS-like applications, a trend that began last year and is accelerating. This channel diversification reduces dependency on traditional foundry customers and broadens the addressable market.
3. Competitive Differentiation and Scale
Camtek’s combination of mechanical precision, advanced optics, and proprietary software (EDC, ADC) is cited as a key differentiator, enabling faster response to evolving customer requirements compared to larger competitors like KLA. Management asserts that technology flexibility and speed of execution are winning factors, particularly as hybrid bonding and fine-pitch micro bump adoption intensifies.
4. Multi-Year Growth Drivers
Upcoming technology transitions—such as the move from HBM3 to HBM4 and the proliferation of chiplet architectures—are expected to drive incremental content per device and higher system demand. Camtek is already qualified at key customers for HBM4, with shipments expected to begin ramping in early 2026. The company also sees metrology as an emerging growth engine, particularly in 3D applications and with Tier 1 customers.
5. Resilient Business Mix and Customer Base
While HPC and advanced packaging are the primary growth engines, Camtek maintains a diverse base of over 350 customers, including active accounts in more mature packaging and front-end markets. This breadth provides a buffer against volatility in any single segment and positions the company to capture cyclical rebounds in lagging areas like compound semiconductors.
Key Considerations
Camtek’s Q2 showcased both execution strength and the strategic benefits of its multi-pronged growth approach. Investors should weigh the following considerations as the company enters a period of heightened demand and competitive scrutiny:
Key Considerations:
- Secular AI and HBM Tailwinds: The ongoing surge in AI compute and memory bandwidth requirements is driving sustained investment in advanced packaging, supporting Camtek’s multi-year growth thesis.
- Product Cycle Acceleration: Rapid adoption of Hawk and Eagle G5 signals a customer willingness to invest in leading-edge inspection tools, potentially expanding Camtek’s served market and raising switching costs.
- Competitive Landscape Dynamic: KLA and other large players are intensifying efforts in hybrid bonding and HBM inspection, but Camtek’s speed and application flexibility are preserving its edge for now.
- OSAT Penetration Broadens TAM: As OSATs take on more advanced packaging work, Camtek’s solutions become increasingly essential, diversifying revenue streams and reducing reliance on a few mega-customers.
- Capex and Customer Spending Cycles: While current order flow is robust, customer capex plans remain subject to change, especially in a fast-evolving market with shifting technology roadmaps.
Risks
Camtek faces several risks that could impact its growth trajectory, including intensified competition from larger inspection tool vendors, potential shifts in customer capex timing (particularly for HBM4 and chiplet projects), and geopolitical disruptions that affect shipping or customer access, especially given its heavy Asia exposure. Elevated inventory and rapid product transitions also carry execution risk if demand forecasts do not materialize as expected.
Forward Outlook
For Q3 2025, Camtek guided to:
- Revenue of approximately $125 million
For full-year 2025, management signaled:
- Annualized run-rate approaching $500 million
Management highlighted several factors that shape the outlook:
- Continued strong order flow and healthy pipeline into Q4
- Expectations for further growth in the advanced packaging and HPC segments, with new products gaining share
Takeaways
Camtek’s record Q2 underscores its strategic positioning at the intersection of advanced packaging, AI, and high-performance memory, with new product traction and OSAT channel expansion setting the stage for continued outperformance.
- Product Innovation Drives Share Gains: Hawk and Eagle G5 adoption is accelerating, enabling Camtek to address more complex inspection requirements and win new applications.
- Customer Base Expansion Reduces Risk: OSAT momentum and a large, diverse customer roster buffer against volatility and create new avenues for growth.
- 2026 Growth Visibility Hinges on HBM4 Ramp: Early customer qualification and market tailwinds suggest another year of double-digit growth is possible, but execution and capex cycles remain key watchpoints.
Conclusion
Camtek enters the back half of 2025 with record momentum, driven by secular demand for advanced packaging inspection and rapid adoption of its next-generation platforms. While competitive and macro risks persist, the company’s diversified product and customer base, alongside strong cash generation, provide a solid foundation for continued growth.
Industry Read-Through
Camtek’s results reinforce that advanced packaging is a critical bottleneck and growth vector in the semiconductor supply chain, particularly as AI workloads and HBM architectures proliferate. The rapid adoption of new inspection and metrology tools highlights rising complexity and customer willingness to invest in yield management. OSATs’ increasing involvement in high-end packaging signals a structural shift in industry value chains, suggesting that tool providers with flexible, high-throughput solutions will be best positioned. Competitors and suppliers across the semiconductor capital equipment landscape should expect continued demand for advanced inspection, but must also contend with intensifying competition and shifting customer requirements.