Key insights
- Camtek (CAMT) reported strong Q1 results driven by AI-related products and advanced packaging. The company secured significant orders from HBM manufacturers and anticipates revenue growth in the second half of 2026. Strategic investments in R&D and AI integration are expected to expand its market reach. This positive outlook for a key semiconductor equipment supplier suggests continued strength in the AI and advanced packaging sectors, potentially benefiting US-listed semiconductor companies.
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Performance in Q1 was driven by AI-related products, which accounted for approximately 50% of revenue, while other advanced packaging applications contributed an additional 20%.
Management reported an unprecedented start to the year in terms of incoming orders, providing a strong foundation for growth through 2027.
The company secured over $260 million in orders and forecasts from two HBM manufacturers for 3D metrology and 2D inspection steps for 2026 and 2027.
Strategic positioning in the OSAT domain is expected to make Camtek a major beneficiary of the current wave of investment in advanced packaging for AI capacity expansion.
The acquisition of Visual Layer was driven by a successful year-long collaboration, aiming to integrate breakthrough AI research and engineering into Camtek's core products.
Market adoption of the new Eagle G5 and Hawk platforms is strong, representing 30% of last year's revenue with expectations for that revenue to double in 2026.
Operational expenses increased due to strategic investments in R&D and sales to support high business volume, alongside headwinds from a weaker U.S. dollar against the shekel.
Management expects a significant surge in revenue for the second half of 2026, projected to be over 25% higher than the first half.
Operating margins are expected to return to the 30% level in the second half of the year as revenue volume increases and new product contributions scale.
The company aims to expand its total addressable market to over $2 billion in 2027 by winning additional process steps in the manufacturing flow, including the front end.
Camtek plans to develop a dedicated AI-based software product line, offering performance-enhancing packages to its existing installed base of thousands of systems.
Inventory levels are expected to increase from the current $116.7 million to support the anticipated growth period and maintain flexible lead times.
Despite the geopolitical situation in Israel, management confirmed that facilities are working as usual with no missed shipments and 100% performance levels.
The company is expanding manufacturing capacity in Germany to diversify its footprint and support global demand.
Accounts receivable increased to $131.7 million due to the timing of collections, which resulted in lower cash generation during the first quarter.
Management noted competitive pressure in China primarily from local players at the lower end of applications, though they maintain a dominant position in the OSAT market.
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The acquisition provides unique technology for annotation and classification that was already being successfully piloted in Camtek products.
It allows Camtek to own the technology and integrate a specialized team of researchers to accelerate the development of breakthrough AI features.
Management believes this combination will provide a significant competitive advantage in detection sensitivity and throughput.
Camtek intends to sell AI software packages to its large existing installed base to improve the performance of older systems.
Revenue contribution from these new AI capabilities is expected to begin in the second half of 2026.
A second phase will involve developing broader AI solutions for the general semiconductor industry beyond Camtek's own hardware.
Lead times for the Eagle system are approximately 3 months, while the Hawk system ranges between 3 to 6 months.
Management expressed high confidence in the supply chain's ability to respond to additional orders beyond current forecasts due to proactive inventory ramping.
Management clarified that their 2026 growth is measured against record 2025 revenues, which differs from some competitors who had a weaker prior year.
They emphasized that they are not losing market share and expect significant growth when looking at the window from late 2026 into the first half of 2027.