WILMINGTON, Mass. - Onto Innovation Inc. (NYSE: NYSE:ONTO), a prominent provider of semiconductor process control and packaging lithography solutions, has announced the acquisition of Lumina Instruments, Inc., a California-based company known for its laser scattering technology. This move is expected to expand Onto's inspection capabilities and addressable market by over $250 million, targeting wafer and panel manufacturing and power semiconductors.
The acquired technology enhances Onto Innovation's ability to detect defects down to below 100nm, complementing its existing Firefly® inspection system for panel packaging applications. The growth of panel-level packaging and the increasing size of silicon carbide (SiC) and gallium nitride (GaN) wafers in the power market underscore the significance of this advanced inspection technology.
In tandem with the Lumina Instruments deal, Onto Innovation has also acquired the lithography business from Kulicke and Soffa Industries, Inc., adding a robust portfolio of 24 issued patents, eight pending patents, and a wealth of semiconductor lithography experience. This addition aims to accelerate the development of Onto's JetStep® panel lithography solutions.
The strategic acquisitions are anticipated to generate up to $100 million in annual revenue within the next three years and are expected to be accretive to earnings within 12 months. However, further details of the transactions remain undisclosed.
Onto Innovation, headquartered in Wilmington, Massachusetts, is recognized for its comprehensive suite of process control technologies, including un-patterned wafer quality, 3D metrology, macro defect inspection, and advanced semiconductor packaging lithography. The company supports its global customer base with a dedicated sales and service organization.
The recent acquisitions align with Onto Innovation's strategy of enhancing its product offerings and market position while addressing the evolving needs of its customers. The company's focus on empowering small, effective teams and driving growth in new areas such as panel level processing was highlighted as a compelling factor by Dr. Steven Meeks, former CTO and president of Lumina Instruments.
This news is based on a press release statement from Onto Innovation Inc. and does not include any speculative or forward-looking statements beyond those provided by the company.
In other recent news, Onto Innovation has made significant strides in the semiconductor industry. The company's revenue has seen a 15% year-over-year increase, which analysts attribute to robust demand across various sectors. B.Riley and Stifel have maintained their Buy rating on Onto Innovation, with B.Riley projecting a potential 30% upside over the next 12 months. Needham has upgraded the company from Hold to Buy, reflecting confidence in Onto's financial health and growth potential.
Onto Innovation has also been the focus of several positive developments. The company recently opened the Packaging (NYSE:PKG) Applications Center of Excellence (PACE) in Wilmington, Massachusetts, aiming to foster innovation in panel-level packaging. This move is expected to accelerate the development and adoption of next-generation packaging technologies.
The company's Firefly product has seen a fourfold increase in revenues year-over-year, contributing to a 46% rise in the Advanced Packaging and Specialty segment. Over 30 JetStep panel lithography systems, including the versatile X500 model, have been shipped worldwide. Onto Innovation's systems are positioned to help alleviate yield challenges in AI infrastructure scaling, presenting an opportunity for the company to advance yield gains in advanced heterogeneous integration.
Long-term prospects for Onto Innovation appear strong, with the company eyeing revenue and earnings per share targets of $1.4 billion and $8.53, respectively, and eventually a $1.8 billion revenue aspiration. Additionally, Onto Innovation has launched a new suite of products, including the JetStep X500 lithography system and the Firefly G3 inspection system, designed to support the industry's shift to glass core panels for advanced IC substrates and panel-level packaging.
InvestingPro Insights
Onto Innovation's recent acquisitions of Lumina Instruments and Kulicke and Soffa Industries' lithography business align well with the company's strong financial position and growth trajectory. According to InvestingPro data, Onto Innovation boasts a market capitalization of $9.79 billion and has demonstrated impressive revenue growth, with quarterly revenue increasing by 27.1% in Q2 2024.
The company's solid financial foundation is further evidenced by InvestingPro Tips, which indicate that Onto Innovation "holds more cash than debt on its balance sheet" and "liquid assets exceed short term obligations." These factors provide the company with the financial flexibility to pursue strategic acquisitions and investments in new technologies, as demonstrated by the recent deals.
Onto Innovation's profitability is also noteworthy, with an operating income margin of 16.79% for the last twelve months as of Q2 2024. This strong performance is reflected in the company's stock price, which has seen a significant 84.58% total return over the past year.
Investors should note that while Onto Innovation is trading at high valuation multiples, including a P/E ratio of 58.13, this may be justified by the company's growth prospects and recent strategic moves. The acquisitions are expected to generate up to $100 million in annual revenue within three years, potentially supporting the current valuation.
For those interested in a deeper analysis, InvestingPro offers 12 additional tips for Onto Innovation, providing a comprehensive view of the company's financial health and market position.
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