Onto Innovation Inc. · NYSE:ONTO
Onto Innovation — Investor Day (June 2023)
56 slides from Onto Innovation's investor day presentation, Jun 1, 2023
Slide 1: 2023 Analyst Day
2023 ANALYST DAY Achieving Growth Outperformance Through Connected Thinking JUNE 1, 2023
Slide 2: Safe Harbor
Safe Harbor The information presented herein contains forward-looking statements that relate to anticipated future operating results and performance. These statements are only predictions based on management’s current expectations and assumptions, including market size and forecasted growth, Total A
Slide 3: Agenda and Technology Row
Agenda and Technology Row AGENDA TECHNOLOGY ROW HIGHLIGHTS Onto Growth Strategy Mike Plisinski, CEO 3D Nano-scale AI Advancing Optical Metrology Process Capability Outperformance in Advanced Nodes Srini Vedula, SVP of Customer Success Unique Technologies for Growth Markets Mike Rosa, CMO and SVP of
Slide 4: Welcome
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Slide 5: Outpacing Industry Growth 5X
Outpacing Industry Growth Global wafer fab equipment spending increased 20% annually since 20191 $1,000 $6.00 REVENUE EPS (NON-GAAP 2 ) $1BILLION $5.00 $800 $600 25% $4.00 5X ONTO EARNINGS CAGR $3.00 GROWTH $400 $2.00 $200 $1.00 $- $0.00 ‘19 NANO RTEC 2020 2021 2022 2019 2020 2021 2022 1Gartner, Sem
Slide 6: Our Differentiated Value Proposition
Our Differentiated Value Proposition RESULTS IN CONNECTED SOLUTIONS ENHANCED BY SOFTWARE Big Data Storage AI Real-time Control Third Party Data and Analytics Systems UNIQUE OPTICAL TECHNOLOGY SPECTROSCOPIC FOURIER CLEARFIND® SUB-MICRON TDI PANEL ACOUSTIC ELLIPSOMETRY / TRANSFORM IMAGING INSPECTION L
Slide 7: Leading Customers Recognize Our Technical Innovation!
Leading Customers Recognize Our Technical Innovation! Four out of six awards recognizing technology 2022 Novel Technology Collaboration Award 2022 232L NAND Achievement for Onto Singapore 2022 Certificate of Honor 2022 Atlas® V Metrology Best New Product Introduction 2020 – 2021 Best Supplier Award
Slide 8: More Critical to Our Industry!
More Critical to Our Industry! # #1 KLA #2 Applied Materials #4 Hitachi High-Tech #5 ASML #6 Lasertec #7 Nova #8 Camtek Source: 2022 Gartner Market Share Report, April 2023 8 Thinking
Slide 9: Positioned to Benefit from Multiple Macro Trends
Positioned to Benefit from Multiple Macro Trends CAGR 2022-2027 43% SECULAR MACRO TRENDS Advanced 1 Nodes GAA 37 % Memory 2 High bandwidth memory CONNECTIVITY BIG DATA 81% Advanced 3 Packaging Chiplets 28 % Specialty 4 AI HPC NET ZERO Automotive/ Power 1Strategic market research GAA = Gate All Aroun
Slide 10: With a Differentiated Offering that Matters
With a Differentiated Offering that Matters PRODUCTS SOFTWARE Advanced IMPULSE® Atlas® Iris® Nodes Metrology Integrated Metrology Metrology GAA Memory IMPULSE® Atlas® Aspect® Echo™ Dragonfly® TrueADC® High bandwidth Metrology Integrated Metrology Metrology Inspection Software Metrology memory Advanc
Slide 11: Up Next
Up Next Why we are winning Dr. Srini Vedula leads the Dr. Mike Rosa is chief Customer Success Group for Onto marketing officer and senior vice Innovation, which includes the field president responsible for strategy. operations, product applications Mike joined Onto in January 2022 and the global sal
Slide 12: Dr. Srini Vedula
Dr. Srini Vedula
Slide 13: Entering the Artificial Intelligence Era
Entering the Artificial Intelligence Era • High Performance Computing • AI Servers Increase DRAM Content • Generative AI • Industry 4.0 10x increase1 in number of transistors per package AI demand for DRAM bit density 1Intel ISS 2Morgan Stanley Techbytes, 2023-28 est. Thinking estimated at >45% CAGR
Slide 14: Gate-All-Around: Logic Architecture Complexity
Gate-All-Around: Logic Architecture Complexity • Complex 3D Structures • Increasing EUV Lithography Layers • New Materials • Local Process Uniformity • Planar Films and Critical Dimensions • Precise Shape Control • Incoming Wafer Quality FinFET GAA FORKSHEET • Backside Defect Control source: IRDS 20
Slide 15: Increasing Device Coverage for Process Control
Increasing Device Coverage for Process Control 15 Thinking
Slide 16: GAA Inflection Increases Onto's Process Control Opportunity
GAA Inflection Increases Onto’s Process Control Opportunity >50% OCD metrology sampling increase Expanding applications in films Increasing EUV and front-end all- surface inspection requirements FinFET GAA Entitlement normalized to $ per wafer starts 1company estimates 16 Thinking
Slide 17: Onto's Optical CD Metrology For GAA Transistor Process Control
Onto’s Optical CD Metrology For GAA Transistor Process Control Measuring additional features Increasing OCD metrology requires more unique signals in critical GAA layers ONTO PATENTED SE TECHNOLOGY >30% OTHER SE TECHNOLOGY LIMIT No. of unique signals FinFET GAA Onto’s Atlas platform is qualified for
Slide 18: Planar Films Metrology Customer Value Proposition
Planar Films Metrology Customer Value Proposition Cost Savings With Onto Films & Flexible Fleet Utilization OCD Common Platform OCD METROLOGY 30% CAPITAL OUTLAY Inline OCD monitoring FAB YIELD Higher films sampling THIN FILMS INTEGRATED METROLOGY METROLOGY Onto lowers total cost-of-ownership with a
Slide 19: Increasing All-Surface Macro Inspection Opportunity
Increasing All-Surface Macro Inspection Opportunity Silicon 4 out of top 5 1 Wafer Mfg substrate manufacturers Device >80% logic Mfg manufacturers 1Top 4 silicon wafer share >75% worldwide (source: Siltronic investor material, 2023) 19 Thinking
Slide 20: Memory Scaling Roadmap for Higher Density
Memory Scaling Roadmap for Higher Density • Higher Aspect Ratio Geometries • Tighter Error Budget (Profile Tilt, Overlay) • Increased EUV Applications in DRAM • DRAM Stacking >200 PAIRS 3D NAND >300 PAIRS 3D NAND >500 PAIRS 3D NAND • Complex 3D Metrology • Transparent & Opaque Film Metrology • Wafer
Slide 21: Memory Roadmap Increases Onto's Opportunity
Memory Roadmap Increases Onto’s Opportunity >30% High aspect process metrology Thick and amorphous films Sub-micron inspection in wafer and packaging applications Current Next Gen Entitlement normalized to $ per wafer starts 1Company estimates 21 Thinking
Slide 22: Extendible Solutions for NAND Vertical Scaling Architecture
Extendible Solutions for NAND Vertical Scaling Architecture Aspect® SIDEWALL PROFILE Echo™ THICKNESS Aspect® RECESS Element™ COMPOSITION Atlas® TILT AND SHIFT Iris™ THICKNESS Aspect® SIDEWALL PROFILE Broad suite of products target key process inflections 22 Thinking
Slide 23: High Bandwidth Memory Scaling Implications
High Bandwidth Memory Scaling Implications 3D STACKING OF DRAM CHIPS VTSS Wafer METROLOGY INSPECT TrueADC® Killer Defects False Defects LT200 Detected METROLOGY Competitor Onto Competitor Onto Onto qualified for >70% of emerging HBM applications 23 Thinking
Slide 24: Inline Materials Characterization Opportunity
Inline Materials Characterization Opportunity COMPOSITION METROLOGY C% O% B% P% Carbon Oxygen Boron Phosphorus H% D% Ge% Hydrogen Deuterium Germanium a-Carbon MATERIAL PROPERTIES Thermal Conductivity Young’s Modulus Dopant Profile In-fab characterization solutions today for future high volume manufa
Slide 25: Dr. Mike Rosa
Dr. Mike Rosa
Slide 26: Resilient Market Growth
Resilient Market Growth Leveraging outsized growth opportunities $1T Unlocking Trillions Entered a NEW ERA of Dollars $.8 of Inflection Growth of Economic Value $.6 $.4 Source: Gartner; Onto Innovation, Corporate Marketing 2022 26 Thinking
Slide 27: New Technology Trends and Device Challenges
New Technology Trends and Device Challenges Performance, Area and Cost Driving Unique Materials / Materials Characterization Compound Semi Materials / Process Challenges Chiplet Based Architecture / Increasing Interconnect Density 27 Thinking
Slide 28: The Power Revolution
The Power Revolution $50B TOTAL Power Device Market1 • Green initiative / electrification 65% 2030 • HVM of compound semi materials enabled devices • Advanced ≤200mm fabrication technologies 43% • Broad wafer size migration 10% x10 more compound semi wafers in power by 2030 2 1Gartner 2023 2Yole Gro
Slide 29: Enabling the Next Killer App
Enabling the Next Killer App Advanced automotive driving increased die count ~ 15x Smartphone 20x > Smartphone CHIPS PER UNIT UNITS SOLD Passenger Car Passenger Car As Automotive vs. vs. Power IC content grows to >50% by 2022 - 2030 2022 - 2030 2030 Onto is well positioned to support the ~ 20% > 50%
Slide 30: Enabling Process Control Technologies
Enabling Process Control Technologies Onto’s technologies provide unique solutions addressing key device performance drivers Atlas® Dragonfly® + EB40 IVS™ > 3x Opportunity Growth Element™ Echo™ Dragonfly® Present at each of the top power device OEMs Onto’s tools cover Thinking 80% of key process con
Slide 31: Positioning for Market Share Gain in Power
Positioning for Market Share Gain in Power Leveraging portfolio strengths and process control solutions Element™ PROCESS STEPS Echo™ Atlas® IVS™ Atlas® Dragonfly® Metrology Atlas® IVS™ Element™ 6” Dia. 8” Dia. Dragonfly® Echo™ Thick Metallization Silicon Carbide Wafer Dragonfly® Portfolio Solutions
Slide 32: Advanced Packaging
Advanced Packaging Evolution of heterogeneous integration (HI) Multi-chip System in a RF FOWLP Heterogeneous Integration (HI) Module (MCM) Package (SiP) Module 3D-IC Disaggregated System on a Chip (SoC) Chiplets enabling HI will define the future of semiconductors, growing >80% YoY through 2030 Sour
Slide 33: Panel Level Packaging
Panel Level Packaging Next generation enablers Chiplet Packages >18x 2022 - 2030 Hybrid Bonding Wafers > 3x Panel Based Chiplet Architecture – Why Now? 2022 - 2030 • Increasing cost for leading-edge nodes Panel • Node optimization per chiplet → cost optimization • Green process – 5% lower waste than
Slide 34: Enabling Process Control Technologies
Enabling Process Control Technologies Onto’s unique process control technologies address key panel level performance drivers PARTICLE ABF 4x BUBBLE ABF > Opportunity JetStep® X500 / S3500 Growth Panel Level Lithography Firefly® Panel Macro Inspection Source: TechSearch and Onto Corp. Marketing, 2023
Slide 35: Enabling 2.5D / 3D Multi-Die Systems
Enabling 2.5D / 3D Multi-Die Systems Chiplet, bump and interconnect challenges Dragonfly® Wafer Macro Inspection One System, Dynamic Capabilities 35 Thinking
Slide 36: Delivering Product Value Through Innovation
Delivering Product Value Through Innovation Enabling multiple device applications via performance enhancing technologies unique to Onto Innovation Laser Detector Reflected Wave Acoustic Wave Element ™ Echo™ Atlas®/ Iris™ Dragonfly® / Firefly® JetStep® Epitaxial Layer Metrology Opaque Materials Optic
Slide 37: Mark Slicer
Mark Slicer
Slide 38: Getting Back to our LTOM Margins
Getting Back to our LTOM Margins Focused on execution back to $1B+ revenue model margins 70% GM% OM% 60% Key Elements 50% • Driving revenue leverage $1,005 40% • Executing manufacturing Revenue cost reductions $789 30% • Manufacturing leverage $556 20% • Maintaining ‘23 operating cost reductions 10%
Slide 39: Manufacturing and Supply Chain Synergies
Manufacturing and Supply Chain Synergies Planned $25M in cost saving synergies 2024-2025 Common Supply Chain Dedicated Logistics Significant opportunities Install Teams Programs on critical path for cost reduction >$25M • Supply chain sourcing IN OPERATING COST SYNERGIES • Common platforms Asia Comm
Slide 40: Manufacturing Capacity Leverage
Manufacturing Capacity Leverage 2022 and 2023 investments support revenue capacity beyond LTOM Capacity in place today for > $1.8B • '22-'23 Cleanroom expansions • Efficiency improvements +50% PRODUCTION UNITS • Contract manufacturing strategies in place +35% • Optimizing shift staffing 2021 2022 LT
Slide 41: Shifting Service to Value Enhancing Business
Shifting Service to Value Enhancing Business Growing install base and regional investments enhance plan to increase value added services Upgrade Sales Service Billable Contracts Labor Service Onto Performance Subscriptions TRANSACTIONAL RECURRING Traditional maintenance Service Part Sales Refurb Too
Slide 42: Customer Pull for Increased Value
Customer Pull for Increased Value Investments in service driving increased recurring revenue Recurring Revenue Jumped 38% Over Two Years +40% Install base >10K tools today • >28% increase in install base • ~800 tools under contract • >95% contract rate renewal • 90% software renewal rates • Lithogra
Slide 43: Long Term Operating Model
Long Term Operating Model* Foundation in place to support our path to $1.8 Billion Annual $1B $1.2B $1.4B Revenue Model Model Model 56% - 57% 57% - 58% 58% - 59% 31% - 32% 33% - 34% 35% - 36% $5.20 - $5.35 $6.80 - $7.00 $8.10 - $8.35 *Non-GAAP Long Term Financial Model: excludes amortization; includ
Slide 44: Mike Plisinski
Mike Plisinski
Slide 45: Positioned for Strong Organic Growth in Next 5 Years
Positioned for Strong Organic Growth in Next 5 Years Based on Gartner market growth estimates and management estimates for share in new markets “New” Surface Metrology Panel Packaging Power and Specialty Semiconductor Devices Films and GAA Adoption $1BILLION 2022 45 Thinking
Slide 46: Extreme Surface Metrology
Extreme Surface Metrology How to James Webb Telescope measure Nanometer scale surface the metrology across 350m2 surface? required to see 13.6 billion light-years away. In miles, that would be about 8 billion trillion miles. 46 Thinking Source: www.nasa.gov
Slide 47: With Onto Innovation's Patented 4Di Technology!
With Onto Innovation’s Patented 4Di™ Technology! Nanometer resolution measurements from 50 meters away 47 Thinking
Slide 48: Expanding into Larger Industry Segments
Expanding into Larger Industry Segments Unique ability to measure independent of vibration opening wide number of applications AUTO MOTIVE Optics Laboratories Industry 4.0 AIRCRAFT OVER MFGS 1,500 AIRLINES SYSTEMS SOLD Controlled Lab Uncontrolled Environments Environment Require Vibration Immune 4Di
Slide 49: Larger Potential Market with Fewer Competitors
Larger Potential Market with Fewer Competitors Industries embracing “Industry 4.0” requiring higher levels of process control and automation >20% CAGR2 2022-2027 Digital technology would sweep through aircraft factories in coming years, enabling higher production ESTIMATED . SAM by 2027 It is going
Slide 50: 4Di Technology Provides Reliable Paint Metrology
4Di Technology Provides Reliable Paint Metrology Car paint represents 30% of cost, automation can reduce rework and costs Inspectors Manual results Auto eyeball paint It’s too late 30% of vehicle quality to correct cost is paint1 Rework bad panels Reduce cost early Paint image Courtesy of GM (from a
Slide 51: 4Di Technology Enables Automated Turbine Checks
4Di Technology Enables Automated Turbine Checks Surface metrology in aviation increases safety at lower costs MEASURE AUTOMATE VALUE Engine Rework Current Aviation “fingernail feel” measures 4Di sensor 25% reduction Safety, Rising roughness of qualitatively Costs, measures turbine Detailed Shortage
Slide 52: Synergies Increase Opportunity and Reduce Risk
Synergies Increase Opportunity and Reduce Risk DYNAMIC Accretive to Margins INTERFEROMETRY $24M (SMALL) Synergies AUTOMATION / SOFTWARE > 25% CAGR (2022-2027) 52 Thinking
Slide 53: Onto Innovation Ready for Next Phase of Growth
Onto Innovation Ready for Next Phase of Growth 1 2 3 4 Aligned to $3B SAM $1.8B $24M Multiple High Potential Factory Platform Growth Markets Output Synergies AI / Compute Room to Grow Scope and Scale to Potential of >$8.00 5G / IoT Support Growth Earnings per Share Green Technology Strong Cash Gener
Slide 54: Thank you!
2023 ANALYST DAY Thank you!
Slide 55: Glossary
HBM High bandwidth memory (high speed and capacity) Glossary HI HPC Heterogeneous integration packaging High performance computing ABF Ajinomoto Build-Up Film substrate HVM High volume manufacturing Acoustic IC Integrated circuit Sound wave technology to measure film thicknesses Metrology Industry 5
Slide 56: Unaudited Reconciliation of GAAP to Non-GAAP
(in thousands, except EPS and percentages) 2019 2020 2021 2022 Non-GAAP Adjusted Gross Profit Reported gross profit - GAAP basis 135,028 278,453 429,086 539,221 Merger related expenses 15,388 10,724 428 79 Restructuring expenses 5,945 8,104 1,440 - Non-GAAP adjusted gross profit $ 156,361 $ 297,281