Onto Innovation to acquire Semilab’s materials analysis business for $545m

WILMINGTON, Mass. - Onto Innovation Inc. (NYSE:ONTO), a semiconductor equipment manufacturer with a market capitalization of $4.8 billion and strong financial health according to InvestingPro analysis, has entered into a definitive agreement to acquire Semilab International’s materials analysis business for approximately $545 million, consisting of $475 million in cash and 706,215 shares of Onto Innovation common stock.

The transaction will add four complementary product lines focused on inline wafer contamination monitoring and materials interface characterization to Onto Innovation’s portfolio. According to the company’s statement, the acquired business has grown at approximately 20% annually since 2021 and is projected to generate approximately $130 million in revenue in 2025. The acquisition aligns with Onto Innovation’s track record of strong growth, having achieved a 26% revenue CAGR over the past five years and maintaining healthy margins with a gross profit margin of 53%.

The acquisition is expected to be immediately accretive to Onto Innovation’s gross and operating margins, increasing non-GAAP earnings per share by more than 10% in the first year following completion. The company’s strong balance sheet, with minimal debt and a current ratio of 8.4, positions it well for this strategic move. According to InvestingPro analysis, the stock appears undervalued based on its Fair Value estimate, suggesting potential upside for investors interested in semiconductor equipment manufacturers.

Mike Plisinski, chief executive officer of Onto Innovation, said, "This acquisition expands our portfolio of process control technologies, which work together to help customers achieve their yield targets."

The transaction comes as demand for advanced materials analysis grows with the expanding use of exotic materials in semiconductor manufacturing, particularly for chips required in AI applications.

Onto Innovation plans to integrate its Ai Diffract modeling engine with the acquired technology to enhance dimensional metrology capabilities, potentially helping to speed yield learning for new devices in packaging, power semiconductors, and advanced nodes.

Subject to U.S. and Hungarian regulatory approvals and customary closing conditions, the transaction is expected to close in the second half of 2025. The companies have arranged detailed transition services to ensure customer continuity.

Onto Innovation affirmed its second quarter guidance initially provided on May 8, 2025, and plans to provide further details during its second quarter earnings release in early August. With eight analysts currently covering the stock and a consensus EPS forecast of $5.15 for FY2025, investors can access detailed analysis and additional insights through InvestingPro’s comprehensive research reports, which cover over 1,400 US stocks including Onto Innovation.

Barclays Capital Inc. is serving as financial advisor to Onto Innovation, while Needham & Company, LLC is advising Semilab on the transaction, according to the press release.

In other recent news, Onto Innovation Inc. announced the appointment of Brian Roberts as its new Chief Financial Officer, taking over from Mark Slicer. Roberts, who previously served as CFO at Sensata Technologies, brings extensive experience to the role. Additionally, Shirley Chen was appointed as the Senior Vice President of Customer Success, succeeding Srini Vedula. These leadership changes are part of Onto’s efforts to sustain and transform its organizational performance. Meanwhile, Jefferies downgraded Onto Innovation’s stock from Buy to Hold, reducing the price target from $135.00 to $110.00. This decision reflects concerns about the prolonged correction in the AI Packaging market, which may continue through 2026. Benchmark, however, maintained its Buy rating, expecting a rebound in the fourth quarter of 2025 and stronger results in 2026. These developments indicate that Onto Innovation is navigating a complex market environment with mixed analyst perspectives.

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