Onto Innovation at Citi’s 2025 Global TMT Conference: Strategic Growth and Innovation

On Thursday, 04 September 2025, Onto Innovation Inc. (NYSE:ONTO) participated in Citi’s 2025 Global TMT Conference. Led by CEO Mike Felcher, the conference call highlighted Onto Innovation’s strategic initiatives, emphasizing both opportunities and challenges. The company is optimistic about growth prospects in 2026, driven by new products and market trends like AI and advanced packaging. However, it also faces competitive pressures and margin challenges.

Key Takeaways

• Onto Innovation expects to achieve approximately $1 billion in revenue this year.
• The company is focused on strategic M&A to enhance capabilities and synergies.
• Advanced nodes have seen nearly 2X growth, outpacing peers.
• Gross margins are slightly below the long-term target but are expected to improve.
• The Semilab acquisition is seen as a strategic move to strengthen materials characterization capabilities.

Financial Results

• Revenue: Onto Innovation is on track to reach about $1 billion in revenues this year.
• Advanced Nodes Growth: The company has achieved nearly 100% growth in advanced nodes.
• Gross Margin: Currently below the long-term target of 56%-57%, with expectations for improvement.
• Q4 Outlook: Anticipated improvement, particularly in AI packaging, which is performing better than expected.

Operational Updates

• New Products: Progress in 3D metrology products, with successful qualifications at major accounts.
• Dragonfly G5: Strong performance and positive customer feedback, indicating a compelling tool.
• Semilab Acquisition: Aimed at enhancing technology through Onto Innovation’s market channels.
• HBM: Strong positioning with all three HBM customers, focusing on 2D inspection and 3D metrology.
• Panel Subsidies: Linked to the enterprise server market recovery and the shift to glass in packaging.
• Overseas Manufacturing: Transition to improve business continuity and leverage Asian supply chains.

Future Outlook

• 2026 Outlook: Confidence in outperforming market growth with new products and solutions.
• AI Impact: Continued expansion of AI technology, creating new opportunities in HBM and logic.
• Hybrid Bonding: Customers likely to delay transition, but opportunities are anticipated.
• Market Focus: Expanding the footprint across the value chain, focusing on packaging investments.

Q&A Highlights

• Market Share in 2.5D Packaging: Strong market presence and confidence in maintaining it.
• Competition: Opportunity to increase prices due to the entrance of a new competitor.
• Gate All-Around: Sustained demand expected for this node.
• HBM: Potential industry digestion period if the third customer receives a large allocation.
• Capital Allocation: M&A remains the best source of return, focusing on software and optics capabilities.

In conclusion, Onto Innovation Inc. is strategically positioned for growth, leveraging innovation and strategic M&A to maintain its competitive edge. For more details, please refer to the full transcript below.

Full transcript - Citi’s 2025 Global TMT Conference:

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Very good. Okay, I’m going to start. Good afternoon, everyone. Thanks for joining us today. My name is Elizabeth Sun, and I’m in the Semiconductor Equipment Team here at Citi Research. In this session, it’s my honor to have Mike Felcher, CEO of Onto Innovation Inc. Welcome, Mike.

Mike Felcher, CEO, Onto Innovation Inc.: Thank you.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: I have a list of prepared questions, and for those in the audience, if you have any questions, feel free to raise your hand anytime. First, Mike, I’d like to start with a high-level question about the market outlook. What’s your view on the end-market growth into next year across various segments you are in, you know, like both on the front end and back end? It’s a big question.

Mike Felcher, CEO, Onto Innovation Inc.: Everybody always wants to know that. I think it’s too early for us to have a very informed view of 2026 right now. We’re still talking to customers. We’re actually starting the process of engaging with customers on their expansion plans for next year. They’re talking to their customers, what demand drivers look like. We’ll know more towards the end of the year. For us, we’ve never really been that obsessed with where’s WFE going and where that overall market is going. Our focus is really on more, what are the underlying waves of growth that are happening within the market and how do we get more and more products onto those waves. I think we’re positioned pretty well for 2026. That’s in both new products as well as the markets we’re serving. AI is continuing to show no signs of abatement. It’s still growing.

The expanding technology, both on the HBM, both on the memory and the logic side, is creating new opportunities, new capital intensity demands. We talked about some of them in the last earnings call, subsurface inspection, et cetera. We have new products as well. New products in 3D metrology are moving well through qualification at large accounts and also being already adopted by smaller accounts. We mentioned OSATS last earnings call and co-packaged optics as well. Of course, the critical films, big, huge market, $500 million market, making very good progress, moving the Iris G2 through that. The other one for next year is, of course, the Dragonfly G5, the next generation high-resolution tool.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: I’ll ask more on that later. I guess next year you are well on track to maybe outperform the market wherever the market is.

Mike Felcher, CEO, Onto Innovation Inc.: That’s our view.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, great. On the leading edge, I just want to ask, what’s your visibility now? Some of your large OEM peers are seeing some seasonalities in the most nodes in maybe the second half. It seems like you guys saw some adjustment in Q2 and maybe to some extent in Q3 as well, but you are expecting Q4 to be back to peak level. Could you help understand the disconnect here?

Mike Felcher, CEO, Onto Innovation Inc.: I’m not sure the disconnect per se. If you look at our growth this year in advanced nodes, it’s nearly 2X, nearly 100%. I don’t think any peer is talking about 100% growth. It’s really hard to say peer-to-peer comparison when we’re significantly faster. Why are we so much faster? The market is not clearly growing that much. It goes back to what I talked about earlier, the different products we put on the wave. As DRAM expansion was required because of the HBM, we weren’t just getting OCD revenue anymore. We were getting films business. We were getting integrated metrology. We added more to that wave of growth. Similar to another example would be the new gate all-around customer we added. Instead of just the OCD order, we significantly increased the size of just that small pipeline by adding the films business as well.

I think when you look at it from, you know, we’re not just talking about growth due to market and market demands, but also what we’re doing to enable the revenue. That’s why we’re seeing this kind of an outperformance. For sure, the revenue in advanced nodes for us was second, first half weighted. We saw the biggest growth there. We always predicted the Q3 drop. We talked about that early on. We still expect, you know, some kind of a Q4 improvement. Not as big as it was, but AI packaging is now bigger than we expected for Q4. Net-net, about the same.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, great. We hear some people, some of the international peers, are talking about maybe 3 nanometers can be larger, like 2 nanometers next year might be smaller than 3 nanometers investment going into next year. Do you agree with this view?

Mike Felcher, CEO, Onto Innovation Inc.: 2 nanometers can be smaller than 3 nanometers, meaning FinFET versus gate all-around? Not from what we see. I’m not sure where that comes from, but at least our customers and TSMC has been public about this. They see a very long and sustained demand for the gate all-around node. I think the performance benefits from both the speed and the power consumption, the reduced power consumption of the gate all-around transistor versus FinFET are pretty compelling. I think once a certain level of critical mass starts adopting it, the rest have to follow or risk being left behind.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, that’s fair. On the packaging side, now, there is a large competitor in the market and gives you some pressure in the 2.5D side. There is a smaller competitor on the front-end who has been also very vocal about gaining share in the packaging side. I guess the first question was, what is Onto Innovation Inc.’s competitive advantage here? How do you maintain your leadership position in the back end? Is there any, like, pricing pressure you’re seeing on that side too?

Mike Felcher, CEO, Onto Innovation Inc.: No, as far as pricing goes, it’s the opposite. With the entrance barely of that one competitor, we’re seeing an opportunity to increase price. As the, and it’s really not so much them, as that customer required much more advanced inspection, it’s a chance for us to move a tool that we’ve been developing over the last three to four years for front-end applications quickly adopted for the back end. That gives us an opportunity to significantly increase pricing and the value associated with that. From the other side, the other front-end company you mentioned, I would say I’m not sure about the share. I think what we’re seeing is more the pie is growing. There’s a lot of different applications that customers need resolved and solved, and they’re solving some.

We don’t see any share, where you worded a share loss, we don’t see any share loss to that second competitor. We’re continuing to grow our films metrology business. We’re continuing to add additional metrology capabilities, the subsurface inspection. We’re continuing to grow. We do know that they’ve solved some unique requirements in TSV and maybe some others that I’m not even aware about based on some of the capabilities of their sensors that maybe we don’t have. I think that just shows the complexity and the importance of the market.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay. I guess I have to ask, what gives you the confidence to gain share back next year on the 2.5D packaging?

Mike Felcher, CEO, Onto Innovation Inc.: I think we’ve had strong market share for a very long time. We will continue to develop the strong market, the technologies that the customers need to maintain that strong market share. We are with Dragonfly G5. We clearly demonstrated it in the early part of this year where the customer is very close to wanting to decide one way or another and then deciding, please pull in the Dragonfly G5. That’s the tool we really want. That’s one piece of confidence. The other is just the performance. We’re seeing the application studies that we’re getting, so the wafers we’re getting, and customers want to see results. The results are impressing, and the feedback we’re getting is very impressive.

The tool wasn’t designed for just solving this one issue, but several generations ahead, and that performance is quite frankly compelling. There are also some new capabilities in there that we’re also now starting to see emerging applications in hybrid bonding that could benefit from those new capabilities. I think we have a very compelling story on this tool.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: It’s good to know. Could you share what is the latest? You provided us, you said you are passing some milestones in the last earnings call to get requalified, I would say, with your key customer. Could you share what is the latest and when do you expect shipment to ramp for that customer?

Mike Felcher, CEO, Onto Innovation Inc.: Really nothing changed between the Q2 and the Q3 call. Really nothing changed. We said when we announced the share situation that the customer was already engaged with us, sending wafers and working with us on developing and accelerating the new tool. The next quarter, I just said, yep, and it worked. I never had any doubt it wasn’t going to work, or I wouldn’t have ever mentioned it. Really all we did was continue to execute along the plans, and we are going to continue to execute. I’d mentioned, I guess the one big piece of real news from last quarter is we said we’d ship one tool, and now we’re going to ship a few tools to several different customers. Clearly demand for the technology is growing.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay. You touched a little bit earlier, but what are the newer opportunities for next-gen Dragonfly? Like anything specifically? You talked about hybrid bonding earlier, but anything else?

Mike Felcher, CEO, Onto Innovation Inc.: We talked about hybrid bonding because there’s going to be, and we’ve known this for a while working with our customers, there’s a real high amount of concern over voids in the hybrid bonds. I think I talked about last, maybe last year, even just one micron void between the wafer stack or die stack, the next stack on it, with that compression, that one micron void makes a crack that pops through the entire die stack sideways. That wipes out the whole stack. It’s a very big concern. What causes those voids? Two main areas they’re focused on. One, the flatness of the pads. If it’s, you know, like a cup and you push, you have void. It’s not totally flat. The other is very, very tiny particles. Even a small particle can potentially cause a void.

That Dragonfly G5 will have the ability to inspect for those types of particles. That creates new opportunity for us, and it’s very high resolution. It’s relatively slow inspection, and we think it’s going to be high sampling. Maybe 100%, but certainly high sampling.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Got it.

Mike Felcher, CEO, Onto Innovation Inc.: That creates new opportunities. Was there a first part of your question?

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Any other opportunities?

Mike Felcher, CEO, Onto Innovation Inc.: On the other, yeah, I knew there was one more point I wanted to make. It was the front end. Of course, there’s the whole front end opportunity, which is what the original intent of this. The front end market for macro inspection is probably around $400 million, $500 million. It’s served only by one competitor. The customer feedback is pretty positive about the capabilities we’re providing, not just with the G5, but other sensors we’re combining in there to enter into that market. That’s another area. It’ll take some time to develop. I would say, in 2026, we should see some movement and then real revenue maybe in 2027. By movement, I mean initial orders.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay. Got it. What is your expectation on hybrid bonding on the timing? It’s a moving target now.

Mike Felcher, CEO, Onto Innovation Inc.: It’s a moving target. I’m getting the sense that the customers will, and I might be wrong, and Sidney yells at me later, but getting a sense that customers will delay this transition for as long as they can. They keep pushing it out, pushing the yields, pushing the capability of the existing technology before making that cut to the hybrid bonding. Who knows what innovations they have in the pipeline, but for sure, hybrid bonding is on their roadmaps. For sure, everyone’s got investments, meaning all the three main memory guys have investments to be ready. I also see them continuing to push and push and push.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Is the main concern the cost, or the yield, or like supply chain?

Mike Felcher, CEO, Onto Innovation Inc.: I think they’re tied. The cost and the yield. If the yield’s low, the cost becomes much higher. I would say they’re somewhat tied, and yes, it’s the yield.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, got it. On the HBM side, it looks like the third HBM customer is finally getting some traction. Could you talk about your market share position across all three HBM customers? If the third customer gets qualified, how does that mean for Onto Innovation?

Mike Felcher, CEO, Onto Innovation Inc.: It’s not just Onto. If the third customer gets qualified, the industry, right? Now, qualified, the second part of that is also how much allocation do they get? If they get allocated, you know, a small amount and the other two have to increase, then that’s good for everyone. If they get allocated a large amount to take up all of their excess capacity, then the other two have to expand just a small amount. Because they have excess capacity, not just from us, but from, you know, they had lines ready to go, that will kind of be a bit of a digestion period for the industry.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Yeah, that’s fair. What is your share position with all three?

Mike Felcher, CEO, Onto Innovation Inc.: It’s very similar across. Extremely strong, extremely high with 2D inspection and activities in all three with 3D inspection, 3D metrology, sorry, I should say. It’s the same with some of the other technologies, subsurface inspection, things like this.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, I’ll pause here to see if there are questions in the audience. Okay, I’ll keep going.

Mike Felcher, CEO, Onto Innovation Inc.: Okay.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: On the new products, I know you’ll be happy to talk about it. Can you talk about the progress you’re making with the new products, especially with the 3D metrology, but maybe others you want to share as well?

Mike Felcher, CEO, Onto Innovation Inc.: For 3D metrology, we talked about having 10 customers now already adopting the technology, including new applications and co-packaged optics, which we think is another future wave, a fairly meaningful wave of growth, given the extreme growth in AI and the power problems tied to AI. I think that’s going to be a big one. The OSATs, so a tier one OSAT for bump applications. The big thing, the other area that we’re focused on is qualifying for some of the tier one semiconductor manufacturers, particularly the memory guys. There, the process is much more rigorous. It’s taking time, and we’re working through it. By time, it’s really around stability testing now, making sure these metrology tools can measure the same way every time for a month at a time. Any deviation, we have to restart the clock. We make some changes, improvements, and then the clock restarts.

That’s taken some time, but I think we’re moving pretty well through that process, and we should be seeing light at the end of that tunnel. The question is, okay, how quickly will they adopt the new technology moving into next year? For sure, the performance is proving out what we expect and what the customers were hoping for. It’s definitely more sensitive. It’s definitely more repeatable. It’s faster than the incumbent technology. We also are opening up new applications. In the bumping area, it’s a long story. Do you want me to tell it? All right. In the bumping area, most of this metrology happens after solder bumps, solder caps are put on the copper pillars. That’s not an ideal step, but it’s because of the existing technology. That’s the only way it was able to measure.

Otherwise, there’s too much scattering on the top surface of the copper pillar bumps. We’re showing in partnership with an OEM that also selected our tool early on, we’re showing that we can measure actually that pre-reflow step, and there’s a big yield benefit to customers if they shift when they do the measurement. They can do more rework and save yield. That’s a fundamental improvement that customers can gain from the tool as well.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: It’s good to know. I want to ask about the Semilab acquisition. Could you just add more color around the Semilab acquisition and what is the market you’re after for this acquisition? Any early thoughts on the synergy opportunities? I know you are probably waiting for the deal to be closed, but anything you can share right now?

Mike Felcher, CEO, Onto Innovation Inc.: Yep. Synergies we’ll leave to the side, at least the quantification. I think there’s some synergies we talked about with our AI Diffracts, so our modeling software being able to enhance the capability of some of their tools, adding more value to our customers. The big advantage, though, is that their technologies are applicable to a wide range of markets. It wasn’t a very market-specific deal. It was really us bringing in some new and unique technology that we felt we could add, we could further enhance. We can enhance them in two ways. One, our channels to market. We see opportunities. We talked about this on the call in the surface charge metrology, which is going to be a growing concern as chiplet architectures continue to migrate and become more widely adopted in the marketplace by designers. That’s going to be a critical source of yield loss.

There’s no other way to measure it except this tool. That’s going to be important. We have good channels to market to help enable that transition. The other is on the materials characterization side. That’s where we can add some enhanced capability, also potentially with some of the other metrology systems that we have as well. Not just the software, but also some technology.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: What do you see? How do you see the market of materials characterization or materials metrology? I think it’s kind of a smaller market, but it’s very dominated by another player in this space. How do you see the market growth going forward?

Mike Felcher, CEO, Onto Innovation Inc.: I think it’s a broad term, and I think there’s a lot of growing interest from the customers as the use of exotic materials and more materials in the advanced nodes and advanced packaging continue to add complexity. It’s not just about dimensional metrology. It’s about how these materials are interfacing with each other. There is one player who’s doing well with X-ray systems in that space, but it doesn’t solve all the materials characterization challenges that customers have. We have one little piece with the element, but that’s only composition. That’s only one piece. Customers are looking for more solutions. This team has some interesting technology. They don’t have the service and support infrastructure, not as broadly as we do, specific to these high-volume manufacturers. We think that that’ll eliminate one barrier to more wide adoption of this type of technology.

It’s an area that we need to continue to look at.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay. Great. I guess next.

Mike Felcher, CEO, Onto Innovation Inc.: I do think it’s an area that’s growing.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Yeah, definitely. I guess I have to ask about panel-level packaging. What is your latest expectation for panel subsidies? Is that a moving target as well? How does it compare with what your expectation was maybe last year or two years ago when you held the investor day?

Mike Felcher, CEO, Onto Innovation Inc.: I would say it’s somewhat of a moving target, but really tied to the enterprise. If you look at the enterprise server market, that hasn’t really recovered yet. That was, you know, the AMDs, the Intels, they’re heavy users of the panel substrate technology. They pushed the substrate manufacturers to increase capacity quite a bit. We’ve delivered a lot of tools, and, you know, the utilization is still. I think that will recover, that will return. The other big inflection that’s happening, and we always said it was unclear when the transition would be, is the move to glass. We see that continuing to build momentum. It’s not like stalled out. It’s not like just a few research. We see more and more players.

Our apps lab is completely, you know, the pace, the application center of excellence we built for that, very full with engagements from customers, many, many customers. I think that area is still, it’s still early, but also very transformative. When you think about being able to drive, if you’re limited to about five microns or so on an advanced IC substrate, being able to take that down to one micron and being able to put all the RDL on a single surface that has much better thermal capabilities than the IC substrates, there’s a lot of compelling advantages to glass. Challenges, technical challenges, but those are being worked through.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Yeah, that’s fair. On gross margin, you are on track to achieve, you know, $1 billion revenues this year, maybe not far from that. It seems like gross margin is a bit below your long-term target model of, I believe it’s 56%, 57%. Could you talk about post-take there? How should we think about how to improve the profitability going forward?

Mike Felcher, CEO, Onto Innovation Inc.: You hire a new CFO. Seeing if anyone’s awake. Several areas, we have been behind on improving our margin profile. I think, you know, we are taking steps to address that. Beyond the little bit of a joke is the moves we’re making on the supply chain. We’ve talked about common eFEM and bringing that. We had seven or eight different eFEMs across the organization. That’s a huge inefficiency, and it also limits our ability to extract value from suppliers. By moving to a common eFEM across all of our platforms, that’s a big savings. The shift to overseas manufacturing and the ability now for us to have far better business continuity, but also a supply chain based in Asia, several areas in Asia, that’s also going to provide help. Just better, let’s say, operational discipline, better efficiencies. Back to the discipline we had in the past.

I think we’ll see, you know, certainly the long-term operating model is well within our reach, if not even improving on it. The other piece is also some of these new products that we’re bringing to market, the Dragonfly G5, the Iris critical films, they’ll all be margin accretive. They’re significantly more advanced than the prior generations.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: That makes sense.

Mike Felcher, CEO, Onto Innovation Inc.: Semilab will be margin accretive. I think the margin story will be a positive.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay. If you look at Onto Innovation over the next three to five years, what kind of key technology transitions are you watching closely, and what is the most exciting business driver for your business?

Mike Felcher, CEO, Onto Innovation Inc.: That’s a good question. I think from a technology transition for us, we’re very careful not to get obsessed with any particular transition. For instance, we won COA seven, eight years ago, went nowhere. If we were obsessed with that, we’d wait seven, eight years, then we’d finally be heroes. No, then we were onto info and we were onto the mobile and the RF 5G transition. For us, it’s, and now, of course, AI packaging explodes and we’re right there. We’re on top of it. For us, it’s more about not trying to pick and watch the winners and losers, but make sure we continue our strategy of expanding our footprint across the value chain and the depth of our footprint in each of those accounts. That’s the beauty of the types of products we produce. The macro inspection is broadly applicable. The films are broadly applicable.

We have various additional capabilities and materials characterization, other sensors that are also broadly applicable to power and front-end and packaging markets. When the different waves of growth occur, we’re right there, we’re on them and we ride them. Power Semi is another great example. Pretty flat for most people, but we’ve been having very strong growth in Power Semi the last several years. This year is kind of flattish, but off of a record year last year. That’s why we don’t obsess over one or two particular things. Not to be facetious and to answer your question a little more specifically, packaging is clearly an area that we’re excited about. We see so much investment happening in packaging, finally an area that we have a very strong position in.

It’s not just in, let’s say, the traditional shrinks that you see in the front end, but we’re seeing the 3D expansion, but we’re also seeing the heterogeneous, the adoption of heterogeneous die and the complexities associated with that, as well as the move to panel. If you have heterogeneous die, you can’t process it very effectively on a round silicon wafer. The shift to panel is there as well. A lot of new challenges in the packaging area are tied to many different markets. Whatever end market drivers you’re looking at, enterprise server, enterprise market, AI, Power Semi, it’s all going to tie into these packaging advances.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: That’s a great answer.

Mike Felcher, CEO, Onto Innovation Inc.: Thank you.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: On capital allocation after Semilab, what’s your priorities on capital allocation? Are you getting more M&As or are you good?

Mike Felcher, CEO, Onto Innovation Inc.: Yeah, I think so. From a capital return perspective and from an increasing shareholder value perspective for a company of our size and for the markets that we’re serving, we still think M&A is the best source of return, the best allocation for the capital. Of course, every quarter, as we’ve said to investors, we’re looking at the M&A pipeline, comparing it to the stock and the opportunities, and we’re always making the decision where we’re best to deploy that capital. We’re a strong cash generator, so we’re lucky that we continue to increase our capital so that we have the ability to deploy it in the way that’s most advantageous for the shareholders.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: How do you look at M&A opportunities? What is the criteria?

Mike Felcher, CEO, Onto Innovation Inc.: Yeah, a lot of investors look for, you know, hurdle rates or particular, you know, numbers that we’re trying to hit. I think that’s too limiting. For us, we look at first the essentially the synergies we think we can extract from it. The closer to the center of our bull’s eye, which is going to be around the broad markets we serve and the software and the optics capabilities. Those are our core competencies. To the extent we expand on those core competencies, we strengthen all the businesses, not just the one business we might be acquiring. That’s the strategic nature of it. From a financial nature, obviously we’re not here to dilute our margins. There are many deals that we could do that we walk away from just because they’re too dilutive and we don’t see enough synergies to actually improve. There’s not a good fit.

Semilab is a great example of a company that we worked with and we had to cultivate, and it wasn’t one that was obvious to people. That’s an example of why we kept telling investors we’re working the pipeline, pipeline’s getting better and stronger. It is. Our M&A pipeline, now that we focused on it, I guess starting three years ago, is pretty robust. It’s not through the run of the mill, everybody knows the same names.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: That’s fair. We have a couple of minutes left. Just any final remarks that you think investors are missing in the Onto story?

Mike Felcher, CEO, Onto Innovation Inc.: I think there was an overreaction to our ability to compete. I think that’s a little hard for me to understand because that competition there from all those sides that you mentioned has always been there. That’s the nature of competition, and we’ve always been able to maintain it. I think as we look forward and as we continue to drive the G5 adoption and demonstrate the capabilities, that we’ll be back in the good graces.

Elizabeth Sun, Semiconductor Equipment Team, Citi Research: Okay, I like that. Thanks, Mike, for coming to our conference. Thanks, everyone in the audience.

Mike Felcher, CEO, Onto Innovation Inc.: Thank you.

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