Camtek Ltd (CAMT) 2021 Q2 法說會逐字稿

Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's results zoom webinar. My name is Kenny Green, and I'm part of the Investor Relations team at Camtek.

女士們，先生們，感謝各位的支持。歡迎大家參加 Camtek 的業績 Zoom 網路研討會。我叫 Kenny Green，是 Camtek 投資者關係團隊的一員。

(Operator Instructions) I would like to remind everyone that this conference call is being recorded, and the recording will be available on Camtek's website from tomorrow.

（操作員指示）我想提醒大家，本次電話會議正在錄音，錄音將於明天在 Camtek 的網站上發布。

You should have all received by now the company's presentation. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, Camtek's CEO; Mr. Moshe Eisenberg, Camtek's CFO; and Mr. Ramy Langer, Camtek's COO.

各位現在應該都已經收到公司的簡報了。如果沒有，請在公司網站上查看。今天與我一起參加電話會議的嘉賓有：Camtek 執行長 Rafi Amit 先生、Camtek 財務長 Moshe Eisenberg 先生以及 Camtek 營運長 Ramy Langer 先生。

Ramy will open by providing an overview of Camtek's results and discuss recent market trends. Moshe will then summarize the financial results of the quarter. Following that, Rafi, Moshe and Ramy will be available to take your questions.

Ramy 將首先概述 Camtek 的業績並討論近期市場趨勢。隨後，Moshe 將總結本季的財務表現。之後，Rafi、Moshe 和 Ramy 將回答大家的問題。

Before we begin, I'd like to remind everyone that certain forward-looking information provided in this call are internal company estimates, unless otherwise specified. These statements are only predictions and may change as time passes. Statements on this call are made as of today, and the company undertakes no obligations to update any of the forward-looking statements contained whether as a result of new information, future events, changes in expectations or otherwise.

在開始之前，我想提醒大家，除非另有說明，本次電話會議中提供的某些前瞻性資訊均為公司內部估計。這些陳述僅供參考，可能會隨著時間的推移而改變。本次電話會議中的陳述截至今日為止，本公司不承擔因新資訊、未來事件、預期變更或其他原因而更新任何前瞻性陳述的義務。

Investors are reminded that actual events or results may differ materially from those projected, including as a result of the effects of general economic conditions, the effect of the COVID-19 pandemic on global markets and on the markets in which we operate, including the risk of continued disruption to our and our customers, providers, business partners, contractors' business, the risk related to concentration of a significant portion of Camtek's expected business in certain countries, particularly China, from which we expect to generate a significant portion of our revenues for the coming few quarters, as well as Taiwan and Korea, including the risks of deviations from our expectations regarding timing and size of orders from customers in these countries, changing industry and market trends, reduced demand for our products, the timing development of our new products and their adoption by the market, increased competition in the industry, price reductions, as well as due to risks identified in the company's filings with the U.S. SEC.

提醒投資者，實際事件或結果可能與預測有重大差異，包括由於一般經濟狀況的影響、COVID-19 疫情對全球市場和我們經營所在市場的影響，包括我們和我們的客戶、供應商、業務合作夥伴、承包商業務持續中斷的風險，與 Camtek預期業務很大一部分集中在某些國家（特別是中國，我們預計未來幾個季度將從中產生很大一部分收入）以及台灣和韓國相關的風險，包括這些國家客戶的訂單時間和規模與我們預期不符的風險、行業和市場趨勢的變化、我們產品需求的減少、我們新產品的開發時間和市場採用、行業競爭加劇、價格下降，以及公司向美國證券交易委員會提交的文件中確定公司的風險。

Please note that the safe harbor statement in today's press release also covers the contents of this conference call. In addition, during this call, certain non-GAAP financial measures will be discussed. These are used by management to make strategic decisions, forecast future results and evaluate the company's future performance. Management believes that the presentation of non-GAAP financial measures are useful to investors' understanding and assessment of the company's ongoing cooperation and prospects for the future. A full reconciliation of non-GAAP to GAAP financial measures are included in today's earnings release.

請注意，今天新聞稿中的安全港聲明也涵蓋了本次電話會議的內容。此外，本次電話會議也將討論某些非公認會計準則 (non-GAAP) 財務指標。管理層使用這些指標來制定策略決策、預測未來績效並評估公司未來表現。管理層認為，非公認會計準則 (non-GAAP) 財務指標的呈現有助於投資者了解和評估公司目前的合作和未來前景。今天的收益報告中已包含非公認會計準則 (non-GAAP) 和公認會計準則 (GAAP) 財務指標的完整對照表。

I would now like to hand the call over to Ramy, Camtek's COO. Ramy, please go ahead.

現在我想把電話交給 Camtek 的營運長 Ramy。請 Ramy 發言。

Thank you, Kenny. Good morning, and thank you for joining our call today. We are enjoying a continuing growing demand for our systems, which has allowed us to demonstrate record financial performance quarter-after-quarter.

謝謝，肯尼。早安，感謝您今天參加我們的電話會議。我們系統的需求持續成長，這使我們能夠一個季度又一個季度地創造創紀錄的財務表現。

We ended the second quarter of 2021 with $67.5 million in revenues, over 52% gross margin and with 27% operating margin. The strong stability is a result of a rapid increase in sales and favorable product mix.

截至2021年第二季度，我們的營收為6,750萬美元，毛利率超過52%，營業利益率為27%。強勁的穩定性得益於銷售額的快速成長和良好的產品組合。

Before I review the second quarter, I would like to give a brief overview of the market environment. We're experiencing demand from all territories and especially from Asia. We expect to show continuous increase in sales in the next 2 quarters, and we see positive signs for Q1 of 2022, based on forecast from all segments and specifically the DRAM.

在回顧第二季之前，我想先簡單介紹一下市場環境。我們感受到來自所有地區，尤其是亞洲的需求。我們預計未來兩季的銷售額將持續成長，根據所有細分市場（尤其是DRAM）的預測，我們看到2022年第一季的正面跡象。

Our revenue guidance for the third quarter is $69 million to $71 million. The reasons for the increasing demand of semiconductors, as we mentioned in previous quarters, are fueled by the transition to 5G mobile phones and the increased demand in data centers.

我們對第三季的營收預期為6,900萬美元至7,100萬美元。正如我們在前幾個季度提到的，半導體需求成長的原因在於向5G手機的過渡以及資料中心需求的成長。

The 5G-based phones include new packaging technologies such as system-on-package, advanced CMOS Image Sensors, advanced packaging, RF and power device modules. In addition, we see the automotive industry undergoing the major change with electrification, connectivity and autonomous driving. We expect Camtek to continue benefit from all these trends in the next few years.

5G手機涵蓋了系統級封裝、先進CMOS影像感測器、先進封裝、射頻和功率元件模組等全新封裝技術。此外，我們看到汽車產業正在經歷電氣化、互聯互通和自動駕駛的重大變革。我們預計Camtek將在未來幾年繼續受益於這些趨勢。

Our success is a result of secular trends that we have been discussing in the past, which has come to fruition, and we are enjoying them now. Mainly the transition to advanced packaging with heterogeneous integration and Fan-Out growing at a very fast pace, requiring extensive inspection and metrology, as well as the increased demand for CMOS Image Sensors.

我們的成功源自於我們過去討論過的長期趨勢，這些趨勢已經結出碩果，我們現在也樂在其中。這主要得益於向先進封裝的過渡，異構整合和扇出型（Fan-Out）技術發展迅速，需要廣泛的檢測和計量，以及對CMOS影像感測器的需求不斷增長。

China is becoming a major territory in the packaging segment. 3 out of the top 10 OSATs are Chinese. Most of the other foreign OSATs have large facilities in China, and we see new Chinese OSATs entering the market.

中國正成為封裝領域的重要市場。全球前十大OSAT廠商中，有三家是中國廠商。其他大多數外國OSAT廠商在中國都有大型工廠，我們也看到新的中國OSAT廠商正在進入市場。

Camtek has been active in China for many years and is well positioned in the semiconductors market. Our global market position, coupled with our technology leadership, enable us to leverage all the opportunities in the Chinese market, in addition, penetrate new segments such as the front-end.

Camtek 多年來一直活躍於中國市場，並在半導體市場中佔據領先地位。憑藉其全球市場地位以及領先的技術，我們能夠充分利用中國市場的所有機遇，並進軍前端等新興領域。

We expect over 80% growth year-over-year for the first 9 months of 2021. We believe that we will outperform the strong industry growth due to our focus on the fastest growing segments, technology leadership, our ability to respond quickly to customers' demand, excellent local support and our strong position in Asia.

我們預計 2021 年前 9 個月的年增率將超過 80%。我們相信，憑藉對成長最快的細分市場的關注、技術領先地位、快速響應客戶需求的能力、卓越的本地支援以及在亞洲的強勢地位，我們的業績將超越強勁的行業成長。

I would like to highlight a few points about Q2. 88% of our sales came from Asia, with China being the largest territory. About 60% of the systems offer advanced packaging applications, including Fan-Out and heterogeneous integration, which are expected to continue growing in the coming quarters. CMOS Image Sensors is also a solid segment for Camtek, and 18% of our revenues were sold to these segments.

我想強調一下第二季的幾點。我們88%的銷售額來自亞洲，其中中國是最大的市場。約60%的系統提供先進的封裝應用，包括扇出型（Fan-Out）和異構集成，預計未來幾季將繼續成長。 CMOS影像感測器也是Camtek的一個穩健業務部門，我們18%的收入來自這些部門。

We have a healthy backlog for the second half of the year. We are in the process of expanding our production capacity to address our long term growth strategy. We are adding clean room space for integration and testing of our systems. In addition, we are increasing our inventory levels and headcount to support the increased demand.

我們下半年的訂單積壓情況良好。我們正在擴大產能，以實現我們的長期成長策略。我們正在增加潔淨室空間，用於系統整合和測試。此外，我們正在增加庫存水準和員工人數，以滿足不斷增長的需求。

To summarize, high demands for semiconductor components have been leading to an increasing demand for inspection and metrology systems. Camtek is providing its customers with reliable, high-performance systems, tailored to their special requirements. Camtek is strongly positioned in the market and as things stand today, we expect 2021 to be an exceptional record year in sales, growth and profitability. I would like to hand over to Moshe for a more detailed financial discussion of the financial results.

總而言之，半導體元件的旺盛需求帶動了檢測和計量系統的需求不斷增長。 Camtek 為客戶提供可靠、高效能的系統，並根據其特殊需求進行客製化。 Camtek 在市場上佔據強大的地位，就目前情況而言，我們預計 2021 年將在銷售額、成長和獲利能力方面創下歷史新高。現在，請 Moshe 就財務表現進行更詳細的財務討論。

Thank you, Ramy. In my financial summary ahead, I will provide you results on a non-GAAP basis. The reconciliation between the GAAP results and the non-GAAP results appear in the tables at the end of the press release issued earlier today.

謝謝，Ramy。在接下來的財務摘要中，​​我將提供非公認會計準則 (Non-GAAP) 的績效。 GAAP 業績和非 GAAP 業績的對帳表已在今天早些時候發布的新聞稿末尾的表格中列出。

Second quarter revenues came at a record level of $67.5 million, an increase of 82% compared with the second quarter of 2020 and 18% compared with the previous quarter. The geographic revenue split for the quarter was as follows: Asia was 88% of the quarter, with the rest of the world, 12%.

第二季營收創下6,750萬美元的紀錄，較2020年第二季成長82%，較上一季成長18%。本季地域收入分佈如下：亞洲佔本季營收的88%，全球其他地區佔12%。

Gross profit for the quarter was $35.2 million. The gross margin for the quarter was 52.1% versus 46.1% in the second quarter of last year and 60.7% in the previous quarter. The improvement in the gross margin was due to significant growth in revenues as well as more profitable products and sales mix this quarter.

本季毛利為3520萬美元。本季毛利率為52.1%，去年第二季為46.1%，上一季為60.7%。毛利率的提升得益於本季營收的大幅成長，以及產品獲利能力的提升和銷售組合的最佳化。

Operating expenses in the quarter were $16.7 million. This is compared with $10.7 million in the second quarter of last year and to the $13.5 million reported in the previous quarter. The increase from the previous quarter is mostly due to increased volume and sales channel mix.

本季營運費用為1670萬美元。相較之下，去年第二季的營運費用為1,070萬美元，上一季的營運費用為1,350萬美元。環比成長主要得益於銷售成長和銷售通路組合的提升。

Operating profit in the quarter was $18.5 million compared to $6.4 million reported in the second quarter of last year and $16.6 million in the previous quarter. Operating margin was 27.4% compared to 17.2% and 27.2% in the previous quarter.

本季營業利潤為1850萬美元，而去年第二季為640萬美元，上一季為1660萬美元。營業利益率為27.4%，而去年同期分別為17.2%和27.2%。

The high operating profit is a result of the high gross margin, together with the rapid growth in revenues, while we are still in the process of adjusting our expense structure to support the increased volume. We expect same level of operating margin in the next couple of quarters.

高營業利潤源自於高毛利率和快速的收入成長，同時我們仍在調整費用結構以支持業務的成長。我們預計未來幾季的營業利潤率將維持相同水準。

Net income for the second quarter of 2021 was $17.1 million or $0.38 per diluted share. This is compared to a net income of $6.3 million or $0.16 per share in the second quarter of last year. Total diluted number of shares at the end of the second quarter was 44.8 million.

2021年第二季淨利為1,710萬美元，即每股攤薄收益0.38美元。相較之下，去年第二季淨利為630萬美元，即每股攤薄收益0.16美元。截至第二季末，稀釋後總股數為4,480萬股。

Turning to some high-level balance sheet and cash flow metrics. Inventory level was $59 million, and it went up by $10 million over the quarter. This is to support the current demand for our products and to ensure the availability of key components.

談談一些高水準的資產負債表和現金流指標。庫存水準為5900萬美元，本季增加了1000萬美元。這是為了支持我們目前產品的需求，並確保關鍵部件的供應。

Accounts receivables went up by $5.8 million due to the increased sales, offset by improved collection in the quarter. We generated $19.9 million in cash from operations in the quarter. Net cash and cash equivalents and short term deposits as of June 30, 2021 were $189.3 million.

由於銷售額成長，應收帳款增加了580萬美元，但本季收款情況的改善抵消了這一增長。本季度，我們營運產生的現金流量為1990萬美元。截至2021年6月30日，淨現金及現金等價物及短期存款為1.893億美元。

And together with the $10 million cash that we have in long term deposits, the total cash amount is $200 million for the quarter. This compared with $180 million at the end of the first quarter. With the current business momentum, we expect revenues of $69 million and $71 million in the third quarter.

加上我們持有的1,000萬美元長期存款，本季現金總額達2億美元。相比之下，第一季末的現金總額為1.8億美元。鑑於目前的業務發展勢頭，我們預計第三季營收將達到6,900萬美元和7,100萬美元。

And with that, Rafi, Ramy and myself will be open to take your questions.

接下來，拉菲、拉米和我願意回答大家的問題。

(Operator Instructions) Our first question will be from Craig Ellis from B. Riley.

（操作員指示）我們的第一個問題來自 B. Riley 的 Craig Ellis。

I just wanted to start with a clarification on the strength in revenues in the second quarter and in the guidance versus my model, at least. 2Q is about $3.5 million better. The guide, about $5 million better. Can you just talk, Moshe or Ramy about where you might have seen strength that is above expectations from 3 months ago across the business, whether it's in CIS or advanced packaging or other areas.

首先，我想澄清一下第二季的營收表現，以及至少與我的模型相比，預期收入的強勁程度。第二季營收成長了約350萬美元。預期收入成長了約500萬美元。 Moshe或Ramy，能否談談哪些業務的成長超過了三個月前的預期，無論是在CIS、先進封裝還是其他領域？

Hi Craig. I think it's both. You can see there was a very strong quarter for the CMOS Image Sensors, 18% of the revenues came from it. It was more -- it was higher than we expected, as we discussed in the previous quarter. No doubt on the advanced packaging, there is a lot of activities, and there is a good strength in the short term and strength looking forward in the use of heterogeneous integration and Fan-Out are both at a very high increase and we're getting a lot of repeat orders and also new customers. So, overall, there is, I would say yes, a little bit more revenues than we expected. And definitely, the outlook is very positive.

你好，Craig。我認為兩者都有。你可以看到，CMOS影像感測器本季表現非常強勁，貢獻了18%的營收。正如我們在上一季討論的那樣，這比我們預期的要高。毫無疑問，在先進封裝方面，我們有很多活動，短期內表現強勁，未來異質整合和扇出型封裝的應用也將保持強勁成長，我們獲得了大量回頭訂單和新客戶。所以，總的來說，我認為收入比我們預期的要高一些。而且，前景非常樂觀。

That's really helpful, Ramy. And as a follow-up question, I wanted to tack something that's little bit longer term. I think in the press release and in the comments, the company commented on visibility into early 2022, which is unusual for this time of year. I was hoping that you could frame up what you're seeing as you interact with your various customers as you look out to 2022 on trends that are at play, either with things that we've just talked about like image sensors or potentially High-Bandwidth Memory, Front-End Macro Inspection and then advanced packaging as we move to much more of that with high performance compute. How do the revenue dynamics frame up with their gives and takes as you look to calendar 2022? Not asking for guidance, but just your sense of the market next year.

拉米，這真的很有幫助。作為後續問題，我想問一個稍微長期的問題。我記得在新聞稿和評論中，公司提到了2022年初的可見性，這在每年的這個時候並不常見。我希望您能結合您與各位客戶的互動，展望2022年的趨勢，包括我們剛才談到的影像感測器，或潛在的高頻寬記憶體、前端巨集偵測，以及先進封裝（我們將在高效能運算領域中更多地採用這些技術）。展望2022年，營收動態如何？您如何看待這些因素？我不是想尋求指導，只是想了解您對明年市場的看法。

No, no. I think at this stage, what we can see is people are positive and starting to ask for slots in early next year. I think I mentioned specifically on the DRAM, we have been asked -- we have a solid forecast for sales for the DRAM market, which shows some of the strength of the market. And it's -- I think when we look forward, there is nothing very specific that comes out. I think it comes across from the -- from our applications, CMOS Image Sensors. It's, obviously, the advanced packaging and in the advanced packaging the memories and we see also strength in other areas as the compound semi, power devices, RF.

不，不。我認為現階段，我們看到的是人們持正面態度，開始要求在明年初安排生產。我記得我特別提到DRAM，有人問過我們——我們對DRAM市場的銷售有一個穩健的預測，這反映了市場的一些實力。而且，我認為當我們展望未來時，還沒有非常具體的消息。我認為這來自我們的應用——CMOS影像感測器。顯然，這是先進封裝，以及先進封裝中的記憶器，我們也看到了其他領域的強勁表現，例如複合半導體、功率元件和射頻。

No doubt, the industry is moving in a very positive momentum. People are very anxious to see deliveries. They want to see their machines already in their facilities. And then as a result, people are starting to talk about slots for early in next year. And so the overall picture is definitely very, very positive.

毫無疑問，整個產業正呈現非常積極的發展動能。人們非常渴望看到機器交付，他們希望看到機器已經進入他們的工廠。因此，人們開始討論明年年初的交貨時間。所以，整體情勢肯定非常非常樂觀。

I'll shift to next question before getting back in the queue. Over to Moshe. Moshe, real nice job on the margins in the business. But the question is, one of the things we've seen, not just in semiconductors and capital equipment, but more broadly in technology is that there are supply chain costs that -- in many cases, are impacting margins. It doesn't appear that, that was the case in the second quarter or in the color that we're getting on margins for the third quarter for Camtek. But can you just clarify, were there any supply chain issues that would have impacted shipments or your ability to deliver and is there any gross margin impact related to those issues in the quarter or the other?

在回到提問隊列之前，我先轉到下一個問題。交給Moshe。 Moshe，你們在業務利潤率方面做得非常好。但問題是，我們看到的一個現象，不僅在半導體和資本設備領域，而且在更廣泛的技術領域，供應鏈成本在許多情況下都會影響利潤率。但Camtek第二季的情況似乎並非如此，第三季的利潤率數據也並非如此。您能否澄清一下，是否有任何會影響出貨量或交貨能力的供應鏈問題？這些問題是否對本季或其他季度的毛利率產生了影響？

Yes. So no doubt, there is some pressure from the supply chain across the boards. We see shortage, we see price pressures. And with such a huge growth year-over-year this comes into play in the last few -- so far, we've managed to work around it. There are some price increases, but not significant that impacts our margins. We've managed to also look through the shipping expenses, and they are now in reasonable levels. So overall, I -- we do see some pressure and some supply chain issues, but not to the extent that they have huge impact on the margin itself.

是的。毫無疑問，供應鏈各方面都面臨一些壓力。我們看到了短缺，也看到了價格壓力。由於同比增長如此之快，過去幾年裡，這些壓力開始顯現——到目前為止，我們已經設法解決了。價格確實有上漲，但幅度不大，不會影響我們的利潤率。我們也設法控制了運輸費用，現在運輸費用處於合理水平。所以總的來說，我們確實看到了一些壓力和供應鏈問題，但還不足以對利潤率造成巨大影響。

Our next question will be from Charles Shi of Needham.

我們的下一個問題來自 Needham 的 Charles Shi。

I think the first question I want to ask is around your advanced packaging side of the business. Obviously, 2021 has been very, very strong. And I understand there are things you consider as secular, for example. I do remember you've said your tools can inspect about -- from a few million to possibly a couple of 10s of million bumps per wafer. That requirement is really coming up and you've been asked to inspect about 500 million bumps per wafer at about the same time or maybe a similar throughput. So how do we think about that secular trend in terms of complexity?

我想問的第一個問題是關於你們先進封裝業務的。顯然，2021年的業務非常強勁。我知道你們認為有些事情是長期的，例如。我記得你說過，你們的設備可以偵測每片晶圓幾百萬到幾千萬個焊球。這個需求正在不斷增長，你們被要求在大約相同的時間或類似的吞吐量下，每片晶圓檢測大約5億個焊球。那麼，我們該如何從複雜性的角度看待這種長期趨勢呢？

But we also face another thing that may be a little bit more transitory here because 2019, 2020, there may be a little bit underinvestment by the industry in '21. There was a little bit of catch-up demand. How should we think about how the secular versus transitory demand are playing out in '22? How does that shaping up from your vantage point about the advanced packaging businesses of yours?

但我們還面臨另一個可能更具暫時性的問題，因為2019年和2020年，以及2021年，產業投資可能會略有不足。出現了一些追趕性需求。我們該如何看待2022年長期需求和短期需求將如何演變？從您先進封裝業務的角度來看，這種情況如何發展？

Let's talk about the secular. I think you mentioned the number of bands. So today, I would say the typical wafer would have about 10 million to 20 million bumps per wafer. We are getting wafers today from 60 million to 100 million bumps. And obviously, down the road, there's going to be a lot more bumps per wafer. So this is something that the industry is going to go through because of the requirements for power consumption, for bandwidth, for all kinds of things that are required from the -- as the components grow and progress. So this is a trend, this is a secular trend.

我們來談談長期趨勢。我記得你提到了波段的數量。所以今天，我想說典型的晶圓上大約有1000萬到2000萬個凸點。我們現在的晶圓上有6000萬到1億個凸點。顯然，未來每個晶圓上的凸點數量會更多。這是行業將要經歷的過程，因為隨著組件的成長和進步，對功耗、頻寬以及各種性能的要求都會提高。所以這是一個趨勢，一個長期趨勢。

This is an enabling technology to move ahead in the roadmap of all the major players. So that's something that is going to happen and to continue, and it relates to primarily heterogeneous integration, you talk about Fan-Out and all the other segments are going to grow. So maybe there is a catch-up this year, and there'll be less catch up next year, but when I look 2, 3, 5 years ago, no doubt that this trend is going to continue. And I think as the leader in this segment, definitely, we will -- we are going to enjoy it in the longer term. In the shorter term and in the longer term.

這是一項賦能技術，能夠推動所有主要參與者在路線圖中不斷前進。所以，這種情況將會發生並持續下去，它主要與異質整合、扇出型（Fan-Out）以及所有其他細分市場相關，這些領域都將實現成長。所以，也許今年會出現追趕，明年追趕速度會減緩，但當我回顧2、3、5年前的情況時，毫無疑問，這種趨勢將會持續下去。我認為，作為這一領域的領導者，我們一定會——從長遠來看，無論是短期還是長期，我們都將享受這種趨勢。

I want to go over to the other segment of your CMOS Image Sensor. I heard you did say the other segment, DRAM, you see some pickup in early 2022 and how about the CMOS Image Sensor, which has been a very, very important sector and a segment that kind of serves as one that dampens the decline in bad years for other segments. So the thing I want to ask is, one trend we're really seeing in CMOS Image Sensor is the IDMs appears to be outsourcing more to foundries, especially to foundries in Taiwan. We've heard Samsung maybe outsourcing more to UMC. We also heard TSMC maybe setting up a fab in Japan, which could take some of the outsourcing orders from Sony. I wonder whether you view that kind of outsourcing trend from a CMOS Image Sensor IDMs to foundries being net positive, net negative or neutral to your business?

我想談談你們CMOS影像感測器的另一個細分市場。我聽說您確實提到DRAM（動態隨機存取記憶體）細分市場在2022年初會有所回升，那麼CMOS影像感測器呢？它一直是一個非常非常重要的細分市場，在經濟不景氣的年份，它可以在一定程度上抑制其他細分市場的下滑。我想問的是，我們在CMOS影像感測器領域看到的一個趨勢是，IDM廠商似乎將更多的業務外包給代工廠，尤其是台灣的代工廠。我們聽說三星可能會將更多的業務外包給聯華電子（UMC）。我們也聽說台積電可能會在日本設立晶圓廠，這可能會接手索尼的部分外包訂單。我想知道，您認為CMOS影像感測器IDM廠商向代工廠的這種外包趨勢對你們的業務是利好、利空還是中性？

And the second part of this question is really it has been strong this year and especially this quarter, but on a run rate basis, CMOS Image Sensors seems to be lower this year than 2020. Are you seeing any signs so far that things could turn more positive next year?

這個問題的第二部分是，今年，尤其是本季度，CMOS 影像感測器的銷售確實很強勁，但從運行率來看，今年的 CMOS 影像感測器銷售似乎低於 2020 年。到目前為止，您是否看到任何跡象表明明年情況可能會變得更加積極？

So I'll start with the first question. I think the trend to outsource by some of the players to go to foundries, I think it's a neutral event from our point of view and I don't think it will affect drastically our business, and we are going to enjoy this business anywhere, wherever it goes.

我先從第一個問題開始。我認為有些廠商將業務外包給代工廠的趨勢，從我們的角度來看，這是一個中性事件，不會對我們的業務造成太大影響。無論業務發展到哪裡，我們都會享受它帶來的樂趣。

Now to your second question. I think, we said in previous calls that we expect that the business this year will be double digits. We thought it will not be as high to the extent that we enjoyed from a percentage point of view as last year. We thought it will be lower in percentage, but still significant. Will be double digits. We still forecast it in the same way. I think the second quarter was extremely strong. The next quarters may be a little bit lower the numbers, but all in all, we are seeing and talking to our customers. We continue to see in the next few quarters healthy growth in expenditure in this area. So no doubt, the CMOS Image Sensors we expect it to continue to be a significant part of our business.

現在回答您的第二個問題。我想，我們在之前的電話會議中說過，我們預計今年的業務將達到兩位數成長。我們認為從百分比來看，今年的成長幅度不會像去年那麼高。我們預計百分比會更低，但仍然很可觀。將達到兩位數。我們仍然以相同的方式進行預測。我認為第二季的表現非常強勁。接下來幾季的業績可能會略有下降，但總的來說，我們正在與客戶溝通。我們預計未來幾季該領域的支出將持續健康成長。因此，毫無疑問，我們預計CMOS影像感測器將繼續成為我們業務的重要組成部分。

Our next question is going to be from Thomas O'Malley from Barclays.

我們的下一個問題來自巴克萊銀行的托馬斯·奧馬利。

The first one is really for Moshe. When you look at this past quarter, you're already operating above your long term model. The gross margins are great and the follow-through is really great as well. You mentioned in your prepared remarks that you're adjusting expenses to kind of match the run rate of your business. Can you talk, one, the timing of those rolling on expenses into the back half of this year? What should we see in terms of those additional investments and the timing around that?

第一個問題其實是問Moshe的。回顧上個季度，你們的營運已經超出了長期目標。毛利率很高，後續工作也非常出色。您在準備好的發言中提到，你們正在調整支出，以適應業務的營運速度。您能否談談，第一，這些費用滾動到今年下半年的具體時間？關於這些額外投資以及相關的時間安排，我們該如何看待？

And then two, if you're able to operate at these better gross margins, could you kind of update us on what the -- what the new or what an updated model may look like given the success that you're having in some of the end markets you are?

其次，如果您能夠以這些更好的毛利率運營，您能否向我們介紹一下——考慮到您在一些終端市場取得的成功，新的或更新的模式可能是什麼樣的？

So first of all, I'll touch upon the gross margin question. So we operated this revenue level between 50% to 52%, depends on revenue mix, depends on profitability of the deal mix, and also -- and I don't expect to deviate much from that perspective, even with the supply chain pressure or with other issues around it. So I believe that between 50% and 52% it drives margin for us to operate at this level.

首先，我想談談毛利率的問題。我們的收入水平在50%到52%之間，這取決於收入結構，取決於交易組合的盈利能力，而且——即使面臨供應鏈壓力或其他相關問題，我預計也不會偏離這個水平太多。所以我認為，在50%到52%之間，利潤率才能讓我們維持目前的水準。

With respect to operating expenses, we are in the process of adding headcount across the board, mainly in R&D functions as well as in production and customer support. That's the main area that we are hiring for, and that these people are needed to support the growth. We are talking about the process that we will take, I would say, 3 quarters -- Q3, Q4 and Q1. And throughout this time, we will adjust the headcount level. And at the same time, we are adding some other operating expenses to support the growth.

關於營運費用，我們正在全面增加員工人數，主要集中在研發部門以及生產和客戶支援部門。這是我們招募的主要領域，這些人才是支持業務成長的必要條件。我們預計招募流程將持續三個季度——第三季、第四季和第一季。在此期間，我們將調整員工人數。同時，我們也在增加一些其他營運費用以支援業務成長。

All in all, I think that what we are going to see in the next 3 quarters is relatively higher gross operating margin than our target model. So the current level of 27%, will be -- will stay with us in the next 3 quarters. And then based on our ability to adjust the expense level, I think we will be anywhere between 25% and 27%. So that's kind of how I see the long term or the midterm in terms of operating profitability.

總而言之，我認為我們未來三個季度的毛營業利潤率將高於我們的目標水準。因此，目前27%的毛營業利潤率將在未來三個季度維持下去。然後，根據我們調整費用水準的能力，我認為我們的毛營業利潤率將在25%到27%之間。這是我對長期或中期營業獲利能力的預測。

My follow-up is really about the visibility into the beginning of '22. You mentioned some activity with DRAM customers. You also mentioned in the prepared remarks about some new OSAT customers in China. Can you talk about the mix of business into next year that you're seeing? Where are you feeling most comfortable? I know you mentioned DRAM a bit earlier. But particularly in China, what's the cadence of new customers that are coming online and are they representing a large part of what your forecast is looking like into next year?

我的後續問題其實是關於2022年初的可預見性。您提到了一些與DRAM客戶的合作。您在準備好的發言中也提到了一些中國新的OSAT客戶。您能談談您預計明年的業務結構嗎？您覺得哪個領域最有信心？我知道您之前提到了DRAM。但特別是在中國，新客戶的上線節奏如何？他們是否在很大程度上代表了您對明年業務的預測？

I think when we talk about the applications, it's not just in China. I think it's similar in most of the territories. 60% is advanced packaging. In advanced packaging today, it's a technology that is used more and more for high-end applications, and we see it everywhere in all the geographies and this, definitely, is strong and going to stay strong.

我認為，說到應用，不只是在中國。我認為大多數地區的情況都差不多。 60%是先進封裝。如今，先進封裝技術越來越多地應用於高端應用，我們在所有地區都能看到它，而且這種趨勢無疑會持續強勁。

When we talk about DRAM, it's again -- it's in the -- as part of the advanced packaging. It's -- I would say it's a specific application for advanced packaging. And then are all the rest of the applications. If it's Front-End, it's an area that we are gaining momentum. It's power devices, compound semi, of course, CMOS Image Sensors that we discussed. So basically, we don't see a major change in the application mix. I think they're going to stay around the numbers that we mentioned.

當我們談論DRAM時，它又是先進封裝的一部分。我想說它是先進封裝的一個特定應用。然後是所有其他應用。如果是前端，這是一個我們正在獲得發展動力的領域。它包括功率元件、複合半導體，當然還有我們討論過的CMOS影像感測器。所以基本上，我們沒有看到應用組合有重大變化。我認為它們將保持在我們提到的數字左右。

(Operator Instructions) Next question will be a follow-up from Craig Ellis from B. Riley.

（操作員指示）下一個問題將是來自 B. Riley 的 Craig Ellis 的後續問題。

Just a very strong performance on numerous assets of the business, including converting strong operating performance into cash. And with the cash investments balance up to $200 million, it's a good opportunity just to check in and see what the company is seeing on the potential acquisition front. I know that's part of the strategy. I know that the COVID restrictions make it hard to do some of the front-end execution that go along with that. But can you give us an update on how you're thinking about M&A in this environment, team?

公司眾多資產表現強勁，包括將強勁的營運表現轉化為現金。現金投資餘額高達2億美元，這是一個很好的機會，可以了解公司在潛在收購方面的情況。我知道這是戰略的一部分。我知道新冠疫情的限制措施使得一些相關的前期執行工作變得困難。團隊，您能否向我們介紹一下在這種環境下，您對併購的看法？

Yes. Craig, yes, indeed, we are very focused on the M&A front. We said that this is our #1 priority for cash use. We -- and actually, the team that is involved in this process is Rafi, Ramy and myself so we are really investing a lot of efforts and time on that. I think we are making progress. We have a list of targets and we are very active. Nothing that will be immediate, but we hope this -- we will have something to report at some point. We are working hard on that and there are opportunities, and hopefully, something will come out of this process.

是的。克雷格，是的，我們確實非常專注於併購。我們說過，這是我們現金使用的首要任務。實際上，參與這個過程的團隊包括拉菲、拉米和我，所以我們確實在這方面投入了大量的精力和時間。我認為我們正在取得進展。我們列出了一系列目標，並且非常積極地推進。雖然不會立即實現，但我們希望——在某個時候能有一些可以報告的內容。我們正在努力，並且有機會，希望這個過程能有所收穫。

Moshe, I don't know if it's possible, but can you elaborate a little bit on areas of technology interest, geographic interest or maybe customer acquisition interest that might be at play as you and Rafi and Ramy work through different options and think about how you use M&A to position Camtek for another leg of growth.

Moshe，我不知道這是否可能，但您能否詳細說明一下在您和 Rafi 和 Ramy 研究不同的選擇並思考如何利用併購為 Camtek 的新一輪增長做好準備時可能涉及的技術興趣領域、地理興趣領域或客戶獲取興趣領域。

Okay. There are -- the way how we select the potential companies is, first of all, based on -- let's say, first priority to find a company that we can see a good synergy between us. That's #1 priority. Other priority, of course, it's always to be in the same market that we are active and we try to select profitable company. We don't want to look on start-ups. And even if we find a some potential company, the fact that we cannot travel, we cannot visit, we cannot accelerate this process, this is definitely -- it is obstacle. And it's not so easy for us to manage it only by remote control. So, definitely, this type of M&A right now in this time is going slower than we expected. But definitely, we try to find good companies with potential that could be [merged] very well.

好的。我們選擇潛在公司的方式首先基於——比如說，我們優先考慮的是找到一家我們之間能夠產生良好協同效應的公司。這是首要考慮。當然，另一個優先考慮的是始終選擇我們活躍的市場，並儘量選擇盈利的公司。我們不想把目光投向新創公司。即使我們找到了一家有潛力的公司，由於我們無法出行，無法訪問，無法加速這一進程，這無疑會成為障礙。而且，僅靠遠端控制來管理並不容易。所以，目前這類併購的進展確實比我們預期的要慢。但我們肯定會努力尋找有潛力、可以很好地進行[合併]的優秀公司。

Indeed, Zoom works great for earnings call, maybe not it's great for the early part of an M&A engagement. Rafi, thanks so much for that color. Thanks team.

確實，Zoom 在財報電話會議上表現不錯，但在併購專案的早期階段可能就不太適用了。拉菲，非常感謝你提供的這個顏色。謝謝團隊。

Thank you.

謝謝。

Our next question will be from Patrick Ho from Stifel.

我們的下一個問題來自 Stifel 的 Patrick Ho。

Maybe a question for Moshe first, in terms of the supply chain, you addressed it in your prepared remarks and answer to questions. But I was just wondering from an inventory building perspective, do you believe that 3Q is probably the peak in terms of trying to get additional parts to buffer yourself or is this something that could also carry into Q4 as well?

首先我想問Moshe一個問題，關於供應鏈，您在準備好的發言和回答問題時已經提到了。但我只是想知道，從庫存建設的角度來看，您是否認為第三季可能是試圖獲取額外零件以緩衝庫存的高峰期，還是這種情況也會延續到第四季度？

We are in the process of building up inventory further to support the growth and we are taking a commitment also for 2022 now, given the strengths and the improved visibility into the beginning of 2022. So no, it's not the peak. We are continuing to build up inventory as we continue to increase revenue levels. Yes.

我們正在進一步增加庫存以支持成長。鑑於目前的強勁勢頭以及2022年初前景的改善，我們也對2022年做出了承諾。所以，現在還不是峰值。隨著收入水準的不斷提高，我們將繼續增加庫存。是的。

And maybe just as a bigger picture question on the technology front, you mentioned heterogeneous integration several times on the call, and that's obviously a key growth market in the advanced packaging segment. From, I guess, the types of device that you're seeing the greatest interest, one of them is high-performance computing. But what other areas or what other type devices are you seeing the interest, especially on the heterogeneous integration front?

或許就技術方面而言，您之前在電話會議上多次提到異質集成，這顯然是先進封裝領域關鍵的成長市場。我想，您看到最受關注的設備類型之一就是高效能運算。但是，您還看到了哪些其他領域或其他類型的設備，尤其是在異質整合方面，人們對此感興趣呢？

I think it's primarily today high-performance computing. This is, I would say, the main application.

我認為今天主要是高效能運算。我想說，這是主要的應用。

And that concludes the question-and-answer session. Before I hand over back to Rafi, I'd like to remind everyone that in the coming hours, we will upload the recording of this call to the Investor Relations section of Camtek's website.

問答環節到此結束。在將發言權交還給拉菲之前，我想提醒大家，在接下來的幾個小時裡，我們會將本次電話會議的錄音上傳到Camtek網站的「投資者關係」板塊。

I want to thank everybody for joining this call and again, we'd appreciate any feedback you have with regards to this new format. And with that, I'd like to hand back to Ramy for the concluding statements.

感謝各位參加本次電話會議，我們再次感謝大家對新會議形式的任何回饋。至此，我想將會議的最後發言交給Ramy。

I would like to thank you all for your continued interest in our business. Again, I would like to thank all of our employees and the management team for their tremendous performance, and we look forward to continuing it.

感謝大家對我們業務的持續關注。再次感謝我們全體員工和管理團隊的出色表現，我們期待繼續保持這樣的勢頭。

To our investors, thank you, long term for support. I look forward to talking with you again next quarter. Thank you, and goodbye.

感謝各位投資者長期以來的支持。期待下季再次與大家交流。謝謝大家，再見。

That ends the conference call. You may go ahead and disconnect. Thank you very much.

電話會議到此結束。您可以掛斷電話了。非常感謝。

Good bye.

再見。