Onto Innovation Inc (ONTO) 2023 Q4 法說會逐字稿

Good day and welcome to the Onto Innovation fourth-quarter and full-year earnings release conference call. This conference is being recorded.

美好的一天，歡迎參加 Onto Innovation 第四季和全年收益發布電話會議。本次會議正在錄製中。

At this time, I would like to turn the conference over to Mike Sheaffer, Investor Relations. Please go ahead.

現在，我想將會議交給投資者關係部的 Mike Sheaffer。請繼續。

Thank you, Rachel, and good afternoon, everyone. Onto Innovation issued its 2023 fourth-quarter and full-year financial results this afternoon, shortly after the market closed. If you did not receive a copy of the release, please refer to the company's website where a copy of the release is posted.

謝謝你，雷切爾，大家下午好。今天下午，市場收盤後不久，Onto Innovation 發布了 2023 年第四季和全年財務業績。如果您沒有收到該新聞稿的副本，請參閱發布新聞稿副本的公司網站。

Joining us on the call today are Michael Plisinski, Chief Executive Officer; and Mark Slicer, Chief Financial Officer.

今天加入我們電話會議的是執行長 Michael Plisinski；和財務長 Mark Slicer。

I would like to remind you that the statements made by management on this call will contain forward-looking statements within the meaning of federal securities laws. Those statements are subject to [rate] changes, risks, and uncertainties that could cause actual results to vary materially.

我想提醒您，管理層在本次電話會議上發表的聲明將包含聯邦證券法含義內的前瞻性聲明。這些陳述可能會受到[利率]變化、風險和不確定性的影響，可能導致實際結果出現重大差異。

For more information regarding the risk factors that impact Onto Innovation's results, I would encourage you to review our earnings release and our SEC filings. Onto Innovation does not undertake the obligation to update these forward-looking statements in light of new information or future events.

有關影響 Onto Innovation 業績的風險因素的更多信息，我建議您查看我們的收益報告和 SEC 備案文件。Onto Innovation 不承擔根據新資訊或未來事件更新這些前瞻性聲明的義務。

Today's discussion of our financial results will be presented on a non-GAAP financial basis unless otherwise specified. As a reminder, a detailed reconciliation between GAAP and non-GAAP results can be found in today's earnings release.

除非另有說明，今天對我們財務表現的討論將在非公認會計準則財務基礎上進行。提醒一下，公認會計原則和非公認會計原則結果之間的詳細調節可以在今天的收益報告中找到。

I will now go ahead and turn the call over to our CEO, Mike Plisinski. Mike?

現在我將把電話轉給我們的執行長 Mike Plisinski。麥克風？

Thank you, Mike. Good afternoon, everyone, and thank you for joining our call today. As you may have already seen, Onto Innovation had a strong end to the year with fourth-quarter revenues exceeding the high end of our guidance range. This was primarily due to stronger-than-projected demand for Dragonfly inspection systems to support packaging of memory and logic devices for AI applications. We expect this demand to continue as reflected in our increased guidance range for the first quarter.

謝謝你，麥克。大家下午好，感謝您今天加入我們的電話會議。正如您可能已經看到的，Onto Innovation 在今年年底表現強勁，第四季度收入超過了我們指導範圍的上限。這主要是由於對用於支援人工智慧應用的記憶體和邏輯裝置封裝的 Dragonfly 檢查系統的需求強於預期。我們預計這種需求將持續下去，正如我們第一季提高的指導範圍所反映的那樣。

Financially, we're starting to benefit from tighter controls and operational efficiencies, which resulted in generating over 28% of cash from operations in the quarter while still supporting the multi-quarter surge in demand for the Dragonfly systems. We expect improvements in margins will soon follow, bringing us back in line with the long-term operating model by end of the year.

在財務方面，我們開始受益於更嚴格的控制和營運效率，這導致本季營運產生了超過 28% 的現金，同時仍支援 Dragonfly 系統的多季需求激增。我們預計利潤率很快就會改善，到年底我們將恢復到長期營運模式。

So let's begin with our specialty and advanced packaging customers where the boom in AI spending lifted revenue from this market by 17% over the prior quarter and set a consecutive quarterly record. In fact, since the start of the year, quarterly revenue for the specialty device and advanced packaging markets has grown 65% while, on an annual basis, revenues have risen from $220 million in 2020 to just over $500 million in 2023.

因此，讓我們從我們的專業和先進包裝客戶開始，人工智慧支出的繁榮使該市場的收入比上一季增長了 17%，並連續創下季度記錄。事實上，自今年年初以來，特種裝置和先進封裝市場的季度收入成長了 65%，而以年度計算，營收已從 2020 年的 2.2 億美元增至 2023 年的 5 億多美元。

Several markets have contributed to this growth, including power semiconductors, where demand for our solutions increased 50% this year. But the greatest and most consistent growth has come from our long-standing partnerships with the top semiconductor manufacturers and their increasing investments in advanced packaging, including chiplet and 3D memory architectures.

包括功率半導體在內的多個市場對此成長做出了貢獻，今年這些市場對我們解決方案的需求增加了 50%。但最大、最穩定的成長來自於我們與頂級半導體製造商的長期合作夥伴關係以及他們對先進封裝（包括小型晶片和 3D 記憶體架構）不斷增加的投資。

Over the next several years, as these architectures increasing complexity and interconnect density, we expect additional process steps to create the need for more Dragonfly inspection in new metrology applications. For example, in the fourth quarter, we shipped several of our newer front-end metrology systems, including ecofilms and Aspect metrology to leading manufacturers and (inaudible) for emerging packaging applications.

在接下來的幾年中，隨著這些架構的複雜性和互連密度不斷增加，我們預計會出現額外的製程步驟，從而在新的計量應用中需要更多的 Dragonfly 檢測。例如，在第四季度，我們向領先製造商和（聽不清楚）新興包裝應用交付了多個較新的前端計量系統，包括生態膜和 Aspect 計量。

Another highlight for the quarter was our lithography team shipping three systems as planned to two customers supporting mobile and high performance compute applications. To complement our lithography tools and provide additional technology for leading-edge panel manufacturers, we announced the availability of our latest Firefly G3 panel inspection system in the fourth quarter.

本季度的另一個亮點是我們的光刻團隊按計劃向兩個支援行動和高效能運算應用程式的客戶交付了三個系統。為了補充我們的光刻工具並為領先的面板製造商提供額外的技術，我們宣佈在第四季度推出最新的 Firefly G3 面板檢測系統。

This third generation of our Firefly panel tool now includes all of the metrology capabilities of the Dragonfly G3 and shares the same high-performance optical design. This tool's inspection and metrology capability is being used to qualify glass panel substrates as well as more traditional panels. It is fully integrated with our software solutions, which we expect will help our customers accelerate their ability to reach productivity and yield targets, especially for the next generation of heterogeneous packaging technologies.

我們的第三代 Firefly 面板工具現在包含 Dragonfly G3 的所有計量功能，並採用相同的高性能光纖設計。該工具的檢查和計量功能可用於鑑定玻璃面板基板以及更傳統的面板。它與我們的軟體解決方案完全集成，我們期望這將幫助我們的客戶加快實現生產力和產量目標的能力，特別是對於下一代異質封裝技術。

Turning briefly to the advanced nodes, as we projected, revenue from these customers declined in the fourth quarter, and we believe it has finally reached the bottom. Consistent with historical performance, the revenue was split nearly equally between DRAM, NAND, and logic.

簡單地轉向先進節點，正如我們預計的那樣，來自這些客戶的收入在第四季度有所下降，我們相信它終於觸底了。與歷史表現一致，收入在 DRAM、NAND 和邏輯之間幾乎平分。

Although revenue was light overall, we continue to receive early orders for gate-all-around pilot lines. And in the fourth quarter, we received approximately 20 million of additional orders for Atlas and Iris systems for deliveries in the first half of 2024. We're optimistic that these placements indicate the strengthening of our position when volume ramps occur likely in early 2025.

儘管整體收入較低，但我們仍繼續收到全封閉試驗線的早期訂單。第四季度，我們收到了約 2,000 萬份 Atlas 和 Iris 系統的額外訂單，預計將於 2024 年上半年交付。我們樂觀地認為，當 2025 年初銷量可能出現上升時，這些配售表明我們的地位得到加強。

Now I'll turn the call over to Mark to discuss our financial performance in the fourth quarter and guidance for the first quarter.

現在我將把電話轉給馬克，討論我們第四季的財務表現和第一季的指導。

Thanks, Mike, and good afternoon, everyone. As Mike highlighted, we closed the fourth quarter with revenue of $219 million, up 6% versus the third quarter and a revenue milestone for us in 2023, exceeding our guidance range while achieving a high mark for revenue within the year. Fourth-quarter EPS increased 10% sequentially to $1.06, exceeding the midpoint of our guidance, but constrained by the decline in our high-margin advanced nodes business and lower services parts revenue within the quarter.

謝謝麥克，大家下午好。正如Mike 所強調的那樣，我們第四季度的收入為2.19 億美元，比第三季度增長6%，這對我們來說是2023 年的收入里程碑，超出了我們的指導範圍，同時在年內實現了收入的高分。第四季每股收益環比增長 10% 至 1.06 美元，超過我們指導的中點，但受到高利潤先進節點業務下滑和本季度服務零件收入下降的限制。

Looking at the quarterly revenue by markets, advanced nodes, which had revenue of $18 million, declined 30% over Q3 and represent 8% of revenue. Specialty device and advanced packaging, with record revenue of $158 million, increased 17% over Q3 and represents 72%o f revenue. Software and services, with revenue of $42 million, declined 8% over Q3 while representing 20% of revenue.

從各市場的季度營收來看，先進節點的營收為 1,800 萬美元，較第三季下降 30%，佔營收的 8%。特種裝置和先進封裝的收入達到創紀錄的 1.58 億美元，比第三季成長 17%，佔營收的 72%。軟體和服務的收入為 4,200 萬美元，較第三季下降 8%，但佔營收的 20%。

Fourth-quarter operating expenses were $56 million, at the low end of our guidance range of $56 million to $58 million. We continue to actively manage costs while realizing the benefits of our cost reduction initiatives put in place earlier in the year in driving our OpEx run rate back to Q4 '21 levels.

第四季營運費用為 5,600 萬美元，處於我們指引範圍 5,600 萬美元至 5,800 萬美元的下限。我們繼續積極管理成本，同時實現今年早些時候實施的成本削減計劃的好處，將我們的營運支出運行率拉回到 21 年第 4 季的水平。

Our operating income of $56 million was 26% of revenue for the fourth quarter compared to 24% for the third quarter. Our net income for the fourth quarter was [$52 million], 24% of revenue versus 23% for the third quarter. Both operating income and net income performance versus the third quarter highlight our improving operating leverage within the year.

我們的營業收入為 5,600 萬美元，佔第四季營收的 26%，而第三季為 24%。我們第四季的淨利潤為 [5​​,200 萬美元]，佔營收的 24%，而第三季為 23%。與第三季相比，營業收入和淨利表現都突顯了我們年內營業槓桿的改善。

Now, moving to the balance sheet. We ended the fourth quarter with cash and short-term investments of $698 million, an increase of $150 million from the beginning of the year, with operating cash flow $62 million within the quarter, representing 28% of revenue and achieving record for operating cash flow.

現在，轉向資產負債表。截至第四季末，我們的現金和短期投資為 6.98 億美元，較年初增加 1.5 億美元，季度內營運現金流為 6,200 萬美元，佔營收的 28%，創營運現金流歷史新高。

Inventory ended the quarter at $328 million, a decrease of $18 million from Q3, representing a 14% reduction of our days inventory outstanding. Even with ramping Dragonfly production requiring us to procure long lead time items, we do expect further reduction in inventory days outstanding, as inventory optimization remains a critical working capital focus area to drive consistent cash flow performance levels exceeding 20% of revenue.

本季末庫存為 3.28 億美元，比第三季減少 1,800 萬美元，相當於我們的未清庫存天數減少了 14%。即使 Dragonfly 產量的增加要求我們採購交貨時間較長的物品，我們預計庫存天數將進一步減少，因為庫存優化仍然是關鍵的營運資金重點領域，以推動現金流績效水準持續超過收入的 20%。

Accounts receivable increased $17 million to $227 million in the quarter. And our days sales outstanding increased two days to 94 days.

該季度應收帳款增加 1,700 萬美元，達到 2.27 億美元。我們的銷售天數增加了兩天，達到 94 天。

Now turning to our outlook for Q1. We currently expect our revenue for the first quarter to be between $215 million and $230 million. We expect gross margins will be between 51% to 53% as we continue to experience historical lows in the advanced nodes business and only the initial phases our supply chain reductions taking hold in the quarter.

現在轉向我們對第一季的展望。我們目前預計第一季的營收將在 2.15 億美元至 2.3 億美元之間。我們預計毛利率將在 51% 至 53% 之間，因為我們的先進節點業務繼續經歷歷史低點，並且本季供應鏈削減僅處於初始階段。

For operating expenses, we expect to be between $58 million to $60 million, higher versus Q4 primarily due to annual reset of payroll taxes and other compensation components. For the full year '24, we expect our effective tax rate to be between 14% to 16%, which does not assume any impact for potential tax legislative changes that may have occur during the year. We expect our diluted share count for Q1 to be approximately 49.8 million shares.

對於營運費用，我們預計將在 5800 萬美元至 6000 萬美元之間，高於第四季度，主要是由於工資稅和其他薪酬部分的年度重置。對於 24 年全年，我們預計有效稅率將在 14% 至 16% 之間，這並未假設年內可能發生的潛在稅收立法變化產生任何影響。我們預計第一季的稀釋後股份數量約為 4,980 萬股。

Based on these assumptions, we anticipate our non-GAAP earnings for the first quarter to be between $1 per share to $1.20 per share. Looking forward to 2024, a critical focus area for us continues to be our targeted programs for operating improvements necessary to return to our operating model.

基於這些假設，我們預計第一季的非 GAAP 收益將在每股 1 美元至 1.20 美元之間。展望 2024 年，我們的一個關鍵重點領域仍然是我們有針對性的營運改善計劃，以恢復我們的營運模式。

And with that, I will turn it back to Mike for additional insights into Q1 and 2024. Mike?

接下來，我會將其轉回給 Mike，以獲取有關第一季和 2024 年的更多見解。麥克風？

Thank you, Mark. Our guidance range for the first quarter reflects continued strong demand for our Dragonfly inspection systems to support increases in AI device production. By way of comparison, our inspection business in the first quarter is expected to be three times larger than Q1 of last year before the generative AI and LLMs started to hit the market. In contrast, advanced node spending is still at historical lows. But we do expect advanced note revenue to pick up a bit in the first quarter and gain some strength through the year.

謝謝你，馬克。我們第一季的指導範圍反映了對我們的 Dragonfly 檢測系統的持續強勁需求，以支援人工智慧設備產量的成長。相較之下，在生成式人工智慧和法學碩士開始進入市場之前，我們第一季的檢查業務預計將是去年第一季的三倍。相較之下，先進節點支出仍處於歷史低點。但我們確實預計第一季預付票據收入將略有回升，並在全年中獲得一些成長。

Broadly speaking, we see advanced packaging, especially for the leading-edge AI devices, will be a healthy multi-year driver for our business. We're encouraged by the recent comments from TSMC during their earnings call, in which they are forecasting a 50% CAGR through 2027 for the AI application processors.

從廣義上講，我們認為先進的封裝，尤其是領先的人工智慧設備，將成為我們業務的多年健康驅動力。台積電最近在財報電話會議上發表的言論令我們感到鼓舞，他們預測人工智慧應用處理器到 2027 年的複合年增長率將達到 50%。

In addition, they also are forecasting we greatly increased silicon content for networking and edge devices that will begin adding neuro processing in phones and PCs. Gartner provided a similar outlook with their expectation that AI semiconductor revenues forecast to be about $140 billion by 2027, a more subdued 27% CAGR.

此外，他們還預測我們將大大增加網路和邊緣設備的矽含量，這些設備將開始在手機和個人電腦中添加神經處理功能。Gartner 也給出了類似的展望，預計到 2027 年，人工智慧半導體收入預計將達到 1,400 億美元左右，複合年增長率為 27%。

What we find exciting is that in addition to the growth rate for AI devices, we expect an increase in capital intensity of process control for those devices as manufacturers increase stacks of DRAM, implement denser and smaller interconnect, and include a greater number of chiplets per package. The increase in complexity will require greater emphasis on the interconnect quality, and the number of steps will increase with layers and complexity. By continuing our partnerships with leaders in this market, we're developing the technologies they require to maintain the pace of innovation and meet production yield targets.

我們發現令人興奮的是，除了人工智慧設備的成長率之外，我們預計隨著製造商增加DRAM 堆疊、實現更密集和更小的互連以及每個晶片包含更多數量的小晶片，這些設備的流程控制的資本強度也會增加。包裹。複雜性的增加將需要更加重視互連質量，步驟的數量將隨著層數和複雜性的增加而增加。透過繼續與該市場的領導者合作，我們正在開發他們所需的技術，以保持創新步伐並實現產量目標。

We're only in the dawn of the AI era, and the outlook is very exciting. We expect AI packaging to be a strong driver for 2024, with our backyard -- backlog already extending into the second half of the year. However, the timing and magnitude of the recovery of an advanced nodes remains uncertain, even as we see tool utilizations improving and incremental technology buys increasing. Based on the strength of our AI packaging business and gradual recovery in the advanced nodes, we project low double-digit growth for the year.

我們正處於人工智慧時代的黎明，前景非常令人興奮。我們預計人工智慧包裝將成為 2024 年的強勁推動力，我們的後院積壓訂單已延長至今年下半年。然而，即使我們看到工具利用率提高和增量技術購買增加，先進節點恢復的時間和幅度仍然不確定。基於我們人工智慧封裝業務的實力以及先進節點的逐步復甦，我們預計今年將實現兩位數的低成長。

With that, Rachel, we'll open the call to your questions. Rachel?

雷切爾，接下來我們將開始回答您的問題。雷切爾？

Thank you. (Operator Instructions) Vedvati Shrotre, Jefferies.

謝謝。（操作員說明）Vedvati Shrotre，Jefferies。

Hi, thanks for taking my question. The first one is -- so last couple of quarters, you've talked about multiple orders, I think, going to $230 million for your packaging revenue. Could you talk about the order momentum you are seeing? Is that the trajectory that continues as we go into next quarter?

您好，感謝您提出我的問題。第一個是——過去幾個季度，您談到了多個訂單，我認為，您的包裝收入將達到 2.3 億美元。您能談談您所看到的訂單動能嗎？當我們進入下個季度時，這種軌跡還會繼續嗎？

Going into the next two -- so the backlog is there to -- yeah. So going into the next two quarters, we'll be strong. And that's reflected in the increase in our guidance. Second half, as we mentioned, we've got backlog that extends all the way through the second half, not at the same level. But it's still early, and we'll see where our customers start to increase as they come out of Chinese New Year -- Lunar New Year.

進入接下來的兩個 - 所以積壓是為了 - 是的。因此，進入接下來的兩個季度，我們將表現強勁。這反映在我們指導意見的增加。下半年，正如我們所提到的，我們的積壓一直延伸到下半年，但水平不同。但現在還為時過早，我們會看到我們的客戶在農曆新年結束後開始增加。

Right. And for my second -- if I may ask a follow-up. So you talked about the strength in metrology starting to get used in packaging application. Could you compare and contrast what kind of use cases there are for (inaudible) tools versus what Dragonfly did on the inspection side?

正確的。我的第二個問題——請容許我跟進。所以您談到了計量學的優勢開始應用於包裝應用。您能否比較和對比（聽不清楚）工具的用例類型與 Dragonfly 在檢查方面的用途？

It's different types of metrology that are more complex. So in some cases, we could be looking for voids in metals or we're looking for metal thicknesses that the Dragonfly doesn't do as well as the Echo product line does. There's different applications for that, whether you're looking at TSVs or bump -- the creation of the -- metal stacking of bumps and bond pads, things like that. There's some other applications as well, but that gives you an idea.

這是更複雜的不同類型的計量學。因此，在某些情況下，我們可能會尋找金屬中的空隙，或者我們正在尋找 Dragonfly 不如 Echo 產品線的金屬厚度。這有不同的應用，無論是 TSV 還是凸塊（凸塊和焊盤的金屬堆疊的創建），諸如此類。還有一些其他應用程序，但這給了您一個想法。

Okay, that's helpful. Thank you.

好的，這很有幫助。謝謝。

Craig Ellis, B. Riley Securities.

克雷格·艾利斯，B.萊利證券。

Yeah, thanks for taking my question. Mike, I want to start with some a couple with you. One, great to see the strength in advanced packaging and Dragonfly. The question is this. Given how robustly that business has ramped up 3x year over year, can you just talk about some of the manufacturing and fulfillment issues? How are you doing on capacity, any constraints, et cetera, as you look to meet demand that exists through your first-quarter guide? And then just a further momentum in the second quarter.

是的，謝謝你回答我的問題。麥克，我想先跟你聊幾句。第一，很高興看到先進封裝和 Dragonfly 的實力。問題是這樣的。鑑於該業務年增了 3 倍，您能否談談一些製造和履行問題？當您希望滿足第一季指南中存在的需求時，您在產能、任何限制等方面做得如何？然後是第二季的進一步勢頭。

Yeah, that's a good question and it's a good concern. But I'm actually very impressed with our team. They've done a great job working with our suppliers, working internally, moving resources from one factory to another, for instance, from California to Minnesota, in order to ensure that we're able to meet the ramp with the level of quality that customers expect from us and even increase it again.

是的，這是一個很好的問題，也是一個很好的擔憂。但實際上我對我們的團隊印象非常深刻。他們在與我們的供應商合作、內部工作方面做得非常出色，將資源從一個工廠轉移到另一個工廠，例如從加利福尼亞州轉移到明尼蘇達州，以確保我們能夠滿足需求的品質水平。客戶對我們的期望甚至再次提高。

So we talked about, at Q4, we're increasing the capacity again for the first half of the year as well. So so far, the team's done an outstanding job working through everything. And we don't see -- we're overcoming every hiccup that we see.

因此，我們在第四季談到，我們也將再次增加上半年的產能。到目前為止，團隊在所有方面都做得非常出色。我們沒有看到——我們正在克服我們看到的每一個小問題。

Yeah, got it. Okay. Good to hear. And then secondly, you did mention you expect pretty modest advanced node pickup in the first half of the year and that to accelerate. Can you talk about which end use areas are the first to see increased tool shipment activity? And how would you expect the other end use areas to layer on as you go to the second half and into next year?

是的，明白了。好的。很高興聽到。其次，您確實提到您預計今年上半年先進節點的成長將相當適度，並且會加速。您能否談談哪些最終使用領域最先看到工具運輸活動的增加？當您進入下半年和明年時，您預計其他最終用途領域將如何發展？

Yeah, I think it's mostly logic and then followed by DRAM. And again, these are incremental improvements. I think there's still a lot -- as I mentioned, still a lot of uncertainties when we'll see real volumes picking up, maybe in the second half or maybe into early next year. But we're definitely seeing some incremental improvements. We've even seen some incremental improvements in NAND, but that will be a little bit further out.

是的，我認為主要是邏輯，然後是 DRAM。再說一遍，這些都是漸進式的改進。我認為，正如我所提到的，當我們看到實際交易量回升時，仍然存在著許多不確定性，可能是在下半年，也可能是明年初。但我們確實看到了一些漸進的改進。我們甚至看到了 NAND 的一些漸進式改進，但這還有些遙遠。

Sure. And then if I could just sneak one in for Mark. Mark, nice to hear that the efficiency enhancements are benefiting things like cash generation with record operating cash flow. The question is on impacted gross margin. You indicated you expect to be back in the target model by the end of the year. What's the contour for getting there? Is it fairly linear from here or is it really more back-end loaded with a little help from advanced nodes? Thank you.

當然。然後我是否可以偷偷地為馬克帶一份。馬克，很高興聽到效率的提高正在使現金產生等方面受益，營運現金流創歷史新高。問題在於受影響的毛利率。您表示預計將在今年底前恢復到目標模型。到達那裡的輪廓是怎樣的？從這裡開始它是相當線性的，還是在高級節點的幫助下，它真的更多地加載到後端？謝謝。

Yeah, Craig. No. Certainly, as we look at the model for the year, I mean, our goal is certainly to show quarter-over-quarter improvement in gross margin. It really comes down to just executing -- similar to what we did with operating expenses in working capital management, just executing what we have in place right now for supplier management, price, commodity pricing; and executing the supply chain initiatives that we have.

是的，克雷格。不。當然，當我們審視今年的模型時，我的意思是，我們的目標肯定是顯示毛利率環比改善。這實際上歸結為執行——類似於我們在營運資本管理中對營運費用的處理，只需執行我們現在針對供應商管理、價格、商品定價所採取的措施；並執行我們現有的供應鏈計劃。

It does certainly help to have advance nodes back in the area where it was previously. I mean, that is our historically higher margin business. But again, there's a lot of things in our control from a cost perspective that we still need to get moving in the year to continue to show that improvement.

讓先進節點回到之前所在的區域確實有幫助。我的意思是，這是我們歷史上利潤率較高的業務。但同樣，從成本角度來看，我們仍然可以控制很多事情，我們仍然需要在今年採取行動，以繼續顯示出這種改進。

Got it. Thanks, guys.

知道了。多謝你們。

Brian Chin, Stifel.

布萊恩·欽，斯蒂菲爾。

Hi there. Good afternoon. Thanks for letting us ask a few questions. Maybe, Mike, where have you managed to keep lead times on the Dragonfly, given the demand and your ability to stay in front of it? And more broadly, we've been talking to customers.

你好呀。午安.感謝您讓我們問幾個問題。也許，麥克，考慮到需求和您保持領先的能力，您在“蜻蜓”上如何設法保持交貨時間？更廣泛地說，我們一直在與客戶交談。

What are your discussions around second-half capacity needs for AI packaging? And should we really think about second-half expansion being a function of expectations for growth in the AI market in 2025? Is that the right way to think about that?

您對下半年AI封裝產能需求有何討論？我們是否真的應該將下半年的擴張視為 2025 年人工智慧市場成長預期的函數？這是正確的思考方式嗎？

Yeah, Brian. So from a lead time perspective, of course, in the packaging world for forever, we had very short visibility and we would always build to a forecast or projection. So lead time is somewhat misleading. But I would say around two quarters' lead times right now, given the high demand for the Dragonfly.

是的，布萊恩。因此，從交貨時間的角度來看，當然，在包裝世界中，我們的可見度非常短，我們總是會進行預測或預測。所以交貨時間有些誤導。但鑑於對蜻蜓的需求量很大，我想說現在的交貨時間大約是兩季。

The second-half expansion is a question right now. I think there's more certainty in 2025, another round of expansion. Our customers are looking at their order books and influx and seeing if the capacity they have that they're bringing online now in the last three quarters, Q4, Q1, Q2, will be enough to get them through the second half or if they need to add additional capacity.

下半年的擴張現在是一個問題。我認為 2025 年會有更多確定性，即另一輪擴張。我們的客戶正在查看他們的訂單和湧入情況，看看他們在過去三個季度（第四季、第一季、第二季）上線的產能是否足以讓他們度過下半年，或者他們是否需要增加額外的容量。

Okay.

好的。

But we've been given more stronger indication that 2025 would be a year that they need to add.

但我們得到了更強有力的跡象表明 2025 年將是他們需要添加的一年。

Okay, got it. I guess looking at your 1Q guide, your commentary about the full year, looks like you still have -- even though you have a harder [compare with probably not appears] with maybe one of the few companies guiding for growth in first half versus second half last year. It looks like based on overall improvement in the business, you see some pickup in the second half or maybe you're tempering it at the moment.

好，知道了。我想看看你的第一季度指南，你對全年的評論，看起來你仍然有- 儘管你有一個更困難的[與可能不會出現的比較]，也許是少數幾家指導上半年與下半年成長的公司之一去年一半。看起來，基於業務的整體改善，你會看到下半年回升，或者你現在可能正在調整它。

I'm tempering it at the moment.

我現在正在緩和它。

Okay. Fair enough. And then maybe, Mark, a question -- additional follow up on the gross margins. The -- obviously, advanced nodes is very cyclically depressed and you're not calling for that big of a pickup in that business at the moment this year. But you do expect to be in the model back in the target model. So it kind of suggests that when you just get any start, pick up, not even close to sort of prior peak levels, but -- saw some pickup in the advanced nodes. You should be really comfortable within that target model probably even exceeding it. Tom?

好的。很公平。馬克，也許還有一個問題——對毛利率的額外後續。顯然，先進節點的周期性蕭條非常嚴重，你並不要求今年該業務有那麼大的回升。但您確實希望模型回到目標模型中。因此，這表明當你剛開始時，就會有所回升，甚至沒有接近之前的峰值水平，但是——在高級節點中看到了一些回升。您應該對目標模型感到非常滿意，甚至可能超過它。湯姆？

Yeah, absolutely. I mean when we get those numbers back, certainly, there are things we're doing now from a cost and operational standpoint are just going to accelerate that.

是的，絕對是。我的意思是，當我們得到這些數字時，當然，從成本和營運的角度來看，我們現在正在做的事情只會加速這個過程。

Yeah, how many points of drag on gross margins is the depressed revenue level advanced nodes right now?

是啊，現在低迷的收入水準對先進節點的毛利率有多少拖累？

Yeah, I wouldn't comment specifically on that. I would just say we've always stated that advanced nodes was well above company average. And the inspection business was at company average.

是的，我不會對此發表具體評論。我想說的是，我們一直表示先進節點遠高於公司平均。檢驗業務處於公司平均。

Okay, thank you.

好的謝謝。

Charles Shi, Needham.

查爾斯·施，李約瑟。

Hi, good afternoon. The first question, Mike, I think one quarter ago, you were expecting AI chip packaging-related revenue to be up by 50% in Q4. What was the actual number, just given you did beat our guidance by roughly $ 10 million. Probably, if we look at over 50 would be my guess, but I really want to hear. what was an actual number.

嗨，下午好。第一個問題，Mike，我想一個季度前，您預計第四季度 AI 晶片封裝相關收入將成長 50%。實際數字是多少，確實超出了我們的指導價值約 1000 萬美元。也許，如果我們看看超過 50 個，這就是我的猜測，但我真的很想聽聽。實際數字是多少。

Yeah, that's a good question, Brian -- sorry, Charles, but I don't have that number in front of me. However, nearly all of the upside we saw in the quarter, if not all of it, was tied to the to the AI packaging. So basically, that $10 million increase was primarily from that.

是的，這是一個很好的問題，布萊恩 - 對不起，查爾斯，但我面前沒有這個號碼。然而，我們在本季看到的幾乎所有好處（如果不是全部的話）都與人工智慧封裝有關。所以基本上，1000 萬美元的成長主要來自於此。

Got it. The second question, I think it's interesting you mentioned that Atlas being adopted, if I heard you correctly, for AI packaging applications. It does -- when I look at [aspect] that, it seems like a (inaudible) OCD systems (inaudible) portfolio. And it's interesting that's being adopted for packaging. Can you provide a little bit of color, what exactly is that used for?

知道了。第二個問題，我認為有趣的是，如果我沒聽錯的話，您提到 Atlas 被用於人工智慧包裝應用程式。確實如此——當我看[方面]時，它似乎是一個（聽不清楚）強迫症系統（聽不清楚）組合。有趣的是，它被用於包裝。你能提供一點顏色嗎，它到底是用來做什麼的？

Well, it has some unique capabilities. Remember, it was designed to measure the channel holes for 3D NAND, so big, big, high, deep aspect ratio, metrology applications for 3D NAND. And you can imagine that there's some applications similar to that in advanced packaging that the product is being applied to, TSVs, for instance, and some other things that I'm not sure how much is public from our customers.

嗯，它有一些獨特的功能。請記住，它是為測量 3D NAND 的通道孔而設計的，因此適用於 3D NAND 的大、大、高、深的深寬比計量應用。您可以想像，有一些與該產品所應用的先進封裝類似的應用，例如 TSV，以及其他一些我不確定我們的客戶公開了多少的應用。

(inaudible) is it more on the HBM application or more on the logic packaging side?

（聽不清楚）更多的是 HBM 應用程式還是邏輯封裝方面？

Yes. No, I think it's more on the HBM applications right now, yeah.

是的。不，我認為現在更多的是 HBM 應用程序，是的。

Yeah, got it. Got it. Lastly, well really, thanks for the color you provided about the trend in this AI side of the business. I want to ask you, what's the status for the HBM in terms of orders?

是的，明白了。知道了。最後，真的，感謝您提供有關人工智慧業務方面趨勢的資訊。我想問一下，HBM的訂單狀況如何？

I think when you started seeing all these orders, you started to see one customer primarily, the HBM customer. And then last quarter, you're talking about a second HBM customer becomes aggressive. The third felt like it was still a little bit muted. Was that the same, like one quarter later now is the status. And I [wanted to thank] the third [guy] on the pick-up orders.

我認為當您開始看到所有這些訂單時，您開始主要看到一個客戶，即 HBM 客戶。然後上個季度，第二個 HBM 客戶變得咄咄逼人。第三個感覺還是有點靜音。是不是一樣，好像四分之一年後現在就是這個狀態了。我[想感謝]提貨訂單上的第三個[人]。

We think the third guy's picking up. So not saying who's who, but in the shell game of one, two, three, we think the third is also picking up now and investing. And they have some unique technology that they think is going to help give them some market share advantages.

我們認為第三個人正在接電話。因此，並不是說誰是誰，而是在一、二、三的騙局中，我們認為第三個現在也正在崛起並進行投資。他們擁有一些獨特的技術，他們認為這些技術將有助於他們獲得一些市場佔有率優勢。

Thanks, Mike.

謝謝，麥克。

You're welcome.

不客氣。

David Duley, Steelhead Securities. If you're speaking to me, I am unable to hear you. Please check the mute button --

大衛杜利 (David Duley)，Steelhead 證券公司。如果你對我說話，我聽不到你的聲音。請檢查靜音按鈕--

Yeah, I'm sorry. I'm on mute. Yeah, I'm on mute. I'm sorry.

是的，對不起。我靜音了是的，我靜音了。對不起。

My first question is on gross margins. Just so I understand, it sounds like gross margins will improve without volume or mix because of cost reductions and what you've been focusing in on. Is that accurate?

我的第一個問題是關於毛利率。據我了解，由於成本降低以及您一直關注的問題，聽起來毛利率將在沒有數量或混合的情況下提高。準確嗎？

Yes, yes.

是的是的。

Great. And then as far as the AI inspection revenue, could you help us understand whatever the growth rate you had last year? How much do you think this is driven by units and/or how much do you think it's driven by much greater levels of intensity?

偉大的。那麼就人工智慧檢查收入而言，您能否幫助我們了解您去年的成長率是多少？您認為這在多大程度上是由單位驅動的和/或您認為它在多大程度上是由更高水平的強度驅動的？

And then as a follow-up to that, as far as Onto goes, does your business have a -- which is a greater piece of this inspection business? Is it high bandwidth memory or the GPU inspection? Thank you.

作為後續行動，就 Onto 而言，您的企業是否有—哪一個是檢驗業務中更大的一部分？是高頻寬記憶體還是GPU檢查？謝謝。

Thanks, Dave. So I mean, a year ago, AI wasn't really on the radar. So I would say -- and the volumes or the pure number of wafers tied to AI is not that high. So this is really about capital intensity. This is really about the complexity of these advanced architectures and how much [precise] metrology and inspection is required to yield these devices.

謝謝，戴夫。所以我的意思是，一年前，人工智慧還沒有真正受到關注。所以我想說——與人工智慧相關的晶圓數量或純粹數量並沒有那麼高。所以這其實與資本密集度有關。這實際上與這些先進架構的複雜性以及生產這些設備需要多少[精確]計量和檢測有關。

So I think that's always been something we've talked about for years, that in these really advanced applications, our Dragonfly tends to shine. It's a Swiss Army knife containing both inspection, metrology,, unique capabilities and [clear sign] that our customers have driven us to ever greater levels of performance.

所以我認為這一直是我們多年來一直在談論的事情，在這些真正先進的應用程式中，我們的 Dragonfly 往往會大放異彩。它是一把瑞士軍刀，包含檢查、計量、獨特的功能和[明確的標誌]，我們的客戶推動我們達到更高的性能水平。

As far as the mix goes, I think the capital intensity is higher for logic. But there are three HBM players. So at least right now, what we've said is our backlog was roughly half-and-half, HBM and logic.

就組合而言，我認為邏輯上資本密集度較高。但HBM球員有3名。所以至少現在，我們所說的是我們的積壓工作大約是 HBM 和邏輯各佔一半。

Okay, thank you.

好的謝謝。

Mark Miller, Benchmark Company.

馬克·米勒，基準公司。

Thank you for the question. You mentioned gate-all-around. You're getting some traction there. I'm just wondering, when does that fully ramp? Is it later this year or 2025?

感謝你的提問。你提到了全環門。你在那裡得到了一些牽引力。我只是想知道，什麼時候才能完全提升？是今年稍後還是 2025 年？

And also about the new fab, the funding by US and Europe and Japan for new fabs' internal chip production. When does that start to really be in full bloom?

還有關於新工廠，美國、歐洲和日本為新工廠內部晶片生產提供的資金。它什麼時候開始真正盛開？

Yeah. So as far as when gate-all-around really ramps, that's the million dollar question we all would like to know. I don't have any great clarity there. Right now, we've bet on an early 2025. There are some signs I read recently.

是的。因此，就何時真正提升閘門而言，這是我們都想知道的價值百萬美元的問題。我對此不太清楚。目前，我們押注於 2025 年初。我最近讀到了一些跡象。

And two, certainly, they're seeing stronger demand. So maybe that pulls in, but we're not seeing anything yet definitive, one way or another, where that ends up ramping. We just know our job right now is to make sure we have a strong a position in gate-all-around as possible. So when it does ramp, we can benefit the most we possibly can.

當然，第二，他們看到了更強勁的需求。所以也許這會產生影響，但我們還沒有看到任何最終的結果，無論是哪種方式。我們只知道我們現在的工作是確保我們在全面的大門中擁有盡可能強大的地位。因此，當它確實增加時，我們可以最大限度地受益。

As far as the fabs around the world that are being incented, whether it's Europe, Japan, US, we've already taken some orders for at least -- I don't know on memory about the European. But for sure, in Japan and in the US, we've already taken orders. But these are very small and those fabs aren't, obviously, as you know, ramping just yet.

就世界各地受到激勵的晶圓廠而言，無論是歐洲、日本、美國，我們至少已經接到了一些訂單——我不記得歐洲的情況。但可以肯定的是，在日本和美國，我們已經接到訂單了。但如你所知，這些工廠規模非常小，而且顯然還沒有開始擴張。

Thank you.

謝謝。

(Operator Instructions) Vedvati Shrotre, Jefferies.

（操作員說明）Vedvati Shrotre，Jefferies。

Hi. Thanks for taking my question again. So you provided some color on the power -- the specialty market. They kept growing 40% this year. Could you talk about what you're seeing into 2024? Does it continue to be strong or are you starting to see weakness there?

你好。感謝您再次提出我的問題。所以你提供了一些關於電力——專業市場的色彩。今年他們保持了 40% 的成長。您能談談您對 2024 年的展望嗎？它是繼續強勁還是你開始看到那裡的疲軟？

No, we continue to see very strong specialty device and packaging going into 2024. So well over --

不會，到 2024 年，我們將繼續看到非常強大的特殊設備和包裝。就這樣結束了--

I just meant the power piece of it. Does the power piece of it grow as well --

我只是指它的力量部分。它的力量部分也會成長嗎--

Ah, power. No. We think it could grow. We're more comfortable with flat at this record level, and there's opportunities for it to grow. We're working with customers in certain timing of their expansions.

啊，力量。不。我們認為它可以增長。我們對這個創紀錄水平的持平感到更加滿意，而且它還有成長的機會。我們正在客戶擴張的特定時間與他們合作。

One of the things that we benefit from, being process control, is our value proposition isn't just tied to expansions with these customers. It's tied to output and the quality of the output. So some of these fabs still have a lot of opportunity to improve yields and therefore improve output without huge capital expense. So a lot of customers we're talking to were still focusing on that value proposition and seeing some traction there.

我們受益的事情之一是流程控制，我們的價值主張不僅與這些客戶的擴張有關。它與產出和產出品質有關。因此，其中一些晶圓廠仍然有許多機會提高產量，從而在無需巨額資本支出的情況下提高產量。因此，與我們交談的許多客戶仍然關注這一價值主張，並看到了一些吸引力。

I see. And if I may double-click on that. So as far as I understand, most of your China revenues really come from the power revenues. So is that -- could you talk about the non-China versus China spend and how that's looking? Is it different from each other or -- are the trends different from each other in the two markets?

我懂了。我可以雙擊它嗎？據我了解，你們中國的大部分收入其實來自電力收入。那麼，您能談談非中國與中國的支出以及情況如何嗎？是否彼此不同，或者兩個市場的趨勢是否不同？

No, I don't believe they're different. We have activity in Japan, Europe, US, as well as China, including discussions into 2024. So I wouldn't say there's any difference from that perspective.

不，我不相信他們有什麼不同。我們在日本、歐洲、美國和中國都有活動，包括一直到 2024 年的討論。所以我不會說從這個角度來看有什麼不同。

Okay. Thank you.

好的。謝謝。

David Duley, Steelhead Securities.

大衛杜利 (David Duley)，Steelhead 證券公司。

Yeah. A couple of questions from me. Mike, could you talk a little bit more about the lithography tool deliveries during the quarter? I think I missed some of the detail. I think you said there was three systems, two customers. I didn't catch which applications. I was wondering if you could also elaborate. Are these new customers or are they current customers that are bringing more tools online?

是的。我有幾個問題。麥克，您能多談談本季光刻工具的交付情況嗎？我想我錯過了一些細節。我想你說過有三個系統，兩個客戶。我沒聽清楚是哪些應用程式。我想知道你是否也能詳細說明一下。這些是帶來更多線上工具的新客戶還是現有客戶？

Good questions. You pretty much got it. There are two applications, mobile and high performance compute. So those are the primary applications. And there are two existing customers, so buying -- repeat business. So it's repeat orders from existing customers.

好問題。你差不多明白了。有兩種應用程式：行動和高效能運算。這些是主要的應用程式。並且有兩個現有客戶，因此購買 - 重複業務。所以這是現有客戶的重複訂單。

And would you expect to see this customer base continue to expand? Or as far as the growth in that segment in '24, if it does grow, is it going to come from current customers or adding new customers? Or how should we think about that?

您希望看到這個客戶群繼續擴大嗎？或者就 24 年該細分市場的成長而言，如果確實成長，是來自現有客戶還是增加新客戶？或者說我們該如何思考這個問題？

Well, we already have a new customer that we've talked about for [Glaff]. So that's a new customer, and we mentioned we'll be shipping that tool sometime in the summer. But the bulk of the 2024 will be repeat business. And then I think in 2025, we'll see more new customers as well as some repeat business as well.

嗯，我們已經有了一個我們已經談過的新客戶[格拉夫]。這是一個新客戶，我們提到我們將在夏天的某個時候運送該工具。但 2024 年的大部分時間將是重複業務。我認為到 2025 年，我們將看到更多的新客戶以及一些回頭客。

Is that glass substrate customers or logic applications or --

是玻璃基板客戶還是邏輯應用還是--

I believe so.

我相信是這樣。

Okay. Final question from me is -- and I'm sorry if you already mentioned it. You talked about how your packaging revenue has grown dramatically, I think 3x last year. What would you guess the growth rate would be for that segment of your business in 2024?

好的。我的最後一個問題是——如果你已經提到了，我很抱歉。您談到了您的包裝收入如何大幅成長，我認為去年成長了 3 倍。您認為 2024 年該業務領域的成長率是多少？

Yeah, I don't know specifically. Because with that comment, I was speaking about Dragonfly. And Dragonfly supplies systems, in particular, is continuing to grow. That much, I know.

是的，具體我也不清楚。因為我說的是蜻蜓這個評論。尤其是 Dragonfly 供應系統正在持續成長。就這麼多，我知道了。

How much? I don't have it in front of me. The whole segment, specialty devices and advanced packaging, will be a pretty high double digits.

多少？我面前沒有它。整個細分市場，包括特種設備和先進封裝，將達到相當高的兩位數。

Okay. Thank you.

好的。謝謝。

You're welcome.

不客氣。

This concludes today's question-and-answer session. I will turn the call back to Mike Sheaffer for any additional or closing remarks.

今天的問答環節到此結束。我會將電話轉回給麥克謝弗 (Mike Sheaffer)，詢問任何補充或結束語。

Thanks again to everyone who joined us on the call today. A replay of the call will be available on our website at approximately 7:30, Eastern time, this evening. I would like to thank you for your continued interest in Onto Innovation. Rachel, please conclude the call. Thank you.

再次感謝今天加入我們電話會議的所有人。今晚東部時間 7:30 左右，我們的網站上將提供電話會議的重播。我要感謝您對 Onto Innovation 的持續關注。雷切爾，請結束通話。謝謝。

This concludes today's call. Thank you for your participation, and you may now disconnect.

今天的電話會議到此結束。感謝您的參與，您現在可以斷開連接。