Onto Innovation Inc. ONTO recently inked a $69 million volume purchase deal with a top DRAM manufacturer. The deal spans ONTO’s rich portfolio of common films, optical critical dimension and integrated metrology solutions. Apart from this, the company announced key advancements in its product suite for 3D interconnect process control, unveiling the 3Di technology on the Dragonfly G3 system and the new EchoScan system.

ONTO’s relentless efforts to stay on top of the game with lucrative deal wins and significant advancements are likely to have impressed investors, with its shares going up 5.89% and closing the trading session at $202.15 on Jan. 14.

Onto Innovation Inc. Price and Consensus

Onto Innovation Inc. price-consensus-chart | Onto Innovation Inc. Quote

This major DRAM deal win highlights the growing uptake of ONTO’s cutting-edge Iris system, which is known for its performance in common films metrology and the rapid adoption of integrated metrology. With deliveries scheduled to begin in the first quarter of 2025, the deal is likely to support the anticipated recovery of the DRAM market in 2025. The company’s commitment to innovation is evident in the nearly doubling of revenue from its films metrology solutions year over year. To further solidify its foothold in the optical metrology space, ONTO has launched the Iris G2 system, capable of measuring ultra-thin multilayer films within 10Å-50Å, ideal for high-growth areas, such as advanced node, mature and specialty device applications.

The new Iris G2 system combines deep ultraviolet and laser ellipsometry to handle common and critical films on one platform. Customers can optimize their cost of ownership by leveraging the system’s flexible capabilities to tailor performance to specific application needs. This consolidation also reduces operational complexity, streamlines fleet management and optimizes fab operations.

The global market for critical films metrology is projected to reach roughly $400 million in 2025, per TechInsights and management estimates. Management expects to capture a major chunk of this market with the Iris G2 system release. It remains on track to grow the films metrology business by more than 50% compared to 2023.

ONTO Introduces 3Di Technology on the Dragonfly G3 System

Per a report from TechInsights, advanced 2.5D and 3D integration schemes are estimated to grow at a robust 19% annual rate in the 2024-2028 period. Bump sizes in high volume manufacturing (HVM) have already decreased from 12µm to 8µm, with the potential to shrink further to 4µm. As these dimensions scale down, the challenges associated with metrology and inspection become increasingly complex. The new 3Di technology on the Dragonfly G3 system addresses these challenges for bump process control in high bandwidth memory and advanced logic applications. 

Designed to meet the industry's stringent requirements for smaller bump sizes, the 3Di technology provides best-in-class stability and accuracy. It supports bump sizes below 5µm in HVM and as small as 2µm in research and development (R&D) environments. In addition, ONTO launched the EchoScan system to identify voids as small as 1µm in wafer bonding processes, including advanced hybrid bonding for Cu-Cu interconnects. The system employs an immersion-free, non-contact technology, ensuring accurate void detection without the risks associated with water immersion. 

Onto Innovation pairs its 3Di and EchoScan technologies with the advanced Discover analytical software. This platform enables real-time defect analysis and feedback to process tools, providing statistical process control that reduces the cycle time of yield loss assessment. Initial 3Di technology orders include a leading HBM manufacturer, a tier-one OSAT and a top bump process equipment maker. The first EchoScan system is set to ship in the first quarter, with more deliveries planned in 2025.

Nonetheless, the development of inspection, lithography and metrology products is risky due to the fast-evolving semiconductor technology. Trade tensions, especially between the United States and China, could hurt growth, affecting global trade, customer demand and the company’s margins. High R&D costs for products with rapid technological changes also affect profitability.

ONTO’s Zacks Rank & Stock Price Performance

ONTO currently carries a Zacks Rank #3 (Hold). Shares of the company have gained 37% in the past year compared with the industry’s rise of 35.8%.

Image Source: Zacks Investment Research

Stocks to Consider

Some better-ranked stocks from the broader technology space are InterDigital, Inc. IDCC, Ubiquiti Inc. UI and Qualcomm Incorporated QCOM. IDCC & UI presently sport a Zacks Rank #1 (Strong Buy), while QCOM carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

IDCC is a pioneer in advanced mobile technologies that enable wireless communications and capabilities. The company engages in designing and developing a wide range of advanced technology solutions, which are used in digital cellular as well as wireless 3G, 4G and IEEE 802-related products and networks. It has a long-term growth expectation of 17.44%.

Ubiquiti’s effective management of its strong global network of more than 100 distributors and master resellers improved its visibility for future demand and inventory management techniques. In the last reported quarter, Ubiquiti delivered an earnings surprise of 20.9%. Its highly flexible global business model remains apt to adapt to the changing market dynamics to overcome challenges while maximizing growth.

Qualcomm is well-positioned to meet its long-term revenue targets driven by solid 5G traction, greater visibility and a diversified revenue stream. It is increasingly focusing on the seamless transition from a wireless communications firm for the mobile industry to a connected processor company for the intelligent edge.


 

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

QUALCOMM Incorporated (QCOM) : Free Stock Analysis Report

InterDigital, Inc. (IDCC) : Free Stock Analysis Report

Ubiquiti Inc. (UI) : Free Stock Analysis Report

Onto Innovation Inc. (ONTO) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research