−Removed: Onto Innovation is a worldwide leader in the design, development, manufacture and support of metrology and inspection tools for the semiconductor industry, including process control tools that perform optical metrology on patterned and unpatterned wafers, wafer macro-defect inspection, including macro-inspection of both 2D and 3D wafer features, wafer substrate and panel substrate lithography systems, and process control analytical software.
+Added: Onto Innovation ® is a worldwide leader in the design, development, manufacture and support of metrology and inspection tools for the semiconductor industry, including process control tools that perform optical metrology and inspection on patterned and unpatterned wafers, including macro defect inspection of both 2D and 3D wafer features, wafer substrate and panel substrate lithography systems, and process control analytical software.
Our products are primarily used by silicon wafer manufacturers, semiconductor integrated circuit (“IC”) fabricators, and advanced packaging manufacturers operating in the semiconductor market.
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Industry Background
−Removed: We participate in the sale, design, manufacture, marketing and support of process control systems for optical critical dimension (“OCD”) metrology, thin film metrology, silicon wafer inspection, 2D and 3D macro inspection and lithography tools for advanced packaging and advanced analytical software for semiconductor manufacturing as well as inspection systems for certain industrial applications and scientific research.
+Added: We participate in the sale, design, manufacture, marketing and support of process control systems across all major segments of the semiconductor industry for optical critical dimension (“OCD”) metrology, thin film metrology, silicon wafer inspection, including 2D and 3D macro inspection and lithography tools for advanced packaging and advanced analytical software for semiconductor manufacturing as well as inspection systems for certain industrial applications and scientific research.
Our principal market is semiconductor capital equipment.
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This includes ICs to enable information processing and management (logic ICs), memory storage (NAND, 3D-NAND, and DRAM), analog devices (e.g., Wi-Fi and 5G radio ICs, power devices), MEMS sensor devices (accelerometers, pressure sensors, microphones), CMOS image sensors, and other specialty end markets including components for hard disk drives, LEDs, and power management devices.
−Removed: Current Trends
Advanced Nodes.
“Advanced nodes” refers to leading-edge ICs where the sizes of transistors and other features continue to shrink.
−Removed: Advanced nodes are associated with transistor dimensions less than 16 nanometers (nm).
−Removed: Our metrology systems used to measure and characterize these small features are generally purchased when a customer is beginning to manufacture at a new, smaller node, in order to set up and test new manufacturing equipment being installed for the new node.
+Added: Advanced nodes are associated with transistor dimensions less than 10 nanometers (nm), with the most advanced logic devices now in production using 3nm and soon 2nm transistor dimensions.
+Added: Our metrology systems used to measure and characterize these small features are generally purchased when a customer is beginning development at a new, smaller node, in order to set up and test new manufacturing equipment being installed for production at the new node.
Our process control/metrology equipment is generally installed prior to the installation of the actual process equipment for that reason.
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Therefore, our sales to customers for advanced nodes is generally higher when manufacturing lines for new nodes are being established and may not represent continuous sales revenue until our initial systems reach high levels of utilization driven by the need for greater capacity.
−Removed: Demand for our products continues to be driven by our customers’ desire for higher overall chip performance enabled by a greater number of transistors per square millimeter, while improving power efficiency, logic processing capability, data storage volume and manufacturing yield.
−Removed: To achieve these goals, our customers have increased their use of more complex
−Removed: materials and processing methods in their manufacturing flow.
+Added: The growth in artificial intelligence (AI) based applications has generated significant demand and new technology requirements in the advanced node segment, including for both logic and memory devices.
+Added: Demand for our products also continues to be driven by our customers’ desire for higher overall chip performance enabled by a greater number of transistors
+Added: per square millimeter, while improving power efficiency, logic processing capability, data storage volume and manufacturing yield.
+Added: To achieve these goals, our customers have increased their use of more complex materials and processing methods in their manufacturing flow.
The primary path for performance gains is geometric scaling, known as node shrinks, or scaling of transistor dimensions.
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Advanced Packaging.
−Removed: “Advanced Packaging” refers to a variety of technologies that enable the miniaturization of electronic products, such as smartphones, watches, and tablets.
+Added: “Advanced packaging” refers to a variety of technologies on either wafer or panel level substrates (or both) that enable the miniaturization of electronic products, such as smartphones, watches, and tablets.
Historically, IC packaging refers to the final stage of semiconductor device fabrication, in which a single circuit made from semiconducting material (a die or chip) is encased in a molded package using small wires to provide connections to a carrier that can be soldered to a printed circuit board and also prevents physical damage and corrosion to the chip.
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Thus, unlike the cyclical nature of our metrology equipment associated with node shrinks, our sales revenue for advanced packaging is generally driven by assembly volumes.
+Added: Recently, the growth in AI applications has generated significant demand and new technology requirements in the advanced packaging segment at both the wafer process and panel process levels.
Panel Substrate Manufacturing .
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In order to meet the growing demand at reduced average selling prices, manufacturers are looking to scalable technology.
−Removed: Advanced packaging facilities looking to improve Cost of Ownership and increase productivity are transitioning from 300mm wafers to large rectangular panels, which can be as large as 650mm x 650mm.
+Added: Advanced packaging facilities looking to improve Cost of Ownership and
+Added: increase productivity are transitioning from 300mm wafers to large rectangular panels, which can be as large as 650mm x 650mm.
This larger size enables companies manufacturing large area packages to increase the number of devices being processed at each step as they are no longer limited to operating within the constraints of a round wafer.
By responding to market opportunities and addressing the stringent demands of customers’ technical roadmaps, we believe that Onto Innovation is optimally positioned to capitalize on the emerging market of high-volume manufacturing of advanced IC substrates.
−Removed: example, the JetStep ® X500 lithography system, having emerged from the flat panel display market, is readily capable of processing RDLs on very thin advanced organic laminate panels in the semiconductor advanced packaging market.
+Added: For example, the JetStep ® X500 lithography system, having emerged from the flat panel display market, is readily capable of processing RDLs on very thin advanced organic laminate panels in the semiconductor advanced packaging market.
The Firefly ® series of panel level macro inspection tools, designed for high resolution inspection, can provide defect detection and location information to the JetStep X500 tool for each die, which greatly improves lithography throughput using our exclusive StepFAST process.
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Once the exposure process has been completed, the substrate is developed with an alkali solution to reveal the underlying material.
−Removed: imaged photoresist serves as a stencil barrier that allows for the processing of the underlying metal or insulating layers.
+Added: The imaged photoresist serves as a stencil barrier that allows for the processing of the underlying metal or insulating layers.
The substrates then continue through the etching, stripping and deposition processes until multi-layer circuits are completed.
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Our customers are located in over 24 countries.
−Removed: The following chart identifies our customers that represented 10% or more of total revenue for each of the last three fiscal years:
−Removed: Samsung Semiconductor
−Removed: Taiwan Semiconductor Manufacturing Co.
−Removed: SK Hynix Inc.
−Removed: * The customer accounted for 10% or more of total revenue during the period.
−Removed: The customer accounted for less than 10% of total revenue during the period.
+Added: The following table shows the revenue concentration at our top customers for the respective fiscal years:
+Added: * Total customer revenue was 10% or more of total revenue.
+Added: Total customer revenue was less than 10% of total revenue.
Sales, Customer Service and Application Support
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Manufacturing
−Removed: Our manufacturing operations are in Milpitas, California;
+Added: Our manufacturing operations are in:
+Added: Milpitas, California;
Tucson, Arizona;
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Most of our automated and integrated products are currently manufactured at our Milpitas and Bloomington facilities.
−Removed: We currently do not expect our manufacturing operations to require additional major investments in capital equipment.
+Added: We currently do not expect our manufacturing operations to require additional major investments in capital equipment in the near term.
We manufacture key modular assemblies and integrated tools and make reasonable efforts to ensure that externally purchased parts or raw materials are available from multiple suppliers, if possible.
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• Passion – ownership, pride and caring in our work
−Removed: • Integrity – honesty, dependable, predictable and accountable
+Added: • Integrity – honesty, dependability, ethicality and accountability
• Collaboration – working together toward a common goal
−Removed: • Results – meeting and exceeding goals, focused toward innovation and growth
+Added: • Results – meeting and exceeding goals, focusing on innovation and growth
These core values define the way we do business in our everyday actions and choices.
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Our stakeholders are essential to our business – shareholders, customers, suppliers, employees, communities as well as the environment and society.
−Removed: We are working to make our workforce more inclusive, our business more sustainable, and our communities more engaged by maintaining strong environmental, social and governance (“ESG”) practices.
+Added: We are working to make our workforce more inclusive, our business more sustainable, and our communities more engaged by maintaining strong sustainability practices.
Actions we have taken in pursuit of these commitments include the following environmental and social programs:
−Removed: • Demanded excellence in our environmental performance, as illustrated in our annual ESG reports.
+Added: • Demanded excellence in our environmental performance.
• Demanded excellence in our quality performance, as demonstrated through our product and process qualification commitments, including ISO 9001 Quality Management;
• Set goals to reduce our environmental impact, including an increase in our use of renewable energy, a decrease in hazardous waste landfill, an increase in recycling materials and beneficial reuse, and a reduction in our freshwater usage;
−Removed: • Committed to RBA Code of Conduct and humane treatment of all at Onto Innovation both upstream and downstream.
−Removed: We established policies and practices to ensure that:
+Added: • Committed to Responsible Business Alliance (RBA) Code of Conduct and humane treatment of all at Onto Innovation both upstream and downstream.
+Added: We have established policies and practices to ensure that:
working conditions are safe;
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• Engaged in community service projects in our communities globally.
−Removed: We encourage you to review our 2022 ESG Report (located on our website at https://ontoinnovation.com/company/environmental-social-governance) for more detailed information regarding our ESG initiatives.
−Removed: Nothing on our website, including our ESG Report or sections thereof, is deemed incorporated by reference into this Form 10-K.
Compliance with Governmental Regulations
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Our compliance with export regulations has negatively impacted our ability to compete for the business of domestic customers in China, which has adversely affected our results of operations.
−Removed: For additional discussion of the impact of trade policies and export regulations on our competitive position, see “Part I, Item IA - Risk Factors - Tariffs, export regulations, and other market barriers have impacted and may continue to impact our ability to compete for the business of domestic customers in China and other jurisdictions, and our results of operations.”
+Added: For additional discussion of the impact of trade policies and export regulations on our competitive position, see “Part I, Item IA - Risk Factors - Tariffs, export regulations, and other market barriers have impacted and may continue to impact our ability to compete for the business of domestic customers in China and other jurisdictions, and our results of operations.” We expect that the new U.S.
+Added: presidential administration will seek to implement a regulatory reform agenda that is significantly different than that of the prior administration, which may impact agency rulemaking and enforcement priorities, which could, in turn, have a material effect on our business.
Available Information
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All filings we make with the SEC are also available free of charge via EDGAR through the SEC’s website at http://www.sec.gov.
−Removed: In addition, the historic reports and materials that were filed by Nanometrics and Rudolph with the SEC are available at our investor relations website at https://investors.ontoinnovation.com.
These filings may also be obtained through the SEC’s website.
Documents that are not available through the SEC’s website may also be obtained by submitting an online request to the SEC at http://www.sec.gov.
−Removed: We also make available, free of charge, through our investor relations website, our corporate governance guidelines, Code of Business Conduct and Ethics, charters of the committees of our Board of Directors, and other information and materials, including information about how to contact our Board of Directors.
+Added: We also make available, free of charge, through our investor relations website at https://investors.ontoinnovation.com, our corporate governance guidelines, Code of Business Conduct and Ethics, charters of the committees of our Board of Directors, and other information and materials, including information about how to contact our Board of Directors.
Investors and others should also note that we announce material financial information to our investors using our investor relations website, SEC filings, press releases, public conference calls and webcasts.
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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.