ONTO Unveils Atlas G6 OCD Metrology System for AI-Era Process Control

Onto Innovation Inc. (ONTO) recently augmented its award-winning Atlas family with the introduction of the Atlas G6 optical critical dimension (OCD) metrology system. Designed specifically for the era of second-generation gate-all-around (GAA) transistors and next-generation high-bandwidth memory (HBM), the Atlas G6 enhances metrology performance by enabling unmatched precision in process control.

As the industry shifts to next-generation GAA logic and vertical gate DRAM for AI, manufacturers face up to 30% tighter dimensions each cycle. These require precise nanowire measurements in GAA and smaller DRAM cell blocks for high-bandwidth memory. Onto’s Atlas G6 employs advanced optical technology with high accuracy and a small spot size to meet these demands and has already secured multiple production orders from leading logic and memory producers.

A key feature of the Atlas G6 is its ability to deliver much smaller spot sizes while maintaining improved signal-to-noise performance. This is crucial because shrinking geometries necessitate metrology tools capable of measuring directly on the device without compromising data quality. For HBM technologies, the reduced spot size enables direct measurements within DRAM cell blocks, allowing for tighter process controls, higher yields, and more dependable long-term performance.

By adding an extra data channel and integrating with Onto’s proprietary Ai Diffract OCD analysis software, the Atlas G6 uses model-guided machine learning algorithms to enhance recipe robustness and reduce time to solutions, enabling quicker, more reliable process optimization. By combining advanced optical technologies with improved stabilization techniques, Onto Innovation has created a system capable of meeting the semiconductor industry’s most urgent challenges.

ONTO Gains Momentum on Broad Market Demand Amid Marco Woes

Onto caters to various markets such as Bare Wafer, Image Sensors, and Flat EchoScan System, which demonstrated unique capabilities for detecting yield-killing voids in hybrid bonding applications without immersing samples in liquid, with tests underway on production samples at Tier 1 customer sites. The technology is expected to be critical for yield control in the high-volume manufacturing of hybrid bonding devices, addressing challenges in future 3D packaging.

Second-quarter memory revenues stayed strong, driven by NAND, while DRAM stayed near record highs. Gate-all-around growth slowed as expected, but Onto secured more than $20 million in new Atlas OCD and Iris films orders from a new customer, with most revenues expected in the fourth quarter. The growth of its common films business is supporting the adoption of the new Iris G2 platform, tailored for the $500 million critical films market.

Furthermore, the Dragonfly 3Di platform continues to be a cornerstone of Onto’s growth strategy. In the second quarter, it shipped tools to more than 10 customers across diverse applications, including co-packaged optics and 2.5D advanced logic packaging. More than 20 Dragonfly systems were shipped during the quarter. Strong adoption was driven by the platform’s capability to address sub-surface defect inspection, a critical need in advanced semiconductor and AI packaging technologies. These position Onto as a leading provider of inspection and metrology solutions for next-gen semiconductor architectures.

However, it faces higher costs and margin pressure from U.S.-China trade tensions, with tariffs adding $2-$3 million in the third and fourth quarters. Gross margin is guided at 53-55% (down 1 point from tariffs), while operating margin is expected to dip to 18-21% on lower revenues and rising R&D spend. It also faces high concentration risks, as the majority of its revenues are generated from a few high-profile customers, with the top three accounting for 52% of its 2024 revenues.

ONTO’s Zacks Rank & Stock Price Performance

ONTO currently carries a Zacks Rank #4 (Sell). Shares of the company have lost 42.9% in the past year compared with the industry’s decline of 43.5%.

Stocks to Consider

Ubiquiti Inc. (UI) sports a Zacks Rank of #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here

In the last reported quarter, it delivered an earnings surprise of 61.29%. Ubiquiti invests significantly in research and development activities to develop innovative products and state-of-the-art technology, expanding its addressable market and staying at the cutting edge of networking technology. The company believes its new product pipeline will help increase average selling prices for high-performance, best-value products, thus raising the top line. Ubiquiti is witnessing healthy traction in the Enterprise Technology segment.

Headquartered in Carlsbad, CA, Viasat Inc. (VSAT) carries a Zacks Rank #2 (Buy) at present. It designs, develops and markets advanced digital satellite telecommunications and other wireless networking and signal processing equipment. It provides high-bandwidth, high-performance communication solutions to the public, as well as to military, enterprise, and government agencies. Viasat’s impressive bandwidth productivity sets it apart from conventional and lower-yield satellite providers that run on incumbent business models.

InterDigital, Inc. (IDCC) currently carries a Zacks Rank #2. The company delivered an average earnings surprise of 54.27% in the trailing four quarters.

InterDigital’s global footprint, diversified product portfolio and the ability to penetrate different markets are impressive. It is focused on pursuing agreements with unlicensed customers in the handset and consumer electronics markets. Apart from its strong portfolio of wireless technology solutions, the addition of technologies related to sensors, user interface and video to its offerings is likely to drive significant value, considering the massive size of the market it licenses.

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