ONTO Inks Deal to Buy Semilab's Materials Analysis Business for $545M

Onto Innovation Inc. ONTO recently finalized a definitive agreement to acquire the materials analysis business of Semilab International for approximately $545 million. The deal includes $475 million in cash and 706,215 shares of Onto Innovation common stock, valued based on the company's closing price as of June 27, 2025. This acquisition enhances Onto Innovation’s portfolio in materials characterization and wafer contamination monitoring.

A detailed transition service agreement has been prepared to ensure that customers experience no disruption during the handover. The acquisition is subject to regulatory approvals in the United States and Hungary and is expected to close in the second half of 2025.

Onto Innovation Inc. Price and Consensus

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

As semiconductor manufacturers incorporate more complex and exotic materials, especially for advanced packaging, power devices and AI applications, the demand for real-time, precise materials analysis has increased. Semilab’s materials analysis business, with a CAGR of around 20% since 2021, has become a strong player in this high-growth segment. The business is projected to generate $130 million in revenue in 2025, and its integration into Onto Innovation is expected to immediately improve gross margin, operating margin and non-GAAP EPS by more than 10% in the first year after the closing.

For ONTO, which has consistently emphasized investments in high-margin and high-growth segments of the semiconductor value chain, the acquisition is poised to support its capital allocation strategy and long-term commitment to shareholder value.

A key aspect of this deal is the technological synergy between Onto Innovation’s existing tools and Semilab’s portfolio. Onto Innovation plans to integrate its Ai Diffract modeling engine with Semilab’s materials interface characterization and inline contamination monitoring systems. Combined with ONTO’s existing advanced dimensional metrology and acoustic metrology solutions, this improved product is likely to support faster yield learning and process optimization for advanced semiconductor nodes.

Buyout Moves Aid ONTO Amid Shifting Semiconductor Dynamics

Onto Innovation is on an acquisition spree. In 2024, it announced the acquisition of California-based Lumina Instruments, bolstering its inspection portfolio with cutting-edge laser scattering technology. It provides ONTO a $250 million market expansion opportunity in wafer and panel manufacturing, as well as in power semiconductors. 

The company also acquired the lithography business from Kulicke and Soffa Industries, Inc., gaining valuable intellectual property, including 24 issued and eight pending patents, along with a skilled team holding more than 200 man-years of experience in lithography and wafer applications. This acquisition bolsters Onto Innovation’s JetStep panel lithography development and enhances its overall metrology and lithography expertise. Management projects these two major acquisitions to generate up to $100 million in additional annual revenues over the next three years.

With the Semilab acquisition, the company has reaffirmed its second-quarter guidance, demonstrating the deal's feasibility and ONTO’s underlying business strength. Additional financial details and integration updates will be shared during the second-quarter earnings call in early August.  

However, the development of inspection, lithography and metrology products is risky due to the fast-changing semiconductor technology. Trade tensions, especially between the United States and China, pose growth challenges. Tariffs and weak demand could hurt global trade, raise costs and squeeze margins. As most products are made in the United States, the company faces higher input costs and the possibility of retaliatory tariffs. For the second quarter, revenues are expected between $240 million and $260 million, with gross margins of 54% to 56%, including up to 75 basis points of headwind from inbound tariffs.

ONTO’s Zacks Rank & Stock Price Performance

ONTO currently carries a Zacks Rank #4 (Sell). Shares of the company have declined 54.9% in the past year compared with the industry’s fall of 55%.

Stocks to Consider

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