Camtek - Q2 2023
July 31, 2023
Transcript
Kenny Green (Investor Relations Officer)
Ladies and gentlemen, thank you for standing by. I would like to welcome all of you to Camtek's Results Zoom webinar. My name is Kenny Green, and I'm part of the investor relations team at Camtek. All participants other than the presenters are currently muted. Following the formal presentation, I'll provide some instructions for participating in the live question and answer session. I'd like to remind everyone that this conference call is being recorded, and the recording will be available on Camtek's website from tomorrow. You should have all received by now the company's press release. If not, please view it on the company's website. With me today on the call, we have Mr. Rafi Amit, Camtek's CEO, Mr. Moshe Eisenberg, Camtek's CFO, and Mr. Ramy Langer, Camtek's COO. Rafi will open by providing an overview of Camtek's results and discuss recent market trends.
Moshe will then summarize the financial results of the quarter. Following that, Rafi, Moshe, and Ramy will be available to take your questions. Before we begin, I'd like to remind everyone that certain information provided on this call are internal company estimates, unless otherwise specified. This call also may contain forward-looking statements. These statements are only predictions and may change as time passes. Statements on this call are made as of today, and the company undertakes no obligation to update any of the forward-looking statements contained, whether as a result of new information, future events, changes, expectations, or otherwise. Investors are reminded that these forward-looking statements are subject to risks and uncertainties that may cause actual events or results to differ materially from those projected, including as a result of the effects of general economic conditions.
Risks related to the concentration of a significant portion of Camtek's expected business in certain countries, particularly China, from which Camtek expects to generate a significant portion of its revenues for the foreseeable future, but also Taiwan and Korea, including risks of deviations from our expectations regarding timing and the size of orders from customers in these countries. Changing industry and market trends, reduced demand for services and products, the timely development of new services and products, and their adoption by the market, increased competition in the industry, and price reductions, as well as due to other risks identified in the company's filings with the SEC. Please note that the safe harbor statement in today's press release also covers the contents of this conference call. In addition, during this call, certain non-GAAP financial measures will be discussed.
These are used by management to make strategic decisions, forecast future results, and evaluate the company's current, current performance. Management believes that the presentation of non-GAAP financial measures are useful to investors' understanding and assessment of the company's ongoing core operations and prospects for the future. A full reconciliation of GAAP to non-GAAP, non-GAAP to GAAP financial measures are included in today's earnings release, and I'd now like to hand the call over to Rafi Amit, Camtek's CEO. Rafi, please go ahead.
Rafi Amit (CEO)
Okay, thanks, Kenny. Good morning or good afternoon to everyone. Camtek closed second quarter with revenue of $73.8 million. Gross margin came in at 48%, which is an improvement over Q1, and we expect further improvement in the coming quarters. Operating margin was 25%. Approximately 60% of our revenues came from advanced interconnect packaging applications. The remaining 40% is divided between compound semiconductor for power device, CIS, and process control applications. I would like to clarify that under the term advanced interconnect packaging, we include chiplet modules, HBM, heterogeneous integration, WLP. Our revenue guidance for Q3 is $77 million-$79 million, with expected continued growth in the fourth quarter, exceeding $300 million in 2023.
This year, started with a lot of uncertainty, but as we progress into the second half, it is shaping up to be stronger than originally expected. The positive trend in the industry and the flow of orders that we are witnessing now elevate our confidence that 2024 will be an important milestone in reaching a $500 million company. There has been consensus in the semiconductor industry that the effective way to significantly increase computing power More than Moore, is through new packaging technologies such as heterogeneous integration, HI, in short, including chiplet modules and high bandwidth memory, HBM in short. We have mentioned that we are involved in the development of this technology with the leading manufacturers. In the last year, we have already shipped systems to the HI segment, but the growth seem to be starting to accelerate now.
It is quite clear, that growth in demand for data server and HI applications increases the need for high performance computer or HPC, in short based on HI technologies. We have recently announced receiving orders for 42 systems. A significant portion of the systems is for chiplet modules and HBM for HI, and we expect to receive more orders of the same kind. The technological roadmap of the HI is aggressive in aiming to reach five to 10 times higher density than today technology, which in itself is very challenging. HI technology requires uncompromising inspection and metrology in many stages of the process to achieve a high yield. Manufacturers will not move to high volume production without maintaining high yield.
We've invested considerable effort in R&D to comply with the technological roadmaps of the HI technology, and we are confident that we will be ready to meet the customer's requirements on time. This state-of-the-art technology is a great opportunity for Camtek to grow significantly in larger market with fewer competitors. As I have mentioned earlier, AI applications depend on HPC, which is based on chiplet modules and HBM technologies. The production process require many steps of inspection and metrologies. Camtek is a key equipment supplier to the players in this market segments, exposing us to significant technology trends and business momentum in this area. We are very encouraged to see that as we predicted in the beginning of the year, the second half of 2023 is shaping up to be a better than the first half. This is fueled by major investment around HI- AI.
Furthermore, in the last few days, we have received an additional multiple systems order from a tier one HBM manufacturer for a total of 10 systems. We expect to receive more orders. We are also seeing customers starting to place orders with longer lead time, which contributes to our visibility into 2024. We expect the chiplet modules and HBM will account for over 30% of our business in 2024. Another growth engine for Camtek is the electrification of cars, using power devices based on silicon carbide, which is also expected to grow over 20% CAGR in the next few years. To summarize, we are very positive about 2024, which expected to be a record year for Camtek and an important milestone in reaching our next goal of a $500 million company. Now, Moshe will review the financial result. Moshe?
Moshe Eisenberg (CFO)
Thank you, Rafi. In my financial summary ahead, I will provide the results on a non-GAAP basis. The reconciliation between the GAAP results and the non-GAAP results appear in the tables at the end of the press release issued earlier today. Second quarter revenues were $73.8 million, marking an upturn from the lower revenue reported in the first quarter of 2023. The geographic revenue split for the quarter was as follows: Asia, 83%, and U.S. and Europe accounted for 17%. Gross profit for the quarter was $35.4 million. The gross margin for the quarter was 48%, an improvement over the 47.3% last quarter. As mentioned before, we have been taking measures to improve the gross margin. We are now seeing the initial impact, and we expect to see continued gradual improvement in the coming quarters.
Operating expenses in the quarter were $17.1 million, an increase from the $16.7 million reported in the second quarter of last year, and a similar level to the previous quarter. The increase is in the R&D level as we continue to invest in future programs. Operating profit in the quarter was $18.3 million, compared to the $17.4 million reported in the previous quarter. Operating margin was 24.8%, compared to 24% in the previous quarter. Financial income for the quarter was $5.8 million, compared with $5.1 million in Q1 and $200,000 last year. The majority of the increase relates to the significantly higher interest rates on an increased cash balance.
Net income for the second quarter of 2023 was $21.9 million, or $0.45 per diluted share. This is compared to a net income of $22.1 million, or $0.46 per share in the second quarter of last year, and $20.4 million or $0.42 per share in the previous quarter. Total diluted number of shares as of the end of Q2 was 48.6 million. Turning to some high-level balance sheet and cash flow metrics. Cash and cash equivalents, including short and long-term deposits, as of June 30th, 2023, were $506.3 million. This is compared with $492.7 million at the end of the first quarter. We generated $15.6 million in cash from operations in the quarter.
Inventory level went down by $2.7 million over the quarter. In the last few quarters, we adjusted the inventory to the reduced business, business volume. We are now at the point that we will start to increase the inventory level again to support the business growth. Accounts receivables were $79 million, up from $66.3 million in the previous quarter, due to the timing of collection. As for guidance, as Rafi said before, with the current business momentum, we expect revenues of $77 million-$79 million in the third quarter, with continued growth into the fourth quarter and in 2024. With that, Rafi, Ramy, and I will be open to take your questions. Kenny?
Kenny Green (Investor Relations Officer)
Thank you, Moshe. At this time, we will begin the question and answer session. If you have a question, please raise your hand via the Zoom platform. I'll introduce you and ask you to unmute, after which you may ask your question. As we have a lot of people on the call, we will take a few moments now to poll for your questions. Our first question will be from Brian Chin from Stifel. Brian, you may go ahead and ask your question.
Brian Chin (Director and Senior Equity Analyst)
Hi there. Good morning. Can you hear me okay?
Kenny Green (Investor Relations Officer)
Yeah, we can.
Brian Chin (Director and Senior Equity Analyst)
Great. Great. good afternoon. Thanks for letting us ask a few questions, and, and congratulations on the results. Maybe to start with the, the sort of the visibility into calendar 2024. again, I think you mentioned 30%+ of revenue next year could be HBM and chiplet packaging related. I, I guess I, I could suggest something or, or approximately $100 million in revenue. For comparison, can you provide what the base revenue from HBM and chiplet is expected to be in calendar 2023? and also in terms of that timing on the revenue next year, do you think it's more heavily first half weighted?
Moshe Eisenberg (CFO)
All right. Yeah, Ramy?
Ramy Langer (COO)
Yeah.
Moshe Eisenberg (CFO)
Could you share this detail with him, please?
Ramy Langer (COO)
I will, I will, I will respond to Brian. Hi, Brian. First of all, let me start with the high-bandwidth memory and chiplet. This business over the next 12 months will double if we compare it to the previous 12 months. If we go, we go even further down, it was even smaller. Definitely, it's a, it's a big step upward, as we discuss this business. Now, as we speak about our visibility for 2024. I think, Rafi said it in the prepared notes, we're definitely seeing customers are more ready to place orders.
We're seeing a much higher conversion from the pipeline into the backlog, and if we look at the overall backlog for 2024 plus the pipelines, so we think we have a good visibility moving forward, and this goes to our expectation towards 2024.
Brian Chin (Director and Senior Equity Analyst)
Okay, got, got it. The Would you say, though, that the orders that you're receiving are for like a two-quarter out shipment at this point to some degree, or is it maybe closer than that?
Ramy Langer (COO)
It's two, even plus one. It's even three quarters ahead.
Brian Chin (Director and Senior Equity Analyst)
Got it. Got it. Okay. Thanks. For my follow-up, just on China as well. Maybe in second half relative to first half, also this year relative to last year, I guess, how is business in China? You know, understandably, it's been more spotty this year relative to last, but are you starting to get better visibility there as well? Is that also part of your improved outlook for next year? Also just for comparison, can you maybe provide what China represented in 2Q in first half?
Ramy Langer (COO)
Let's talk in general, first of all. I think the business in China is solid. It has been solid, and we are seeing continuing investments in China in the current OSATs and new OSATs are coming, a lot of startup companies. Maybe you want to say a word about it, Moshe?
Moshe Eisenberg (CFO)
Yeah. In terms of the numbers, you know, we see China coming up pretty much like in the same level as 2022, so we don't see any decline in the business in China.
Brian Chin (Director and Senior Equity Analyst)
Okay, got it. All right. I'll, I'll, I'll hop out. Thanks a lot for the help.
Moshe Eisenberg (CFO)
Thank you, Brian.
Ramy Langer (COO)
Thank you.
Kenny Green (Investor Relations Officer)
Thank you. Our next question is gonna be from Charles Shi from Needham. Charles, please go ahead.
Charles Shi (Research Analyst)
Hey, good afternoon. Thanks, and congrats on the strong results, yeah, and the strong guidance. I wanna ask a little bit more about HBM. Knowing that HBM, historically, it, it, it, it was strong for a couple years, and then it went back down for a couple years, and now it's strong again. Obviously, I just see you quoted about that the AI chips, how that they are strong double-digit growth going into the next few years. Maybe there, there are stronger secular tailwind behind that. How much do you think the current strength is a cyclical recovery of HBM? How much do you think the secular tailwind is gonna be? How, how long it's gonna last? That's probably the first question. A little bit high level, but appreciate your thoughts. Thank you.
Ramy Langer (COO)
Charles, you know, first of all, yes, I, I agree with you. If we talk about the cyclicality, if we go two or three years backwards, then it started, and it didn't really run. I think that the applications, when we talk about the AI today, most of these components are coming with HBM. As Rafi said in the prepared notes, the high performance computing requires the chiplets or the CPU, the strong CPU, and this is coming with something like six to eight HBMs on each component, on each system. Definitely, I think the difference of the HBM today, and if we want to compare it to the past, that the application is there, something that it wasn't. I think the main application back a few, couple of years ago, was primarily a gaming application. It was a graphics card.
Today, I think the story is different. I think with the GPT and other applications coming along, the number of AI component systems that are sold is much higher, therefore, I think the demand is definitely here, I would say, for the, you know, I don't want to say, I don't know what is foreseeable future, I don't see this becoming cyclical very quickly.
Charles Shi (Research Analyst)
Thank you, Ramy, for the color. Maybe I wanna ask you about competition for the HBM related inspection metrology. How do you see the competitive landscape? Is it fair to say Camtek probably holds the majority share? And what do you expect competitor to catch up? Even how strong this market is, I mean, it's becoming a lot more attractive.
Ramy Langer (COO)
First of all, yes, you're right. It's a lot more attractive, and as the volume grows up. Definitely, we are a very strong market leader here. I think today, with our market position, our understanding of the customer requirements, I think the barrier for entry is much higher than it used to be previously. Yes, there's gonna be competitors, but, you know, I think that we understand the market, and moving forward, I think we will continue to hold a major market share in the future as well.
Charles Shi (Research Analyst)
Thanks, Ramy. Maybe just one last clarification. Why do you think the barriers to entry is higher today? Thank you. That's my last question.
Ramy Langer (COO)
Because I think we have learned a lot of things, what the application requires. We have very close relationship with the customers. We provide a very good customer support, and we're really entrenched in the processes, how to inspect things, how to measure things. I think this to replace contact today, with all the understanding and the experience that we have accumulated over the last few years, I think is not an easy task.
Rafi Amit (CEO)
I, I would like to add that another issue, very typically to the semiconductor industry, I think that the key, one of the major issue is maintaining high yield in general in this industry. If you cannot do it, you're out of the business. When customers, using, you know, equipment and they get good result, high yield, very good support, they have no good reason to replace it with, with other competitors. We work very hard, number one, to be all the time very competitive in performance. Number two, to give an excellent support to customer. Support is not just to fix machine and application, it's a lot of special feature, new R&D, whatever is needed, and do it quickly.
When you provide to a customer such services, he really has no any good reason to go and to look for another competitor. This is very obvious in this industry.
Charles Shi (Research Analyst)
Yeah. Thank, thanks for the insights. Understood. I appreciate the answers. Thank you.
Ramy Langer (COO)
Thank you, Charles.
Kenny Green (Investor Relations Officer)
Thanks, Charles. Our next question is gonna be from Tom O'Malley, from Barclays. Tom, please go ahead.
Tom O'Malley (Director and Equity Research Analyst)
Good morning. Good afternoon, guys. Thanks for taking the question. My, my first one was just on the supply chain. You, you're seeing some, some real acceleration in terms of orders on the HBM side. Could you talk about where specifically to the supply chain you're selling? Is that to the, the end device maker? Is that to the memory guy? That's the first part of the question. The second part is just, given the acceleration, are you seeing the potential to have a 10% customer? Is this a singular customer you're selling to, or are there multiple customers that you're selling to in this space?
Ramy Langer (COO)
Hi, Tom. First of all, we are selling here, the HBM, we're selling to the DRAM manufacturers. We are selling to all of them, all the leading ones. I don't want to mention name, but I think you can understand those vendors that I'm talking about. In that respect, I am not sure that we will see here a 10% customer.
Tom O'Malley (Director and Equity Research Analyst)
Okay, and then traditionally, you guys break out, Asia Pacific and rest of world as a percentage of revenue. What was that in this past quarter?
Moshe Eisenberg (CFO)
Last quarter, it was 90% Asia and 10% U.S. and Europe. This quarter, it shifted a little bit more towards U.S. and Europe, 17% and 83% for Asia.
Tom O'Malley (Director and Equity Research Analyst)
Great. Just one more quickly. You, on the prepared remarks, you guys talked about the year being over $300 million. I don't know if you were being very specific about that, but if you look at December, even just a slight amount of sequential growth and even flat gets you above $300 million. Are you guys being specific, or could it easily be a lot greater than $300 million? Can you just talk about how specific you were being with that guidance into Q4?
Moshe Eisenberg (CFO)
What we said is, basically, we provided guidance for Q3 of $77 million-$79 million, and we also mentioned we expect a sequential growth in Q4 as well. We did not mention at this point how significant the growth will be in, in Q4 versus Q3.
Rafi Amit (CEO)
By the way, you know, most of the demand that we can see actually stores to 2024, and the beginning of 2024. Just to, you know, to put things into proportion.
Tom O'Malley (Director and Equity Research Analyst)
Helpful. Thank you.
Kenny Green (Investor Relations Officer)
Thank you, Tom. Our next question will be from Craig Ellis from B. Riley. Craig, you may go ahead.
Craig Ellis (Director of Research and Senior Semiconductor and Capital Equipment Analyst)
Yeah, good afternoon, team, and congratulations on the momentum in the business. I wanted to start by shifting away a little bit from high bandwidth memory, where there's been a lot of really good color, and check on the visibility that you have in calendar 2024 in other areas. Can you comment on the visibility in CIS and front-end macro inspection as you look out to next year?
Ramy Langer (COO)
Hi, Craig. I think when we look at 2024, so yes, we, we covered 30%. We said it's going to be the, the chiplets and the HBM. When we talk about the other, the other segments, first of all, you know, with the front-end macro, this is roughly about 15%, 15% of the business, and I think it will be a similar number or maybe even a little bit long, larger next year. Similar number is the silicon carbide portion, so I think these together will also amount to something like about 30%. CMOS image sensors is a little lower this year. It's in the range of about 8%. I think it will be a little stronger next year. Here, I've already discussed about the 70%.
The other portion, and we're talking here just the chiplet and the, the HBM, definitely there is what we call the, the wafer-level packaging, fan-in, fan-out. This is a significant portion of the business in the range of about 25%-30%. Also, this segment continues to be strong. Overall, when we look at 2024, I think what we are enjoying is the fact that it's changing, and today we are inspecting the wafers in a lot more steps than historically we used to do. This is, in many parts, it's related to the chiplet business, where they will unfold in multiple step, but it's also correct also in the front-end business as well. Coupled with that, a healthy backlog and pipeline.
All of these together, all of the things that I have just discussed, this is the reason for our optimistic view on 2024.
Craig Ellis (Director of Research and Senior Semiconductor and Capital Equipment Analyst)
That's very helpful color, Ramy. Thank you. Moshe, if I could turn it over to you and just dig in further on the gross margin implications of the color we're getting as we look into 2024. Clearly, you've messaged that we're going to have continued gross margin gains. The question is this: as we think about the magnitude of gains, are there any items, whether it would be higher cost inventory or things that are happening with manufacturing, that would lead to more substantial decreases at certain points as revenues ramp, or should it be fairly steady and linear in association with the revenue ramp up?
Moshe Eisenberg (CFO)
Hi, Craig. Generally speaking, what we have done in the last few months is we have taken, you know, different steps in, in different directions, you know, on the costing side, supply chain issues, engineering changes, you know, into the product. Also, we've looked into the ASP and the marketing efforts around customers. All in all, we believe that all these major initiatives will result in improved gross margin over the course of the next few quarters. Obviously, product mix is a factor here, so I cannot predict the impact, but in general, I think the trend will be a positive trend of improving gross margin to around the 50% gross margin level that we've been operating in a year, a year ago.
Craig Ellis (Director of Research and Senior Semiconductor and Capital Equipment Analyst)
That's really helpful. Then lastly, if I could, a more strategic question for Rafi. Rafi, in the past, you've expressed, excuse me, strong ambition for M&A. Can you talk about some of the gives and takes to executing on M&A in the current environment? For example, previously, you know, COVID issues made person-to-person interaction difficult. That would have seemed to have gone away now, but on the other hand, you've also got a rapidly growing business, and perhaps that directs attention just towards organic growth. Can you just walk us through the puts and takes to how you're thinking about M&A in the near and intermediate term? Thank you.
Rafi Amit (CEO)
Okay. First of all, you know, we're growing very nice, but, you know, we invest a lot, a lot of efforts of executing M&A. Okay? We search companies, we, we, we had a lot of meetings with companies, but, you know, there are some things that this industry, the semiconductor, are very optimistic industry, and most of the investors really believe on their companies, and they're not so running to, to sell the company. We do a lot of effort, and, and hopefully, we can maybe do something not so far. What I try to tell, we put a lot of attention. Most of my time, I think now, is for executing M&A. Definitely, we continue investing efforts, and, and I believe that we will see the fruits soon.
Craig Ellis (Director of Research and Senior Semiconductor and Capital Equipment Analyst)
That's really helpful, Rafi. Thank you.
Kenny Green (Investor Relations Officer)
Okay. Thank you, Craig. Our next question is from Gus Richard of Northland. Gus, your line is open.
Gus Richard (Managing Director and Senior Research Analyst)
Yes. Thank you so much for letting me ask a couple questions. Could you give us a sense of, you know, what you think the compounded annual growth rate of HBM plus AI will be, you know, over the next couple of years?
Ramy Langer (COO)
Well, the CAGR is above 20%. You need to look at it depends on, I would say, the number of wafers or what is related, more related to our business. It's above 20% if you look at the next five years, Gus.
Gus Richard (Managing Director and Senior Research Analyst)
Okay. Okay. Then, in terms of heterogeneous integration, are you primarily selling? What's the mix between OSAT and, you know, foundry IDM?
Ramy Langer (COO)
Well, I don't have the numbers in front of me, but, but I think, as you know, the business, when, you know, the world, there is the, we sell to all of them today. If you talk about the more advanced applications which are related to the chiplets and HBM, which are packaged in the heterogeneous integration, this is more today, the foundries or a foundry and the leading IDMs. This business is starting to proliferate also to the main OSATs, but they are the smaller portion of this business. Definitely, over time, this will become more of a, more a business of OSATs as well.
Gus Richard (Managing Director and Senior Research Analyst)
Got it. Got it. Thank you. That's, that's very helpful. Last one for me. When you think about your wafer-level packaging portion of your business, you know, what is the driver of that business? Is it mobile phones? Is it something else? Could you just give a little color on the end market dynamics there?
Ramy Langer (COO)
I think this is a very broad market. Definitely, phones, IoT, everything today that is redesigned is utilizing the wafer-level packaging. Now, you see a very loud growth in the fan-out segment because as people, you know, start to make those dies smaller and smaller, they just don't have enough room for the bumps, and therefore, they're using the fan-out. Fan-out is also cheaper, it doesn't require the substrate, and it has some, some advantages from the electrical performance as well. Overall, fan-out is a significant driver in this business, and definitely, quite a few machines are sold here.
Gus Richard (Managing Director and Senior Research Analyst)
Got it. Then, just, you know, what do you think the growth rate of that segment could be for the next couple of years?
Ramy Langer (COO)
Oh, it will be. It's anywhere between, I would say, it's more than 10%, for sure.
Gus Richard (Managing Director and Senior Research Analyst)
Got it.
Ramy Langer (COO)
It depends, you know, but it, it's significantly more than 10%.
Gus Richard (Managing Director and Senior Research Analyst)
Okay, got it. That's it for me. Thank you so much.
Kenny Green (Investor Relations Officer)
Thanks, Gus. Our next question is from Vedvati Shrotre from Jefferies. Please go ahead. You may. Vedvati, please unmute.
Vedvati Shrotre (VP of Equity Research)
Do you hear me okay?
Kenny Green (Investor Relations Officer)
Yeah. Yeah.
Vedvati Shrotre (VP of Equity Research)
Okay. Thanks for taking my question. I wanted to hit on the gross margin, side of things. Your revenues, looks like in 2024, your revenues start to grow beyond that $300 mark, which would be sort of a record year for Camtek. That gets you closer to the high end of your target model. So what, what does that mean for gross margins? Like, do you think going to that 52% is a possibility into 2024?
Ramy Langer (COO)
As I, as I said, Vedvati, as I've mentioned before, we are in an improvement trend in the gross margin level. We've been operating in the last two or three years around the 50%-52%, I don't see a reason that we cannot go back to this range. The difference between 50% and 52% is mainly a product mix, and this I cannot predict, but in general, we, our target is to exceed the 50% gross margin, as we are increasing our revenue levels.
Vedvati Shrotre (VP of Equity Research)
Right. To follow up on that, so when you say product mix, are there any specific segments that could be sort of margin dilutive? So like, what, how does the mix affect? Like, is it the application? Is it the, you know, is it CIS versus, HBM, kind of a story? If you could give any color on what impacts the product mix.
Ramy Langer (COO)
As a matter of fact, you know, it's not geography specific or an application specific. It's more like a deal mix, you know, so it, it depends on the deal level. Size of the deal obviously has its own impact. Not only that, just, you know, different dynamic around the deal and also the machine configuration. Some machines have a very basic configuration, and these machines come with relatively lower gross margin.
Vedvati Shrotre (VP of Equity Research)
I think that's all for me. Thank you.
Rafi Amit (CEO)
Thank you.
Kenny Green (Investor Relations Officer)
Thanks, Vedvati. Again, as a reminder, if there are any questions, please raise your hands on the platform. Our next question is from Alon Last of Meitav. Alon, please go ahead and ask your questions. Alon, please unmute as well.
Alon Last (Analyst)
Yes, sorry for that. Can you hear me?
Kenny Green (Investor Relations Officer)
Yeah.
Ramy Langer (COO)
Yes.
Alon Last (Analyst)
Yes. Thanks for taking my questions. My first one is about the $500 million target. Given your current visibility, when do you aim to hit the target? How many years do you think will take you to reach that? What kind of embedded assumption do you put in the target?
Rafi Amit (CEO)
Okay. Okay, maybe, maybe I will answer to you. Look, first of all, you know, everything is under the assumption that semiconductor industry continue to grow. You know, all the analysts, everyone predict that by the end of this decade, we come to maybe close to $1 trillion revenue. Definitely, it means that the semiconductor industry is going to grow roughly a two-digit from year to year. We always say that we believe that we can grow faster than the industry, because we are focusing on specific segment, that the growth rate is higher than the average industry. This is the first assumption. Now, the second one, that we definitely feel comfortable that we continue to be a leading supplier, we continue to provide superior support to our customer.
If we continue doing it and don't miss anything, customer, as I mentioned before, are not going to replace vendor. This is the culture in our industry. If we take this, the first one and the second one, and definitely we feel confident that we can deliver it, then we can do it. Now, when I said we can do it, the question if it take two years or three years, also depends if we make an M&A in between, if it's only organic. This is, could be roughly if you take out the M&A, it can be about three years. If you go with M&A, it could be maybe two years. We talk about roughly this level of targets.
Alon Last (Analyst)
Okay. Thanks very much. My second question is about the, the orders that you have gotten. Could you speak about the value of them and what's the schedule of delivery for them?
Rafi Amit (CEO)
Ramy, do you want to give us information?
Ramy Langer (COO)
Look, first of all, from the average ASP, those orders are anywhere from $0.9 million-$1 million. This would.
Rafi Amit (CEO)
Per machine.
Ramy Langer (COO)
Per machine, this would give you the more or less the. From the shipments point of view, most of the machines, in what we have discussed, about 80% of them will be shipped this year, in the third and the fourth quarter. About 20% will be shipped in the first quarter of next year.
Alon Last (Analyst)
That you speak about the 42, 42 machines, or also for the 10 that were ordered in the last couple of days?
Ramy Langer (COO)
I included the 10 as well.
Alon Last (Analyst)
Okay. Basically, the question is the extent of the growth that we may see in 2024. It's obvious that there is a sense that we have reached a bottom, and from here things will get improved. The question is, what is the extent of improvement? Is it something that will get you similar, to similar levels like 2022, or is it something that will bring you much, at much, to much higher levels? What's the range of possibilities that you foresee for now, from now, about the revenues in 2024?
Ramy Langer (COO)
Look, Alon, what we can say at this stage, and I think we said it in our prepared notes, that it will be a record year. It will be better than the record that we achieved in 2022. At this stage, I think we explained exactly how we see, and we shed a lot of color into the business of 2024. I think at this stage, we cannot predict any more than we've just said. Definitely, as we'll continue and get closer to 2024, we'll be in a much better position to give a better assessment, a more accurate assessment, of what will be the final revenues.
Alon Last (Analyst)
Okay. Thank you very much.
Ramy Langer (COO)
Thank you.
Kenny Green (Investor Relations Officer)
Thanks, Alon. Our next question is from Brian Chin from Stifel. Brian, you may go ahead.
Brian Chin (Director and Senior Equity Analyst)
Hi, hi there. Just, one quick follow-up. Going back to the 42 system order that you press released a few weeks ago, was the HBM portion of that order a lot bigger than the 10 additional systems that you discussed today from a different customer? Number one. Two, like, more broadly, I, I think many of us expect strong industry expansion for HBM, but can you help us understand, you know, when you ship 10 systems, what is sort of the equivalent increase in HBM capacity?
Ramy Langer (COO)
Hi, Brian. First of all, in the 42, I, I don't want to go into numbers, but, it's not a much bigger number than the, the second order. Obviously, I think we, we said that we will see more orders in the near future. I think this is all we can say at this stage about the number of HBMs. I don't have in front of me, we can, have a follow-on call and give you, if we can find it, an indication of the capacity versus those machines. I'm, definitely, I'm not in a position to answer now because I don't know the number, but I can see if we can provide this number.
Brian Chin (Director and Senior Equity Analyst)
Okay. No, that's fair. That'd be really helpful. Appreciate that. That's it for me.
Kenny Green (Investor Relations Officer)
Okay. I think that ends our Q&A session. Before I hand over back to Rafi, I'd like to let you all know that in the coming hours, we will upload the recording of the conference call to the investor relations section of Camtek's website at www.camtek.com. I would like to thank everybody for joining this call. Rafi, please go ahead with your closing statement.
Rafi Amit (CEO)
Okay. I would like to thank you all for your continued interest in our business. I want to especially thanks the employees and my management team for their tremendous performance. To our investor, I thank you for your long-term support. I look forward to talking with you again next quarter. Thank you and goodbye.
Kenny Green (Investor Relations Officer)
Thank you. That ends our conference call. You may go ahead and disconnect.