Camtek (CAMT) Q2 2023 Earnings Call Transcript

Camtek (CAMT 4.18%)
Q2 2023 Earnings Call
Jul 31, 2023, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Kenny Green

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. [Operator instructions] 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 first -- for the foreseeable future, but also Taiwan and Korea, including the 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 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 -- Chief Executive Officer

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 to $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 more 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 seems 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 road map of the HI is aggressive in aiming to reach 5 times to 10 times higher density than today's 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 have invested considerable effort in R&D to comply with the technological road maps of the HI technology, and we are confident that we will be ready to meet the customers' 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 processes require many steps of inspection and metrology.

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 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 1 HBM manufacturer for a total of 10 systems, and 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.

And now, Moshe will review the financial results. Moshe?

Moshe Eisenberg -- Chief Financial Officer

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.

So cash and cash equivalents, including short- and long-term deposits as of June 30, 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 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 collections. As for guidance, as Rafi said before, with the current business momentum, we expect revenues of $77 million to $79 million in the third quarter with continued growth into the fourth quarter and in 2024.

And with that, Rafi, Ramy, and I will be open to take your questions. Kenny?

Kenny Green

Thank you, Moshe. At this time, we will begin the question-and-answer session. [Operator instructions] Our first question will be from Brian Chin from Stifel. Brian, you may go ahead and ask your question.

Brian Chin -- Stifel Financial Corp. -- Analyst

Hi there. Good morning, team. Can you hear me OK?

Kenny Green

Yeah, we can.

Brian Chin -- Stifel Financial Corp. -- Analyst

Great. Good afternoon. Thanks for letting us ask a few questions, and congratulations on the results. Maybe to start with the sort of the visibility into calendar '24, again, I think you mentioned 30% plus of revenue next year could be HBM and chiplet packaging related.

I guess that could suggest something -- or approximately $100 million in revenue. So for comparison, can you provide what the base revenue from HBM and chiplet is expected to be in calendar '23? And also, in terms of that timing on the revenue next year, do you think it's more heavily first half weighted?

Rafi Amit -- Chief Executive Officer

Ramy, could you share this detail with him?

Ramy Langer -- Chief Operating Officer

I will respond to Brian. So hi, Brian. So first of all, let me start with the high bandwidth memory and chiplets. So this business over the next 12 months will double if we compare it to the previous 12 months.

And if we go even further down, it was even smaller. So definitely, it's a big step upward as we discuss this business. Now as we speak about our visibility for '24, so I think Rafi said it in the prepared notes, we're definitely seeing customers are more ready to place orders. We are seeing a much higher conversion from the pipeline into the backlog.

And if we look at the overall backlog for '24, plus the pipelines, so we think we have a good visibility moving forward, and this goes to our expectation toward 2024.

Brian Chin -- Stifel Financial Corp. -- Analyst

OK. Got it. 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 -- Chief Operating Officer

It's two even plus one. It's even three quarters ahead.

Brian Chin -- Stifel Financial Corp. -- Analyst

Got it. OK. And then maybe for my follow-up, just on China as well. Maybe in second half relative to first half and also this year relative to last year, I guess, how is business in China? Understandably, it seemed 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? And then also just for comparison, can you maybe provide what China represented in 2Q and first half?

Ramy Langer -- Chief Operating Officer

So 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 start-up companies. And the -- maybe you want to say a word about it, Moshe?

Moshe Eisenberg -- Chief Financial Officer

Yeah. In terms of the numbers, 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 -- Stifel Financial Corp. -- Analyst

OK. Got it. OK. All right.

I'll hop out. Thanks a lot for the help.

Ramy Langer -- Chief Operating Officer

Thank you, Brian.

Kenny Green

Thank you. Our next question is going to be from Charles Shi from Needham. Charles, please go ahead.

Charles Shi -- Needham and Company -- Analyst

Hi. Good afternoon. Thanks, and congrats on the strong results and strong guidance. I want to ask a little bit more about HBM.

Knowing that HBM, historically, it was strong for a couple of years, and then it went back down for a couple of years. And now, it's strong again. Obviously, I just see you quoted about the AI chips, how -- very strong double-digit growth going into the next few years. Maybe this time, they're the strongest secular tailwind behind that.

But how much do you think the current strength is a cyclical recovery of HBM? And how much do you think the secular tailwind is going to be? How long it's going to last? And that's probably the first question. A little bit high level, but I appreciate your thoughts. Thank you.

Ramy Langer -- Chief Operating Officer

So, Charles, first of all, yes. I agree with you. If we talk about the cyclicality, if we go two or three years backwards, then it started, and then it didn't really run. I think that the applications, and we talk about the AI today, most of these components are coming with HBM.

So as Rafi said in the prepared notes, the high-performance computing requires the chiplets with the CPU -- the strong CPU, and this is coming with something like six to eight HBMs on each component on each system. So 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 -- a 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. And therefore, I think the demand is definitely here, I would say, for the -- I don't want to say. I don't know what is foreseeable future, but I don't see this becoming cyclical very quickly.

Charles Shi -- Needham and Company -- Analyst

Thank you, Ramy, for the color. Maybe I want to ask you about competition for the HBM-related inspection metrology. How do you see the competitive landscape? Is it fair to say Camtek probably closed the majority share? And what do you expect competitors to catch up? And given how strong this market is, I mean, is it becoming a lot more attractive?

Ramy Langer -- Chief Operating Officer

So first of all, yes, you are right. It's a lot more attractive. And as the volume grows up, definitely, we are a very strong market leader. 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.

So yes, there is going to be competitors. But 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 -- Needham and Company -- Analyst

Thanks, Ramy. Maybe just one last clarification. Why do you think the barriers to entry is higher today? That's my last question.

Ramy Langer -- Chief Operating Officer

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 are really entrenched in the processes, how to inspect things, how to measure things. And I think this to replace Camtek today with all the understanding and the experience that we have accumulated over the last few years, I think it's not an easy task.

Rafi Amit -- Chief Executive Officer

Yes. 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 are out of the business.

Now when customers using equipment and they get good results, high yield, very good support, they have no good reason to replace it with other competitors. So we work very hard, number one, to be all the time very competitive in performance; number two, to give an excellent support to customer. And 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.

So 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 -- Needham and Company -- Analyst

Yes. Thanks for the insights. Understood. I appreciate the answers.

Thank you.

Ramy Langer -- Chief Operating Officer

Thank you, Charles.

Kenny Green

Thanks, Charles. Our next question is going to be from Tom O'Malley from Barclays. Tom, please go ahead.

Tom O'Malley -- Barclays -- Analyst

Good morning and good afternoon, guys. Thanks for taking the question. My first one was just on the supply chain. You're seeing 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 end-device maker? Is that to the memory guy? And 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 -- Chief Operating Officer

Hi, Tom. So first of all, we are selling here the HBM, we are selling to the DRAM manufacturers. Now we are selling to all of them, all the leading ones. Obviously, I don't want to mention name, but I think you can understand those vendors that I'm talking about.

So in that respect, I'm not sure that we will see here a 10% customer.

Tom O'Malley -- Barclays -- Analyst

OK. 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 -- Chief Financial Officer

Last quarter, it was 90% Asia and 10% U.S. and Europe. This quarter, it shifted a little bit more toward U.S. and Europe, 17%; and 83% for Asia.

Tom O'Malley -- Barclays -- Analyst

Great. And then just one more quickly. 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 in the Q4?

Moshe Eisenberg -- Chief Financial Officer

What we said is, basically, we provided guidance for Q3 of $77 million to $79 million, and we also mentioned we expect a sequential growth in the fourth quarter as well. We did not mention at this point how significant the growth will be in the fourth quarter versus Q3.

Rafi Amit -- Chief Executive Officer

By the way, most of the demand that we can see actually stores to 2024 and the beginning of 2024, just to put things in proportion.

Tom O'Malley -- Barclays -- Analyst

Helpful. Thank you.

Kenny Green

Thank you, Tom. Our next question will be from Craig Ellis from B. Riley. Craig, you may go ahead.

Craig Ellis -- B. Riley Financial -- Analyst

Yeah. Good afternoon team, and congratulations on the momentum in the business. I wanted to start just 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 '24 and other areas. So can you comment on the visibility in CIS and front-end macro inspection as you look out to next year?

Ramy Langer -- Chief Operating Officer

Hi, Craig. So I think when we look at '24, so yes, we covered 30% we said is going to be the chiplets and the HBM. When we talk about the other segments, so first of all, with the front-end macro, this is roughly about 15% of the business, and I think it will be a similar number or maybe even a little bit 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. So here, I have already discussed about 70% of the business.

Now the other portion, and we are talking here just the chiplet and the HBM, but definitely, there is what we call the wafer level packaging, fan-in, fan-out. This is a significant portion of the business in the range of about 25% to 30%. So -- also, this segment continues to be strong. So overall, when we look at '24, I think what we are enjoying is the fact that our business is 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 -- we were involved in multiple step, but it's also correct also in the front-end business as well. So coupled with that, a healthy backlog and pipeline. So all of these together, all of the things that I've just discussed, this is the reason for our optimistic view on 2024.

Craig Ellis -- B. Riley Financial -- 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 -- Chief Financial Officer

Hi, Craig. So generally speaking, what we have done in the last few months is we have taken different steps in different directions. On the costing side, supply chain issues, engineering changes into the product. And also, we've looked into the ASP and the marketing efforts around customers.

And 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 ago.

Craig Ellis -- B. Riley Financial -- Analyst

That's really helpful. And then lastly, if I could, a more strategic question for Rafi. Rafi, in the past, you've expressed 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, 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 direct attention just toward 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 -- Chief Executive Officer

OK. First of all, we're growing very nice, but we invest a lot of efforts of executing M&A, OK? We search companies. We had a lot of meetings with companies. But there are something that this industry, the semiconductor, are a very optimistic industry.

And most of the investors really believe in their companies, and they're not so running to sell the company. So we do a lot of effort. And hopefully, we can maybe do something not so far. But what I tried to tell, we put a lot of attention.

Most of my time, I think, now is for executing M&A. So definitely, we continue investing efforts, and I believe that we will see the fruit soon.

Craig Ellis -- B. Riley Financial -- Analyst

That's really helpful, Rafi. Thank you.

Kenny Green

OK. Thank you, Craig. Our next question is from Gus Richard of Northland. Your line is open.

Gus Richard -- Northland Securities -- Analyst

Yeah. Thank you so much for letting me ask couple of questions. Could you give us a sense of what you think the compounded annual growth rate of HBM plus AI will be over the next couple of years?

Ramy Langer -- Chief Operating Officer

Well, the CAGR is above 20%. Now 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 -- Northland Securities -- Analyst

OK, OK. And in terms of heterogeneous integration, are you primarily selling -- what's the mix between OSAT and foundry IDM?

Ramy Langer -- Chief Operating Officer

Well, I don't have the numbers in front of me. But I think, as you know the business, when the world there is -- we sell to all of them today. But if you talk about the more advanced applications which are related to the chiplets and HBM with our package on -- 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.

But definitely, over time, this will become more of business for OSATs as well.

Gus Richard -- Northland Securities -- Analyst

Got it. Got it. Thank you. That's very helpful.

And then last one for me. When you think about your wafer level packaging portion of your business, 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 -- Chief Operating Officer

I think this is a very broad market. Definitely phones, IoTs, everything today that is redesigned is utilizing the wafer level packaging. Now you see a very large growth in the fan-out segment because as people 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 substrate, and it has some advantages from the electrical performance as well. So overall, fan-out is a significant driver in this business. And definitely, quite a few machines are sold there.

Gus Richard -- Northland Securities -- Analyst

Got it. And then what do you think the growth rate of that segment could be into the next couple of years?

Ramy Langer -- Chief Operating Officer

It will be -- it's anywhere between, I would say, it's more than 10% for sure. And it depends, but it's significantly more than 10%.

Gus Richard -- Northland Securities -- Analyst

OK. Got it. That's it from me. Thank you so much.

Kenny Green

Thanks, Gus. Our next question is from Vedvati Shrotre from Jefferies. Please go ahead. You may-Vedvati, please unmute.

Vedvati Shrotre -- Jefferies -- Analyst

Do you hear me OK?

Kenny Green

Yes.

Vedvati Shrotre -- Jefferies -- Analyst

OK. Thanks for taking my question. So I wanted to hit on the gross margin side of things. So your revenues look like in 2024, your revenues start to grow beyond that $300 million mark, which will be sort of a record year for Camtek, and that gets you closer to the high end of your target model.

So what does that mean for gross margins? Do you think going to that 52% is a possibility into 2024?

Moshe Eisenberg -- Chief Financial Officer

As I said – hi, 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% to 52%, and 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 -- Jefferies -- Analyst

Right. And so to follow up on that, so when you see product mix, are there any specific segments that could be sort of margin-dilutive? So like how does the mix effect? Like is it the application? Is it CIS versus HBM kind of a story? If you could give any color on what impacts the product mix.

Moshe Eisenberg -- Chief Financial Officer

Yeah. As a matter of fact, it's not geography-specific or an application-specific. It's more like a deal mix, so it depends on the deal level. Size of the deal, obviously, has its own impact.

But not only that, just different dynamics 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 -- Jefferies -- Analyst

I think, that's all from me. Thank you.

Moshe Eisenberg -- Chief Financial Officer

Thank you.

Kenny Green

Thanks, Vedvati. [Operator instructions] Our next question is from Alon Last of Meitav. Alon, please go ahead and ask your question. Alon, please unmute as well.

Alon Last -- Meitav Dash -- Analyst

Yeah. Sorry for that. Can you hear me?

Ramy Langer -- Chief Operating Officer

Yes.

Alon Last -- Meitav Dash -- Analyst

Yeah. 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? What kind of -- how many years do you think will take you to reach that? And what kind of embedded assumptions do you put in that target?

Rafi Amit -- Chief Executive Officer

OK. Maybe I will answer to you. Look, first of all, everything is under the assumption that semiconductor industry continue to grow. All the analysts, everyone predict that by the end of this decade, we come to maybe close to $1 trillion revenue.

And definitely, it means that the semiconductor industry is going to grow roughly two digit from year to year. And 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. And 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. So if we take this the first one and the second one, and definitely, we feel confident that we can deliver it, so then we can do it.

Now when I said we can do it, the question if it takes two years or three years also depend if we make an M&A in between, if it's only organic. So this 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. But we talk about roughly this level of targets.

Alon Last -- Meitav Dash -- Analyst

OK. Thanks very much. My second is about the orders that you've gotten. Could you speak about the value of them? And what's the schedule of delivery for them?

Rafi Amit -- Chief Executive Officer

Ramy, do you want to give --

Ramy Langer -- Chief Operating Officer

Look, so first of all, from the average ASP, those orders are anywhere from $0.9 million to $1 million. So this is --

Moshe Eisenberg -- Chief Financial Officer

Per machine.

Ramy Langer -- Chief Operating Officer

Per machine. So this would give you the more or less the -- and so -- and from the shipment 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 -- Meitav Dash -- Analyst

That you speak about the 42 machines or also for the 10 that were ordered in the last couple of years?

Ramy Langer -- Chief Operating Officer

I included the 10 as well.

Alon Last -- Meitav Dash -- Analyst

OK. So basically, the question is the extent of 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 to similar levels like 2022? Or is it something that will bring you much -- to much higher levels? What's the range of possibilities that you foresee from now about the revenues in 2024?

Ramy Langer -- Chief Operating Officer

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 in the record that we achieved in 2022. At this stage, I think we explained exactly how we see it, and we shed a lot of color into the business of '24. I think at this stage, we cannot predict any more than we've just said.

Definitely, as we'll continue and get closer to '24, we'll be in a much better position to give a better assessment and more accurate assessment of what will be the final revenues.

Alon Last -- Meitav Dash -- Analyst

OK. Thank you very much.

Ramy Langer -- Chief Operating Officer

Thank you.

Kenny Green

Thanks, Alon. Our next question is from Brian Chin from Stifel. Brian, you may go ahead.

Brian Chin -- Stifel Financial Corp. -- Analyst

Hi there. Just one quick follow-up. Just the -- 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. And two, like more broadly, I think many of us expect strong industry expansion for HBM, but can you help us understand when you ship 10 systems, what is sort of the equivalent increase in HBM capacity?

Ramy Langer -- Chief Operating Officer

Hi, Brian. So first of all, in the 42, I don't want to go into numbers, but it's not a much bigger number than the second order. But obviously, I think we said that we will see more orders in the near future. So 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. Definitely, I'm not in position to answer now because I don't know the number, but I can see if we can provide this number.

Brian Chin -- Stifel Financial Corp. -- Analyst

OK. No, that's fair. That would be really helpful. I appreciate that.

That's it from me.

Kenny Green

OK. 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. That's www.camtek.com.

And I would like to thank everybody for joining this call. Rafi, please go ahead with your closing statements.

Rafi Amit -- Chief Executive Officer

OK. I would like to thank you all for your continued interest in our business. I want to especially thank 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

[Operator instructions]

Duration: 0 minutes

Call participants:

Kenny Green

Rafi Amit -- Chief Executive Officer

Moshe Eisenberg -- Chief Financial Officer

Brian Chin -- Stifel Financial Corp. -- Analyst

Ramy Langer -- Chief Operating Officer

Charles Shi -- Needham and Company -- Analyst

Tom O'Malley -- Barclays -- Analyst

Tom OMalley -- Barclays -- Analyst

Craig Ellis -- B. Riley Financial -- Analyst

Gus Richard -- Northland Securities -- Analyst

Vedvati Shrotre -- Jefferies -- Analyst

Alon Last -- Meitav Dash -- Analyst

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