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Onto Innovation (NYSE:ONTO) formed a partnership with Rigaku Holdings focused on next-generation X-ray process control for semiconductors.
As part of the partnership, Onto Innovation agreed to acquire a substantial minority equity stake in Rigaku Holdings.
The company reported record quarterly revenue alongside strong international demand, with Japan highlighted as a key growth driver.
Onto Innovation, which provides process control and inspection equipment for semiconductor manufacturing, is moving deeper into X-ray based metrology through its agreement with Rigaku Holdings. For investors, this links the company more closely with tools that help chipmakers manage increasingly complex production steps and tighter tolerances.
The combination of record quarterly revenue and stronger activity in regions such as Japan gives investors additional context for how Onto Innovation is positioning itself in global semiconductor supply chains. The Rigaku partnership and equity stake add another dimension to that picture and may affect how the company allocates capital and pursues opportunities in advanced process control.
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NYSE:ONTO Earnings & Revenue Growth as at May 2026
For Onto Innovation, the Rigaku partnership and 27% equity stake look like an effort to deepen its position in complex process control rather than just add another product line. X-ray metrology sits alongside Onto Innovation’s existing optical and inspection tools, so closer access to Rigaku’s technology could help the company address more steps in advanced-node and advanced-packaging workflows that are important for customers such as AI chip and high-bandwidth memory producers. The roughly US$710 million investment is sizeable, so investors will likely focus on how quickly the new X-ray portfolio can contribute to revenue and margins, especially after first quarter 2026 net income of US$33.75 million was lower than the US$64.1 million reported a year earlier, even with record sales of US$291.95 million. The strong revenue contribution from Japan, which accounted for 55.1% of total revenue, also ties into this move, as both companies have deep ties to Asian semiconductor ecosystems where competitors like KLA, Applied Materials and ASML are active.
How This Fits Into The Onto Innovation Narrative
The Rigaku partnership supports the existing narrative that Onto Innovation is building out a broader process-control toolkit for advanced nodes and advanced packaging, alongside platforms such as Dragonfly G5 and Atlas G6.
The scale of the US$710 million equity investment, combined with lower net income year on year, could challenge assumptions in the narrative about how quickly margins recover while the company funds acquisitions and product expansion.
The sharp revenue surprise in Japan and the new X-ray capabilities tied to Rigaku may not be fully reflected in earlier commentary that focused more on packaging tools and other acquisitions like Semilab.
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The Risks and Rewards Investors Should Consider
⚠️ The planned US$710 million purchase of a 27% stake in Rigaku increases capital commitments, so if X-ray tools do not gain traction as expected this could weigh on returns from the deal.
⚠️ First quarter 2026 net income fell compared with a year earlier even though revenue reached a record level, and analysts also highlight profit margins that are currently lower than last year.
🎁 Record quarterly revenue of US$291.95 million, strong client uptake of Dragonfly G5 and Atlas G6 systems, and a 9.5% revenue increase show customers are using Onto Innovation’s tools across advanced-node and advanced-packaging applications.
🎁 The Rigaku partnership, strong contribution from Japan and guidance for higher second quarter 2026 revenue point to a broader international footprint and more complete process-control offering for chipmakers.
What To Watch Going Forward
From here, the key issues are execution and integration. Watch how quickly Onto Innovation and Rigaku bring joint X-ray solutions to market for advanced logic, memory and packaging, and whether those tools show up in segment revenue over the next few quarters. Track whether margins move in line with the company’s guidance as Onto Innovation targets a higher operating margin by the fourth quarter of 2026 while funding the Rigaku stake. It is also worth following regional revenue mix, particularly Japan versus weaker regions like Taiwan, South Korea and Southeast Asia, to see if dependence on one market increases. Finally, keep an eye on how competitors such as KLA, Applied Materials and ASML respond in advanced inspection and metrology.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
Companies discussed in this article include ONTO.
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