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Investors Presentation Rafi Amit, CEO Moshe Eisenberg, CFO January 2018 Needham Conference 2018

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Page 1: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Investors Presentation

Rafi Amit, CEOMoshe Eisenberg, CFO

January 2018

Needham Conference 2018

Page 2: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Safe Harbor

2Copyright of Camtek Ltd. 2017 © All rights reserved

The information presented today contains forward-looking statements that relate to anticipated futureoperating results and performance. These statements are only predictions based on management’s currentexpectations and assumptions, including with respect to market size, Total Available Market (or “TAM”) andrevenue targets, and necessarily involve risks and uncertainties. Moreover, our stated revenue targets areinspirational and should not be taken as projections of actual future results. We do not assume any obligationto update the information provided. Actual events or results may differ materially from those projected,including as a result of changing industry and market trends, reduced demand for our products, the timelydevelopment of our new products and their adoption by the market, increased competition in the industry,price reductions and other subsequent developments and business conditions, as well as due to risks and otherimportant information identified in the documents filed with the Securities and Exchange Commission,including the Company’s Annual Reports on Form 20-F and Reports on Form 6-K.

The presentation includes non-GAAP financial measures which are not intended to be considered in isolation oras a substitute for the financial information prepared and presented in accordance with GAAP. Managementuses both GAAP and non-GAAP measures when evaluating the business internally and therefore believes it isimportant to make these non-GAAP measures available to the financial community. Reconciliations of non-GAAP measures to the most relevant GAAP amounts are included in the Company press releases.

This presentation includes the company’s estimations on Market size and TAM, (“Total Available Market,” or“TAM”) these estimations can vary and may be differ materially from the reality and are based on internalestimations. TAM or market size is the company’s estimation on the total yearly market size.

Page 3: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Develops, Manufactures and Sells Inspection and metrology

Systems to the Semiconductors Market

CMOS Image Sensors

Bumping

RDL

MEMS, RF

Advanced Packaging

Post Dicing

Memory

• 2D & 3D metrology• 2D inspection

• 2D & 3D metrology• 2D inspection

• 2D inspection & metrology

• 2D inspection & 3D metrology• 2D inspection &

metrology

• 2D inspection & metrology

• 2D Inspection & metrology

Copyright of Camtek Ltd. 2017 © All rights reserved 3

Page 4: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Camtek ID

Copyright of Camtek Ltd © 2017. All rights reserved

PRESENCE IN

CO $235m UNTRIES

Market Cap *Net Cash

PO ~$45mUNTRIES

*2017E revenues

PO ~$92m>+15% YoY

* Q417E gross margin

PO ~50%

* Q417E op. margin

PO ~15%

Employees

PO 270

Global presence

China, Taiwan, Korea, Singapore, Hong Kong, USA, Europe

Page 5: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Camtek: Strong Customer Base

Copyright of Camtek Ltd. 2017 © All rights reserved 5

Page 6: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Performance highlights

• Doubled our Semi revenues 2013-2017

• Improving our profitability to 15% operating margin

• Net cash – $45M with no debt

• Good start for 2018

• Plan to continue doubling our revenue in the next 3-4 years

Copyright of Camtek Ltd © 2017. All rights reserved

Page 7: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Strong and Improving Operating Performance

~16% growth in revenue expected in 2017• Q4 revenue guidance of $24-25m

Profitability improvements in H2 2017 driven by:• Semi growth - high margin & leverage• Significantly reduced legal expenses• Lower FIT expense structure

New operating model• H217 gross margins grow to ~50%• Operating margins increasing to ~15% by Q4 and

continuing improvement into 2018

More than doubled semi revenue organically from 2013 to 2017

Sem

ico

nd

uct

or

4455

6879

~92

2013 2014 2015 2016 2017E

Copyright of Camtek Ltd. 2017 © All rights reserved 7

Page 8: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Well Positioned Semiconductors Company

Signed agreement to divest PCB business

Reached final legal settlementwith Rudolph

Settlement of $13mRemoved uncertaintiesSaves $2.5-$3m/year in legal fees

Strong PCB market createdopportunity for divestment

Completed sale ofPCB business

Sold for $32m +potential $3m earn-out

Internal Reorganization

Semi onlyNew Offices in China and Taiwan

Reduced overall expenses

NovemberJuly August October

Copyright of Camtek Ltd. 2017 © All rights reserved 8

Q4 – Pure Play Semiconductors Company

Page 9: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Semiconductors Market Growth Engines

Source: Cisco Global Cloud Index, Nov 2016

Mobility & Connected Devices

Autonomous Car

HealthcareVirtual Reality

Artificial Intelligence

Cloud

RF Filters MEMSAdvanced Packaging

Data Centers & Storage

Multiple Growth Drivers

244 TB/seconddouble last year

Copyright of Camtek Ltd. 2017 © All rights reserved 9

Page 10: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Mobile memory density continues to grow

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Page 11: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Automotive Industry Trend

11Copyright of Camtek Ltd. 2017 © All rights reserved

Today ~70 electronics modules with 4000-8000 chips2020 ~100 electronics modules predicted

Page 12: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Top 10 IDM’s [$B]

12

Samsung, 65.6, 15%

Intel, 61, 14%

SK Hynix, 26.2, 6%

Micron, 23.4, 5%

Broadcom, 17.6, 4%

Qualcomm, 17.1, 4%TI, 13.9, 3%Toshibe, 13.5, 3%

Nvidia, 9.2, 2%

NXP, 9.2, 2%

Others, 182, 42%

Our sales to IDMs in 2017 is ~70%

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Page 13: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

2017 Top OSATs by RevenueOutsourced Semiconductor Assembly and Test

13

ASE25%

Amkor20%

JCET15%

SPIL13%

PTI9%

TSHT5%

TFME4%

KYEC3%

UTAC Group3% ChipMost

3%

2017 OSAT MARKET SHARE

Camtek has presence in all top OSATS

Copyright of Camtek Ltd. 2017 © All rights reserved

Page 14: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

14

14

Advanced Packaging Driving Increased Inspection & Metrology Capital Spending

Bumped wafers number is growing driving AOI spending growth faster

Source: Yole

Copyright of Camtek Ltd. 2017 © All rights reserved

Page 15: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Our Target Segments Show Double-digit Growth

Source: Yole, Gartner, IC Insights% 2016-2022 CAGR

Cam

tek

Focu

s

7%

7.6%

7.6%

11%

12%

12%

19%

21%

Semi total

Foundry

Memory

RF

MEMS

CIS

3D IC

Fan-out

Memory will grow in 2017 by 60%

AP

Copyright of Camtek Ltd. 2017 © All rights reserved

Installed BaseBased on 760

machines installed worldwide

50%

20%

14%

16%

Advanced Packaging Inspectionand Metrology

CIS

RF/POWER/MEMS

General Inspection

Page 16: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

3DIC Growth Rate 19%

Copyright of Camtek Ltd © 2017. All rights reserved

Source: Yole

Page 17: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Memory move to 3DIC

17

• DRAM

3DIC is used at high end application (gaming

was the first application)

Resulting in higher data transfer rate and low

power consumption

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Page 18: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

CMOS Image Sensors

18

• Ensuring Defect Free Pixels

• Chipping and inner cracks

• Surface defects down to 1 micron size defect

RGB damaged pixel

Chipping

Source: Yole 2015

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Page 19: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

MEMS Market

19

• CAGR 16.7%

• Key growth drivers

include: Automotive, IoT,

wearables, medical and

other smart devices

2017 – 2022 MEMS Market Forecast – In US$B

MEMS packaging market will increase from $2.56 billion last year to $6.46 billion in 2022

Copyright of Camtek Ltd. 2017 © All rights reserved

Page 20: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

RF Power Market

20

Overall market revenue could increase 75% between 2016 and the end of 2022

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Page 21: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Challenges for RF/Power and MEMS

• Different material (RF)

• Detection and Metrology requiring special image

processing and algorithms on same system

• Customized material handling

• Several wafer sizes on same system

• End Effectors

• Chucks

Copyright of Camtek Ltd. 2017 © All rights reserved 21

RF Filter

Page 22: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Plan Into 2018

Copyright of Camtek Ltd. 2017 © All rights reserved

• Continue maintaining our growth rate

Aim to double revenue again in 3-4 years

Growth through organic growth and potentially M&A

• Capitalize our latest new products

Next generation 3D metrology system

New 2D capability (post dicing, RDL)

Our new software tools

• Develop new segments

Macro inspection

2D and 3D special applications

• Higher margins

Through operational leverage

22

Page 23: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Why Are We Winning?

High performance systems

Strong R&D

Flexible operation organization Excellent sales and CS

Dedicated employees

23Copyright of Camtek Ltd. 2017 © All rights reserved

Page 24: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Recent Financial Highlights

Q3 2017 Summary• Revenues $23.8m, up 13% YoY;

Camtek record for semiconductors

• non-GAAP gross margin: 49.4%

• non-GAAP operating income: $3.0m 9.4% operating margin

• Issued $4.9m dividend

Q4 2017 Guidance• Q4 revenue: $24-25m (~+17% YoY)

• 2018 revenue: continuous growth

• ~50% gross margin

• ~15% operating margin

• Start Q4 with net cash of ~$40m

16.8

19.821 21.5 21.1

22.723.8 24.5

0

5

10

15

20

25

30

Q116 Q216 Q316 Q416 Q117 Q217 Q317 Q417

QUARTERLY REVENUE US$M

24

~50%

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Page 25: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Mid-Long Term Target Operating Model*

Double-digit growth from semi

100%

50-52%

Gross MarginRevenue

13-15%

R&D

15-20%

Operating Margin

25

*Illustrative Purposes Only

25Copyright of Camtek Ltd. 2017 © All rights reserved

Page 26: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Investment Highlights

• We focus on the fastest growing segments of the Semiconductors industry

• Expects operating margin improvement in Q4 2017 and beyond

Copyright of Camtek Ltd. 2017 © All rights reserved 26

Aim to double revenues again within 3-4 years

Page 27: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

Thank you!

Page 28: Wafer Inspection & Metrology...development of our new products and their adoption by the market, increased competition in the industry, price reductions and other subsequent developments

GAAP Financial Results

Annual 2017FY Q1 Q2 Q3

(US $ in Millions) 2016Revenues 79.2 21.1 22.7 23.8

Gross Profit 32.5 10.2 11.2 11.8

Gross Margin 41% 48% 49% 50%

R&D 12.6 3.5 3.4 3.2

16% 17% 15% 13%

SG&A 21.9 5.4 5.8 5.7

28% 26% 26% 24%

Reorganisation -4.1 - - -

Loss from litigation - - 13 -Operating Profit (Loss) 2 1.4 -11 2.9

Operating Margin 3% 7% -48% 12%

Continuing Operations 0.9 1.3 -5.7 2.8

Discontinued Operations 3.9 2 1.8 8.9

Net Profit (Loss) 4.7 3.3 -3.9 11.7

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