10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 26, 2021

OR

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from          to

Commission File No. 001-39110

ONTO INNOVATION INC.

(Exact name of registrant as specified in its charter)

Delaware	94-2276314
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification Number)

16 Jonspin Road, Wilmington, Massachusetts 01887

(Address of principal executive offices, including zip code)

Registrant’s telephone number, including area code: (978) 253-6200

Securities registered pursuant to Section 12(b) of the Act

Title of Each Class	Trading Symbol(s)	Name of Each Exchange on Which Registered
Common Stock, $0.001 par value per share	ONTO	New York Stock Exchange (NYSE)

Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ☒    No  ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).     Yes  ☒    No  ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company.  See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☒	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.  ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).     Yes  ☐    No ☒

The number of outstanding shares of the Registrant’s Common Stock on July 12, 2021 was 49,267,758.

TABLE OF CONTENTS

Item No.		Page
	PART I    FINANCIAL INFORMATION
Item 1.	Financial Statements (unaudited)	1
	Condensed Consolidated Statements of Operations for the three and six months ended June 26, 2021 and June 27, 2020	1
	Condensed Consolidated Statements of Comprehensive Income for the three and six months ended June 26, 2021 and June 27, 2020	2
	Condensed Consolidated Balance Sheets at June 26, 2021 and December 26, 2020	3
	Condensed Consolidated Statements of Cash Flows for the six months ended June 26, 2021 and June 27, 2020	4
	Condensed Consolidated Statements of Stockholders’ Equity for the three and six months ended June 26, 2021 and June 27, 2020	5
	Notes to Condensed Consolidated Financial Statements	6
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	24
Item 4.	Controls and Procedures	24
	PART II    OTHER INFORMATION
Item 1.	Legal Proceedings	25
Item 1A.	Risk Factors	25
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	37
Item 3.	Defaults Upon Senior Securities	37
Item 4.	Mine Safety Disclosures	37
Item 5.	Other Information	38
Item 6.	Exhibits	38

Signatures

PART I FINANCIAL INFORMATION

Item 1. Financial Statements

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share data)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Revenue	$	193,387		$	134,948		$	362,666		$	274,876
Cost of revenue		87,931			63,363			166,741			140,660
Gross profit		105,456			71,585			195,925			134,216
Operating expenses:
Research and development		25,507			22,167			47,471			43,094
Sales and marketing		15,429			11,869			28,533			24,940
General and administrative		16,255			15,916			31,814			36,063
Amortization		12,324			13,703			24,681			27,435
Total operating expenses		69,515			63,655			132,499			131,532
Operating income		35,941			7,930			63,426			2,684
Interest income, net		304			686			665			1,896
Other expense, net		(289	)		(1,198	)		(1,533	)		(1,166	)
Income before provision for income taxes		35,956			7,418			62,558			3,414
Provision (benefit) for income taxes		905			(6	)		3,394			394
Net income	$	35,051		$	7,424		$	59,164		$	3,020
Earnings per share:
Basic	$	0.71		$	0.15		$	1.20		$	0.06
Diluted	$	0.71		$	0.15		$	1.19		$	0.06
Weighted average shares outstanding:
Basic		49,193			48,736			49,105			49,417
Diluted		49,701			49,014			49,645			49,782

The accompanying notes are an integral part of these financial statements.

1

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

	Three Months Ended					Six Months Ended
	June 26,			June 27,		June 26,			June 27,
	2021			2020		2021			2020
Net income	$	35,051		$	7,424	$	59,164		$	3,020
Other comprehensive (loss) gain, net of tax:
Change in net unrealized (losses) gains on      available-for-sale marketable securities		(567	)		795		(698	)		269
Change in currency translation adjustments		537			2,495		(1,362	)		264
Total other comprehensive (loss) gain, net of tax		(30	)		3,290		(2,060	)		533
Total comprehensive income	$	35,021		$	10,714	$	57,104		$	3,553

The accompanying notes are an integral part of these financial statements.

2

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands)

(Unaudited)

	June 26, 2021		December 26, 2020
ASSETS
Current Assets:
Cash and cash equivalents	$	134,218	$	136,720
Marketable securities		276,621		237,002
Accounts receivable, less allowance of $720 and $784		174,662		149,251
Inventories, net		206,981		191,217
Prepaid expenses and other current assets		19,147		17,471
Total current assets		811,629		731,661
Property, plant and equipment, net		88,015		87,950
Goodwill		313,891		306,632
Identifiable intangible assets, net		305,886		318,357
Deferred income taxes		2,263		2,235
Other assets		24,809		21,337
Total assets	$	1,546,493	$	1,468,172
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities:
Accounts payable	$	46,685	$	40,183
Accrued liabilities		40,957		37,075
Deferred revenue		21,190		14,334
Other current liabilities		24,336		28,499
Total current liabilities		133,168		120,091
Deferred and other tax liabilities		55,867		55,623
Other non-current liabilities		27,895		27,712
Total liabilities		216,930		203,426
Commitments and contingencies
Stockholders’ equity:
Common stock		49		49
Additional paid-in capital		1,241,680		1,233,967
Accumulated other comprehensive income		2,508		4,568
Retained earnings		85,326		26,162
Total stockholders’ equity		1,329,563		1,264,746
Total liabilities and stockholders’ equity	$	1,546,493	$	1,468,172

The accompanying notes are an integral part of these financial statements.

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ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

	Six Months Ended
	June 26,			June 27,
	2021			2020
Cash flows from operating activities:
Net income	$	59,164		$	3,020
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Amortization of intangibles		24,681			27,435
Depreciation		7,484			6,240
Share-based compensation		10,997			8,730
Acquired inventory step-up amortization		252			10,173
Provision for inventory valuation		3,706			3,108
Other, net		1,892			1,102
Changes in operating assets and liabilities, net of effects of business acquired		(31,748	)		(12,937	)
Net cash and cash equivalents provided by operating activities		76,428			46,871
Cash flows from investing activities:
Purchases of marketable securities		(142,072	)		(140,364	)
Proceeds from sales of marketable securities		102,027			147,473
Cash received from convertible note receivable		—			2,848
Purchase of business, net of cash acquired		(26,795	)		—
Purchases of property, plant and equipment		(9,558	)		(2,609	)
Net cash and cash equivalents (used in) provided by investing activities		(76,398	)		7,348
Cash flows from financing activities:
Purchase of common stock		—			(52,000	)
Tax payments related to shares withheld for share-based compensation plans		(6,499	)		(3,279	)
Payment of contingent consideration for acquired business		—			(435	)
Issuance of shares through share-based compensation plans		3,215			179
Net cash and cash equivalents used in financing activities		(3,284	)		(55,535	)
Effect of exchange rate changes on cash and cash equivalents		752			31
Net decrease in cash and cash equivalents		(2,502	)		(1,285	)
Cash and cash equivalents at beginning of period		136,720			130,673
Cash and cash equivalents at end of period	$	134,218		$	129,388
Supplemental disclosure of cash flow information:
Income taxes paid	$	4,980		$	3,463

The accompanying notes are an integral part of these financial statements.

4

ONTO INNOVATION INC.

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY

(In thousands)

(Unaudited)

	Common Stock					Additional Paid-in			Accumulated Other Comprehensive			Retained
	Shares			Amount		Capital			Income			Earnings		Total
Balance at December 26, 2020		48,758		$	49	$	1,233,967		$	4,568		$	26,162	$	1,264,746
Net income		—			—		—			—			24,113		24,113
Share-based compensation		—			—		4,890			—			—		4,890
Issuance of shares through share-based    compensation plans		240			—		3,085			—			—		3,085
Share-based compensation plan     withholdings		(41	)		—		(2,492	)		—			—		(2,492	)
Currency translation		—			—		—			(1,899	)		—		(1,899	)
Unrealized loss on investments		—			—		—			(131	)		—		(131	)
Balance at March 27, 2021		48,957		$	49	$	1,239,450		$	2,538		$	50,275	$	1,292,312
Net income		—			—		—			—			35,051		35,051
Share-based compensation		—			—		6,107			—			—		6,107
Issuance of shares through share-based    compensation plans, net		288			—		130			—			—		130
Share-based compensation plan     withholdings		(56	)		—		(4,007	)		—			—		(4,007	)
Currency translation		—			—		—			537			—		537
Unrealized loss on investments		—			—		—			(567	)		—		(567	)
Balance at June 26, 2021		49,189		$	49	$	1,241,680		$	2,508		$	85,326	$	1,329,563

	Common Stock						Additional Paid-in			Accumulated Other Comprehensive			Accumulated
	Shares			Amount			Capital			Loss			Deficit			Total
Balance at December 31, 2019		50,184		$	50		$	1,269,437		$	(598	)	$	(4,863	)	$	1,264,026
Repurchase of common stock		(1,250	)		(1	)		(33,613	)		—			—			(33,614	)
Net loss		—			—			—			—			(4,404	)		(4,404	)
Share-based compensation		—			—			3,955			—			—			3,955
Issuance of shares through share-based    compensation plans		240			—			164			—			—			164
Share-based compensation plan     withholdings		(42	)		—			(1,565	)		—			—			(1,565	)
Currency translation		—			—			—			(2,231	)		—			(2,231	)
Unrealized loss on investments		—			—			—			(526	)		—			(526	)
Balance at March 28, 2020		49,132		$	49		$	1,238,378		$	(3,355	)	$	(9,267	)	$	1,225,805
Issuance of shares through share-based    compensation plans, net		279			—			15			—			—			15
Repurchase of common stock		(632	)		—			(18,385	)		—			—			(18,385	)
Net income		—			—			—			—			7,424			7,424
Share-based compensation		—			—			4,775			—			—			4,775
Share-based compensation plan     withholdings		(55	)		—			(1,715	)		—			—			(1,715	)
Currency translation		—			—			—			2,495			—			2,495
Unrealized gain on investments		—			—			—			795			—			795
Balance at June 27, 2020		48,724		$	49		$	1,223,068		$	(65	)	$	(1,843	)	$	1,221,209

The accompanying notes are an integral part of these financial statements.

5

ONTO INNOVATION INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share data)

(Unaudited)

NOTE 1. Basis of Presentation

The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to December 31^st. Our fiscal year ending January 1, 2022 (“fiscal year 2021”) is a 53-week fiscal year. The first quarter of the Company’s fiscal year 2021 ended on March 27, 2021, the second quarter ended on June 26, 2021 and the third quarter ends on September 25, 2021. Our fiscal year ended December 26, 2020 was a 52-week fiscal year.

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by Onto Innovation Inc. (together with its consolidated subsidiaries, unless otherwise specified or suggested by the context, the “Company,” or “Onto Innovation,” “we,” “our” or “us”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Preparing financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual amounts could differ materially from reported amounts.  The interim results for the three and six months ended June 26, 2021 are not necessarily indicative of results to be expected for the entire year or any future periods.  This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020 (the “2020 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on February 19, 2021.  The accompanying Condensed Consolidated Balance Sheet at December 26, 2020 has been derived from the audited consolidated financial statements included in the 2020 Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management that are evaluated on an ongoing basis include the allowances for credit losses, excess and obsolete inventory, fair value of assets acquired and liabilities assumed in a business combination, recoverability and useful lives of property, plant and equipment and identifiable intangible assets, recoverability of goodwill, recoverability of deferred tax assets, liabilities for product warranty and contingencies, including litigation reserves, share-based payments and liabilities for tax uncertainties. Actual results could differ from those estimates.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances. The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, fair value of assets acquired and liabilities assumed in a business combination and stock awards. Such estimates often require the selection of appropriate valuation methodologies and significant judgment. Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

The Company also assessed the impacts of COVID-19 on the above accounting matters as of June 26, 2021 and through the date of this report. While there was not a material impact as of and for the quarter ended June 26, 2021 and through the date of this report, future actual magnitude and duration of the COVID-19 pandemic, as well as other associated factors, could result in material negative impacts to the Company’s condensed consolidated financial statements in future reporting periods.

Recent Accounting Pronouncements

Recently Adopted

Effective December 27, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplified the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplified aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarified the accounting for transactions that resulted in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The adoption of ASU No.

6

2019-12 did not have a significant impact on the Company’s consolidated financial position, results of operations, and cash flows.

NOTE 2. Business Combination

Inspectrology, LLC

On December 31, 2020, the Company acquired Inspectrology, LLC (“Inspectrology”), a leading supplier of overlay metrology for controlling lithography and etch processes in the compound semiconductor market for $27,015 in cash and a potential earnout of $10,000, subject to achievement of certain revenue targets earned for fiscal 2021 and 2022. As of June 26, 2021, the Company does not believe the earnout criteria will be met. Certain payments, including the earnout, are subject to the principals remaining with the Company for a period of one to three years.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents	$	220
Account receivables		4,071
Inventories		2,587
Prepaid expenses and other current assets		104
Property, plant and equipment		86
Identifiable intangible assets		12,210
Other assets		3,000
Total assets acquired		22,278
Accounts payable		(1,048	)
Payroll and related expenses		(512	)
Deferred revenue		(386	)
Other current liabilities		(576	)
Net assets acquired		19,756
Goodwill		7,259
Total purchase consideration	$	27,015

NOTE 3. Fair Value Measurements

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.  The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short-term maturity of these instruments.

Fair Value Hierarchy

The Company applies a three-level valuation hierarchy for fair value measurements. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based on management’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

7

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 26, 2021 and December 26, 2020:

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 26, 2021
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	142,931	$	—	$	142,931	$	—
Asset-backed securities		4,094		—		4,094		—
Certificates of deposit		44,021		—		44,021		—
Commercial paper		50,979		—		50,979		—
Corporate bonds		34,596		—		34,596		—
Foreign currency forward contracts		27		—		27		—
Total assets	$	276,648	$	—	$	276,648	$	—
December 26, 2020
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	124,640	$	—	$	124,640	$	—
Asset-backed securities		11,708		—		11,708		—
Certificates of deposit		36,373		—		36,373		—
Commercial paper		32,699		—		32,699		—
Corporate bonds		31,582		—		31,582		—
Total assets	$	237,002	$	—	$	237,002	$	—
Liabilities:
Foreign currency forward contracts		36		—		36		—
Total liabilities	$	36	$	—	$	36	$	—

Available-for-sale debt securities classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency.  The foreign currency forward contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers.  Investment prices are obtained from third party pricing providers, which model prices utilizing the above observable inputs, for each asset class.

See Note 4 for additional discussion regarding the fair value of the Company’s marketable securities.

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NOTE 4. Marketable Securities

At June 26, 2021 and December 26, 2020, marketable securities are categorized as follows:

	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
June 26, 2021
Municipal notes and bonds	$	142,821	$	128	$	19	$	142,930
Asset-backed securities		4,090		4		—		4,094
Certificates of deposit		44,003		19		1		44,021
Commercial paper		50,961		19		—		50,980
Corporate bonds		34,651		6		61		34,596
Total marketable securities	$	276,526	$	176	$	81	$	276,621
December 26, 2020
Municipal notes and bonds	$	124,387	$	257	$	4	$	124,640
Asset-backed securities		11,679		29		—		11,708
Certificates of deposit		36,349		24		—		36,373
Commercial paper		32,690		12		3		32,699
Corporate bonds		31,544		50		12		31,582
Total marketable securities	$	236,649	$	372	$	19	$	237,002

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, is as follows at June 26, 2021 and December 26, 2020:

	June 26, 2021				December 26, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	195,632	$	195,733	$	170,099	$	170,321
Due after one through five years		80,894		80,888		66,550		66,681
Due after five through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total marketable securities	$	276,526	$	276,621	$	236,649	$	237,002

The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at June 26, 2021 and December 26, 2020:

	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 26, 2021
Municipal notes and bonds	$	30,626	$	19	$	—	$	—
Certificate of deposit		4,603		1		—		—
Corporate bonds		24,485		61		—		—
Total	$	59,714	$	81	$	—	$	—
December 26, 2020
Municipal notes and bonds	$	8,641	$	4	$	—	$	—
Commercial paper		8,862		3		—		—
Corporate bonds		14,947		12		—		—
Total	$	32,450	$	19	$	—	$	—

See Note 3 for additional discussion regarding the fair value of the Company’s marketable securities.

NOTE 5. Derivative Instruments and Hedging Activities

The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions. At June 26, 2021 and December 26, 2020, these contracts included the

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future sale of British pound sterling, euro, Israeli shekel, Japanese yen, Korean won, Singapore dollar, Taiwanese dollar, and Chinese renminbi to purchase U.S. dollars.  Foreign currency forward contracts are not designated as hedges for accounting purposes and therefore, the change in fair value is recorded in “Other expense, net,” in the Condensed Consolidated Statements of Operations.  The Company records its forward contracts at fair value in either prepaid expenses and other current assets or other current liabilities in the Condensed Consolidated Balance Sheets.

The dollar equivalent of the U.S. dollar forward contracts and related fair values as of June 26, 2021 and December 26, 2020 were as follows:

	June 26, 2021		December 26, 2020
Notional amount	$	11,397	$	37,580
Fair value of asset (liability)	$	27	$	(36	)

NOTE 6. Goodwill and Purchased Intangible Assets

Goodwill

The changes in the carrying amount of goodwill are as follows:

Balance at December 26, 2020	$	306,632
Goodwill acquired during the period (Note 2)		7,259
Balance at June 26, 2021	$	313,891

Intangible Assets

Purchased intangible assets as of June 26, 2021 and December 26, 2020 are as follows:

	Gross Carrying Amount		Accumulated Amortization		Net
June 26, 2021
Finite-lived intangibles:
Developed technology	$	331,747	$	132,270	$	199,477
Customer and distributor relationships		74,701		23,267		51,434
Trademarks and trade names		14,361		5,986		8,375
Total finite-lived intangible assets		420,809		161,523		259,286
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	467,409	$	161,523	$	305,886
December 26, 2020
Finite-lived intangibles:
Developed technology	$	326,877	$	110,851	$	216,026
Customer and distributor relationships		69,261		20,654		48,607
Trademarks and trade names		12,461		5,337		7,124
Total finite-lived intangible assets		408,599		136,842		271,757
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	455,199	$	136,842	$	318,357

10

Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, future estimated amortization expenses are:

	Expected Amortization
Fiscal Year:	Expense
2021 (remainder)	$	24,548
2022		48,830
2023		48,355
2024		42,669
2025		26,119
2026		24,926
Thereafter		43,839
Total	$	259,286

NOTE 7. Balance Sheet Details

Inventories

Inventories, net are comprised of the following:

	June 26, 2021		December 26, 2020
Materials	$	128,389	$	124,926
Work-in-process		54,706		44,829
Finished goods		23,886		21,462
Total inventories, net	$	206,981	$	191,217

Property, Plant and Equipment

Property, plant and equipment, net is comprised of the following:

	June 26, 2021			December 26, 2020
Machinery and equipment	$	57,061		$	52,833
Land and building		48,188			47,544
Computer equipment and software		15,651			15,549
Leasehold improvements		13,759			12,927
Furniture and fixtures		3,985			4,013
		138,644			132,866
Accumulated depreciation and amortization		(50,629	)		(44,916	)
Total property, plant and equipment, net	$	88,015		$	87,950

Other assets

Other assets is comprised of the following:

	June 26, 2021		December 26, 2020
Operating lease right-of-use assets	$	20,449	$	19,669
Other		4,360		1,668
Total other assets	$	24,809	$	21,337

Accrued liabilities

Accrued liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Payroll and related expenses	$	32,026	$	30,270
Warranty		7,611		6,062
Other		1,320		743
Total accrued liabilities	$	40,957	$	37,075

11

Other current liabilities

Other current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Customer deposits	$	10,949	$	15,177
Current operating lease obligations		5,121		4,470
Income tax payable		1,076		4,109
Accrued professional fees		1,259		1,184
Other		5,931		3,559
Total other current liabilities	$	24,336	$	28,499

Other non-current liabilities

Other non-current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Non-current operating lease obligations	$	16,365	$	16,455
Unrecognized tax benefits (including interest)		2,765		3,812
Deferred revenue		1,716		1,292
Other		7,049		6,153
Total other non-current liabilities	$	27,895	$	27,712

NOTE 8. Commitments and Contingencies

Factoring

The Company maintains arrangements under which eligible accounts receivable in Japan are sold without recourse to unrelated third-party financial institutions. The Company sold $6,226 of receivables during the six months ended June 26, 2021. These receivables were not included in the condensed consolidated balance sheets as the criteria for sale treatment had been met. There were no material gains or losses on the sale of such receivables. There were no amounts due from such third-party financial institutions at June 26, 2021.

Intellectual Property Indemnification Obligations

The Company has entered into agreements with customers that include limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third-party intellectual property claims arising from these transactions. The nature of the intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers. Historically, the Company has not made any indemnification payments under such agreements, and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees.

Warranty Reserves

The Company generally provides a warranty on its products for a period of 12 to 14 months against defects in material and workmanship. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time revenue is recognized. The Company’s estimate is based primarily on historical experience. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Settlements of warranty reserves are generally associated with sales that occurred during the 12 to 14 months prior to the period-end and warranty accruals are related to sales during the same year.

Changes in the Company’s warranty reserves are as follows:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Balance, beginning of the period	$	6,485		$	6,348
Accruals		3,560			2,794
Warranty liability assumed in acquisition		407			—
Usage		(2,229	)		(2,327	)
Balance, end of the period	$	8,223		$	6,815

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Warranty reserves are reported in the Condensed Consolidated Balance Sheets under the captions “Accrued liabilities” and “Other non-current liabilities.”

Legal Matters

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business. The following reflects an overview of the material developments with regard to the Company’s pending material legal proceedings.

Optical Solutions Inc. v. Nanometrics Incorporated (Case No. 18-cv-00417-BLF): On August 2, 2017, Nanometrics was named as defendant in a complaint filed in New Hampshire Superior Court (the “Complaint”). The Complaint, brought by Optical Solutions, Inc. (“OSI”), alleges claims arising from a purported exclusive purchase contract between OSI and Nanometrics pertaining to certain products. The relief sought is the award of damages in an amount to be proven at trial, attorney’s fees and cost as well as other relief the court deems just and proper. On September 18, 2017, Nanometrics removed the action to the United States District Court for the District of New Hampshire (the “District of New Hampshire”). On September 25, 2017, Nanometrics moved to transfer the Complaint to the United States District Court for the Northern District of California (the “Northern District of California”). On December 20, 2017, Nanometrics filed its complaint against OSI in the California Superior Court for the County of Santa Clara alleging claims arising from OSI’s breach of certain purchase orders. The relief sought is the award of damages in an amount to be proven at trial including pre- and post-judgment interest, punitive damages, restitution for benefits unjustly received by OSI, attorney’s fees and cost as well as other relief the court deems just and proper.  Nanometrics’ complaint was later removed by OSI to the Northern District of California. On May 29, 2018, the District of New Hampshire issued an order granting Nanometrics’ motion to transfer the Complaint to the Northern District of California and denying Nanometrics’ motion to dismiss the Complaint without prejudice. On June 14, 2018, the Complaint was consolidated with Nanometrics’ complaint against OSI. On August 9, 2018, OSI filed an Amended Complaint. On September 19, 2018, Nanometrics filed a motion to dismiss OSI’s Amended Complaint for failure to state a claim. Nanometrics’ motion to dismiss was heard on February 28, 2019. On March 5, 2019, the Northern District of California granted Nanometrics’ motion to dismiss with leave to amend. OSI filed a Second Amended Complaint on March 29, 2019. Nanometrics filed a motion to dismiss OSI’s Second Amended Complaint on May 31, 2019. In October 2019, Nanometrics was renamed Onto Innovation Inc. as a result of the Merger. Thereafter, the Company’s second motion to dismiss was heard on November 14, 2019. On November 26, 2019, the Northern District of California granted the Company’s motion to dismiss with leave to amend. OSI filed a Third Amended Complaint on January 21, 2020. On March 2, 2020, the Company filed a motion to dismiss OSI’s Third Amended Complaint and a hearing on the motion was held on June 11, 2020. On June 23, 2020, the Northern District of California granted the Company’s motion to dismiss with prejudice with regard to two claims asserted by OSI and dismissed two other claims asserted by OSI with leave to amend. Thereafter, on July 7, 2020, OSI filed a Fourth Amended Complaint. On August 14, 2020, the Company filed a motion to dismiss with regard to one of the two remaining claims. On December 1, 2020, the Northern District of California denied this final motion to dismiss and as a result the Company filed its Answer in this matter on December 22, 2020. This matter is currently in discovery. The Northern District of California granted a joint stipulation that discovery cutoff is September 3, 2022 and the trial date is set for December 4, 2023. At this time, the loss contingency in this matter is remote and the Company does not anticipate the outcome of the matter to have a material impact on its financial position, results of operations, or cash flows.

Line of Credit

The Company has a credit agreement with a bank that provides for a line of credit which is secured by the marketable securities the Company has with the bank.  The Company is permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed.  The available line of credit as of June 26, 2021 was approximately $99.4 million with an available interest rate of 1.8%.  The credit agreement is available to the Company until such time that either party terminates the arrangement at their discretion.  The Company has not utilized the line of credit to date.

NOTE 9. Revenue

The following table represents a disaggregation of revenue by timing of revenue:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Point-in-time	$	182,133	$	131,796	$	343,294	$	265,541
Over-time		11,254		3,152		19,372		9,335
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

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See Note 15 for additional discussion of the Company’s disaggregated revenue in detail.

Contract Liabilities

The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Condensed Consolidated Balance Sheets.  

Changes in deferred revenue were as follows:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Balance, beginning of the period	$	22,429		$	18,032		$	15,626		$	15,093
Deferred revenue assumed in acquisition		—			—			386			—
Deferral of revenue		15,117			8,818			34,348			23,252
Recognition of deferred revenue		(14,640	)		(8,956	)		(27,454	)		(20,451	)
Balance, end of the period	$	22,906		$	17,894		$	22,906		$	17,894

NOTE 10. Share-Based Compensation

Restricted Stock Unit Activity

A summary of the Company’s restricted stock unit activity with respect to the six months ended June 26, 2021 is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at December 26, 2020		964		$	31.37
Granted		285		$	69.47
Vested		(404	)	$	30.74
Forfeited		(46	)	$	37.61
Nonvested at June 26, 2021		799		$	45.67

As of June 26, 2021 and December 26, 2020, there was $27,391 and $19,135 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.  That cost is expected to be recognized over a weighted average period of 1.8 years and 1.7 years for June 26, 2021 and December 26, 2020, respectively.

NOTE 11. Other Expense, Net

Other expense, net, is comprised of the following:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Foreign currency exchange losses, net	$	(328	)	$	(1,271	)	$	(1,599	)	$	(1,305	)
Other		39			73			66			139
Total other expense, net	$	(289	)	$	(1,198	)	$	(1,533	)	$	(1,166	)

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NOTE 12. Income Taxes

The following table provides details of income taxes:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Income before income taxes	$	35,956		$	7,418		$	62,558		$	3,414
Provision (benefit) for income taxes	$	905		$	(6	)	$	3,394		$	394
Effective tax rate		3	%		0	%		5	%		12	%

The income tax provision for the three and six months ended June 26, 2021 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.  The increase in the Company’s income tax provision for the three and six months ended June 26, 2021 as compared to the three and six months ended June 27, 2020 is primarily due to an increase in quarterly earnings, offset by (i) an increase in the Foreign Derived Intangible Income (“FDII”) deduction, (ii) an increase in the excess tax benefit associated with equity compensation, and (iii) a release of reserves due to expiration of the applicable statute of limitations.  The Company’s recorded effective tax rate is less than the U.S. statutory rate primarily due to projected FDII deductions and federal research and development tax credits.

The Company currently has a partial valuation allowance recorded against certain foreign and state net operating loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt.  Each quarter, the Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers available evidence, both positive and negative, including forecasted earnings in assessing its need for a valuation allowance.  As a result of the Company’s analysis, it concluded that it is more likely than not that a portion of its deferred tax assets will not be realized. Therefore, the Company continues to provide a valuation allowance against certain deferred tax assets.  The Company continues to monitor available evidence and may reverse some or all of its remaining valuation allowance in future periods, if appropriate.  The Company has a recorded valuation allowance against a certain portion of its deferred tax assets of $14,254 and $14,238 as of June 26, 2021 and December 26, 2020, respectively.

NOTE 13. Earnings Per Share

Basic earnings per share is calculated using the weighted average number of shares of common stock outstanding during the period. Restricted stock units, employee stock purchase grants and stock options are included in the calculation of diluted earnings per share, except when their effect would be anti-dilutive.

The Company’s basic and diluted earnings per share amounts are as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Numerator:
Net income	$	35,051	$	7,424	$	59,164	$	3,020
Denominator:
Basic earnings per share - weighted average shares    outstanding		49,193		48,736		49,105		49,417
Effect of potential dilutive securities:
Employee stock options, employee stock purchase grants and    restricted stock units - dilutive shares		508		278		540		365
Diluted earnings per share - weighted average shares    outstanding		49,701		49,014		49,645		49,782
Earnings per share:
Basic	$	0.71	$	0.15	$	1.20	$	0.06
Diluted	$	0.71	$	0.15	$	1.19	$	0.06

15

NOTE 14. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, net of tax, at June 26, 2021, as well as the activity for the six months ended June 26, 2021, were as follows:

	Foreign currency translation adjustments			Net unrealized gains (losses) on available-for-sale marketable securities			Accumulated other comprehensive income
Balance at December 26, 2020	$	4,479		$	89		$	4,568
Net current period other comprehensive loss		(1,362	)		(698	)		(2,060	)
Reclassifications		—			—			—
Balance at June 26, 2021	$	3,117		$	(609	)	$	2,508

NOTE 15. Segment Reporting and Geographic Information

The Company is engaged in the design, development, manufacture and support of high-performance control metrology, defect inspection, lithography and data analysis systems used by microelectronics device manufacturers. The Company and its subsidiaries currently operate in a single operating segment: the design, development, manufacture and support of high-performance process control defect inspection and metrology, lithography and process control software systems used by microelectronics device manufacturers. Therefore, the Company has one reportable segment. The Company’s chief operating decision maker is the Chief Executive Officer (the “CEO”). The CEO allocates resources and assesses performance of the business and other activities at the reportable segment level.

The following table lists the different sources of revenue:

	Three Months Ended								Six Months Ended
	June 26,				June 27,				June 26,				June 27,
	2021				2020				2021				2020
Systems and software	$	162,898	84	%	$	108,247	80	%	$	304,407	84	%	$	222,577	81	%
Parts		18,697	10	%		16,329	12	%		36,115	10	%		29,904	11	%
Services		11,792	6	%		10,372	8	%		22,144	6	%		22,395	8	%
Total revenue	$	193,387	100	%	$	134,948	100	%	$	362,666	100	%	$	274,876	100	%

The Company’s significant operations outside the United States include sales, service and application offices in Asia and Europe.  For geographical revenue reporting, revenue is attributed to the geographic location to which the product is shipped.  Revenue by geographic region is as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Revenue from third parties:
South Korea	$	41,299	$	22,964	$	91,828	$	43,721
Taiwan		48,501		31,997		84,793		67,178
China		42,274		27,001		68,053		58,384
United States		25,700		22,378		51,180		42,026
Europe		14,446		10,089		31,832		25,158
Japan		17,386		13,908		25,251		28,935
Southeast Asia		3,781		6,611		9,729		9,474
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

The following customers accounted for 10% or more of total revenue for the indicated periods:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Samsung Semiconductor		22	%		18	%
Taiwan Semiconductor Manufacturing Co. Ltd.		16	%		17	%

16

NOTE 16. Share Repurchase Authorization

In November 2020, the Onto Innovation Board of Directors approved a new share repurchase authorization, which allows the Company to repurchase up to $100,000 worth of shares of its common stock.  Repurchases may be made through both public market and private transactions from time to time with shares purchased being subsequently retired. At June 26, 2021, there was $100,000 available for future share repurchases under this share repurchase authorization.

The following table summarizes the Company’s share repurchases for the periods indicated:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Shares of common stock repurchased		—		632		—		1,882
Cost of shares repurchased	$	—	$	18,385	$	—	$	52,000
Average price paid per share	$	—	$	29.08	$	—	$	27.62

17

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations 

Forward-Looking Statements

Certain statements in this Quarterly Report on Form 10-Q (this “Form 10-Q”) of Onto Innovation Inc. (referred to in this Form 10-Q, together with its consolidated subsidiaries, unless otherwise specified or suggested by the context, as the “Company,” “Onto Innovation,” “we,” “our” or “us”) may be considered “forward-looking statements,” including, but not limited to, those concerning:

• anticipated effects of, and future actions to be taken in response to the COVID-19 pandemic,  

• our business momentum and future growth,

• acceptance of our products and services,

• our ability to deliver both products and services consistent with our customers’ demands and expectations and to strengthen our market position,

• our expectations of the semiconductor market outlook,

• future revenue, gross profits, research and development and engineering expenses, selling, general and administrative expenses,

• product introductions,

• technology development,

• manufacturing practices,

• cash requirements,

• our dependence on certain significant customers and anticipated trends and developments in and management plans for our business and the markets in which we operate,

• our anticipated revenue as a result of acquisitions, and

• our ability to be successful in managing our cost structure and cash expenditures and results of litigation.

The statements contained in this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements may be identified by words such as, but not limited to, “anticipate,” “believe,” “continue,” “estimate,” “expect,” “intend,” “plan,” “should,” “may,” “could,” “will,” “would,” “forecast,” “project” and words or phrases of similar meaning, as they relate to our management or us.

The forward-looking statements contained herein reflect our expectations with respect to future events and are subject to certain risks, uncertainties and assumptions. Actual results may differ materially from those included in such forward-looking statements for a number of reasons including, but not limited to, the following:

• effects of the COVID-19 pandemic and the measures being taken to limit the spread of COVID-19, including impact on demand for our products, reduction in production levels, R&D activities, and qualification activities with our customers, increased costs, disruptions to our supply chain and a decrease in availability under our credit agreement;

• the severity, including the virulence and transmissibility, of newly identified strains of COVID-19, the timing, availability, efficacy and public utilization of vaccines for COVID-19; 

• variations in the level of orders which can be affected by general economic conditions;

• seasonality and growth rates in the semiconductor manufacturing industry and in the markets served by our customers;

• the global economic and political climates;

• difficulties or delays in product functionality or performance;

• the delivery performance of sole source vendors;

• the shortage of semiconductor chips or other key components;

• the timing of future product releases;

• failure to respond adequately to either changes in technology or customer preferences;

• changes in pricing by us or our competitors;

• our ability to manage growth; changes in management;

• risk of nonpayment of accounts receivable;

• changes in budgeted costs;

• our ability to leverage our resources to improve our position in our core markets, to weather difficult economic environments, to open new market opportunities and to target high-margin markets;

• the strength/weakness of the back-end and/or front-end semiconductor market segments;

• the imposition of tariffs or trade restrictions and costs, burdens and restrictions associated with other governmental actions;

18

• the ability to successfully complete the integration of the businesses of Rudolph Technologies, Inc. (“Rudolph”) and Nanometrics Incorporated (“Nanometrics”) within the expected time frame and to maintain the anticipated synergies and value-creation contemplated by the merger of Rudolph and Nanometrics (the “2019 Merger”);

• unanticipated difficulties or expenditures relating to the completion of the integration of the Rudolph and Nanometrics businesses;

• the response of business partners and retention as a result of the 2019 Merger;

• the diversion of management time in connection with the integration; and

• the “Risk Factors” set forth in Item 1A of the Company’s Annual Report on Form 10-K for the year ended December 26, 2020 (the “2020 Form 10-K”), in Part II, Item 1A of the Company’s Quarterly Report on Form 10-Q for the quarter ended March 27, 2021 (the “Q1 2021Form 10-Q”) and in Part II, Item 1A of this Form 10-Q.

You should carefully review the cautionary statements and “Risk Factors” contained in the 2020 Form 10-K, the Q1 2021 Form 10-Q and this Form 10-Q. You should also review any additional disclosures and cautionary statements and “Risk Factors” we include from time to time in our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings we make with the Securities and Exchange Commission (the “SEC”). The forward-looking statements reflect our position as of the date of this Form 10-Q and we undertake no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise, except as required by law.

Critical Accounting Policies

The preparation of condensed consolidated financial statements and related disclosures in conformity with accounting principles generally accepted in the United States (“U.S. GAAP”) requires management to make judgments, assumptions and estimates that affect the amounts reported.  Certain of these significant accounting policies are considered to be critical accounting policies, as defined below.

A critical accounting policy is defined as one that is both material to the presentation of our condensed consolidated financial statements and requires management to make difficult, subjective or complex judgments that could have a material effect on our financial condition or results of operations.  Specifically, these policies have the following attributes: (1) we are required to make judgments and assumptions about matters that are highly uncertain at the time of the estimate; and (2) different estimates we could reasonably have used, or changes in the estimate that are reasonably likely to occur, could have a material effect on our financial position and results of operations.

Estimates and assumptions about future events and their effects cannot be determined with certainty.  We base our estimates on historical experience and on various other assumptions believed to be applicable and reasonable under the circumstances.  These estimates may change as new events occur, as additional information is obtained and as our operating environment changes.  In addition, management is periodically faced with uncertainties, the outcomes of which are not within our control and will not be known for prolonged periods of time. Certain of these uncertainties are discussed in our 2020 Form 10-K in the Items entitled “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”  Based on a critical assessment of our accounting policies and the underlying judgments and uncertainties affecting the application of those policies, we believe that our condensed consolidated financial statements are fairly stated in accordance with U.S. GAAP and provide a fair presentation of our financial position and results of operations.

For more information, please see our critical accounting policies as previously disclosed in our 2020 Form 10-K and recent accounting pronouncements discussed in Note 1 to the Condensed Consolidated Financial Statements.

Executive Summary

We are a worldwide leader in the design, development, manufacture and support of process control tools that perform macro-defect inspection and metrology, lithography systems, and process control analytical software used by semiconductor and advanced packaging device manufacturers. We deliver comprehensive solutions throughout the semiconductor fabrication process with our families of proprietary products that provide critical yield-enhancing information, enabling microelectronic device manufacturers to drive down costs and time to market of their devices. We provide process and yield management solutions used in both wafer processing facilities, often referred to as “front-end,” and in device packaging and test facilities, commonly referred to as “back-end” manufacturing. Our advanced process control software portfolio includes powerful solutions for standalone tools, groups of tools, or factory-wide suites to enhance productivity and achieve significant cost savings.

19

The following table summarizes certain key financial information for the periods indicated below (in thousands, except per share and percent data):

	Three Months Ended
	June 26,			March 27,			June 27,
	2021			2021			2020
Revenue	$	193,387		$	169,279		$	134,948
Gross profit	$	105,456		$	90,469		$	71,585
Gross profit as a percent of revenue		55	%		53	%		53	%
Total operating expenses	$	69,515		$	62,984		$	63,656
Net income	$	35,051		$	24,113		$	7,424
Diluted earnings per share	$	0.71		$	0.49		$	0.15

• In the fiscal quarter ended June 26, 2021 (the “June 2021 quarter”), revenue increased 14.2% compared to the fiscal quarter ended March 27, 2021 (the “March 2021 quarter”), primarily due to an increase in sales in our specialty device markets, mainly from our RF and Power customers, partially offset by a decline in sales in our advanced nodes markets.

• The increase in gross margin as a percentage of revenue in the June 2021 quarter compared to the March 2021 quarter was primarily driven by shift in sales to products with slightly higher margins.

• The increase in operating expenses in the June 2021 quarter compared to the March 2021 quarter was mainly an increase in employee-related expenses.

Our cash, cash equivalents and marketable securities balance increased to $410.8 million at the end of the June 2021 quarter compared to $373.7 million at the end of the fiscal quarter ended December 26, 2020. This increase was primarily the result of $76.4 million of cash generated from operating activities. This source of cash was partially offset by net cash of $26.8 million used for the purchase of Inspectrology and $9.6 million used for capital expenditures. Employee headcount as of June 26, 2021 was approximately 1,294.

Key Events

Trade Restriction and Emerging Regulation. The United States Department of Commerce has added certain China-based entities to the U.S. Entity List, restricting our ability to provide products and services to such entities without an export license. In addition, the U.S. Department of Commerce has imposed new export licensing requirements related to China-based customers alleged to engage in military end uses, as well as requiring that an export license be obtained for the purchase and use of certain semiconductor capital equipment based on U.S. technology. As of June 26, 2021, we currently have purchase orders of approximately $7.3 million from customers in China which are affected by these restrictions. We have filed for licenses with the U.S. government and are waiting for a response to ship these orders. In addition, companies in China are being considered as potential military suppliers and these new additions may have a material impact to our sales in China. We continue to monitor the trade related actions governments may take during 2021.

Impact of the COVID-19 Pandemic on Our Business. Events surrounding the ongoing COVID-19 pandemic initially resulted in a reduction in economic activity across the globe, and the timing and extent of the ongoing economic recovery remains uncertain. As a result, we have experienced volatility in the markets that our products are sold into, driven by the move to a stay-at-home economy and fluctuations in consumer and business spending, which has affected demand for certain of our products. The ultimate extent to which COVID-19 will impact our business depends on future developments, which are highly uncertain and very difficult to predict, including the effectiveness and utilization of vaccines for COVID-19 and its variants, new information that may emerge concerning the severity of COVID-19 and its variants, and actions to contain or limit their spread. As of August 5, 2021, our operations have been impacted by our pandemic response, as described below, and the global nature of our workforce and our operations, but we have not experienced significant financial impact directly related to the pandemic.

We have prioritized the health and safety of our employees and customers in our pandemic response. As governmental authorities implement restrictions on commercial operations, we have continued to ensure compliance with these directives while also maintaining business continuity for our essential operations. We have a global workforce.  Although our manufacturing is conducted solely in the U.S., we maintain offices in the United States, South Korea, Japan, Taiwan, China, Singapore and Europe. Our operations at these offices are subject to various governmental directives and, as a result thereof, we have instituted a work-from-home policy for these employees to the extent practical.  Where our essential employees are required to continue to report to work to perform their responsibilities, we have implemented staggered shifts or otherwise adjusted work schedules to maximize our operating capacity while adhering to applicable restrictions, including recommended

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distancing between persons.  We have also provided our essential employees with appropriate protective equipment and have enhanced and increased cleanings at our facilities. At this time, we have not experienced any reduction in productivity, though we have incurred certain costs related to the implementation of these policies and practices.  We may take further actions that we determine to be in the best interests of our employees or as may be required by federal, state, or local authorities.

We cannot at this time predict the impact that the COVID-19 pandemic will have on our financial condition and operations, although we are continuing to monitor our supply chain and orders from customers for COVID-19-related changes. Disruptions to our supply chain in connection with the sourcing of materials, equipment and engineering support, and services from geographic areas that have been impacted by COVID-19 may pose risks to our business, results of operations and financial condition. In this time of uncertainty as a result of the COVID-19 pandemic, we are continuing to serve our customers while taking every precaution to provide a safe work environment for our employees and customers.

To date, the COVID-19 pandemic has disrupted the way that we conduct business, but has not had a material adverse impact on our operations.  However, the extent of the pandemic’s effect on our operational and financial performance will depend in large part on future developments, which cannot be predicted with confidence at this time. Future developments include the duration, scope and severity of the pandemic, the severity of newly identified strains of COVID-19, the actions taken to contain or mitigate its impact, such as the extent of restrictions on gatherings and travel, the impact on governmental programs and budgets, the development, administration, efficacy and public utilization of treatments and vaccines, and the resumption of widespread economic activity. Trade tensions between the United States and China may escalate as a result of COVID-19 or otherwise and could result in the imposition of additional tariffs, trade restrictions or policy changes, any of which could increase costs of our product components and pricing of, and consumer demand for, our products, which could have a negative effect on our results of operations.

Although the inherent uncertainty of the unprecedented and rapidly evolving crisis makes it difficult to predict with any confidence the likely impact on our future operations, the COVID-19 pandemic could have a material adverse impact on our consolidated business, results of operations and financial condition.

For a discussion of certain risks related to the international nature of our business and our operations and the COVID-19 pandemic, see Part II, Item 1A – Risk Factors of this Form 10-Q, Part II, Item 1A – Risk Factors of our Q1 2021 Form 10-Q and Part I, Item 1A – Risk Factors of our 2020 Form 10-K.

Results of Operations for the Three and Six Months Ended June 26, 2021 and June 27, 2020

Revenue.  Our revenue is primarily derived from the sale of our systems, services, spare parts and software licensing.  Our revenue of $193.4 million increased 43.3% for the three months ended June 26, 2021 as compared to the same period in 2020, in which revenue totaled $134.9 million.  For the six month periods ended June 26, 2021 and June 27, 2020, our revenue totaled $362.7 million and $274.9 million, respectively, representing a year-over-year increase of 31.9%.  

The following table lists, for the periods indicated, the different sources of our revenue in dollars (thousands) and as percentages of our total revenue:

	Three Months Ended								Six Months Ended
	June 26,				June 27,				June 26,				June 27,
	2021				2020				2021				2020
Systems and software	$	162,898	84	%	$	108,247	80	%	$	304,407	84	%	$	222,577	81	%
Parts		18,697	10	%		16,329	12	%		36,115	10	%		29,904	11	%
Services		11,792	6	%		10,372	8	%		22,144	6	%		22,395	8	%
Total revenue	$	193,387	100	%	$	134,948	100	%	$	362,666	100	%	$	274,876	100	%

Total systems and software revenue increased $81.1 million for the six months ended June 26, 2021 as compared to the six months ended June 27, 2020 primarily due to an increase of units shipped in our metrology and inspection product lines. The year-over-year increase in parts and services revenue in absolute dollars from the six months ended June 27, 2020 to the six months ended June 26, 2021 was primarily due to servicing a larger installed base.  Parts and services revenue is generated from part sales, maintenance service contracts, and system upgrades, as well as time and material billable service calls.

Gross Profit.  Our gross profit has been and will continue to be affected by a variety of factors, including inventory step-up from purchase accounting, manufacturing efficiencies, provision for excess and obsolete inventory, pricing by competitors or suppliers, new product introductions, production volume, customization and reconfiguration of systems, international and domestic sales mix, system and software product mix and parts and service margins.  Our gross profit was $105.5 million and

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$195.9 million for the three and six months ended June 26, 2021, respectively, as compared to $71.6 million and $134.2 million for the three and six months ended June 27, 2020, respectively.  Our gross profit represented 54.5% and 54.0% of our revenue for the three and six months ended June 26, 2021, respectively, and 53.0% and 48.8% for the three and six months ended June 27, 2020, respectively.  The increase in gross profit as a percentage of revenue for the six months ended June 26, 2021, as compared to the six months ended June 27, 2020, is primarily due to charges to cost of goods sold of $9.9 million in the 2020 period for the sale of inventory written-up to fair value upon the 2019 Merger and strengthening product margins across several product lines.

Operating Expenses.  

Our operating expenses consist of:

• Research and Development. We believe that it is critical to continue to make substantial investments in research and development to ensure the availability of innovative technology that meets the current and projected requirements of our customers’ most advanced designs. We have maintained and intend to continue our commitment to investing in research and development in order to continue to offer new products and technologies.  Accordingly, we devote a significant portion of our technical, management and financial resources to research and development programs. Research and development expenditures consist primarily of salaries and related expenses of employees engaged in research, design and development activities. They also include consulting fees, the cost of related supplies and legal costs to defend our patents. Our research and development expenses were $25.5 million and $47.5 million for the three and six months ended June 26, 2021, respectively, as compared to $22.2 million and $43.1 million for the three and six months ended June 27, 2020, respectively.  The year-over-year dollar increase for the six month period ended June 26, 2021 as compared to the six month period ended June 27, 2020 was primarily due to an increase in new product initiatives.  

• Sales and Marketing. Sales and marketing expenses are primarily comprised of salaries and related costs for sales and marketing personnel, as well as commissions and other non-personnel related expenses.  Our sales and marketing expenses were $15.4 million and $28.5 million for the three and six months ended June 26, 2021, respectively, as compared to $11.9 million and $24.9 million for the three and six months ended June 27, 2020, respectively.  The year-over-year increase in sales and marketing expenses for the six month period ended June 26, 2021 as compared to the six month period ended June 27, 2020 was primarily due to increased variable compensation plan costs.

• General and Administrative. General and administrative expenses are primarily comprised of salaries and related costs for administrative personnel, as well as other non-personnel related expenses. Our general and administrative expenses were $16.3 million and $31.8 million for the three and six months ended June 26, 2021, respectively, as compared to $15.9 million and $36.1 million for the three and six months ended June 27, 2020, respectively.  The year-over-year dollar decrease in general and administrative expenses for the six month period ended June 26, 2021 as compared to the six month period ended June 27, 2020 was primarily due to higher compensation expense in the 2020 period related to restructuring charges as a result of the 2019 Merger.  

• Amortization of Identifiable Intangible Assets.  Amortization of identifiable intangible assets was $12.3 million and $24.7 million for the three and six months ended June 26, 2021, respectively, as compared to $13.7 million and $27.4 million for the same periods in 2020.  The year-over-year decrease in amortization expense for the six month period ended June 26, 2021 as compared to the six month period ended June 27, 2020 was due to certain intangible assets becoming fully amortized during this period, partially offset by amortization for the business acquired in fiscal 2021.

Interest income, net.  Net interest income was $0.3 million and $0.7 million for the three and six months ended June 26, 2021, respectively, as compared to $0.7 million and $1.9 million for the same periods in 2020.  The decrease in net interest income for the six months ended June 26, 2021 as compared to the six months ended June 27, 2020 was due to lower interest rates during the 2021 period.

Other expense, net.  Net other expense was $0.3 million and $1.5 million for the three and six months ended June 26, 2021, as compared to $1.2 million for both the three and six months ended June 27, 2020.  The increase in other expense, net for the six months ended June 26, 2021 as compared to the six months ended June 27, 2020 was primarily due to higher foreign exchange losses during the 2021 period.

Income Taxes. We recorded an income tax provision of $0.9 million and $3.4 million for the three and six months ended June 26, 2021, respectively, as compared to income tax benefit of $6 thousand and income tax provision of $0.4 million for the same period in 2020.  Our effective tax rate of 5.4% differs from the statutory rate of 21% for the six months ended June 26, 2021 primarily due to (i) research and development tax credits, (ii) the deduction related to foreign derived intangible income (FDII), (iii) excess tax benefits associated with equity compensation, and (iv) a release of reserves due to expiration of the

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applicable statute of limitations.  Our effective tax rate of 12% differs from the statutory rate of 21% for the six months ended June 27, 2020, primarily due to (i) changes in mix of forecasted earnings by jurisdiction, (ii) computed research and development credits on forecasted earning levels, and (iii) a one-time provision for additional withholding tax related to a dividend distribution from the Company’s Korea subsidiary

Our future effective income tax rate depends on various factors, such as possible further tax legislation, the geographic composition of our pre-tax income, the amount of our pre-tax income as business activities fluctuate, non-deductible expenses incurred in connection with business combinations, and research and development tax credits as a percentage of aggregate pre-tax income.

We currently have a partial valuation allowance recorded for certain foreign and state loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt.  Each quarter we assess the likelihood that we will be able to recover our deferred tax assets primarily relating to state research and development credits.  We consider available evidence, both positive and negative, including historical levels of income, expectations and risks associated with estimates of future taxable income and ongoing prudent and feasible tax planning strategies in assessing the need for a valuation allowance.  As a result of our analysis, we concluded that it is more likely than not that a portion of our net deferred tax assets will not be realized.  Therefore, we continue to provide a valuation allowance against certain net deferred tax assets.  We continue to monitor available evidence and may reverse some or all of the valuation allowance in future periods, if appropriate.

Liquidity and Capital Resources

At June 26, 2021, we had $410.8 million of cash, cash equivalents and marketable securities and $678.5 million in working capital.  At December 26, 2020, we had $373.7 million of cash, cash equivalents and marketable securities and $611.6 million in working capital.

Net cash and cash equivalents provided by operating activities for the six months ended June 26, 2021 and June 27, 2020 were $76.4 million and $46.9 million, respectively. 

• The net cash and cash equivalents provided by operating activities during the six months ended June 26, 2021 resulted primarily from net income, adjusted to exclude the effect of non-cash operating charges, of $108.1 million, partially offset by a decrease in cash provided from operating assets and liabilities of $31.7 million.  

• The net cash and cash equivalents provided by operating activities during the six months ended June 27, 2020 resulted primarily from net income, adjusted to exclude the effect of non-cash operating charges of $59.8 million, partially offset by a decrease in cash provided from operating assets and liabilities of $12.9 million.

Net cash and cash equivalents used in investing activities for the six months ended June 26, 2021 was $76.4 million, while during the six months ended June 27, 2020 investing activities provided $7.3 million.  

• During the six months ended June 26, 2021, net cash and cash equivalents used in investing activities included purchases of marketable securities of $142.1 million, purchase of a business of $26.8 million and capital expenditures of $9.6 million, partially offset by proceeds from sales of marketable securities of $102.0 million.  

• During the six months ended June 27, 2020, net cash and cash equivalents provided by investing activities included proceeds from sales of marketable securities of $147.5 million and cash received from convertible note receivable of $2.8 million, partially offset by purchases of marketable securities of $140.4 million and capital expenditures of $2.6 million.

Net cash and cash equivalents used in financing activities were $3.3 million and $55.5 million for the six months ended June 26, 2021 and June 27, 2020, respectively.  

• During the six months ended June 26, 2021, financing activities used cash for tax payments related to shares withheld for share-based compensation plans of $3.2 million.  This use of cash was primarily offset by proceeds from sales of shares through share-based compensation plans of $6.5 million.

• During the six months ended June 27, 2020, financing activities used cash for the purchase of shares of our common stock under a share repurchase authorization of $52.0 million and tax payments related to shares withheld for share-based compensation plans of $3.3 million and payment of contingent consideration for acquired business of $0.4 million, partially offset by proceeds from sales of shares through share-based compensation plans of $0.2 million.

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From time to time, we evaluate whether to acquire new or complementary businesses, products and/or technologies.  We may fund all of or a portion of the price of these investments or acquisitions in cash, stock, or a combination of cash and stock.  On December 31, 2020, the Company acquired Inspectrology, a leading supplier of overlay metrology for controlling lithography and etch processes in the compound semiconductor market for $27,015 in cash and a potential earnout of $10,000, subject to the achievement of certain revenue targets earned for fiscal 2021 and 2022.  

In November 2020, the Onto Innovation Board of Directors approved a new share repurchase authorization, which allows the Company to repurchase up to $100 million worth of shares of its common stock.  Repurchases may be made through both public market and private transactions from time to time with shares purchased being subsequently retired. At June 26, 2021, there was $100 million available for future share repurchases.

We have a credit agreement with a bank that provides for a line of credit that is secured by the marketable securities we have with the bank.  We are permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed.  As of June 26, 2021, the available line of credit was approximately $99.4 million with an available interest rate of 1.8%.  The credit agreement is available to us until such time that either party terminates the arrangement at its discretion.   To date, we have not utilized the line of credit.

Our future capital requirements will depend on many factors, including the timing and amount of our revenue and our investment decisions, which will affect our ability to generate additional cash. In addition, although the ultimate impact of the COVID-19 pandemic on our future results remains uncertain, we believe our business model and our current cash reserves leave us well-positioned to manage our business through this crisis as it continues to unfold. We expect that our existing cash, cash equivalents, marketable securities and availability under our line of credit will be sufficient to meet our anticipated cash requirements for working capital, capital expenditures and other cash needs for the next 12 months following the filing of this Form 10-Q. Thereafter, if cash generated from operations and financing activities is insufficient to satisfy our working capital requirements, we may seek additional funding through bank borrowings, sales of securities or other means. Market conditions due to the COVID-19 pandemic may have an impact on our ability to access such additional funding. Our borrowing capacity under our existing line of credit is tied to the value of eligible securities held at the time of borrowing, which may be negatively impacted by market conditions due to COVID-19 and government responses thereto. In addition, a reduction in or volatility with respect to our stock price or the general market downturn could materially impact our ability to sell securities on favorable terms or at all. There can be no assurance that we will be able to raise any such capital on terms acceptable to us or at all.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

There have been no material changes in market risk from the information presented in Part II, Item 7A. “Quantitative and Qualitative Disclosures About Market Risk,” in the 2020 Form 10-K.

Item 4. Controls and Procedures

Evaluation of Disclosure Controls and Procedures

We maintain disclosure controls and procedures that are designed to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time period specified in SEC rules and forms. These controls and procedures are also designed to ensure that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer, as appropriate, to allow timely decisions regarding required disclosure. In designing and evaluating disclosure controls and procedures, we have recognized that any controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving the desired control objectives. Management is required to apply judgment in evaluating its controls and procedures.

We performed an evaluation under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, to assess the effectiveness of the design and operation of our disclosure controls and procedures under the Exchange Act as of June 26, 2021. Based on that evaluation, our management, including our principal executive officer and principal financial officer, concluded that our disclosure controls and procedures were effective as of June 26, 2021 at the reasonable assurance level.

Changes in Internal Control over Financial Reporting

There have been no changes in the Company’s internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) that occurred during the Company’s quarter ended June 26, 2021 that have materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. We have not experienced any material impact

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to our internal controls over financial reporting due to the fact that most of our employees responsible for financial reporting are working remotely during the COVID-19 pandemic. We are continually monitoring and assessing the impact of the COVID-19 pandemic on our internal controls to minimize the impact to their design and operating effectiveness.

PART II OTHER INFORMATION

Item 1. Legal Proceedings

For a description of our material pending legal proceedings refer to the information set forth under “Legal Matters” of Note 8, “Commitments and Contingencies,” to the Condensed Consolidated Financial Statements included in Part 1, Item 1 of this Form 10-Q.

Item 1A. Risk Factors.

The risks and uncertainties described below are not the only ones we face. If any of the following risks actually occurs, our business, financial condition or results of operations could be materially adversely affected. Many of the risks and uncertainties described below may be exacerbated by the COVID-19 pandemic and any worsening of the global business and economic environment as a result.

Risks Related to Our Business

The effects of the COVID-19 pandemic have affected our business and could in the future adversely affect our business, results of operations, and financial condition.

The effects of a public health crisis caused by the COVID-19 pandemic and the measures being taken to limit the spread of COVID-19 are uncertain and difficult to predict, but pose the following risks to our business, results of operations and financial condition:

• A likely decrease in short-term and/or long-term demand for our products and disruptions to our operations resulting from the immediate consequences of and responses to the pandemic, including precautionary measures instituted by governments and businesses to mitigate its spread, which have raised the prospect of an extended global recession, which would adversely impact the businesses of our customers, suppliers and partners;

• Changes in our operations in response to COVID-19 and employee illnesses resulting from the pandemic, which have impacted the way that we operate and conduct business, and may result in inefficiencies or delays and/or negatively impact our operations, including, but not limited to, the following:

▪ reduction in sales and qualification activities with our customers;

▪ reduction in product development efforts; and

▪ reduction in production levels.

In addition there may be incremental costs related to business continuity initiatives, which cannot be avoided or alleviated through succession planning, employees working remotely or teleconferencing technologies as well as inefficiencies, delays, and increased costs resulting from our efforts to mitigate the impact and spread of COVID-19 through the changes in our operations which we have enacted at certain of our locations around the world in an effort to protect our employees’ health and well-being (including the implementation of work-from-home policies, social-distancing measures, modified work schedules and shifts, the suspension of employee travel, and limits  on the number of employees attending in-person meetings and the number of people permitted to be present at our facilities at any one time);

• Management focus on mitigating the impact of the COVID-19 pandemic, which has required and will continue to require a substantial investment of time and resources across our enterprise, which has resulted and can be expected to continue to result in a diversion of management attention and resources;

• Disruptions to our supply chain in connection with the sourcing of materials, equipment and engineering support, and services from geographic areas that have been impacted by COVID-19 and by efforts to contain the spread of COVID-19;

• A decrease in availability under our credit agreement, which permits us to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed, due a decrease in the value of eligible securities resulting from the impact of COVID-19 on global markets; and

• Difficulty accessing capital, if needed in the future, through a sale of securities, or in obtaining favorable terms of such securities, due to market conditions generally or a decline or volatility in the market for our securities.

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The resumption of normal business operations after such interruptions may be delayed or constrained by lingering effects of COVID-19 on our suppliers, third-party service providers, and/or customers. These effects, alone or taken together, could have a material adverse effect on our business, results of operations, legal exposure, or financial condition. The duration of the COVID-19 pandemic, resurgences, the severity of newly identified strains of the virus, the timing, availability, efficacy and public utilization of vaccines cannot be determined. A sustained or prolonged outbreak, a delayed or slower-than-anticipated vaccine rollout, or widespread hesitancy to utilize vaccines could exacerbate the adverse impact of such measures.

Our largest customers account for a substantial portion of our revenue, and our revenue and cash flows could decline considerably if one or more of these customers were to purchase significantly fewer of our systems or delay or cancel a large order.

Sales to end user customers that individually represent at least five percent of our revenue typically account for, in the aggregate, a considerable amount of our revenue. We operate in the highly concentrated, capital-intensive semiconductor device manufacturing industry. Historically, a substantial portion of our revenue in each quarter and year has been derived from sales to relatively few customers, and this trend is expected to continue. If any of our key customers were to purchase significantly fewer of our systems in the future, or if they delay or cancel a large order, our revenue and cash flows could meaningfully decline. We expect that we will continue to depend on a small number of large customers for a sizable portion of our revenue. In addition, as large semiconductor device manufacturers seek to establish closer relationships with their suppliers, we expect that our customer base will become even more concentrated.

Our customers may be unable to pay us for our products and services.

Our customers include some companies that may, from time to time, encounter financial difficulties. If a customer’s financial difficulties become severe, the customer may be unwilling or unable to pay our invoices in the ordinary course of business, which could adversely affect collections of both our accounts receivable balance and unbilled services. The bankruptcy of a customer with a substantial account balance owed to us could have a material adverse effect on our financial condition and results of operations. In addition, if a customer declares bankruptcy after paying us certain invoices, a court may determine that we are not properly entitled to that payment and may require repayment of some or all of the amount we received, which could adversely affect our financial condition and results of operations.

Variations in the amount of time it takes for us to sell our systems may cause fluctuations in our operating results, which could cause our stock price to decline.

Variations in the length of our sales cycles could cause our revenue and cash flows, and consequently, our business, financial condition, operating results and cash flows to fluctuate widely from period to period. This variation could cause our stock price to decline. Our customers generally take a long time to evaluate our inspection and/or film metrology systems and many people are involved in the evaluation process. We expend significant resources educating and providing information to our prospective customers regarding the uses and benefits of our systems in the semiconductor fabrication process. The length of time it takes for us to make a sale depends upon many factors, including, but not limited to:

• the efforts of our sales force;

• the complexity of the customer’s fabrication processes;

• the internal technical capabilities and sophistication of the customer;

• the customer’s budgetary constraints; and

• the quality and sophistication of the customer’s current metrology, inspection or lithography equipment.

Because of the number of factors influencing the sales process, the period between our initial contact with a customer and the time when we recognize revenue from that customer and receive payment, if ever, varies widely in length. Our sales cycles, including the time it takes for us to build a product to customer specifications after receiving an order to the time we recognize revenue, typically range from three to twenty-four months. Sometimes our sales cycles can be much longer, particularly with customers in Asia. During these cycles, we commit substantial resources to our sales efforts in advance of receiving any revenue, and we may never receive any revenue from a customer despite our sales efforts. If we do make a sale, our customers often purchase only one of our systems, the performance of which they then evaluate for a lengthy period before purchasing any more of our systems. The number of additional products a customer purchases, if any, depends on many factors, including the customer’s capacity requirements. The period between a customer’s initial purchase and any subsequent purchases can vary from three months to a year or longer, and variations in the length of this period could cause further fluctuations in our operating results and, possibly, in our stock price.

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We are subject to order and shipment uncertainties. Our profitability will decline if we fail to accurately forecast customer demand when managing inventory.

We typically plan production and inventory levels based on internal forecasts of customer demand, which can be highly unpredictable and can fluctuate substantially, which could lead to excess inventory write-downs and resulting negative impacts on gross margin and net income. We have limited visibility into our customers’ inventories, future customer demand and the product mix that our customers will require, which could adversely affect our production forecasts and operating margins. In addition, innovation in our industry could render significant portions of our inventory obsolete. If we overestimate our customers’ requirements, we may have excess inventory, which could lead to obsolete inventory and unexpected costs. Conversely, if we underestimate our customers’ requirements, we may have inadequate inventory, which could lead to foregone revenue opportunities, loss of potential market share and damage to customer relationships as product deliveries may not be made on a timely basis, disrupting our customers’ production schedules. In response to anticipated long lead times to obtain inventory and materials from outside suppliers and foundries, we periodically order materials in advance of customer demand. This advance ordering has in the past and may in the future result in excess inventory levels or unanticipated inventory write-downs if expected orders fail to materialize, or other factors make our products less saleable. In addition, any significant future cancellation or deferral of product orders could adversely affect our revenue and margins, increase inventory write-downs due to obsolete inventory, and adversely affect our operating results and stock price.

Our earnings could be negatively affected and our inventory levels could materially increase if we are unable to predict our inventory needs in an accurate and timely manner and adjust our orders for parts and subcomponents in the event that our needs increase or decrease materially due to unexpected increases or decreases in demand for our products. Any material increase in our inventories could result in an adverse effect on our financial position, while any material decrease in our ability to procure needed inventories could result in an inability to supply customer demand for our products, thus adversely affecting our revenue.

Most of our revenue has been derived from customers outside of the United States, subjecting us to operational, financial and political risks, such as unexpected changes in regulatory requirements, tariffs, political and economic instability, outbreaks of hostilities, natural disasters, climate change and difficulties in managing foreign sales representatives and foreign branch operations, as well as risks associated with foreign currency fluctuations.

Due to the significant level of our international sales, we are subject to a number of material risks, including:

Compliance with foreign laws. Our business is subject to risks inherent in doing business internationally, including compliance with, inconsistencies among, and unexpected changes in, a wide variety of foreign laws and regulatory environments with which we are not familiar, including, among other issues, with respect to employees, protection of our intellectual property, and a wide variety of operational regulations and trade and export controls under domestic, foreign, and international law.

Unexpected changes in legal and regulatory requirements including tariffs and other market barriers. The semiconductor device industry is a high-visibility industry in many of the European and Asian countries in which we sell our products. Because the governments of these countries have provided extensive financial support to our semiconductor device manufacturing customers in these countries, we believe that our customers could be disproportionately affected by any trade embargoes, excise taxes, tariffs or other restrictions imposed by their governments on trade with United States companies such as ourselves, particularly with respect to the ongoing trade negotiations between the United States and China.

Over the last several years, the U.S. government has significantly expanded export controls on certain technologies and commodities to certain markets, particularly with respect to semiconductor and other high technology exports to China. For example, effective June 29, 2020, the U.S. Department of Commerce imposed new export controls on the transfer of many U.S. products and technologies, including many commercial-grade electronics, to “military end users” or for “military end use” in China, which may include many Chinese commercial companies that sell products to or do business with the Chinese military. Likewise, beginning in May 2019, the U.S. Department of Commerce has imposed significant restrictions on the transfer of any products from the United States, as well as many products produced overseas that incorporate U.S. content or rely on U.S. software or technology, to Huawei Technologies Co., Ltd., and a large number of its overseas affiliates, including HiSilicon, followed by a comparable action in December of 2020, related to Semiconductor Manufacturing International Corporation (SMIC)., and a large number of its overseas affiliates, including Ningbo Semiconductor International Corporation (NSIC). The U.S. government is also engaged in an ongoing process of assessing which “emerging and foundational technologies” warrant new or additional controls, which could subject additional U.S.-origin products and services to more stringent export restrictions. It is possible that these modified regulations, and any future regulations could reduce demand for our products. In particular, these restrictive measures may reduce overall global demand for our customers’ products or for other products produced or manufactured in the United States or based on United States technology, in turn reducing demand for our products, which could have a material adverse effect on our business, financial condition and results of operations.

We are faced with various risks that may be associated with our compliance with existing, new, different, inconsistent or conflicting laws, regulations and rules enacted by governments and/or their regulatory agencies in the countries in which we

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operate as well as rules and policies implemented at our customer sites. These laws, regulations, rules and policies could relate to any of an array of issues including, but not limited to, environmental, tax, intellectual property, trade secrets, product liability, contracts, antitrust, employment, securities, import/export and unfair competition. In the event that we fail to comply with or violate U.S. or foreign laws or regulations or customer policies, we could be subject to civil or criminal claims or proceedings that may result in monetary fines, penalties or other costs against us or our employees, which may adversely affect our operating results, financial condition, customer relations and ability to conduct our business.

Political and economic instability. We are subject to various global risks related to political and economic instabilities in countries in which we derive sales. If terrorist activities, armed conflict, civil or military unrest or political instability occurs outside of the U.S., these events may result in reduced demand for our products. There is considerable political instability in Taiwan related to its disputes with China and in South Korea related to its disputes with North Korea. In addition, several Asian countries, particularly Japan, have experienced significant economic instability. An outbreak of hostilities or other political upheaval in China, Taiwan or South Korea, or an economic downturn in Japan or other countries, would likely harm the operations of our customers in these countries. The effect of these types of events on our revenue and cash flows could be material because we derive substantial revenue from sales to semiconductor device foundries in Taiwan such as Taiwan Semiconductor Manufacturing Company Ltd., from memory chip manufacturers in South Korea such as Samsung Electronics Co., Ltd., and from semiconductor device manufacturers in Japan such as Toshiba Corporation.

Natural disasters and climate change. Natural disasters, changes in climate and geo-political events could materially adversely affect our worldwide operations (or those of our business partners). The occurrence of one or more natural disasters such as hurricanes, tropical storms, fires, cyclones, earthquakes, tsunamis, flooding, typhoons, volcanic eruptions and weather conditions such as major or extended winter storms, droughts and tornadoes, whether as a result of climate change or otherwise, may disrupt manufacturing or other operations. For example, our Milpitas operations are located near major earthquake fault lines in California. There may also be conflict or uncertainty in the countries in which we operate, including public health issues (for example, an outbreak of a contagious disease such as COVID-19, avian influenza, measles or Ebola), safety issues, natural disasters, fire, disruptions of service from utilities, nuclear power plant accidents or general economic or political unrest, including war, civil unrest or terrorist attacks.

Difficulties in staffing and managing foreign branch operations. During periods of tension between the governments of the United States and certain other countries, it is often difficult for United States companies such as ours to staff and manage operations in such countries. Language and other cultural differences may also inhibit our sales and marketing efforts and create internal communication problems among our U.S. and foreign research and development teams, increasing the difficulty of managing multiple remote locations performing various development, quality assurance, and yield ramp analysis projects.

Currency fluctuations as compared to the U.S. Dollar. A substantial portion of our international sales are denominated in U.S. dollars. As a result, if the dollar rises in value in relation to foreign currencies, our systems will become more expensive to customers outside the United States and less competitive with systems produced by competitors outside the United States. These conditions could negatively impact our international sales. Foreign sales also expose us to collection risk in the event it becomes more expensive for our foreign customers to convert their local currencies into U.S. dollars. Additionally, in the event a larger portion of our revenue becomes denominated in foreign currencies, we would be subject to a potentially significant exchange rate risk.

FCPA and Other Anti-Corruption Laws. We are subject to the Foreign Corrupt Practices Act of 1977 ("FCPA"), and other laws that prohibit improper payments or offers of payments to foreign governments and their officials and political parties by U.S. persons and issuers as defined by the statute, for the purpose of obtaining or retaining business. Also, similar worldwide anti-bribery laws, such as the U.K. Bribery Act and Chinese anti-corruption laws, generally prohibit companies and their intermediaries from making improper payments to non-U.S. officials for the purpose of obtaining or retaining business. Some of our distribution partners are located in parts of the world that have experienced governmental corruption to some degree and, in certain circumstances, strict compliance with anti-bribery laws may conflict with local customs and practices. The policies and procedures we have implemented to discourage these practices by our employees, our existing safeguards and any future improvements may prove to be less than effective, and our employees, consultants, sales agents or distributors may engage in conduct for which we might be held responsible. Violations of the FCPA or international anti-corruption laws may result in severe criminal or civil sanctions, and we may be subject to other liabilities, which could negatively affect our business, operating results and financial condition. In addition, the U.S. government may seek to hold us liable for successor liability FCPA violations committed by companies in which we invest or that we acquire. We cannot assure you that our internal control policies and procedures will protect us from reckless or negligent acts committed by our employees, distributors, partners, consultants or agents.

If we deliver systems with defects, our credibility will be harmed and the sales and market acceptance of our systems will decrease.

Our systems are complex and have occasionally contained errors, defects and bugs when introduced. Defects may be created during probing, bumping, dicing or general handling, and can have a major impact on device and process quality. When

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this occurs, our credibility and the market acceptance and sales of our systems could be harmed. Further, if our systems contain errors, defects or bugs, computer viruses or malicious code as a result of cyber-attacks to our computer networks, we may be required to expend significant capital and resources to alleviate these problems. Defects could also lead to product liability as a result of product liability lawsuits against us or against our customers. We have agreed to indemnify our customers under certain circumstances against liability arising from defects in our systems. Our product liability insurance policy currently provides $2.0 million of aggregate coverage, with an overall umbrella limit of $14.0 million. In the event of a successful product liability claim, we could be obligated to pay damages significantly in excess of our product liability insurance limits.

If we are not successful in developing new and enhanced products for the semiconductor device manufacturing industry, we will lose sales and market share to our competitors.

We operate in an industry that is highly competitive and subject to evolving industry standards, rapid technological changes, rapid changes in consumer demands and the rapid introduction of new, higher performance systems with shorter product life cycles. To be competitive in our demanding market, we must continually design, develop and introduce in a timely manner new lithography, inspection and metrology process control systems that meet the performance and price demands of semiconductor device manufacturers. We must also continue to refine our current systems so that they remain competitive. We expect to continue to make significant investments in our research and development activities. We may experience difficulties or delays in our development efforts with respect to new systems, and we may not ultimately be successful in our product enhancement efforts to improve and advance products or in responding effectively to technological change, as not all research and development activities result in viable commercial products. In addition, we cannot provide assurance that we will be able to develop new products for the most opportunistic new markets and applications. Any significant delay in releasing new systems could cause our products to become obsolete, adversely affect our reputation, give a competitor a first-to-market advantage or cause a competitor to achieve greater market share.

In addition, our competitors may provide innovative technology that may have performance advantages over systems we currently offer or may offer in the future. They may be able to develop products comparable or superior to those that we offer or may adapt more quickly to new technologies or evolving customer requirements. In particular, while we currently are developing additional product enhancements that we believe will address future customer requirements, we may fail in a timely manner to complete the development or introduction of these additional product enhancements successfully, or these product enhancements may not achieve market acceptance or be competitive.

Further, customers that may otherwise desire to purchase our products from us and purchase other products from our competitors may nevertheless purchase competing products from our competitors rather than purchase our products due to a variety of reasons, including to gain favor or volume pricing from our competitors.

If new products developed by us do not gain general market acceptance, we will be unable to generate revenue and recover our research and development costs.

Inspection, lithography and metrology product development is inherently risky because it is difficult to foresee developments in semiconductor device manufacturing technology, coordinate technical personnel, and identify and eliminate system design flaws. Further, our products are complex and often the applications to our customers’ businesses are unique. Any new systems we introduce may not achieve or sustain a significant degree of market acceptance and sales.

We expect to spend a significant amount of time and resources developing new systems and refining our existing systems. In light of the long product development cycles inherent in our industry, these expenditures will be made well in advance of the prospect of deriving revenue from the sale of those systems. Our ability to commercially introduce and successfully market new systems are subject to a wide variety of challenges during the development cycle, including start-up bugs, design defects, and other matters that could delay introduction of these systems. In addition, since our customers are not obligated by long-term contracts to purchase our systems, our anticipated product orders may not materialize, or orders that are placed may be canceled. As a result, if we do not achieve market acceptance of new products, we may be unable to generate sufficient revenue and cash flow to recover our research and development costs and our market share, revenue, operating results or stock price would be negatively impacted.

Even if we are able to develop new products that gain market acceptance, sales of these new products could impair our ability to sell existing products.

Competition from our new systems could have a negative effect on sales of our existing systems and the prices that we could charge for these systems. We may also divert sales and marketing resources from our current systems in order to successfully launch and promote our new or next generation systems. This diversion of resources could have a further negative effect on sales of our current systems and the value of inventory.

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Our integrated metrology systems are integrated with systems sold independently by wafer fabrication equipment suppliers, and a decrease in sales by these suppliers, or the development of competing systems by these suppliers, could harm our business.

We believe that sales of integrated metrology systems will continue to be an important source of our net revenues. Sales of our integrated metrology systems depend upon the ability of a small number of wafer fabrication equipment suppliers to sell semiconductor manufacturing equipment products that are compatible with our metrology systems as components. If these suppliers, such as Applied Materials, Inc., Ebara Corporation, Lam Research Corporation and Tokyo Electron, are unable to sell such products, if they choose to focus their attention on products that do not integrate our systems, or if they choose to develop competing systems, our business could suffer.

If our relationships with our large customers deteriorate, our product development activities could be adversely affected.

The success of our product development efforts depends on our ability to anticipate market trends and the price, performance and functionality requirements of semiconductor device manufacturers. In order to anticipate these trends and ensure that critical development projects proceed in a coordinated manner, we must continue to collaborate closely with our largest customers. Our relationships with these and other customers provide us with access to valuable information regarding trends in the semiconductor device industry, which enables us to better plan our product development activities. If our current relationships with our large customers are impaired, or if we are unable to develop similar collaborative relationships with important customers in the future, our product development activities could be adversely affected.

We may fail to adequately protect our intellectual property and, therefore, lose our competitive advantage.

Our future success and competitive position depend in part upon our ability to obtain and maintain proprietary technology for our principal product families, and we rely, in part, on patent and trade secret law and confidentiality agreements to protect that technology. If we fail to adequately protect our intellectual property, it will give our competitors a significant advantage. We own or have licensed a number of patents relating to our transparent and opaque thin film metrology, lithography and macro-defect inspection systems, and have filed applications for additional patents.  Any of our pending patent applications may be rejected, and we may be unable to develop additional proprietary technology that is patentable in the future.

In addition, the patents that we do own or that have been issued or licensed to us may not provide us with competitive advantages and may be challenged by third parties. Further, third parties may also design around these patents. In addition to patent protection, we rely upon trade secret protection for our confidential and proprietary information and technology. We routinely enter into confidentiality agreements with our employees and other third parties. Even though these agreements are in place, there can be no assurances that trade secrets and proprietary information will not be disclosed, that others will not independently develop substantially equivalent proprietary information and techniques or otherwise gain access to our trade secrets, or that we can fully protect our trade secrets and proprietary information. Violations by others of our confidentiality agreements and the loss of employees who have specialized knowledge and expertise could harm our competitive position and cause our sales and operating results to decline as a result of increased competition. Costly and time-consuming litigation might be necessary to enforce and determine the scope of our proprietary rights, and failure to obtain or maintain trade secret protection might adversely affect our ability to continue our research or bring products to market.

The laws of some foreign countries, including China, Japan, South Korea and Taiwan, where we do business, do not protect our proprietary rights to as great an extent as do the laws of the United States, and many U.S. companies have encountered substantial problems in protecting their proprietary rights against infringement abroad. For example, litigation discovery practice in China, Japan, South Korea, and Taiwan is not as robust as the U.S., so it can be more difficult to determine if a company is infringing on our patents and more challenging to bring a lawsuit. Similarly, China’s protection of intellectual property rights historically has been less stringent and robust compared to other countries such as the United States, and consequently intellectual property rights and confidentiality protections in China may not be as effective as in the United States or other countries.  Monitoring and preventing unauthorized use are also difficult and the measures we take to protect our intellectual property rights may not be adequate.  Accordingly, infringement of our intellectual property rights poses a serious risk of doing business in China. Consequently, there is a risk that we may be unable to adequately protect our proprietary rights in certain foreign countries. If this occurs, it would be easier for our competitors to develop and sell competing products in these countries.

Protection of our intellectual property rights, or the efforts of third parties to enforce their own intellectual property rights against us, may result in costly and time-consuming litigation, substantial damages, lost product sales and/or the loss of important intellectual property rights.

We may be required to initiate litigation in order to enforce any patents issued to or licensed by us or to determine the scope or validity of a third party’s patent or other proprietary rights. Any litigation, regardless of outcome, could be expensive and time consuming and could subject us to significant liabilities or require us to re-engineer our products or obtain expensive

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licenses from third parties. There can be no assurance that any patents issued to or licensed by us will not be challenged, invalidated or circumvented, or that the rights granted thereunder will provide us with a competitive advantage.

In addition, our commercial success depends in part on our ability to avoid infringing or misappropriating patents or other proprietary rights owned by third parties. From time to time, we receive communications from third parties asserting that our products or systems infringe, or may infringe, on the proprietary rights of these third parties. These claims of infringement may lead to protracted and costly litigation, which could require us to pay substantial damages or have the sale of our products or systems stopped by an injunction. Infringement claims could also cause product or system delays or require us to redesign our products or systems, and these delays could result in the loss of substantial revenue. We may also be required to obtain a license from the third party or cease activities utilizing the third party’s proprietary rights. We may not be able to enter into such a license or such a license may not be available on commercially reasonable terms. Accordingly, the loss of important intellectual property rights could hinder our ability to sell our systems or to make the sale of these systems more expensive.

Some of our current and potential competitors have significantly greater resources than we do, and increased competition could impair sales of our products or cause us to reduce our prices.

The market for semiconductor capital equipment is highly competitive. We face substantial competition from established companies in each of the markets we serve. We principally compete with KLA Corporation, Nova Measuring Instruments, Camtek and Veeco Instruments. We compete to a lesser extent with Nikon. Each of our products also competes with products that use different metrology, inspection or lithography techniques. Some of our competitors have greater financial, engineering, manufacturing and marketing resources, broader product offerings and service capabilities and larger installed customer bases than we do. As a result, these competitors may be able to respond more quickly to new or emerging technologies or market developments by devoting greater resources to the development, promotion and sale of products, which, in turn, could impair sales of our products. Further, there may be significant merger and acquisition activity among our competitors and potential competitors, which, in turn, may provide them with a competitive advantage over us by enabling them to rapidly expand their product offerings and service capabilities to meet a broader range of customer needs.

Many of our customers and potential customers in the semiconductor device manufacturing industry are large companies that require global support and service for their semiconductor capital equipment. We believe that our global support and service infrastructure is sufficient to meet the needs of our customers and potential customers. However, some of our competitors have more extensive infrastructures than we do, which could place us at a disadvantage when competing for the business of global semiconductor device manufacturers. Many of our competitors are investing heavily in the development of new systems that will compete directly with our systems. We have, from time to time, selectively reduced prices on our systems in order to protect our market share, and competitive pressures may necessitate further price reductions. We expect our competitors in each product area to continue to improve the design and performance of their products and to introduce new products with competitive prices and performance characteristics. These product introductions would likely require us to decrease the prices of our systems and increase the level of discounts that we grant our customers. Price reductions or lost sales as a result of these competitive pressures would reduce our total revenue and could adversely impact our financial results.

Because of the high cost of switching equipment vendors in our markets, it is sometimes difficult for us to win new customers from our competitors even if our systems are superior to theirs.

We believe that once a semiconductor device manufacturer has selected one vendor’s capital equipment for a production-line application, the manufacturer generally relies upon that capital equipment and, to the extent possible, subsequent generations of the same vendor’s equipment for the life of the application. Once a vendor’s equipment has been installed in a production line application, a semiconductor device manufacturer must often make substantial technical modifications and may experience production-line downtime in order to switch to another vendor’s equipment. Accordingly, unless our systems offer performance or cost advantages that outweigh a customer’s expense of switching to our systems, it will be difficult for us to achieve significant sales to that manufacturer once it has selected another vendor’s capital equipment for an application.

We must attract and retain experienced senior executives and other key personnel with knowledge of semiconductor device manufacturing and inspection, metrology or lithography equipment and related software to help support our future growth, and competition for such personnel in our industry is high.

Our success depends, to a significant degree, upon the continued contributions of our key executive management, engineering, sales and marketing, customer support, finance and manufacturing personnel. The loss of any of these key personnel through resignations, retirement or other circumstances, each of whom would be extremely difficult to replace, could harm our business and operating results. Although we have employment and noncompetition agreements with key members of our senior management team, these individuals or other key employees may still leave us, which could have a material adverse effect on our business. We do not have key person life insurance on any of our executives. In addition, to support our future growth, we will need to attract and retain additional qualified employees. Competition for such personnel in our industry is intense, and we may not be successful in attracting and retaining qualified employees.

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In order to attract and retain executives and other key employees, we must provide a competitive compensation package, including cash and stock-based compensation. If the anticipated value of our stock-based incentive awards does not materialize so that they cease to be viewed as valuable, if our profits decrease, or if our total compensation package is not viewed as competitive, our ability to attract, retain and motivate executives and key employees could be weakened.

Any prolonged disruption in the operations of our manufacturing facilities could have a material adverse effect on our revenue.

We produce the majority of our systems in our manufacturing facilities located in Milpitas, California and Bloomington, Minnesota. We use contract manufacturers in China, Israel, Japan and the United States. Our manufacturing processes are highly complex and require sophisticated and costly equipment and a specially designed facility. As a result, any prolonged disruption in the operations of our manufacturing facilities could seriously harm our ability to satisfy our customer order deadlines. If we cannot timely deliver our systems, our results from operations and cash flows could be materially and adversely affected.

We may outsource select manufacturing activities to third-party service providers, which decreases our control over the performance of these functions and may result in lower quality and functionality of our products.

We may outsource product manufacturing to third-party service providers. Outsourcing reduces our control over the performance of the outsourced functions. Dependence on outsourcing may also adversely affect our ability to bring new products to market. If we do not effectively manage our outsourcing strategy or if third party service providers do not perform as anticipated, we may experience operational difficulties, increased costs, manufacturing interruptions or inefficiencies in the operation of our supply chain, any or all of which could delay our delivery of products to our customers, and materially and adversely affect our business, financial condition, and results of operations.

We are in a multi-year process of consolidating a world-wide enterprise resource planning (“ERP”) system, and problems with the design or implementation of this ERP system could interfere with our business and operations.

We are currently engaged in a multi-year process of conforming all our operations to one global enterprise resource planning (“ERP”) system. The ERP system is designed to accurately maintain the Company’s books and records and enhance the speed and quality of information provided to our management team for use in the operation and management of our business.  The Company’s ERP transition has required, and will continue to require, the investment of significant human and financial resources. We may not be able to successfully implement the ERP transition without experiencing delays, increased costs and other difficulties. Beyond cost and scheduling, if there are flaws in the implementation of the ERP system, or if the ERP system does not operate as expected, this may pose risks to the Company’s ability to operate successfully and efficiently, including the risk that the effectiveness of our disclosure controls and procedures or internal controls over financial reporting may be negatively impacted, affecting our ability to make timely and accurate SEC filings. If we are unable to successfully implement the consolidated ERP system as planned, our financial position, results of operations and cash flows could be negatively impacted.

If our network security measures are breached and unauthorized access is obtained to a customer’s data, to our data, or to our information technology systems, we may incur significant legal and financial exposure and liabilities.

As part of our business, we store our data and certain data about our customers, vendors and employees in our information technology system.  While we have security measures in place that are designed to protect this information and prevent data loss and other security breaches, if these measures are breached as a result of third-party action, employee error, malfeasance, break-ins or otherwise, and someone obtains unauthorized access to our customers’, vendors’ or employees’ data, we could face loss of business, regulatory investigations or court orders, our reputation could be severely damaged, we could be required to expend significant capital and other resources to alleviate the problem, as well as incur significant costs and liabilities, including due to litigation, indemnity obligations, damages for contract breach, penalties for violation of applicable laws or regulations, and costs for remediation and other incentives offered to customers.

Cyber-attacks and other malicious internet-based activities continue to increase. In response to the COVID-19 pandemic, our expanded reliance on remote access to our information systems has further increased our exposure to potential cybersecurity breaches.  As the techniques used to obtain unauthorized access or sabotage systems change frequently and generally are not identified until they are launched against a target, we may be unable to anticipate these techniques or to implement adequate preventative measures. In addition, third parties may attempt to fraudulently induce employees or users to disclose information to gain access to our data or our customers’ data. If any of these events occur, our or our customers’ and vendors’ information could be accessed or disclosed improperly. Any or all of these issues could negatively affect our ability to attract new customers, cause existing customers to choose to purchase from our competitors, result in reputational damage or subject us to third-party lawsuits, regulatory fines or other action or liability, which could adversely affect our operating results.

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The General Data Protection Regulation (“GDPR”) is a regulation in European Union (“EU”) law on data protection and privacy for all individuals within the EU and the European Economic Area (“EEA”). It also addresses the export of personal data outside the EU and EEA areas. Appropriate technical and organizational measures are necessary to implement these data protection principles.  We may also be subject to other data privacy laws in the United States and the other countries in which we operate.

Our ability to fulfill our backlog may have an effect on our long-term ability to procure contracts and fulfill current contracts.

Our ability to fulfill our backlog may be limited by our ability to devote sufficient financial and human capital resources and may be limited by available material supplies. If we do not fulfill our backlog in a timely manner, we may experience delays in product delivery, which would postpone receipt of revenue from those delayed deliveries. Additionally, if we are consistently unable to fulfill our backlog, this may be a disincentive to customers to award large contracts to us in the future until they are comfortable that we can effectively manage our backlog.

If we do not manage our supply chain effectively, our operating results may be adversely affected.

We need to continually evaluate our global supply chains and assess opportunities to reduce costs. We must also enhance quality, speed and flexibility to meet changing demand for our products and product mix and uncertain market conditions. Our success also depends in part on refining our cost structure and supply chains so that we have flexibility and can maintain and improve profitability. Although the current tariff environment has not had a material adverse effect on our costs to date, further deterioration in the tariff environment, or changes in suppliers, may cause our costs to increase, which if we are not able to offset by charging higher sales prices, will cause a decline in our margins. To improve our margins on a product, we will need to establish high volume supply agreements with our vendors. We cannot be certain that we will be able to timely negotiate vendor supply agreements on improved terms and conditions, or at all. Failure to achieve the desired level of cost reductions could adversely affect our financial results. Despite our efforts to control costs and increase efficiency in our facilities, changes in demand could still cause us to realize lower operating margins and profitability.

We obtain some of the components and subassemblies included in our systems from a limited group of suppliers and do not have long-term contracts with many of our suppliers. Our dependence on limited source suppliers of components and our lack of long-term contracts with many of our suppliers expose us to several risks, including a potential inability to obtain an adequate supply of components, price increases, late deliveries and poor component quality. Disruption or termination of the supply of these components could delay shipments of our systems, damage our customer relationships and reduce our sales. From time to time in the past, we have experienced temporary difficulties in receiving shipments from our suppliers. The lead-time required for shipments of some of our components can be as long as six months. In addition, the lead time required to qualify new suppliers for lasers and certain optics could be as long as a year, and the lead time required to qualify new suppliers of other components could be as long as nine months. If we are unable to accurately predict our component needs, or if our component supply is disrupted, we may miss market opportunities by not being able to meet the demand for our systems. Further, a significant increase in the price of one or more of these components or subassemblies could seriously harm our results of operations and cash flows.

We may choose to acquire new and complementary businesses, products or technologies instead of developing them ourselves, and we may be unable to complete these acquisitions or may not be able to successfully integrate an acquired business in a cost-effective and non-disruptive manner.

Our success depends on our ability to continually enhance and broaden our product offerings in response to changing technologies, customer demands and competitive pressures. To this end, we have, from time to time, engaged in the process of identifying, analyzing and negotiating possible acquisition transactions, and, from time to time, acquiring one or more businesses, and we expect to continue to do so in the future. We may choose to acquire new and complementary businesses, products, technologies and/or services instead of developing them ourselves. We may, however, face competition for acquisition targets from larger and more established companies with greater financial resources, making it more difficult for us to complete acquisitions. We cannot provide any assurance that we will be successful in consummating future acquisitions on favorable terms or that we will realize the benefits that we anticipate from one or more acquisitions that we consummate. Integrating any business, product, technology or service into our current operations could be expensive and time-consuming and/or disrupt our ongoing business. Further, there are numerous risks associated with acquisitions and potential acquisitions, including, but not limited to:

• diversion of management’s attention from day-to-day operational matters and current products and customers;

• lack of synergy or the inability to successfully integrate the new business or to realize expected synergies;

• failure to commercialize the new technology or business;

• failure to meet the expected performance of the new technology or business;

• failure to retain key employees and customer or supplier relationships;

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• lower-than-expected market opportunities or market acceptance of any new products; and

• unexpected reduction of sales of existing products as a result of the introduction of new products.

Our inability to consummate one or more acquisitions on favorable terms, or our failure to realize the intended benefits from one or more acquisitions, could have a material adverse effect on our business, liquidity, financial position and/or results of operations, including as a result of our incurrence of indebtedness and related interest expense and our assumption of unforeseen contingent liabilities. We might need to raise additional funds through public or private equity or debt financings to finance any acquisition. In that event, we could be forced to obtain financing on terms that are not favorable to us and, in the case of equity financing, that result in dilution to our stockholders. In addition, any impairment of goodwill or other intangible assets, amortization of intangible assets, write-down of other assets or charges resulting from the costs of acquisitions and purchase accounting could harm our business and operating results.

If we cannot effectively manage growth, our business may suffer.

Over the long-term, we intend to grow our business by increasing our sales efforts and completing strategic acquisitions. To effectively manage growth, we must, among other things:

• engage, train and manage a larger sales force and additional service personnel;

• expand the geographic coverage of our sales force;

• expand our information systems;

• identify and successfully integrate acquired businesses into our operations; and

• administer appropriate financial and administrative control procedures.

Growth of our business will likely place a significant strain on our management, financial, operational, technical, sales and administrative resources. Any failure to effectively manage our growth may cause our business to suffer and our stock price to decline.

Risks Related to Tax Laws, Financial Markets and the Environment

Changes in tax rates or tax liabilities could affect results.

As a global company, we are subject to taxation in the United States and various other countries. Significant judgment is required to determine and estimate worldwide tax liabilities. Our future annual and quarterly tax rates could be affected by numerous factors, including changes in the (1) applicable tax laws; (2) composition of earnings in countries with differing tax rates; or (3) recoverability of our deferred tax assets and liabilities.  In addition, we are subject to regular examination of our income tax returns by the Internal Revenue Service and other tax authorities. We regularly assess the likelihood of favorable or unfavorable outcomes resulting from these examinations to determine the adequacy of our provision for income taxes. Although we believe our tax estimates are reasonable, there can be no assurance that any final determination will not be materially different from the treatment reflected in our historical income tax provisions and accruals, which could materially and adversely affect our results of operations.

The Organization for Economic Co-operation and Development (“OECD”), released guidance covering various topics, including country-by-country reporting, definitional changes to permanent establishment and Base Erosion and Profit Shifting (“BEPS”), an initiative that aims to standardize and modernize global tax policy. Depending on the final form of guidance adopted by OECD members and legislation ultimately enacted, if any, there may be significant consequences for us due to our international business activities, including, but not limited to, an increase in our tax uncertainty and adverse effects on our provision for income taxes.

Turmoil or fluctuations in the credit markets and the financial services industry may negatively impact our business, results of operations, financial condition or liquidity, and our factoring arrangements may expose us to additional risks.

In the past, global credit markets and the financial services industry have experienced a period of unprecedented turmoil and upheaval characterized by the tightening of the credit markets, the weakening of the global economy and an unprecedented level of intervention from the United States and other governments. Adverse economic conditions, such as sustained periods of economic uncertainty or a crisis in the financial markets may have a material adverse effect on our liquidity and financial condition if our ability to obtain credit from the capital financial markets, or from trade creditors was impaired. In addition, a worsening economy or an economic crisis could also adversely impact our customers’ ability to finance the purchase of systems from us or our suppliers’ ability to provide us with product, either of which may negatively impact our business and results of operations. In addition, we enter into factoring arrangements with certain financial institutions to sell a certain portion of our trade receivables. If we were to stop entering into these factoring arrangements, our operating results, financial condition and cash flows could be adversely impacted by delays or failure to collect the trade receivables. However, by entering into these arrangements, we are exposed to additional risks.  If any of these financial institutions experiences financial difficulties or

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is otherwise unable to honor the terms of our factoring arrangements, we may experience material financial losses due to the failure of such arrangements, which could have an adverse impact upon our operating results, financial condition and cash flows.

We are subject to various environmental laws and regulations that could impose substantial costs upon us and may harm our business, operating results and financial condition.

Some of our operations use substances regulated under various federal, state, local, and international laws governing the environment, including those relating to the storage, use, discharge, disposal, labeling, and human exposure to hazardous and toxic materials. We could incur costs, fines and civil or criminal sanctions, third-party property damage or personal injury claims, or could be required to incur substantial investigation or remediation costs, if we were to violate or become liable under environmental laws. Liability under environmental laws can be joint and several and without regard to comparative fault. Compliance with current or future environmental laws and regulations could restrict our ability to expand our facilities or require us to acquire additional expensive equipment, modify our manufacturing processes, or incur other significant expenses. We may unintentionally violate environmental laws or regulations in the future as a result of human error, equipment failure or other causes.

Risks Related to the 2019 Merger

Any ongoing actions related to the combination of the businesses of Rudolph and Nanometrics may be more difficult, costly or time-consuming than expected and we may fail to realize the anticipated benefits of the 2019 Merger, which may adversely affect our business results and negatively affect the value of our common stock.

The success of the 2019 Merger depends on, among other things, our ability to combine the businesses of Rudolph and Nanometrics in a manner that realizes cost savings and facilitates growth opportunities.

In addition, we must achieve the anticipated growth and cost savings without adversely affecting current revenues and investments in future growth. If we are not able to successfully achieve these objectives, the anticipated benefits of the 2019 Merger may not be realized fully, or at all, or may take longer to realize than expected.

An inability to realize the full extent of the anticipated benefits of the 2019 Merger, as well as any delays encountered in any remaining activities which are part of the integration process, could have an adverse effect upon our revenues, level of expenses and operating results, which may adversely affect the value of our common stock.

In addition, any remaining integration activities may result in additional and unforeseen expenses, and the anticipated benefits of the integration plan may not be realized. Actual growth and cost savings, if achieved, may be lower than what we expect and may take longer to achieve than anticipated. If we are not able to adequately address any remaining integration challenges, we may be unable to realize the anticipated benefits of the integration of Rudolph and Nanometrics.

The failure to complete the successful integration of the businesses and operations of Rudolph and Nanometrics in the expected time frame may adversely affect our future results.

Prior to completion of the 2019 Merger, Rudolph and Nanometrics operated independently. There can be no assurances that their businesses can be fully integrated successfully. It is possible that the ongoing integration process could result in the loss of key employees, the loss of customers, the disruption of our ongoing businesses, inconsistencies in standards, controls, procedures and policies, unexpected integration issues, higher than expected integration costs or an overall post-completion integration process that takes longer than originally anticipated. Specifically, the following issues, among others, continue to be addressed in integrating the operations of Rudolph and Nanometrics in order to realize the anticipated benefits of the 2019 Merger so we perform as expected:

• integrating and unifying the offerings and services available to customers;

• harmonizing the companies’ operating practices, employee development and compensation programs, internal controls and other policies, procedures and processes;

• consolidating the companies’ administrative and information technology infrastructure; and

• coordinating geographically dispersed organizations.

In addition, at times the attention of certain members of management and resources may be focused on the integration of the businesses of the two companies and diverted from day-to-day business operations or other opportunities that may have been beneficial, which may disrupt our business.

35

Risks Related to the Global Economy and the Semiconductor Industry

Cyclicality in the semiconductor device industry has led to substantial decreases in demand for our systems and may, from time to time, continue to do so.

Our operating results are subject to significant variation due to global economic conditions and the cyclical nature of the semiconductor device industry. Our business depends upon the capital expenditures of semiconductor device manufacturers, which, in turn, depend upon the current and anticipated market demand for semiconductors and products using semiconductors. The timing, length and severity of the up-and-down cycles in the semiconductor equipment industry are difficult to predict. In recent years, the industry has experienced significant downturns, generally in connection with declines in economic conditions. This cyclical nature of the industry in which we operate affects our ability to accurately predict future revenue and, thus, future expense levels. When cyclical fluctuations result in lower than expected revenue levels, operating results may be adversely affected, and cost reduction measures may be necessary in order for us to remain competitive and financially sound. During a down cycle, we must be in a position to adjust our cost and expense structure to prevailing market conditions and to continue to motivate and retain our key employees. In addition, during periods of rapid growth, we must be able to increase manufacturing capacity and personnel to meet customer demand. We can provide no assurance that these objectives can be met in a timely manner in response to industry cycles. If we fail to respond to industry cycles, our business could be seriously harmed.

We may also experience supplier or customer issues as a result of adverse macroeconomic conditions. If our customers have difficulties in obtaining capital or financing, this could result in lower sales. Customers with liquidity issues could also result in an increase in bad debt expense. These conditions could also affect our key suppliers, which could affect their ability to supply parts and result in delays of our customer shipments.

Our future rate of growth is highly dependent on the development and growth of the market for microelectronic device inspection, lithography and metrology equipment.

We target our products to address the needs of microelectronic device manufacturers for defect inspection, metrology and lithography.  If for any reason the market for microelectronic device inspection, lithography or metrology equipment fails to grow in the long term, we may be unable to maintain current revenue levels in the short term and maintain our historical growth in the long term. Growth in the inspection market is dependent to a large extent upon microelectronic manufacturers replacing manual inspection with automated inspection technology. Growth in the metrology market is dependent to a large extent upon new chip designs and capacity expansion of microelectronic manufacturers. Growth in the lithography market is dependent on the development of cost-effective packaging with high fine pitch RDLs, ultimately migrating to multi-die, large, form-factor packages. There can be no assurance that manufacturers will undertake these actions at the rate we expect.

General Risk Factors

Provisions of our charter documents and of Delaware law could discourage potential acquisition proposals and/or delay, deter or prevent a change in control of our company.

Provisions of our certificate of incorporation and by-laws may inhibit changes in control of our company not approved by our Board of Directors. These provisions also limit the circumstances in which a premium can be paid for our common stock and in which a proxy contest for control of our board may be initiated. These provisions provide for:

• a prohibition on stockholder actions through written consent;

• a requirement that special meetings of stockholders be called only by our chief executive officer or Board of Directors;

• advance notice requirements for stockholder proposals and director nominations by stockholders;

• limitations on the ability of stockholders to amend, alter or repeal our by-laws; and

• the authority of our board to issue, without stockholder approval, preferred stock with such terms as the board may determine; and

• The authority of our board, without stockholder approval, to adopt a stockholder rights plan.

We are also entitled to avail ourselves of the protections of Section 203 of the Delaware General Corporation Law, which could inhibit changes in control of the Company.

Our stock price is volatile.

The market price of our common stock has fluctuated widely. Consequently, the current market price of our common stock may not be indicative of future market prices, and we may be unable to sustain or increase the value of an investment in our common stock. Factors affecting our stock price may include:

36

• variations in operating results from quarter to quarter;

• changes in earnings estimates by analysts or our failure to meet analysts’ expectations;

• changes in the market price per share of our public company customers;

• market conditions in the semiconductor and other industries into which we sell products;

• general economic conditions;

• political changes, hostilities or natural disasters such as hurricanes and floods;

• the impact of the COVID-19 pandemic, or other future infectious disease pandemics, on the global economy and on our customers, suppliers, employees, and business

• low trading volume of our common stock; and

• the number of firms making a market in our common stock.

In addition, the stock market has experienced periods of significant price and volume fluctuations. These fluctuations have particularly affected the market prices of the securities of high technology companies like ours. Any such market fluctuations in the future could adversely affect the market price of our common stock.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

In November 2020, the Onto Innovation Board of Directors approved a new share repurchase authorization, which allows the Company to repurchase up to $100 million worth of shares of its common stock.  Repurchases may be made through both public market and private transactions from time to time with shares purchased being subsequently retired. At June 26, 2021, there was $100 million available for future share repurchases under the share repurchase authorization.  For further information, see Note 16, “Share Repurchase Authorization” of the Notes to the Condensed Consolidated Financial Statements.

In addition to our share repurchase program, we withhold shares of common stock to cover tax withholding obligations upon the vesting of restricted stock unit awards and stock option exercises under the Company’s equity incentive program. During the three and six months ended June 26, 2021, we withheld 56 thousand and 97 thousand shares through net share settlements.  For the three and six months ended June 26, 2021, net share settlements cost $4.0 million and $6.5 million, respectively. Please refer to Note 10, “Share-Based Compensation,” of the Notes to the Condensed Consolidated Financial Statements for further discussion regarding our equity incentive plan.

The following table provides details of common stock purchased during the three months ended June 26, 2021 (in thousands, except per share data):

Period	Total Number of Shares Purchased (1)		Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program		Maximum Approximate Dollar Value of Shares that May Yet be Purchased Under the Program
March 28, 2021 - April 26, 2021		26	$	71.33		—	$	100,000
April 27, 2021 - May 26, 2021		—				—	$	100,000
May 27, 2021 - June 26, 2021		30	$	71.90		—	$	100,000
Three months ended June 26, 2021		56	$	71.64		—
1 Includes shares withheld through net share settlements.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

37

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description
3.1	Amended and Restated Certificate of Incorporation of Onto Innovation Inc., dated October 25, 2019, incorporated by reference to Exhibit 3.2 to the Company’s Form 8-K filed with the SEC on October 28, 2019 (File No. 001-39110).
3.2	Amended and Restated Bylaws of Onto Innovation Inc., dated January 22, 2020, incorporated by reference to Exhibit 3.1 to the Company’s Form 8-K filed with the SEC on January 27, 2020 (File No. 001-39110).
10.1*	Onto Innovation Inc. 2020 Stock Plan amended form of restricted stock units purchase agreements and performance stock unit purchase agreements.
31.1*	Certification of Michael P. Plisinski, Chief Executive Officer, pursuant to Securities Exchange Act Rule 13a-14(a)
31.2*	Certification of Steven R. Roth, Chief Financial Officer, pursuant to Securities Exchange Act Rule 13a-14(a)
32.1**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Michael P. Plisinski, Chief Executive Officer of Onto Innovation Inc.
32.2**	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, signed by Steven R. Roth, Chief Financial Officer of Onto Innovation Inc.
101.INS*	Inline XBRL Instance Document – the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.
101.SCH*	Inline XBRL Taxonomy Extension Schema Document
101.CAL*	Inline XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF*	Inline XBRL Taxonomy Extension Definition Linkbase Document
101.LAB*	Inline XBRL Taxonomy Extension Label Linkbase Document
101.PRE*	Inline XBRL Taxonomy Extension Presentation Linkbase Document
104*	Cover Page Interactive Data File (formatted as Inline XBRL and included in Exhibit 101)

* Filed herewith.

**Furnished herewith.

38

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		Onto Innovation Inc.
Date:	August 5, 2021	By:	/s/ Michael P. Plisinski
		Michael P. Plisinski
		Chief Executive Officer
Date:	August 5, 2021	By:	/s/ Steven R. Roth
		Steven R. Roth
		Senior Vice President, Chief Financial Officer and Principal Accounting Officer

39

EX-10.1

EXHIBIT 10.1

Onto Innovation Inc.

Employee Restricted Stock Unit Purchase Agreement

THIS AGREEMENT(“Agreement”),dated,20(the “Award Date”), is madebetween OntoInnovationInc.,aDelawarecorporation,hereinafterreferredtoasthe“Company,”and

(the“Participant”).

1.Definitions. All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Onto Innovation 2020 Stock Plan, as amended from time to time (the “Plan”). In addition, the following definition shallapply:

• “Retirement Eligible” shall mean the Participant has achieved a combination of age plus years of service with the company totaling 70, with a base minimum age of 58 years old and a minimum service term of five (5)years.

• “Retirement” shall mean Participant has become Retirement Eligible and has formally notified the Companyofhis/herintentiontoretirefromtheemployoftheCompanyonadatecertainanddoessoretire or as otherwise approved by theAdministrator.

2. Award of Restricted StockUnits.

(a)Award. In consideration of Participant’s agreement to remain in the employ of Company or one of its Subsidiaries, and for other good and valuable consideration, the Company hereby issues to Participant, as of the Award Date, the grant of Restricted Stock Units (“RSUs”) covering shares (“Shares”) of common stock of the Company(“CommonStock”)asdescribedinAttachmentI–NoticeofAward(the“NoticeofAward”)attachedto this Agreement (the “Award”). The number of RSUs subject to the Award (which shall be subject to adjustmentin accordancewithSection14ofthePlan)issetforthintheNoticeofAward.EachRSUrepresentstherighttoreceive one Share, subject to the terms and conditions of this Agreement. Upon granting of the Award, all RSUs shall be credited to Participant’s employee stock plan account established at the stock plan administration service determined by Company (the “Stock Service”). The current Stock Service is set forth in the Notice ofAward.

(b)VestedSharestobeIssuedinBookEntryForm.UponvestingoftheRSUsandthesatisfactionofallother applicable conditions set forth in this Agreement, the Company shall cause uncertificated Shares to be issued to Participant’s account. Shares to be delivered to Participant under the terms of this Award shall be delivered to Participantnolaterthantwoandone-halfmonthsfollowingthelastdayoftheyearthatincludesthedateofvesting andlapseofRestrictions,providedthatCompanymayfurtherdelaythedistributionofShareswithrespecttoRSUs thatbecomevestedunderSection4(g)asaresultofParticipant’sdeath,butnotbeyondsuchperiodasispermitted under Section 409A of the Code (as definedbelow).

(c)Plan. The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article 14(a) thereof. The Award constitutes Restricted Stock Units pursuant to Section 8 of thePlan.

3. Restrictions.

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(a)Forfeiture. Except only as may otherwise be expressly set forth in (i) any employment, severance or change in control agreement of the Company or a Subsidiary with Participant, or (ii) Section 3(g) below related to the Retirement or death of the Participant, any Award which is not vested as of the date Participant ceases to bean employee of Company or one of its Subsidiaries shall thereupon be forfeited immediately and terminate without any further action by Company.

(b)Vesting and Lapse of Restrictions. Subject to the terms of this Agreement, the RSUs covered by this Award shall vest and all Restrictions thereon shall lapse in accordance with the schedule set forth in the Notice of Award, provided in each case that Participant remains continuously as an employee of Company or a Subsidiary from the Award Date through the particular scheduled vesting date therefor (except only as may otherwise be expresslysetforthin(i)anyemployment,severanceorchangeincontrolagreementoftheCompanyoraSubsidiary with Participant, or (ii) Section 3(g) below related to the Retirement or death of the Participant). For purposes of this Agreement, “Restrictions” shall mean the exposure to forfeiture set forth in thisAward.

(c)AccelerationofVesting.NotwithstandinganyotherprovisionofthisAward,anytime-basedAwardshall become fully vested and all Restrictions applicable to such Award shall lapse in the event of a Change in Control event(asdefinedinSection2(h)ofthePlan)andthesuccessororacquiringcorporationoranaffiliatethereofdoes not assume or substitute for this Award in accordance with Section 14(c)(i) of the Plan. Should the successor or acquiring corporation or an affiliate thereof assume or substitute for the time-based Award in accordance with Section 14(c)(i) of the Plan, then no accelerated vesting or lapse of Restrictions of this Award shall apply, except as the Board may otherwise determine or as provided in an employment or other written agreement with the Participant.

(d)Tax Withholding; Issuance of Uncertificated Shares for Participants Domiciled Outside the U.S. For Participants domiciled outside of the United States, the provisions set forth herein related to U.S. federal and/or statetaxwithholdingdonotapply.SharesshallbedeliveredtosuchParticipantorhisorherlegalrepresentativeat thetimethevestingrequirementsasprovidedinthisAwardshallhavebeensatisfied.Participantsdomiciledoutside theU.S.areadvisedtoconsultwithalocaltaxadvisorregardingthetaxramificationsoftheAwardintheircountry of residence and assure compliance with such taxobligations.

(e)TaxWithholdingforParticipantsDomiciledinU.S.WithholdingRequirements.ByacceptingthisAward, Participant agrees to make appropriate arrangements with the Company for the satisfaction, as of the applicable withholding date, of all applicable federal, state and local tax withholding requirements, including in connection with the vesting and settlement of this Award. No Shares will be issued until satisfaction of such applicable tax withholding has been received by the Company. Prior to the delivery of any Shares pursuant to this Award, the Companywillhavethepowerandtherighttodeductorwithholdanamountsufficienttosatisfyfederal,state,local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to the vesting or settlement of thisAward.

(f)Withholding Arrangements. The Company, pursuant to such procedures as it will specify from time to time, will permit Participant to satisfy such tax withholding obligation, in each case as of the applicable tax withholding date, by (without limitation and in such combinations as the Participant mayelect):

(i) paying cash or by personal check, certified check or bank check or wire transfer of immediately availablefunds;

(ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld;or

(iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to bewithheld.

TheFairMarketValueoftheSharestobewithheldordeliveredwillbedeterminedasofthedatethatthetaxesare required to be withheld. Participant may elect to make prior arrangements with the Stock Service to sell Shares as

Std. Employee RSU Agreement - Rev. 080121

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of the vesting date and apply the appropriate amount of the proceeds thereof to the applicable tax withholding amount and remit any balance of the proceeds to Participant, provided that if Participant elects to have anyShares

sold by the Stock Service or otherwise, any such proposed sale of Shares shall be in compliance with and satisfy all requirements and conditions under the Onto Innovation Inc. Insider Trading Compliance Program.

4. Retirement;Death.

(a)Subject to the terms of this Agreement, in the event of the Retirement of the Participant, the RSUs shall vestbasedonthevestingschedulesetforthintheNoticeofAwardfortime-basedAwards.Forclarity,intheevent of the Participant’s Retirement, there will be no acceleration of an Award’s vesting schedule or forfeiture of unvestedAwards.

(b)Subject to the terms of this Agreement, in the event of the death of the Participant while employed by Company, any unvested RSUs shall become immediatelyvested.

5.Company Share Issuance Prerequisites. Company shall not be required to issue or deliver any Shares prior to the fulfillment of all of the followingconditions:

(a)theadmissionoftheSharestolistingonallstockexchangesonwhichsuchCommonStockisthenlisted;

(b)the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Company shall, in its sole and absolute discretion, deem necessary andadvisable;

(c)the obtaining of any approval or other clearance from any state or federal governmental agency that the Company shall, in its absolute discretion, determine to be necessary or advisable;and

(d)the lapse of any such reasonable period of time following the date the Restrictions lapse as the Company may from time to time establish for reasons of administrativeconvenience.

6.RestrictedStockUnitsNotTransferable.NoRSUsoranyinterestorrightthereinorpartthereofshallbeliable for the debts, contracts or engagements of Participant or his or her successors in interest or shall be subject to dispositionbytransfer,alienation,anticipation,pledge,encumbrance,assignmentoranyothermeanswhethersuch disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any otherlegalorequitableproceedings(includingbankruptcy),andanyattempteddispositionthereofshallbenulland voidandofnoeffect;provided,however,thatthisSection6shallnotpreventtransfersbywillorbyapplicablelaws of descent and distribution if permitted under thePlan.

7.Rights as Stockholder. Until Participant has satisfied all requirements for vesting and the satisfaction of all conditions set forth in this Agreement and Shares have been issued to Participant, Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any suchShares.

8.Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other Service Provider of Company or any of itsSubsidiaries.

9.Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement and the Award regardless of the law that might be applied under principles of conflicts oflaws.

10.ConformitytoSecuritiesLaws.ParticipantacknowledgesthatthePlanandthisAwardareintendedtoconform totheextentnecessarywithallprovisionsoftheSecuritiesActof1933,asamended,andtheExchangeAct,andall regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without

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limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered,andtheAwardsaregranted,onlyinsuchamannerastoconformtosuchlaws,rulesandregulations.

11.Amendment, Suspension and Termination. The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Compensation Committee of the Board of Directors of the Company, which is the Administrator of the Plan (the “Committee”), provided that, except as otherwiseprovidedbythePlan,neithertheamendment,suspensionnorterminationofthisAgreementshall,without the consent of Participant, alter or impair any material rights of Participant under thisAward.

12.Notices. Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to Participant at his or her address then shown in Company records, and to Company at its principal executiveoffice.

13.Severability.TheprovisionsofthisAgreementareseverableandifanyoneormoreprovisionsaredetermined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding andenforceable.

14. Section409A.

(a)This Award is intended to constitute a “short-term deferral” for purposes of Section 409A of the Internal RevenueCodeof1986,asamended(“Code”)andtherulesandregulationspromulgatedthereunderandisintended to comply with the requirements of Section 409A of the Code so as not to be subject to taxes, interest or penalties under Section 409A of the Code. This Agreement shall be interpreted and administered to give effect to such intention andunderstanding.

(b)Notwithstanding anything in this Agreement to the contrary, any payment or issuance of Shares to be madetotheParticipantunderthisAwardinconnectionwithParticipant’sseparationfromserviceshallnotbemade until the date six months and one day after the date of the Participant’s separation from service to the extent necessary to comply with Section 409A(a)(B)(i) of the Code and applicable Treasury regulations thereunder, after giving effect to the extent applicable to the short-term deferral exemption under Treasury Regulation §1.409A- 1(b)(4) and the severance pay exemption under Treasury Regulation §1.409A-1(b)(9)(iii). Following any suchsix- month and one-day delay, all such delayed payments will be paid in a single lump sum on the date six months and onedayaftertheParticipant’sseparationfromservice.ForthepurposesofthisAgreement,“separationofservice” means a separation from service as defined in Section 409A of the Code determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. Each and every payment or issuanceofSharesmadepursuanttothisAwardshallbedeemedaseparatepaymentorissuanceandnotaseriesof payments orissuances.

(c)If any provision of this Award would, in the reasonable, good faith judgment of the Committee, result or likely result in the imposition on the Participant, beneficiary or any other person claiming by or through the Participant, of any additional tax, accelerated taxation, interest or penalties under Section 409A of the Code, the Committee may, in its sole discretion, modify the terms of this Award or take any other such action, without the consent of the Participant or any spouse, beneficiary or any other person claiming by or through the Participant, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such additional tax, accelerated taxation, interest or penalties or otherwise comply with Sections 409A of the Code. However, nothing in this Agreement is intended to or shall create any obligation or liability on the part of the Company or the Committee or its members to modify the Agreement, the Award or any RSUs or other rights granted hereunder nor guarantee that the Participant will not be subject to additional taxes, accelerated taxation, interest or penalties under Section 409A of theCode.

ParticipantrepresentsthatheorshehasreadthisAgreementandthePlanandisfamiliarwiththetermsand provisions of each. Participant acknowledges that the Award is issued pursuant to, and is subject to the terms and

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conditionsof,thePlan,andParticipantwillbeboundbythetermsofthePlanasifitweresetforthverbatiminthis Agreement.ParticipantagreestocomplywithallrulestheCommitteemayestablishfromtimetotimewithrespect tothePlan.Participantagreestoacceptasbinding,conclusiveandfinalalldecisionsorinterpretationsofthe CommitteewithrespecttoanyquestionsarisingunderthePlanorthisAgreement.Participantfurtheracknowledges andagreesthatthisAgreement(includingthePlan)constitutestheentireagreementbetweenthepartieswithrespect totheAwardandthatthisAgreement(includingthePlan)supersedesanyandallprioragreements,whetherwritten or oral, between the parties with respect to theAward.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

ONTOINNOVATIONINC.PARTICIPANT

By:

Name:Name:

Title:

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ATTACHMENT I NOTICE OF AWARD

PARTICIPANT INFORMATION:

ParticipantName:

ParticipantResidenceAddress:«STREET1»

«STREET2»

«CITY», «STATE» «ZIP»

«COUNTRY»

Participant Section16Status:Participantisisnota Section 16 Insider ofCompany.

AWARD INFORMATION:

AwardDate:

Aggregate number of Restricted Stock Units subject to theAward:

GrantNumber:

TypeofAward:Time-basedOther:

Vesting Schedule:

Thetime-basedAwardshallvestandRestrictionsshalllapsewithrespecttopercentofthe SharessubjecttotheAward(roundeddowntothenextwholenumberofshares)oneachofthefirst

anniversaries of the AwardDate.

The Award shall vest and Restrictions shall lapse with respect to

Additional Vesting Requirements:

Company Stock Plan Administration Service (the “StockService”):

Onto Innovation Inc.

Director Restricted Stock Unit Purchase Agreement

THIS AGREEMENT(“Agreement”),dated, 20       (the “AwardDate”),is made between Onto Innovation Inc., a Delaware corporation, hereinafter referred to as the “Company,”and(the“Participant”).

1.Definitions. All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Onto Innovation 2020 Stock Plan, as amended from time to time (the “Plan”).

2. Award of Restricted StockUnits.

(a)Award.InconsiderationofParticipant’sagreementtoremainintheserviceasaDirector of Company and for other good and valuable consideration, the Company hereby issues to Participant,asoftheAwardDate,theawardforRestrictedStockUnits(“RSUs”)coveringshares (“Shares”) of common stock of the Company (“Common Stock”) as described in Attachment I – Notice of Award (the “Notice of Award”) attached to this Agreement (the “Award”). Thenumber ofRSUssubjecttotheAward(whichshallbesubjecttoadjustmentinaccordancewithSection14 ofthePlan)issetforthintheNoticeofAward.EachRSUrepresentstherighttoreceiveoneShare, subjecttothetermsandconditionsofthisAgreement.UpongrantingoftheAward,allRSUsshall be credited to Participant’s employee stock plan account established at the stock plan administration service determined by Company (the “Stock Service”). The current Stock Service is set forth in the Notice ofAward.

(b)Vested Shares to be Issued in Book Entry Form. Upon vesting of the RSUs and the satisfactionofallotherapplicableconditionssetforthinthisAgreement,theCompanyshallcause uncertificated Shares to be issued to Participant’s account. Shares to be delivered to Participant under the terms of this Award shall be delivered to Participant no later than two and one-half monthsfollowingthelastdayoftheyearthatincludesthedateofvestingandlapseofRestrictions, provided that Company may further delay the distribution of Shares with respect to RSUs that becomevestedunderSection4(g)asaresultofParticipant’sdeath,butnotbeyondsuchperiodas is permitted under Section 409A of the Code (as definedbelow).

(c)Plan. The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation, Article 14(a) thereof. The Award constitutes Restricted Stock Units pursuant to Section 8 of thePlan.

3. Restrictions.

(a)Forfeiture. Except only as may otherwise be expressly set forth in Section 3(f) below related to the death of the Participant, any Award which is not vested as of the date Participant ceasestobeaDirectorofCompanyshallthereuponbeforfeitedimmediatelyandterminatewithout any further action byCompany.

(b)Vesting and Lapse of Restrictions. Subject to the terms of this Agreement, the RSUs covered by this Award shall vest and all Restrictions thereon shall lapse in accordance with the schedule set forth in the Notice of Award, provided in each case that Participant remains continuously as a Director of

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Company from the Award Date through the particular scheduled vesting date therefor (except only as may otherwise be expressly set forth in (i) the Notice of Award, or (ii) Section 3(f) below related to the death of the Participant). For purposes of this Agreement, “Restrictions” shall mean the exposure to forfeiture set forth in thisAward.

(c)Acceleration of Vesting. Notwithstanding any other provision of this Award, the Award shall become fully vested and all Restrictions applicable tosuch Award shall lapse in the event of a Change in Control event and the successor or acquiring corporation or an affiliate thereof does notassumeorsubstituteforthisAwardinaccordancewithSection14(c)(i)ofthePlan.Shouldthe successor or acquiring corporation or an affiliate thereof assume or substitute for this Award in accordance with Section 14(c)(i) of the Plan, then no accelerated vesting or lapse of Restrictions ofthisAwardshallapply,exceptastheBoardmayotherwisedetermineorasprovidedinawritten agreement with theParticipant.

(d)Tax Withholding; Issuance of Uncertificated Shares for Participants Domiciled Outside the U.S. For Participants domiciled outside of the United States, the provisions set forth herein relatedtoU.S.federaland/orstatetaxwithholdingdonotapply.Sharesshallbedeliveredtosuch Participant or his or her legal representative at the time the vesting requirements as provided in thisAwardshallhavebeensatisfied.ParticipantsdomiciledoutsidetheU.S.areadvisedtoconsult with a local tax advisor regarding the tax ramifications of the Award in their country of residence and assure compliance with such taxobligations.

(e)Tax Withholding; Conditions to Issuance of Uncertificated Shares for Participants Domiciled within theU.S.

(i)For Participants domiciled in the United States, Shares shall be delivered to Participant or his or her legal representative at such time as the vesting requirements as provided in this Award have beensatisfied.

(ii)Participantisfullyresponsibleforallapplicabletaxobligationsrelatedtothevesting of the Shares, including but not limited to Participant’s federal, state, and local income tax. It is acknowledged that Company shall not withhold any taxes related to the vesting of the Shares on behalfofParticipant.CompanyshallissuetoParticipanta1099Formatyearendcoincidingwith the vesting of the Shareshereunder.

(f)Death.SubjecttothetermsofthisAgreement,intheeventofthedeathoftheParticipant while employed by Company, any unvested RSUs shall become immediatelyvested.

4.CompanyShareIssuancePrerequisites.Companyshallnotberequiredtoissueordeliverany Shares prior to the fulfillment of all of the followingconditions:

(a)the admission of the Shares to listing on all stock exchanges on which such Common Stock is then listed;

(b)the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or  other governmental regulatory body, which the Company shall, in its sole and absolute discretion, deem necessary and advisable;

(c)the obtaining of any approval or other clearance from any state or federal governmental agency that the Company shall, in its absolute discretion, determine to be necessary or advisable; and

(d)the lapse of any such reasonable period of time following the date the Restrictions lapse as the Company may from time to time establish for reasons of administrativeconvenience.

Director RSU Agreement - Rev. 080121

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5.Restricted Stock Units Not Transferable. No RSUs or any interest or right therein or part thereofshallbeliableforthedebts,contractsorengagementsofParticipantorhisorhersuccessors in interest or shall be subject to disposition by transfer, alienation, anticipation, pledge, encumbrance,assignmentoranyothermeanswhethersuchdispositionbevoluntaryorinvoluntary or by operation of law by judgment, levy, attachment, garnishment or any other legal or equitable proceedings (including bankruptcy), and any attempted disposition thereof shall be null and void and of no effect; provided, however, that this Section 5 shall not prevent transfers by will or by applicable laws of descent and distribution if permitted under thePlan.

6.Rights as Stockholder. Until Participant has satisfied all requirements for vesting and the satisfactionofallconditionssetforthinthisAgreementandShareshavebeenissuedtoParticipant, Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any suchShares.

7.Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to serve as an employee or other Service Provider of Company or any of its Subsidiaries.

8.Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement and the Award regardless of the law that might be applied under principles of conflicts oflaws.

9.Conformity to Securities Laws. Participant acknowledges that the Plan and this Award are intended to conform to the extent necessary with all provisions of the Securities Act of 1933, as amended, and the Exchange Act, and all regulations and rules promulgated thereunder by the Securities and Exchange Commission, including without limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered, and the Awards are granted, only in such a manner as to conform to such laws, rules and regulations.

10.Amendment, Suspension and Termination. The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Compensation Committee of the Board of Directors of the Company, which is the Administrator ofthePlan(the“Committee”),providedthat,exceptasotherwiseprovidedbythePlan,neitherthe amendment, suspension nor termination of this Agreement shall, without the consent of Participant, alter or impair any material rights of Participant under thisAward.

11.Notices.Noticesrequiredorpermittedhereundershallbegiveninwritingandshallbedeemed effectivelygivenuponpersonaldeliveryorupondepositintheUnitedStatesmailbycertified mail, with postage and fees prepaid, addressed to Participant at his or her address then shown in Company records, and to Company at its principal executive office.

12.Severability.TheprovisionsofthisAgreementareseverableandifanyoneormoreprovisions are determined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding andenforceable.

13. Section409A.

(a)ThisAwardisintendedtoconstitutea“short-termdeferral”forpurposesofSection409A of the Internal Revenue Code of 1986, as amended (“Code”) and the rules and regulations promulgated thereunder and is intended to comply with the requirements of Section 409A of the Code so as not to be subject to taxes, interest or penalties under Section 409A of the Code. This Agreementshallbeinterpretedandadministeredtogiveeffecttosuchintentionandunderstanding.

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(b)Notwithstanding anything in this Agreement to the contrary, any payment or issuance of Shares to be made to the Participant under this Award in connection with Participant’s separation from service shall not be made until the date six months and one day after the date of the Participant’sseparationfromservicetotheextentnecessarytocomplywithSection409A(a)(B)(i) of the Code and applicable Treasury regulations thereunder, after giving effect to the extent applicable to the short-term deferral exemption under Treasury Regulation §1.409A-1(b)(4) and theseverancepayexemptionunderTreasuryRegulation§1.409A-1(b)(9)(iii).Followinganysuch six-month and one day delay, all such delayed payments will be paid in a single lump sum on the date six months and one day after the Participant’s separation from service. For the purposes of this Agreement, “separation of service” means a separation from service as defined in Section 409AoftheCodedeterminedusingthedefaultprovisionssetforthinTreasuryRegulation

§1.409A-1(h) or any successor regulation thereto. Each and every payment or issuance of Shares made pursuant to this Award shall be deemed a separate payment or issuance and not a series of payments or issuances.

(c)If any provision of this Award would, in the reasonable, good faith judgment of the Committee, result or likely result in the imposition on the Participant, beneficiary or any other person claiming by or through the Participant, of any additional tax, accelerated taxation, interest or penalties under Section 409A of the Code, the Committee may, in its sole discretion, modify thetermsofthisAwardortakeanyothersuchaction,withouttheconsentoftheParticipantorany spouse, beneficiary or any other person claiming by or through the Participant, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such additional tax, accelerated taxation, interest or penalties or otherwise comply with Sections 409A of the Code. However, nothing in this Agreement is intended to or shallcreateanyobligationorliabilityonthepartoftheCompanyortheCommitteeoritsmembers tomodifytheAgreement,theAwardoranyRSUsorotherrightsgrantedhereundernorguarantee thattheParticipantwillnotbesubjecttoadditionaltaxes,acceleratedtaxation,interestorpenalties under Section 409A of the Code.

Participant represents that he or she has read this Agreement and the Plan and is familiar withthetermsandprovisionsofeach.ParticipantacknowledgesthattheAwardisissuedpursuant to, and is subject to the terms and conditions of, the Plan, and Participant will be bound by the terms of the Plan as if it were set forth verbatim in this Agreement. Participant agrees to comply with all rules the Committee may establish from time to time with respect to the Plan.Participant agrees to accept as binding, conclusive and final all decisions or interpretations of the Committee with respect to any questions arising under the Plan or this Agreement. Participant further acknowledgesandagreesthatthisAgreement(includingthePlan)constitutestheentireagreement between the parties with respect to the Award and that this Agreement (including the Plan) supersedes any and all prior agreements, whether written or oral, between the parties with respect to the Award.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

ONTOINNOVATIONINC.PARTICIPANT

By:

Name:Name:

Title:

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ATTACHMENT I NOTICE OF AWARD

PARTICIPANT INFORMATION:

ParticipantName:

ParticipantResidenceAddress:«STREET1»

«STREET2»

«CITY», «STATE» «ZIP»

«COUNTRY»

Participant Section 16Status:Participantisis not   a Section 16 Insider of Company.

AWARD INFORMATION:

AwardDate:

Award to Directorisan:Initial GrantAnnual GrantOther Grant

Aggregate number of Restricted Stock Units subject to theAward:

Grant Number:

Vesting Schedule:

Initial Grant: The Award shall vest and Restrictions shall lapse with respect to one hundred percent (100%) of the Shares subject to the Award on the first anniversary of the Award Date.

AnnualGrant:TheAwardshallvestandRestrictionsshalllapsewithrespecttoonehundredpercent (100%) of the Shares subject to the Award on the first anniversary of the Award Date provided however that if the Participant is not re-elected as a Director at the Annual Shareholders Meeting corresponding to the first anniversary of the Award Date, then one hundred percent (100%) of the Shares subject to the Award shall fully vest as of the date of said Annual ShareholdersMeeting.

Other Grant: The Award shall vest and Restrictions shall lapse with respectto

Additional Vesting Requirements:

Stock Plan Administration Service (the “StockService”):

Onto Innovation Inc.

Employee Performance Stock Unit Purchase Agreement

THIS AGREEMENT(“Agreement”),dated,20(the “Award Date”), is madebetween OntoInnovationInc.,aDelawarecorporation,hereinafterreferredtoasthe“Company,”and

(the“Participant”).

1.Definitions. All capitalized terms used in this Agreement without definition shall have the meanings ascribed in the Onto Innovation 2020 Stock Plan, as amended from time to time (the “Plan”). In addition, the following definition shallapply:

• “Retirement Eligible” shall mean the Participant has achieved a combination of age plus years of service with the company totaling 70, with a base minimum age of 58 years old and a minimum service term of five (5)years.

• “Retirement” shall mean Participant has become Retirement Eligible and has formally notified the Companyofhis/herintentiontoretirefromtheemployoftheCompanyonadatecertainanddoessoretire or as otherwise approved by theAdministrator.

2. Award of Performance StockUnits.

(a)Award. In consideration of Participant’s agreement to remain in the employ of Company or one of its Subsidiaries, and for other good and valuable consideration, the Company hereby issues to Participant, as of the Award Date, the grant of Performance Stock Units (“PSUs”) covering shares (“Shares”) of common stock of the Company(“CommonStock”)asdescribedinAttachmentI–NoticeofAward(the“NoticeofAward”)attachedto this Agreement (the “Award”). The number of PSUs subject to the Award (which shall be subject to adjustment in accordancewithSection14ofthePlan)issetforthintheNoticeofAward.EachPSUrepresentstherighttoreceive one Share, subject to the terms and conditions of this Agreement. Upon granting of the Award, all PSUs shall be credited to Participant’s employee stock plan account established at the stock plan administration service determined by Company (the “Stock Service”). The current Stock Service is set forth in the Notice ofAward.

(b)VestedSharestobeIssuedinBookEntryForm.UponvestingofthePSUsandthesatisfactionofallother applicable conditions set forth in this Agreement, the Company shall cause uncertificated Shares to be issued to Participant’s account. Shares to be delivered to Participant under the terms of this Award shall be delivered to Participantnolaterthantwoandone-halfmonthsfollowingthelastdayoftheyearthatincludesthedateofvesting andlapseofRestrictions,providedthatCompanymayfurtherdelaythedistributionofShareswithrespecttoRSUs thatbecomevestedunderSection4(g)asaresultofParticipant’sdeath,butnotbeyondsuchperiodasispermitted under Section 409A of the Code (as definedbelow).

(c)Plan. The Award granted hereunder is subject to the terms and provisions of the Plan, including without limitation,Article14(a)thereof.TheAwardconstitutesPerformanceStockUnitspursuanttoSection10ofthePlan.

3. Restrictions.

(a)Forfeiture. Except only as may otherwise be expressly set forth in (i) any employment, severance or change in control agreement of the Company or a Subsidiary with Participant, or (ii) Section 3(g) below related to the Retirement or death of the Participant, any Award which is not vested as of the date Participant ceases to bean

employee of Company or one of its Subsidiaries shall thereupon be forfeited immediately and terminate without any further action by Company.

(b)Vesting and Lapse of Restrictions. Subject to the terms of this Agreement, the PSUs covered by this Award shall vest and all Restrictions thereon shall lapse in accordance with the schedule set forth in the Notice of Award, provided in each case that Participant remains continuously as an employee of Company or a Subsidiary from the Award Date through the particular scheduled vesting date therefor (except only as may otherwise be expresslysetforthin(i)anyemployment,severanceorchangeincontrolagreementoftheCompanyoraSubsidiary with Participant, or (ii) Section 3(g) below related to the Retirement or death of the Participant). For purposes of this Agreement, “Restrictions” shall mean the exposure to forfeiture set forth in thisAward.

(c)Acceleration of Vesting. Notwithstanding any other provision of this Award, with regard to any performance-based Award, in the event of a Change in Control event, the performance conditions will be deemed to have been achieved at the target level and the Participant will be deemed to have earned the target number of PSUs that were subject to theAward.

(d)Tax Withholding; Issuance of Uncertificated Shares for Participants Domiciled Outside the U.S. For Participants domiciled outside of the United States, the provisions set forth herein related to U.S. federal and/or statetaxwithholdingdonotapply.SharesshallbedeliveredtosuchParticipantorhisorherlegalrepresentativeat thetimethevestingrequirementsasprovidedinthisAwardshallhavebeensatisfied.Participantsdomiciledoutside theU.S.areadvisedtoconsultwithalocaltaxadvisorregardingthetaxramificationsoftheAwardintheircountry of residence and assure compliance with such taxobligations.

(e)TaxWithholdingforParticipantsDomiciledinU.S.WithholdingRequirements.ByacceptingthisAward, Participant agrees to make appropriate arrangements with the Company for the satisfaction, as of the applicable withholding date, of all applicable federal, state and local tax withholding requirements, including in connection with the vesting and settlement of this Award. No Shares will be issued until satisfaction of such applicable tax withholding has been received by the Company. Prior to the delivery of any Shares pursuant to this Award, the Companywillhavethepowerandtherighttodeductorwithholdanamountsufficienttosatisfyfederal,state,local, foreign or other taxes (including the Participant’s FICA obligation) required to be withheld with respect to the vesting or settlement of thisAward.

(f)Withholding Arrangements. The Company, pursuant to such procedures as it will specify from time to time, will permit Participant to satisfy such tax withholding obligation, in each case as of the applicable tax withholding date, by (without limitation and in such combinations as the Participant mayelect):

(i) paying cash or by personal check, certified check or bank check or wire transfer of immediately availablefunds;

(ii) electing to have the Company withhold otherwise deliverable Shares having a Fair Market Value equal to the minimum statutory amount required to be withheld;or

(iii) delivering to the Company already-owned Shares having a Fair Market Value equal to the minimum statutory amount required to bewithheld.

TheFairMarketValueoftheSharestobewithheldordeliveredwillbedeterminedasofthedatethatthetaxesare required to be withheld. Participant may elect to make prior arrangements with the Stock Service to sell Shares as of the vesting date and apply the appropriate amount of the proceeds thereof to the applicable tax withholding amount and remit any balance of the proceeds to Participant, provided that if Participant elects to have any Shares soldbytheStockServiceorotherwise,anysuchproposedsaleofSharesshallbeincompliancewithandsatisfyall requirements and conditions under the Onto Innovation Inc. Insider Trading ComplianceProgram.

Std. Employee PSU Agreement - Rev. 080121

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(g) Retirement;Death.

(a)Subject to the terms of this Agreement, in the event of the Retirement of the Participant, the PSUs shall vest based on the actual performance results for performance-based Awards. For clarity, in the event of the Participant’s Retirement, there will be no acceleration of an Award’s vesting schedule or forfeiture of unvested Awards.

(b)Subject to the terms of this Agreement, in the event of the death of the Participant while employed by Company, unvested PSUs shall become immediately vested in accordance with the followingcalculation:

• The target number of PSUs multiplied by the number of days worked since the grant date divided bythe total number of days in the full vestingterm.

In the event of Retirement or death, any PSUs under this Award that do not vest under this Section 3(g) will be forfeited.

4.Company Share Issuance Prerequisites. Company shall not be required to issue or deliver any Shares prior to the fulfillment of all of the followingconditions:

(a)theadmissionoftheSharestolistingonallstockexchangesonwhichsuchCommonStockisthenlisted;

(b)the completion of any registration or other qualification of the Shares under any state or federal law or under rulings or regulations of the Securities and Exchange Commission or other governmental regulatory body, which the Company shall, in its sole and absolute discretion, deem necessary andadvisable;

(c)the obtaining of any approval or other clearance from any state or federal governmental agency that the Company shall, in its absolute discretion, determine to be necessary or advisable;and

(d)the lapse of any such reasonable period of time following the date the Restrictions lapse as the Company may from time to time establish for reasons of administrativeconvenience.

5.Performance Stock Units Not Transferable. No PSUs or any interest or right therein or part thereof shall be liableforthedebts,contractsorengagementsofParticipantorhisorhersuccessorsininterestorshallbesubjectto dispositionbytransfer,alienation,anticipation,pledge,encumbrance,assignmentoranyothermeanswhethersuch disposition be voluntary or involuntary or by operation of law by judgment, levy, attachment, garnishment or any otherlegalorequitableproceedings(includingbankruptcy),andanyattempteddispositionthereofshallbenulland voidandofnoeffect;provided,however,thatthisSection5shallnotpreventtransfersbywillorbyapplicablelaws of descent and distribution if permitted under thePlan.

6.Rights as Stockholder. Until Participant has satisfied all requirements for vesting and the satisfaction of all conditions set forth in this Agreement and Shares have been issued to Participant, Participant shall not be deemed to be a shareholder or to have any of the rights of a shareholder with respect to any suchShares.

7.Not a Contract of Employment. Nothing in this Agreement or in the Plan shall confer upon Participant any right to continue to serve as an employee or other Service Provider of Company or any of itsSubsidiaries.

8.Governing Law. The laws of the State of Delaware shall govern the interpretation, validity, administration, enforcement and performance of the terms of this Agreement and the Award regardless of the law that might be applied under principles of conflicts oflaws.

9.ConformitytoSecuritiesLaws.ParticipantacknowledgesthatthePlanandthisAwardareintendedtoconform totheextentnecessarywithallprovisionsoftheSecuritiesActof1933,asamended,andtheExchangeAct,andall

Std. Employee PSU Agreement - Rev. 080121

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regulationsandrulespromulgatedthereunderbytheSecuritiesandExchangeCommission,includingwithout

limitation Rule 16b-3 under the Exchange Act. Notwithstanding anything herein to the contrary, the Plan shall be administered,andtheAwardsaregranted,onlyinsuchamannerastoconformtosuchlaws,rulesandregulations.

10.Amendment, Suspension and Termination. The Awards may be wholly or partially amended or otherwise modified, suspended or terminated at any time or from time to time by the Compensation Committee of the Board of Directors of the Company, which is the Administrator of the Plan (the “Committee”), provided that, except as otherwiseprovidedbythePlan,neithertheamendment,suspensionnorterminationofthisAgreementshall,without the consent of Participant, alter or impair any material rights of Participant under thisAward.

11.Notices. Notices required or permitted hereunder shall be given in writing and shall be deemed effectively given upon personal delivery or upon deposit in the United States mail by certified mail, with postage and fees prepaid, addressed to Participant at his or her address then shown in Company records, and to Company at its principal executiveoffice.

12.Severability.TheprovisionsofthisAgreementareseverableandifanyoneormoreprovisionsaredetermined to be illegal or otherwise unenforceable, in whole or in part, the remaining provisions will nevertheless be binding andenforceable.

13. Section409A.

(a)This Award is intended to constitute a “short-term deferral” for purposes of Section 409A of the Internal RevenueCodeof1986,asamended(“Code”)andtherulesandregulationspromulgatedthereunderandisintended to comply with the requirements of Section 409A of the Code so as not to be subject to taxes, interest or penalties under Section 409A of the Code. This Agreement shall be interpreted and administered to give effect to such intention andunderstanding.

(b)Notwithstanding anything in this Agreement to the contrary, any payment or issuance of Shares to be madetotheParticipantunderthisAwardinconnectionwithParticipant’sseparationfromserviceshallnotbemade until the date six months and one day after the date of the Participant’s separation from service to the extent necessary to comply with Section 409A(a)(B)(i) of the Code and applicable Treasury regulations thereunder, after giving effect to the extent applicable to the short-term deferral exemption under Treasury Regulation §1.409A- 1(b)(4) and the severance pay exemption under Treasury Regulation §1.409A-1(b)(9)(iii). Following any suchsix- month and one-day delay, all such delayed payments will be paid in a single lump sum on the date six months and onedayaftertheParticipant’sseparationfromservice.ForthepurposesofthisAgreement,“separationofservice” means a separation from service as defined in Section 409A of the Code determined using the default provisions set forth in Treasury Regulation §1.409A-1(h) or any successor regulation thereto. Each and every payment or issuanceofSharesmadepursuanttothisAwardshallbedeemedaseparatepaymentorissuanceandnotaseriesof payments orissuances.

(c)If any provision of this Award would, in the reasonable, good faith judgment of the Committee, result or likely result in the imposition on the Participant, beneficiary or any other person claiming by or through the Participant, of any additional tax, accelerated taxation, interest or penalties under Section 409A of the Code, the Committee may, in its sole discretion, modify the terms of this Award or take any other such action, without the consent of the Participant or any spouse, beneficiary or any other person claiming by or through the Participant, in the manner that the Committee may reasonably and in good faith determine to be necessary or advisable to avoid the imposition of such additional tax, accelerated taxation, interest or penalties or otherwise comply with Sections 409A of the Code. However, nothing in this Agreement is intended to or shall create any obligation or liability on the part of the Company or the Committee or its members to modify the Agreement, the Award or any PSUs or other rights granted hereunder nor guarantee that the Participant will not be subject to additional taxes, accelerated taxation, interest or penalties under Section 409A of theCode.

ParticipantrepresentsthatheorshehasreadthisAgreementandthePlanandisfamiliarwiththetermsand

Std. Employee PSU Agreement - Rev. 080121

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provisions of each. Participant acknowledges that the Award is issued pursuant to, and is subject to the terms and

conditionsof,thePlan,andParticipantwillbeboundbythetermsofthePlanasifitweresetforthverbatiminthis Agreement.ParticipantagreestocomplywithallrulestheCommitteemayestablishfromtimetotimewithrespect to the Plan. Participant agrees to accept as binding, conclusive and final all decisions or interpretations of the CommitteewithrespecttoanyquestionsarisingunderthePlanorthisAgreement.Participantfurtheracknowledges andagreesthatthisAgreement(includingthePlan)constitutestheentireagreementbetweenthepartieswithrespect totheAwardandthatthisAgreement(includingthePlan)supersedesanyandallprioragreements,whetherwritten or oral, between the parties with respect to theAward.

IN WITNESS WHEREOF, this Agreement has been executed and delivered by the parties hereto as of the date first set forth above.

ONTOINNOVATIONINC.PARTICIPANT

By:

Name:Name:

Title:

Std. Employee PSU Agreement - Rev. 080121

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ATTACHMENT I NOTICE OF AWARD

PARTICIPANT INFORMATION:

ParticipantName:

ParticipantResidenceAddress:«STREET1»

«STREET2»

«CITY», «STATE» «ZIP»

«COUNTRY»

Participant Section16Status:Participantisisnota Section 16 Insider ofCompany.

AWARD INFORMATION:

AwardDate:

Aggregate number of Performance Stock Units subject to theAward:

GrantNumber:

TypeofAward:Performance-based VestingSchedule:

The performance-based Award shall vest in full upon the conclusion of the performance period with the final number of shares earned contingent upon the meeting of the applicable performance criteria set forth in the associated performance plan document.

The Award shall vest and Restrictions shall lapse with respect to

Additional Vesting Requirements:

Company Stock Plan Administration Service (the “StockService”):

EX-31.1

Exhibit 31.1

Rule 13a-14(a) Certification of Chief Executive Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

I, Michael P. Plisinski, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Onto Innovation Inc.;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterial fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;

4. Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is beingprepared;

b. Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyaccepted accountingprinciples;

c. Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and

5. Theregistrant’sothercertifyingofficerandIhavedisclosed,basedonourmostrecentevaluationofinternalcontrol overfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(or persons performing the equivalentfunctions):

a. Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;and

b. Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantrole in the registrant’s internal control over financialreporting.

Date: August 5, 2021

By:	/s/ Michael P. Plisinski
	Michael P. Plisinski
	Chief Executive Officer

EX-31.2

Exhibit 31.2

Rule 13a-14(a) Certification of Chief Financial Officer
Pursuant to Section 302 of the Sarbanes-Oxley Act of2002

I, Steven R. Roth, certify that:

1. I have reviewed this quarterly report on Form 10-Q of Onto Innovation Inc.;

2. Basedonmyknowledge,thisreportdoesnotcontainanyuntruestatementofamaterialfactoromittostateamaterial fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by thisreport;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in thisreport;

4. Theregistrant’sothercertifyingofficerandIareresponsibleforestablishingandmaintainingdisclosurecontrols and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant andhave:

a. Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is beingprepared;

b. Designedsuchinternalcontroloverfinancialreporting,orcausedsuchinternalcontroloverfinancialreporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reportingandthepreparationoffinancialstatementsforexternalpurposesinaccordancewithgenerallyaccepted accountingprinciples;

c. Evaluatedtheeffectivenessoftheregistrant’sdisclosurecontrolsandproceduresandpresentedinthisreport our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation;and

d. Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting;and

5. Theregistrant’sothercertifyingofficer andIhavedisclosed,basedonourmostrecentevaluationofinternalcontrol overfinancialreporting,totheregistrant’sauditorsandtheauditcommitteeoftheregistrant’sboardofdirectors(or persons performing the equivalentfunctions):

a. Allsignificantdeficienciesandmaterialweaknessesinthedesignoroperationofinternalcontroloverfinancial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information;and

b. Anyfraud,whetherornotmaterial,thatinvolvesmanagementorotheremployeeswhohaveasignificantrole in the registrant’s internal control over financialreporting.

Date: August 5, 2021

By:	/s/ Steven R. Roth
	Steven R. Roth
	Senior Vice President and Chief Financial Officer

EX-32.1

Exhibit 32.1

CERTIFICATION OF CHIEF EXECUTIVE OFFICER PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANTTO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Michael P. Plisinski, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Onto Innovation Inc. on Form 10-Q for the period ended June 26, 2021 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Onto Innovation Inc.

Date: August 5, 2021

By:	/s/ Michael P. Plisinski
	Michael P. Plisinski
	Chief Executive Officer

EX-32.2

Exhibit 32.2

CERTIFICATION OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

I, Steven R. Roth, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that the Quarterly Report of Onto Innovation Inc. on Form 10-Q for the period ended June 26, 2021 fully complies with the requirements of Section 13(a) or 15(d), as applicable, of the Securities Exchange Act of 1934 and that the information contained in the Quarterly Report on Form 10-Q fairly presents, in all material respects, the financial condition and results of operations of Onto Innovation Inc.

Date: August 5, 2021

By:	/s/ Steven R. Roth
	Steven R. Roth
	Senior Vice President and Chief Financial Officer

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Document and Entity Information Document - shares	6 Months Ended
	Jun. 26, 2021	Jul. 12, 2021
Cover [Abstract]
Entity Registrant Name	ONTO INNOVATION INC.
Trading Symbol	ONTO
Entity Central Index Key	0000704532
Current Fiscal Year End Date	--01-01
Entity Filer Category	Large Accelerated Filer
Document Type	10-Q
Document Period End Date	Jun. 26, 2021
Document Fiscal Year Focus	2021
Document Fiscal Period Focus	Q2
Document Quarterly Report	true
Document Transition Report	false
Entity Interactive Data Current	Yes
Amendment Flag	false
Entity Small Business	false
Entity Emerging Growth Company	false
Entity Current Reporting Status	Yes
Entity Shell Company	false
Title of 12(b) Security	Common Stock, $0.001 par value per share
Security Exchange Name	NYSE
Entity Common Stock, Shares Outstanding		49,267,758
Entity File Number	001-39110
Entity Incorporation, State or Country Code	DE
Entity Tax Identification Number	94-2276314
Entity Address, Address Line One	16 Jonspin Road
Entity Address, City or Town	Wilmington
Entity Address, State or Province	MA
Entity Address, Postal Zip Code	01887
City Area Code	978
Local Phone Number	253-6200

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Condensed Consolidated Statements of Operations (Unaudited) - USD ($) shares in Thousands, $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Income Statement [Abstract]
Revenue	$ 193,387	$ 134,948	$ 362,666	$ 274,876
Cost of revenue	87,931	63,363	166,741	140,660
Gross profit	105,456	71,585	195,925	134,216
Operating expenses:
Research and development	25,507	22,167	47,471	43,094
Sales and marketing	15,429	11,869	28,533	24,940
General and administrative	16,255	15,916	31,814	36,063
Amortization	12,324	13,703	24,681	27,435
Total operating expenses	69,515	63,655	132,499	131,532
Operating income	35,941	7,930	63,426	2,684
Interest income, net	304	686	665	1,896
Other expense, net	(289)	(1,198)	(1,533)	(1,166)
Income before provision for income taxes	35,956	7,418	62,558	3,414
Provision (benefit) for income taxes	905	(6)	3,394	394
Net income	$ 35,051	$ 7,424	$ 59,164	$ 3,020
Earnings per share:
Basic	$ 0.71	$ 0.15	$ 1.20	$ 0.06
Diluted	$ 0.71	$ 0.15	$ 1.19	$ 0.06
Weighted average shares outstanding:
Basic	49,193	48,736	49,105	49,417
Diluted	49,701	49,014	49,645	49,782

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CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Unaudited) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Statement Of Income And Comprehensive Income [Abstract]
Net income	$ 35,051	$ 7,424	$ 59,164	$ 3,020
Other comprehensive (loss) gain, net of tax:
Change in net unrealized (losses) gains on available-for-sale marketable securities	(567)	795	(698)	269
Change in currency translation adjustments	537	2,495	(1,362)	264
Total other comprehensive (loss) gain, net of tax	(30)	3,290	(2,060)	533
Total comprehensive income	$ 35,021	$ 10,714	$ 57,104	$ 3,553

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Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Current Assets:
Cash and cash equivalents	$ 134,218	$ 136,720
Marketable securities	276,621	237,002
Accounts receivable, less allowance of $720 and $784	174,662	149,251
Inventories, net	206,981	191,217
Prepaid expenses and other current assets	19,147	17,471
Total current assets	811,629	731,661
Property, plant and equipment, net	88,015	87,950
Goodwill	313,891	306,632
Identifiable intangible assets, net	305,886	318,357
Deferred income taxes	2,263	2,235
Other assets	24,809	21,337
Total assets	1,546,493	1,468,172
Current liabilities:
Accounts payable	46,685	40,183
Accrued liabilities	40,957	37,075
Deferred revenue	21,190	14,334
Other current liabilities	24,336	28,499
Total current liabilities	133,168	120,091
Deferred and other tax liabilities	55,867	55,623
Other non-current liabilities	27,895	27,712
Total liabilities	216,930	203,426
Commitments and contingencies
Stockholders’ equity:
Common stock	49	49
Additional paid-in capital	1,241,680	1,233,967
Accumulated other comprehensive income	2,508	4,568
Retained earnings	85,326	26,162
Total stockholders’ equity	1,329,563	1,264,746
Total liabilities and stockholders’ equity	$ 1,546,493	$ 1,468,172

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Condensed Consolidated Balance Sheets (Parenthetical) (Unaudited) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Statement Of Financial Position [Abstract]
Allowances for doubtful accounts	$ 720	$ 784

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CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($) $ in Thousands	6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020
Cash flows from operating activities:
Net income	$ 59,164	$ 3,020
Adjustments to reconcile net income to net cash and cash equivalents provided by operating activities:
Amortization of intangibles	24,681	27,435
Depreciation	7,484	6,240
Share-based compensation	10,997	8,730
Acquired inventory step-up amortization	252	10,173
Provision for inventory valuation	3,706	3,108
Other, net	1,892	1,102
Changes in operating assets and liabilities, net of effects of business acquired	(31,748)	(12,937)
Net cash and cash equivalents provided by operating activities	76,428	46,871
Cash flows from investing activities:
Purchases of marketable securities	(142,072)	(140,364)
Proceeds from sales of marketable securities	102,027	147,473
Cash received from convertible note receivable		2,848
Purchase of business, net of cash acquired	(26,795)
Purchases of property, plant and equipment	(9,558)	(2,609)
Net cash and cash equivalents (used in) provided by investing activities	(76,398)	7,348
Cash flows from financing activities:
Purchase of common stock		(52,000)
Tax payments related to shares withheld for share-based compensation plans	(6,499)	(3,279)
Payment of contingent consideration for acquired business		(435)
Issuance of shares through share-based compensation plans	3,215	179
Net cash and cash equivalents used in financing activities	(3,284)	(55,535)
Effect of exchange rate changes on cash and cash equivalents	752	31
Net decrease in cash and cash equivalents	(2,502)	(1,285)
Cash and cash equivalents at beginning of period	136,720	130,673
Cash and cash equivalents at end of period	134,218	129,388
Supplemental disclosure of cash flow information:
Income taxes paid	$ 4,980	$ 3,463

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CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (Unaudited) - USD ($) shares in Thousands, $ in Thousands	Total	Common Stock [Member]	Additional Paid-in Capital [Member]	Accumulated Other Comprehensive Income (Loss) [Member]	Retained Earnings (Accumulated Deficit) [Member]
Balance at Dec. 31, 2019	$ 1,264,026	$ 50	$ 1,269,437	$ (598)	$ (4,863)
Balance, Shares at Dec. 31, 2019		50,184
Repurchase of common stock	(33,614)	$ (1)	(33,613)
Repurchase of common stock, Shares		(1,250)
Net income (loss)	(4,404)				(4,404)
Share-based compensation	3,955		3,955
Issuance of shares through share-based compensation plans	164		164
Issuance of shares through share-based compensation plans, Shares		240
Share-based compensation plan withholdings	(1,565)		(1,565)
Share-based compensation plan withholdings, Shares		(42)
Currency translation	(2,231)			(2,231)
Unrealized gain (loss) on investments	(526)			(526)
Balance at Mar. 28, 2020	1,225,805	$ 49	1,238,378	(3,355)	(9,267)
Balance, shares at Mar. 28, 2020		49,132
Balance at Dec. 31, 2019	1,264,026	$ 50	1,269,437	(598)	(4,863)
Balance, Shares at Dec. 31, 2019		50,184
Net income (loss)	3,020
Currency translation	264
Balance at Jun. 27, 2020	1,221,209	$ 49	1,223,068	(65)	(1,843)
Balance, shares at Jun. 27, 2020		48,724
Balance at Mar. 28, 2020	1,225,805	$ 49	1,238,378	(3,355)	(9,267)
Balance, Shares at Mar. 28, 2020		49,132
Repurchase of common stock	(18,385)		(18,385)
Repurchase of common stock, Shares		(632)
Net income (loss)	7,424				7,424
Share-based compensation	4,775		4,775
Issuance of shares through share-based compensation plans	15		15
Issuance of shares through share-based compensation plans, Shares		279
Share-based compensation plan withholdings	(1,715)		(1,715)
Share-based compensation plan withholdings, Shares		55
Currency translation	2,495			2,495
Unrealized gain (loss) on investments	795			795
Balance at Jun. 27, 2020	1,221,209	$ 49	1,223,068	(65)	(1,843)
Balance, shares at Jun. 27, 2020		48,724
Balance at Dec. 26, 2020	1,264,746	$ 49	1,233,967	4,568	26,162
Balance, Shares at Dec. 26, 2020		48,758
Net income (loss)	24,113				24,113
Share-based compensation	4,890		4,890
Issuance of shares through share-based compensation plans	3,085		3,085
Issuance of shares through share-based compensation plans, Shares		240
Share-based compensation plan withholdings	(2,492)		(2,492)
Share-based compensation plan withholdings, Shares		(41)
Currency translation	(1,899)			(1,899)
Unrealized gain (loss) on investments	(131)			(131)
Balance at Mar. 27, 2021	1,292,312	$ 49	1,239,450	2,538	50,275
Balance, shares at Mar. 27, 2021		48,957
Balance at Dec. 26, 2020	1,264,746	$ 49	1,233,967	4,568	26,162
Balance, Shares at Dec. 26, 2020		48,758
Net income (loss)	59,164
Currency translation	(1,362)
Balance at Jun. 26, 2021	1,329,563	$ 49	1,241,680	2,508	85,326
Balance, shares at Jun. 26, 2021		49,189
Balance at Mar. 27, 2021	1,292,312	$ 49	1,239,450	2,538	50,275
Balance, Shares at Mar. 27, 2021		48,957
Net income (loss)	35,051				35,051
Share-based compensation	6,107		6,107
Issuance of shares through share-based compensation plans	130		130
Issuance of shares through share-based compensation plans, Shares		288
Share-based compensation plan withholdings	(4,007)		(4,007)
Share-based compensation plan withholdings, Shares		56
Currency translation	537			537
Unrealized gain (loss) on investments	(567)			(567)
Balance at Jun. 26, 2021	$ 1,329,563	$ 49	$ 1,241,680	$ 2,508	$ 85,326
Balance, shares at Jun. 26, 2021		49,189

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Basis of Presentation

6 Months Ended

Jun. 26, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Basis of Presentation

NOTE 1. Basis of Presentation

The Company operates on a 52- or 53-week fiscal year ending on the Saturday closest to December 31^st. Our fiscal year ending January 1, 2022 (“fiscal year 2021”) is a 53-week fiscal year. The first quarter of the Company’s fiscal year 2021 ended on March 27, 2021, the second quarter ended on June 26, 2021 and the third quarter ends on September 25, 2021. Our fiscal year ended December 26, 2020 was a 52-week fiscal year.

The accompanying interim unaudited Condensed Consolidated Financial Statements have been prepared by Onto Innovation Inc. (together with its consolidated subsidiaries, unless otherwise specified or suggested by the context, the “Company,” or “Onto Innovation,” “we,” “our” or “us”) and in the opinion of management reflect all adjustments, consisting of normal recurring accruals, necessary for their fair presentation in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”).  Preparing financial statements requires management to make estimates and assumptions that affect amounts reported in the financial statements and accompanying notes.  Actual amounts could differ materially from reported amounts.  The interim results for the three and six months ended June 26, 2021 are not necessarily indicative of results to be expected for the entire year or any future periods.  This interim financial information should be read in conjunction with the financial statements and the notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 26, 2020 (the “2020 Form 10-K”) filed with the Securities and Exchange Commission (“SEC”) on February 19, 2021.  The accompanying Condensed Consolidated Balance Sheet at December 26, 2020 has been derived from the audited consolidated financial statements included in the 2020 Form 10-K.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management that are evaluated on an ongoing basis include the allowances for credit losses, excess and obsolete inventory, fair value of assets acquired and liabilities assumed in a business combination, recoverability and useful lives of property, plant and equipment and identifiable intangible assets, recoverability of goodwill, recoverability of deferred tax assets, liabilities for product warranty and contingencies, including litigation reserves, share-based payments and liabilities for tax uncertainties. Actual results could differ from those estimates.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances. The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, fair value of assets acquired and liabilities assumed in a business combination and stock awards. Such estimates often require the selection of appropriate valuation methodologies and significant judgment. Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

The Company also assessed the impacts of COVID-19 on the above accounting matters as of June 26, 2021 and through the date of this report. While there was not a material impact as of and for the quarter ended June 26, 2021 and through the date of this report, future actual magnitude and duration of the COVID-19 pandemic, as well as other associated factors, could result in material negative impacts to the Company’s condensed consolidated financial statements in future reporting periods.

Recent Accounting Pronouncements

Recently Adopted

Effective December 27, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplified the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplified aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarified the accounting for transactions that resulted in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The adoption of ASU No.

2019-12 did not have a significant impact on the Company’s consolidated financial position, results of operations, and cash flows.

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Business Combination

6 Months Ended

Jun. 26, 2021

Business Combinations [Abstract]

Business Combination

NOTE 2. Business Combination

Inspectrology, LLC

On December 31, 2020, the Company acquired Inspectrology, LLC (“Inspectrology”), a leading supplier of overlay metrology for controlling lithography and etch processes in the compound semiconductor market for $27,015 in cash and a potential earnout of $10,000, subject to achievement of certain revenue targets earned for fiscal 2021 and 2022. As of June 26, 2021, the Company does not believe the earnout criteria will be met. Certain payments, including the earnout, are subject to the principals remaining with the Company for a period of one to three years.

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents	$	220
Account receivables		4,071
Inventories		2,587
Prepaid expenses and other current assets		104
Property, plant and equipment		86
Identifiable intangible assets		12,210
Other assets		3,000
Total assets acquired		22,278
Accounts payable		(1,048	)
Payroll and related expenses		(512	)
Deferred revenue		(386	)
Other current liabilities		(576	)
Net assets acquired		19,756
Goodwill		7,259
Total purchase consideration	$	27,015

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Fair Value Measurements

6 Months Ended

Jun. 26, 2021

Fair Value Disclosures [Abstract]

Fair Value Measurements

NOTE 3. Fair Value Measurements

Fair Value of Financial Instruments

The Company has evaluated the estimated fair value of financial instruments using available market information and valuations as provided by third-party sources. The use of different market assumptions and/or estimation methodologies could have a significant effect on the estimated fair value amounts.  The carrying value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximates fair value because of the short-term maturity of these instruments.

Fair Value Hierarchy

The Company applies a three-level valuation hierarchy for fair value measurements. This hierarchy prioritizes the inputs into three broad levels. Level 1 inputs are quoted prices (unadjusted) in active markets for identical assets or liabilities. Level 2 inputs are quoted prices for similar assets and liabilities in active markets or inputs that are observable for the asset or liability, either directly or indirectly through market corroboration, for substantially the full term of the asset or liability. Level 3 inputs are unobservable inputs based on management’s assumptions used to measure assets and liabilities at fair value. A financial asset’s or liability’s fair value measurement classification within the hierarchy is determined based on the lowest level input that is significant to the fair value measurement.

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 26, 2021 and December 26, 2020:

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 26, 2021
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	142,931	$	—	$	142,931	$	—
Asset-backed securities		4,094		—		4,094		—
Certificates of deposit		44,021		—		44,021		—
Commercial paper		50,979		—		50,979		—
Corporate bonds		34,596		—		34,596		—
Foreign currency forward contracts		27		—		27		—
Total assets	$	276,648	$	—	$	276,648	$	—
December 26, 2020
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	124,640	$	—	$	124,640	$	—
Asset-backed securities		11,708		—		11,708		—
Certificates of deposit		36,373		—		36,373		—
Commercial paper		32,699		—		32,699		—
Corporate bonds		31,582		—		31,582		—
Total assets	$	237,002	$	—	$	237,002	$	—
Liabilities:
Foreign currency forward contracts		36		—		36		—
Total liabilities	$	36	$	—	$	36	$	—

Available-for-sale debt securities classified as Level 2 are valued using observable inputs to quoted market prices, benchmark yields, reported trades, broker/dealer quotes or alternative pricing sources with reasonable levels of price transparency.  The foreign currency forward contracts are primarily measured based on the foreign currency spot and forward rates quoted by the banks or foreign currency dealers.  Investment prices are obtained from third party pricing providers, which model prices utilizing the above observable inputs, for each asset class.

See Note 4 for additional discussion regarding the fair value of the Company’s marketable securities.

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Marketable Securities

6 Months Ended

Jun. 26, 2021

Marketable Securities [Abstract]

Marketable Securities

NOTE 4. Marketable Securities

At June 26, 2021 and December 26, 2020, marketable securities are categorized as follows:

	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
June 26, 2021
Municipal notes and bonds	$	142,821	$	128	$	19	$	142,930
Asset-backed securities		4,090		4		—		4,094
Certificates of deposit		44,003		19		1		44,021
Commercial paper		50,961		19		—		50,980
Corporate bonds		34,651		6		61		34,596
Total marketable securities	$	276,526	$	176	$	81	$	276,621
December 26, 2020
Municipal notes and bonds	$	124,387	$	257	$	4	$	124,640
Asset-backed securities		11,679		29		—		11,708
Certificates of deposit		36,349		24		—		36,373
Commercial paper		32,690		12		3		32,699
Corporate bonds		31,544		50		12		31,582
Total marketable securities	$	236,649	$	372	$	19	$	237,002

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, is as follows at June 26, 2021 and December 26, 2020:

	June 26, 2021				December 26, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	195,632	$	195,733	$	170,099	$	170,321
Due after one through five years		80,894		80,888		66,550		66,681
Due after five through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total marketable securities	$	276,526	$	276,621	$	236,649	$	237,002

The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at June 26, 2021 and December 26, 2020:

	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 26, 2021
Municipal notes and bonds	$	30,626	$	19	$	—	$	—
Certificate of deposit		4,603		1		—		—
Corporate bonds		24,485		61		—		—
Total	$	59,714	$	81	$	—	$	—
December 26, 2020
Municipal notes and bonds	$	8,641	$	4	$	—	$	—
Commercial paper		8,862		3		—		—
Corporate bonds		14,947		12		—		—
Total	$	32,450	$	19	$	—	$	—

See Note 3 for additional discussion regarding the fair value of the Company’s marketable securities.

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Derivative Instruments and Hedging Activities

6 Months Ended

Jun. 26, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Derivative Instruments and Hedging Activities

NOTE 5. Derivative Instruments and Hedging Activities

The Company, when it considers it to be appropriate, enters into forward contracts to hedge the economic exposures arising from foreign currency denominated transactions. At June 26, 2021 and December 26, 2020, these contracts included the

future sale of British pound sterling, euro, Israeli shekel, Japanese yen, Korean won, Singapore dollar, Taiwanese dollar, and Chinese renminbi to purchase U.S. dollars.  Foreign currency forward contracts are not designated as hedges for accounting purposes and therefore, the change in fair value is recorded in “Other expense, net,” in the Condensed Consolidated Statements of Operations.  The Company records its forward contracts at fair value in either prepaid expenses and other current assets or other current liabilities in the Condensed Consolidated Balance Sheets.

The dollar equivalent of the U.S. dollar forward contracts and related fair values as of June 26, 2021 and December 26, 2020 were as follows:

	June 26, 2021		December 26, 2020
Notional amount	$	11,397	$	37,580
Fair value of asset (liability)	$	27	$	(36	)

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Goodwill and Purchased Intangible Assets

6 Months Ended

Jun. 26, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Goodwill and Purchased Intangible Assets

NOTE 6. Goodwill and Purchased Intangible Assets

Goodwill

The changes in the carrying amount of goodwill are as follows:

Balance at December 26, 2020	$	306,632
Goodwill acquired during the period (Note 2)		7,259
Balance at June 26, 2021	$	313,891

Intangible Assets

Purchased intangible assets as of June 26, 2021 and December 26, 2020 are as follows:

	Gross Carrying Amount		Accumulated Amortization		Net
June 26, 2021
Finite-lived intangibles:
Developed technology	$	331,747	$	132,270	$	199,477
Customer and distributor relationships		74,701		23,267		51,434
Trademarks and trade names		14,361		5,986		8,375
Total finite-lived intangible assets		420,809		161,523		259,286
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	467,409	$	161,523	$	305,886
December 26, 2020
Finite-lived intangibles:
Developed technology	$	326,877	$	110,851	$	216,026
Customer and distributor relationships		69,261		20,654		48,607
Trademarks and trade names		12,461		5,337		7,124
Total finite-lived intangible assets		408,599		136,842		271,757
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	455,199	$	136,842	$	318,357

Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, future estimated amortization expenses are:

	Expected Amortization
Fiscal Year:	Expense
2021 (remainder)	$	24,548
2022		48,830
2023		48,355
2024		42,669
2025		26,119
2026		24,926
Thereafter		43,839
Total	$	259,286

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Balance Sheet Details

6 Months Ended

Jun. 26, 2021

Balance Sheet Detail [Abstract]

Balance Sheet Details

NOTE 7. Balance Sheet Details

Inventories

Inventories, net are comprised of the following:

	June 26, 2021		December 26, 2020
Materials	$	128,389	$	124,926
Work-in-process		54,706		44,829
Finished goods		23,886		21,462
Total inventories, net	$	206,981	$	191,217

Property, Plant and Equipment

Property, plant and equipment, net is comprised of the following:

	June 26, 2021			December 26, 2020
Machinery and equipment	$	57,061		$	52,833
Land and building		48,188			47,544
Computer equipment and software		15,651			15,549
Leasehold improvements		13,759			12,927
Furniture and fixtures		3,985			4,013
		138,644			132,866
Accumulated depreciation and amortization		(50,629	)		(44,916	)
Total property, plant and equipment, net	$	88,015		$	87,950

Other assets

Other assets is comprised of the following:

	June 26, 2021		December 26, 2020
Operating lease right-of-use assets	$	20,449	$	19,669
Other		4,360		1,668
Total other assets	$	24,809	$	21,337

Accrued liabilities

Accrued liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Payroll and related expenses	$	32,026	$	30,270
Warranty		7,611		6,062
Other		1,320		743
Total accrued liabilities	$	40,957	$	37,075

Other current liabilities

Other current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Customer deposits	$	10,949	$	15,177
Current operating lease obligations		5,121		4,470
Income tax payable		1,076		4,109
Accrued professional fees		1,259		1,184
Other		5,931		3,559
Total other current liabilities	$	24,336	$	28,499

Other non-current liabilities

Other non-current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Non-current operating lease obligations	$	16,365	$	16,455
Unrecognized tax benefits (including interest)		2,765		3,812
Deferred revenue		1,716		1,292
Other		7,049		6,153
Total other non-current liabilities	$	27,895	$	27,712

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Commitments and Contingencies

6 Months Ended

Jun. 26, 2021

Commitments And Contingencies Disclosure [Abstract]

Commitments and Contingencies

NOTE 8. Commitments and Contingencies

Factoring

The Company maintains arrangements under which eligible accounts receivable in Japan are sold without recourse to unrelated third-party financial institutions. The Company sold $6,226 of receivables during the six months ended June 26, 2021. These receivables were not included in the condensed consolidated balance sheets as the criteria for sale treatment had been met. There were no material gains or losses on the sale of such receivables. There were no amounts due from such third-party financial institutions at June 26, 2021.

Intellectual Property Indemnification Obligations

The Company has entered into agreements with customers that include limited intellectual property indemnification obligations that are customary in the industry. These guarantees generally require the Company to compensate the other party for certain damages and costs incurred as a result of third-party intellectual property claims arising from these transactions. The nature of the intellectual property indemnification obligations prevents the Company from making a reasonable estimate of the maximum potential amount it could be required to pay to its customers. Historically, the Company has not made any indemnification payments under such agreements, and no amount has been accrued in the accompanying consolidated financial statements with respect to these indemnification guarantees.

Warranty Reserves

The Company generally provides a warranty on its products for a period of 12 to 14 months against defects in material and workmanship. The Company estimates the costs that may be incurred during the warranty period and records a liability in the amount of such costs at the time revenue is recognized. The Company’s estimate is based primarily on historical experience. The Company periodically assesses the adequacy of its recorded warranty liabilities and adjusts the amounts as necessary. Settlements of warranty reserves are generally associated with sales that occurred during the 12 to 14 months prior to the period-end and warranty accruals are related to sales during the same year.

Changes in the Company’s warranty reserves are as follows:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Balance, beginning of the period	$	6,485		$	6,348
Accruals		3,560			2,794
Warranty liability assumed in acquisition		407			—
Usage		(2,229	)		(2,327	)
Balance, end of the period	$	8,223		$	6,815

Warranty reserves are reported in the Condensed Consolidated Balance Sheets under the captions “Accrued liabilities” and “Other non-current liabilities.”

Legal Matters

From time to time, the Company is subject to legal proceedings and claims in the ordinary course of business. The following reflects an overview of the material developments with regard to the Company’s pending material legal proceedings.

Optical Solutions Inc. v. Nanometrics Incorporated (Case No. 18-cv-00417-BLF): On August 2, 2017, Nanometrics was named as defendant in a complaint filed in New Hampshire Superior Court (the “Complaint”). The Complaint, brought by Optical Solutions, Inc. (“OSI”), alleges claims arising from a purported exclusive purchase contract between OSI and Nanometrics pertaining to certain products. The relief sought is the award of damages in an amount to be proven at trial, attorney’s fees and cost as well as other relief the court deems just and proper. On September 18, 2017, Nanometrics removed the action to the United States District Court for the District of New Hampshire (the “District of New Hampshire”). On September 25, 2017, Nanometrics moved to transfer the Complaint to the United States District Court for the Northern District of California (the “Northern District of California”). On December 20, 2017, Nanometrics filed its complaint against OSI in the California Superior Court for the County of Santa Clara alleging claims arising from OSI’s breach of certain purchase orders. The relief sought is the award of damages in an amount to be proven at trial including pre- and post-judgment interest, punitive damages, restitution for benefits unjustly received by OSI, attorney’s fees and cost as well as other relief the court deems just and proper.  Nanometrics’ complaint was later removed by OSI to the Northern District of California. On May 29, 2018, the District of New Hampshire issued an order granting Nanometrics’ motion to transfer the Complaint to the Northern District of California and denying Nanometrics’ motion to dismiss the Complaint without prejudice. On June 14, 2018, the Complaint was consolidated with Nanometrics’ complaint against OSI. On August 9, 2018, OSI filed an Amended Complaint. On September 19, 2018, Nanometrics filed a motion to dismiss OSI’s Amended Complaint for failure to state a claim. Nanometrics’ motion to dismiss was heard on February 28, 2019. On March 5, 2019, the Northern District of California granted Nanometrics’ motion to dismiss with leave to amend. OSI filed a Second Amended Complaint on March 29, 2019. Nanometrics filed a motion to dismiss OSI’s Second Amended Complaint on May 31, 2019. In October 2019, Nanometrics was renamed Onto Innovation Inc. as a result of the Merger. Thereafter, the Company’s second motion to dismiss was heard on November 14, 2019. On November 26, 2019, the Northern District of California granted the Company’s motion to dismiss with leave to amend. OSI filed a Third Amended Complaint on January 21, 2020. On March 2, 2020, the Company filed a motion to dismiss OSI’s Third Amended Complaint and a hearing on the motion was held on June 11, 2020. On June 23, 2020, the Northern District of California granted the Company’s motion to dismiss with prejudice with regard to two claims asserted by OSI and dismissed two other claims asserted by OSI with leave to amend. Thereafter, on July 7, 2020, OSI filed a Fourth Amended Complaint. On August 14, 2020, the Company filed a motion to dismiss with regard to one of the two remaining claims. On December 1, 2020, the Northern District of California denied this final motion to dismiss and as a result the Company filed its Answer in this matter on December 22, 2020. This matter is currently in discovery. The Northern District of California granted a joint stipulation that discovery cutoff is September 3, 2022 and the trial date is set for December 4, 2023. At this time, the loss contingency in this matter is remote and the Company does not anticipate the outcome of the matter to have a material impact on its financial position, results of operations, or cash flows.

Line of Credit

The Company has a credit agreement with a bank that provides for a line of credit which is secured by the marketable securities the Company has with the bank.  The Company is permitted to borrow up to 70% of the value of eligible securities held at the time the line of credit is accessed.  The available line of credit as of June 26, 2021 was approximately $99.4 million with an available interest rate of 1.8%.  The credit agreement is available to the Company until such time that either party terminates the arrangement at their discretion.  The Company has not utilized the line of credit to date.

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Revenue

6 Months Ended

Jun. 26, 2021

Revenue From Contract With Customer [Abstract]

Revenue

NOTE 9. Revenue

The following table represents a disaggregation of revenue by timing of revenue:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Point-in-time	$	182,133	$	131,796	$	343,294	$	265,541
Over-time		11,254		3,152		19,372		9,335
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

See Note 15 for additional discussion of the Company’s disaggregated revenue in detail.

Contract Liabilities

The Company records contract liabilities when the customer has been billed in advance of the Company completing its performance obligations. These amounts are recorded as deferred revenue in the Condensed Consolidated Balance Sheets.  

Changes in deferred revenue were as follows:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Balance, beginning of the period	$	22,429		$	18,032		$	15,626		$	15,093
Deferred revenue assumed in acquisition		—			—			386			—
Deferral of revenue		15,117			8,818			34,348			23,252
Recognition of deferred revenue		(14,640	)		(8,956	)		(27,454	)		(20,451	)
Balance, end of the period	$	22,906		$	17,894		$	22,906		$	17,894

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Share-Based Compensation

6 Months Ended

Jun. 26, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Share-Based Compensation

NOTE 10. Share-Based Compensation

Restricted Stock Unit Activity

A summary of the Company’s restricted stock unit activity with respect to the six months ended June 26, 2021 is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at December 26, 2020		964		$	31.37
Granted		285		$	69.47
Vested		(404	)	$	30.74
Forfeited		(46	)	$	37.61
Nonvested at June 26, 2021		799		$	45.67

As of June 26, 2021 and December 26, 2020, there was $27,391 and $19,135 of total unrecognized compensation cost related to restricted stock units granted under the Company’s stock plans, respectively.  That cost is expected to be recognized over a weighted average period of 1.8 years and 1.7 years for June 26, 2021 and December 26, 2020, respectively.

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Other Expense, Net

6 Months Ended

Jun. 26, 2021

Other Income Expense [Abstract]

Other Expense, Net

NOTE 11. Other Expense, Net

Other expense, net, is comprised of the following:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Foreign currency exchange losses, net	$	(328	)	$	(1,271	)	$	(1,599	)	$	(1,305	)
Other		39			73			66			139
Total other expense, net	$	(289	)	$	(1,198	)	$	(1,533	)	$	(1,166	)

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Income Taxes

6 Months Ended

Jun. 26, 2021

Income Tax Disclosure [Abstract]

Income Taxes

NOTE 12. Income Taxes

The following table provides details of income taxes:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Income before income taxes	$	35,956		$	7,418		$	62,558		$	3,414
Provision (benefit) for income taxes	$	905		$	(6	)	$	3,394		$	394
Effective tax rate		3	%		0	%		5	%		12	%

The income tax provision for the three and six months ended June 26, 2021 was computed based on the Company’s annual forecast of profit by jurisdiction and forecasted effective tax rate for the year.  The increase in the Company’s income tax provision for the three and six months ended June 26, 2021 as compared to the three and six months ended June 27, 2020 is primarily due to an increase in quarterly earnings, offset by (i) an increase in the Foreign Derived Intangible Income (“FDII”) deduction, (ii) an increase in the excess tax benefit associated with equity compensation, and (iii) a release of reserves due to expiration of the applicable statute of limitations.  The Company’s recorded effective tax rate is less than the U.S. statutory rate primarily due to projected FDII deductions and federal research and development tax credits.

The Company currently has a partial valuation allowance recorded against certain foreign and state net operating loss and credit carryforwards where the realizability of such deferred tax assets is substantially in doubt.  Each quarter, the Company assesses the likelihood that it will be able to recover its deferred tax assets. The Company considers available evidence, both positive and negative, including forecasted earnings in assessing its need for a valuation allowance.  As a result of the Company’s analysis, it concluded that it is more likely than not that a portion of its deferred tax assets will not be realized. Therefore, the Company continues to provide a valuation allowance against certain deferred tax assets.  The Company continues to monitor available evidence and may reverse some or all of its remaining valuation allowance in future periods, if appropriate.  The Company has a recorded valuation allowance against a certain portion of its deferred tax assets of $14,254 and $14,238 as of June 26, 2021 and December 26, 2020, respectively.

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Earnings Per Share

6 Months Ended

Jun. 26, 2021

Earnings Per Share [Abstract]

Earnings Per Share

NOTE 13. Earnings Per Share

Basic earnings per share is calculated using the weighted average number of shares of common stock outstanding during the period. Restricted stock units, employee stock purchase grants and stock options are included in the calculation of diluted earnings per share, except when their effect would be anti-dilutive.

The Company’s basic and diluted earnings per share amounts are as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Numerator:
Net income	$	35,051	$	7,424	$	59,164	$	3,020
Denominator:
Basic earnings per share - weighted average shares    outstanding		49,193		48,736		49,105		49,417
Effect of potential dilutive securities:
Employee stock options, employee stock purchase grants and    restricted stock units - dilutive shares		508		278		540		365
Diluted earnings per share - weighted average shares    outstanding		49,701		49,014		49,645		49,782
Earnings per share:
Basic	$	0.71	$	0.15	$	1.20	$	0.06
Diluted	$	0.71	$	0.15	$	1.19	$	0.06

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Accumulated Other Comprehensive Income

6 Months Ended

Jun. 26, 2021

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Accumulated Other Comprehensive Income

NOTE 14. Accumulated Other Comprehensive Income

The components of accumulated other comprehensive income, net of tax, at June 26, 2021, as well as the activity for the six months ended June 26, 2021, were as follows:

	Foreign currency translation adjustments			Net unrealized gains (losses) on available-for-sale marketable securities			Accumulated other comprehensive income
Balance at December 26, 2020	$	4,479		$	89		$	4,568
Net current period other comprehensive loss		(1,362	)		(698	)		(2,060	)
Reclassifications		—			—			—
Balance at June 26, 2021	$	3,117		$	(609	)	$	2,508

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Segment Reporting and Geographic Information

6 Months Ended

Jun. 26, 2021

Segment Reporting [Abstract]

Segment Reporting and Geographic Information

NOTE 15. Segment Reporting and Geographic Information

The Company is engaged in the design, development, manufacture and support of high-performance control metrology, defect inspection, lithography and data analysis systems used by microelectronics device manufacturers. The Company and its subsidiaries currently operate in a single operating segment: the design, development, manufacture and support of high-performance process control defect inspection and metrology, lithography and process control software systems used by microelectronics device manufacturers. Therefore, the Company has one reportable segment. The Company’s chief operating decision maker is the Chief Executive Officer (the “CEO”). The CEO allocates resources and assesses performance of the business and other activities at the reportable segment level.

The following table lists the different sources of revenue:

	Three Months Ended								Six Months Ended
	June 26,				June 27,				June 26,				June 27,
	2021				2020				2021				2020
Systems and software	$	162,898	84	%	$	108,247	80	%	$	304,407	84	%	$	222,577	81	%
Parts		18,697	10	%		16,329	12	%		36,115	10	%		29,904	11	%
Services		11,792	6	%		10,372	8	%		22,144	6	%		22,395	8	%
Total revenue	$	193,387	100	%	$	134,948	100	%	$	362,666	100	%	$	274,876	100	%

The Company’s significant operations outside the United States include sales, service and application offices in Asia and Europe.  For geographical revenue reporting, revenue is attributed to the geographic location to which the product is shipped.  Revenue by geographic region is as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Revenue from third parties:
South Korea	$	41,299	$	22,964	$	91,828	$	43,721
Taiwan		48,501		31,997		84,793		67,178
China		42,274		27,001		68,053		58,384
United States		25,700		22,378		51,180		42,026
Europe		14,446		10,089		31,832		25,158
Japan		17,386		13,908		25,251		28,935
Southeast Asia		3,781		6,611		9,729		9,474
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

The following customers accounted for 10% or more of total revenue for the indicated periods:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Samsung Semiconductor		22	%		18	%
Taiwan Semiconductor Manufacturing Co. Ltd.		16	%		17	%

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Share Repurchase Authorization

6 Months Ended

Jun. 26, 2021

Share Repurchase Program [Abstract]

Share Repurchase Authorization

NOTE 16. Share Repurchase Authorization

In November 2020, the Onto Innovation Board of Directors approved a new share repurchase authorization, which allows the Company to repurchase up to $100,000 worth of shares of its common stock.  Repurchases may be made through both public market and private transactions from time to time with shares purchased being subsequently retired. At June 26, 2021, there was $100,000 available for future share repurchases under this share repurchase authorization.

The following table summarizes the Company’s share repurchases for the periods indicated:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Shares of common stock repurchased		—		632		—		1,882
Cost of shares repurchased	$	—	$	18,385	$	—	$	52,000
Average price paid per share	$	—	$	29.08	$	—	$	27.62

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Basis of Presentation (Policies)

6 Months Ended

Jun. 26, 2021

Organization Consolidation And Presentation Of Financial Statements [Abstract]

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Significant estimates made by management that are evaluated on an ongoing basis include the allowances for credit losses, excess and obsolete inventory, fair value of assets acquired and liabilities assumed in a business combination, recoverability and useful lives of property, plant and equipment and identifiable intangible assets, recoverability of goodwill, recoverability of deferred tax assets, liabilities for product warranty and contingencies, including litigation reserves, share-based payments and liabilities for tax uncertainties. Actual results could differ from those estimates.

These estimates and assumptions are based on historical experience and on various other factors which the Company believes to be reasonable under the circumstances. The Company may engage third-party valuation specialists to assist with estimates related to the valuation of financial instruments, fair value of assets acquired and liabilities assumed in a business combination and stock awards. Such estimates often require the selection of appropriate valuation methodologies and significant judgment. Actual results could differ from these estimates under different assumptions or circumstances and such differences could be material.

The Company also assessed the impacts of COVID-19 on the above accounting matters as of June 26, 2021 and through the date of this report. While there was not a material impact as of and for the quarter ended June 26, 2021 and through the date of this report, future actual magnitude and duration of the COVID-19 pandemic, as well as other associated factors, could result in material negative impacts to the Company’s condensed consolidated financial statements in future reporting periods.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Recently Adopted

Effective December 27, 2020, the Company adopted Accounting Standards Update (“ASU”) No. 2019-12, “Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes.” This standard simplified the accounting for income taxes by eliminating certain exceptions to the guidance in Topic 740 related to the approach for intraperiod tax allocation, the methodology for calculating income taxes in an interim period and the recognition of deferred tax liabilities for outside basis differences. The new guidance also simplified aspects of the accounting for franchise taxes and enacted changes in tax laws or rates and clarified the accounting for transactions that resulted in a step-up in the tax basis of goodwill and allocating consolidated income taxes to separate financial statements of entities not subject to income tax. The adoption of ASU No.

2019-12 did not have a significant impact on the Company’s consolidated financial position, results of operations, and cash flows.

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Business Combination (Tables)

6 Months Ended

Jun. 26, 2021

Business Combinations [Abstract]

Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed

The following table summarizes the preliminary fair values of assets acquired and liabilities assumed at the date of acquisition:

Cash and cash equivalents	$	220
Account receivables		4,071
Inventories		2,587
Prepaid expenses and other current assets		104
Property, plant and equipment		86
Identifiable intangible assets		12,210
Other assets		3,000
Total assets acquired		22,278
Accounts payable		(1,048	)
Payroll and related expenses		(512	)
Deferred revenue		(386	)
Other current liabilities		(576	)
Net assets acquired		19,756
Goodwill		7,259
Total purchase consideration	$	27,015

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Fair Value Measurements - (Tables)

6 Months Ended

Jun. 26, 2021

Fair Value Disclosures [Abstract]

Schedule of Assets and Liabilities Carried at Fair Value Measured on a Recurring Basis

The following tables provide the assets and liabilities carried at fair value measured on a recurring basis at June 26, 2021 and December 26, 2020:

			Fair Value Measurements Using
	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
June 26, 2021
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	142,931	$	—	$	142,931	$	—
Asset-backed securities		4,094		—		4,094		—
Certificates of deposit		44,021		—		44,021		—
Commercial paper		50,979		—		50,979		—
Corporate bonds		34,596		—		34,596		—
Foreign currency forward contracts		27		—		27		—
Total assets	$	276,648	$	—	$	276,648	$	—
December 26, 2020
Assets:
Available-for-sale debt securities:
Municipal notes and bonds	$	124,640	$	—	$	124,640	$	—
Asset-backed securities		11,708		—		11,708		—
Certificates of deposit		36,373		—		36,373		—
Commercial paper		32,699		—		32,699		—
Corporate bonds		31,582		—		31,582		—
Total assets	$	237,002	$	—	$	237,002	$	—
Liabilities:
Foreign currency forward contracts		36		—		36		—
Total liabilities	$	36	$	—	$	36	$	—

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Marketable Securities - (Tables)

6 Months Ended

Jun. 26, 2021

Marketable Securities [Abstract]

Schedule of Marketable Securities by Category

At June 26, 2021 and December 26, 2020, marketable securities are categorized as follows:

	Amortized Cost		Gross Unrealized Holding Gains		Gross Unrealized Holding Losses		Fair Value
June 26, 2021
Municipal notes and bonds	$	142,821	$	128	$	19	$	142,930
Asset-backed securities		4,090		4		—		4,094
Certificates of deposit		44,003		19		1		44,021
Commercial paper		50,961		19		—		50,980
Corporate bonds		34,651		6		61		34,596
Total marketable securities	$	276,526	$	176	$	81	$	276,621
December 26, 2020
Municipal notes and bonds	$	124,387	$	257	$	4	$	124,640
Asset-backed securities		11,679		29		—		11,708
Certificates of deposit		36,349		24		—		36,373
Commercial paper		32,690		12		3		32,699
Corporate bonds		31,544		50		12		31,582
Total marketable securities	$	236,649	$	372	$	19	$	237,002

Schedule of Amortized Cost and Estimated Fair Value of Marketable Securities Classified by Maturity Date

The amortized cost and estimated fair value of marketable securities classified by the maturity date listed on the security, regardless of the Condensed Consolidated Balance Sheets classification, is as follows at June 26, 2021 and December 26, 2020:

	June 26, 2021				December 26, 2020
	Amortized Cost		Fair Value		Amortized Cost		Fair Value
Due within one year	$	195,632	$	195,733	$	170,099	$	170,321
Due after one through five years		80,894		80,888		66,550		66,681
Due after five through ten years		—		—		—		—
Due after ten years		—		—		—		—
Total marketable securities	$	276,526	$	276,621	$	236,649	$	237,002

Summary of Estimated Fair Value and Gross Unrealized Holding Losses of Marketable Securities in Unrealized Loss Position

The following table summarizes the estimated fair value and gross unrealized holding losses of marketable securities, aggregated by investment instrument and period of time in an unrealized loss position, at June 26, 2021 and December 26, 2020:

	In Unrealized Loss Position For Less Than 12 Months				In Unrealized Loss Position For Greater Than 12 Months
	Fair Value		Gross Unrealized Losses		Fair Value		Gross Unrealized Losses
June 26, 2021
Municipal notes and bonds	$	30,626	$	19	$	—	$	—
Certificate of deposit		4,603		1		—		—
Corporate bonds		24,485		61		—		—
Total	$	59,714	$	81	$	—	$	—
December 26, 2020
Municipal notes and bonds	$	8,641	$	4	$	—	$	—
Commercial paper		8,862		3		—		—
Corporate bonds		14,947		12		—		—
Total	$	32,450	$	19	$	—	$	—

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Derivative Instruments and Hedging Activities (Tables)

6 Months Ended

Jun. 26, 2021

Derivative Instruments And Hedging Activities Disclosure [Abstract]

Forward Contracts and Related Fair Values

The dollar equivalent of the U.S. dollar forward contracts and related fair values as of June 26, 2021 and December 26, 2020 were as follows:

	June 26, 2021		December 26, 2020
Notional amount	$	11,397	$	37,580
Fair value of asset (liability)	$	27	$	(36	)

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Goodwill and Purchased Intangible Assets (Tables)

6 Months Ended

Jun. 26, 2021

Goodwill And Intangible Assets Disclosure [Abstract]

Changes in the Carrying Amount of Goodwill

The changes in the carrying amount of goodwill are as follows:

Balance at December 26, 2020	$	306,632
Goodwill acquired during the period (Note 2)		7,259
Balance at June 26, 2021	$	313,891

Schedule of Purchased Intangible Assets

Intangible Assets

Purchased intangible assets as of June 26, 2021 and December 26, 2020 are as follows:

	Gross Carrying Amount		Accumulated Amortization		Net
June 26, 2021
Finite-lived intangibles:
Developed technology	$	331,747	$	132,270	$	199,477
Customer and distributor relationships		74,701		23,267		51,434
Trademarks and trade names		14,361		5,986		8,375
Total finite-lived intangible assets		420,809		161,523		259,286
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	467,409	$	161,523	$	305,886
December 26, 2020
Finite-lived intangibles:
Developed technology	$	326,877	$	110,851	$	216,026
Customer and distributor relationships		69,261		20,654		48,607
Trademarks and trade names		12,461		5,337		7,124
Total finite-lived intangible assets		408,599		136,842		271,757
In-process research and development		46,600		—		46,600
Total identifiable intangible assets	$	455,199	$	136,842	$	318,357

Schedule of Estimated Future Amortization Expenses

Assuming no change in the gross carrying value of identifiable intangible assets and estimated lives, future estimated amortization expenses are:

	Expected Amortization
Fiscal Year:	Expense
2021 (remainder)	$	24,548
2022		48,830
2023		48,355
2024		42,669
2025		26,119
2026		24,926
Thereafter		43,839
Total	$	259,286

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Balance Sheet Details (Tables)

6 Months Ended

Jun. 26, 2021

Balance Sheet Detail [Abstract]

Schedule of Inventories

Inventories, net are comprised of the following:

	June 26, 2021		December 26, 2020
Materials	$	128,389	$	124,926
Work-in-process		54,706		44,829
Finished goods		23,886		21,462
Total inventories, net	$	206,981	$	191,217

Schedule of Property, Plant and Equipment, Net

Property, plant and equipment, net is comprised of the following:

	June 26, 2021			December 26, 2020
Machinery and equipment	$	57,061		$	52,833
Land and building		48,188			47,544
Computer equipment and software		15,651			15,549
Leasehold improvements		13,759			12,927
Furniture and fixtures		3,985			4,013
		138,644			132,866
Accumulated depreciation and amortization		(50,629	)		(44,916	)
Total property, plant and equipment, net	$	88,015		$	87,950

Schedule of Other Assets

Other assets is comprised of the following:

	June 26, 2021		December 26, 2020
Operating lease right-of-use assets	$	20,449	$	19,669
Other		4,360		1,668
Total other assets	$	24,809	$	21,337

Schedule of Accrued Liabilities

Accrued liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Payroll and related expenses	$	32,026	$	30,270
Warranty		7,611		6,062
Other		1,320		743
Total accrued liabilities	$	40,957	$	37,075

Schedule of Other Current Liabilities

Other current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Customer deposits	$	10,949	$	15,177
Current operating lease obligations		5,121		4,470
Income tax payable		1,076		4,109
Accrued professional fees		1,259		1,184
Other		5,931		3,559
Total other current liabilities	$	24,336	$	28,499

Schedule of Other Non-Current Liabilities

Other non-current liabilities is comprised of the following:

	June 26, 2021		December 26, 2020
Non-current operating lease obligations	$	16,365	$	16,455
Unrecognized tax benefits (including interest)		2,765		3,812
Deferred revenue		1,716		1,292
Other		7,049		6,153
Total other non-current liabilities	$	27,895	$	27,712

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 26, 2021

Commitments And Contingencies Disclosure [Abstract]

Schedule of Changes in Warranty Reserves

Changes in the Company’s warranty reserves are as follows:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Balance, beginning of the period	$	6,485		$	6,348
Accruals		3,560			2,794
Warranty liability assumed in acquisition		407			—
Usage		(2,229	)		(2,327	)
Balance, end of the period	$	8,223		$	6,815

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Revenue (Tables)

6 Months Ended

Jun. 26, 2021

Revenue From Contract With Customer [Abstract]

Schedule of Disaggregation of Revenue

The following table represents a disaggregation of revenue by timing of revenue:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Point-in-time	$	182,133	$	131,796	$	343,294	$	265,541
Over-time		11,254		3,152		19,372		9,335
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

Schedule of Changes in Deferred Revenue

Changes in deferred revenue were as follows:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Balance, beginning of the period	$	22,429		$	18,032		$	15,626		$	15,093
Deferred revenue assumed in acquisition		—			—			386			—
Deferral of revenue		15,117			8,818			34,348			23,252
Recognition of deferred revenue		(14,640	)		(8,956	)		(27,454	)		(20,451	)
Balance, end of the period	$	22,906		$	17,894		$	22,906		$	17,894

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Share-Based Compensation - (Tables)

6 Months Ended

Jun. 26, 2021

Disclosure Of Compensation Related Costs Sharebased Payments [Abstract]

Summary of Restricted Stock Unit Activity

A summary of the Company’s restricted stock unit activity with respect to the six months ended June 26, 2021 is as follows:

	Number of Shares			Weighted Average Grant Date Fair Value
Nonvested at December 26, 2020		964		$	31.37
Granted		285		$	69.47
Vested		(404	)	$	30.74
Forfeited		(46	)	$	37.61
Nonvested at June 26, 2021		799		$	45.67

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Other Expense, Net (Tables)

6 Months Ended

Jun. 26, 2021

Other Income Expense [Abstract]

Schedule of Other Expense, Net

Other expense, net, is comprised of the following:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Foreign currency exchange losses, net	$	(328	)	$	(1,271	)	$	(1,599	)	$	(1,305	)
Other		39			73			66			139
Total other expense, net	$	(289	)	$	(1,198	)	$	(1,533	)	$	(1,166	)

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Income Taxes - (Tables)

6 Months Ended

Jun. 26, 2021

Income Tax Disclosure [Abstract]

Details of Income Tax

The following table provides details of income taxes:

	Three Months Ended						Six Months Ended
	June 26,			June 27,			June 26,			June 27,
	2021			2020			2021			2020
Income before income taxes	$	35,956		$	7,418		$	62,558		$	3,414
Provision (benefit) for income taxes	$	905		$	(6	)	$	3,394		$	394
Effective tax rate		3	%		0	%		5	%		12	%

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Earnings Per Share (Tables)

6 Months Ended

Jun. 26, 2021

Earnings Per Share [Abstract]

Schedule of Basic and Diluted Earnings Per Share

The Company’s basic and diluted earnings per share amounts are as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Numerator:
Net income	$	35,051	$	7,424	$	59,164	$	3,020
Denominator:
Basic earnings per share - weighted average shares    outstanding		49,193		48,736		49,105		49,417
Effect of potential dilutive securities:
Employee stock options, employee stock purchase grants and    restricted stock units - dilutive shares		508		278		540		365
Diluted earnings per share - weighted average shares    outstanding		49,701		49,014		49,645		49,782
Earnings per share:
Basic	$	0.71	$	0.15	$	1.20	$	0.06
Diluted	$	0.71	$	0.15	$	1.19	$	0.06

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Accumulated Other Comprehensive Income (Tables)

6 Months Ended

Jun. 26, 2021

Accumulated Other Comprehensive Income Loss Net Of Tax [Abstract]

Components of Accumulated Other Comprehensive Income, Net of Tax

The components of accumulated other comprehensive income, net of tax, at June 26, 2021, as well as the activity for the six months ended June 26, 2021, were as follows:

	Foreign currency translation adjustments			Net unrealized gains (losses) on available-for-sale marketable securities			Accumulated other comprehensive income
Balance at December 26, 2020	$	4,479		$	89		$	4,568
Net current period other comprehensive loss		(1,362	)		(698	)		(2,060	)
Reclassifications		—			—			—
Balance at June 26, 2021	$	3,117		$	(609	)	$	2,508

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Segment Reporting and Geographic Information - (Tables)

6 Months Ended

Jun. 26, 2021

Segment Reporting [Abstract]

Schedule of Revenue from External Customers by Products and Services

The following table lists the different sources of revenue:

	Three Months Ended								Six Months Ended
	June 26,				June 27,				June 26,				June 27,
	2021				2020				2021				2020
Systems and software	$	162,898	84	%	$	108,247	80	%	$	304,407	84	%	$	222,577	81	%
Parts		18,697	10	%		16,329	12	%		36,115	10	%		29,904	11	%
Services		11,792	6	%		10,372	8	%		22,144	6	%		22,395	8	%
Total revenue	$	193,387	100	%	$	134,948	100	%	$	362,666	100	%	$	274,876	100	%

Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area

For geographical revenue reporting, revenue is attributed to the geographic location to which the product is shipped.  Revenue by geographic region is as follows:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Revenue from third parties:
South Korea	$	41,299	$	22,964	$	91,828	$	43,721
Taiwan		48,501		31,997		84,793		67,178
China		42,274		27,001		68,053		58,384
United States		25,700		22,378		51,180		42,026
Europe		14,446		10,089		31,832		25,158
Japan		17,386		13,908		25,251		28,935
Southeast Asia		3,781		6,611		9,729		9,474
Total revenue	$	193,387	$	134,948	$	362,666	$	274,876

Schedule of Revenue by Major Customer by Reporting Segments

The following customers accounted for 10% or more of total revenue for the indicated periods:

	Six Months Ended
	June 26,			June 27,
	2021			2020
Samsung Semiconductor		22	%		18	%
Taiwan Semiconductor Manufacturing Co. Ltd.		16	%		17	%

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Share Repurchase Authorization (Tables)

6 Months Ended

Jun. 26, 2021

Share Repurchase Program [Abstract]

Summary of Share Repurchases

The following table summarizes the Company’s share repurchases for the periods indicated:

	Three Months Ended				Six Months Ended
	June 26,		June 27,		June 26,		June 27,
	2021		2020		2021		2020
Shares of common stock repurchased		—		632		—		1,882
Cost of shares repurchased	$	—	$	18,385	$	—	$	52,000
Average price paid per share	$	—	$	29.08	$	—	$	27.62

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Business Combination - Textual (Details) - Inspectrology, LLC [Member] - USD ($) $ in Thousands		6 Months Ended
	Dec. 31, 2020	Jun. 26, 2021
Business Acquisition [Line Items]
Business acquisition, date of acquisition	Dec. 31, 2020
Business acquisition, cash consideration	$ 27,015
Business combination potential earnout payment	$ 10,000
Minimum [Member]
Business Acquisition [Line Items]
Business combination potential earnout subject to principal remaining period		1 year
Maximum [Member]
Business Acquisition [Line Items]
Business combination potential earnout subject to principal remaining period		3 years

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Business Combination - Summary of Preliminary Fair Values of Assets Acquired and Liabilities Assumed (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Mar. 27, 2021	Dec. 31, 2020	Dec. 26, 2020
Business Acquisition [Line Items]
Goodwill	$ 313,891	$ 313,891		$ 306,632
Inspectrology, LLC [Member]
Business Acquisition [Line Items]
Cash and cash equivalents			$ 220
Account receivables			4,071
Inventories			2,587
Prepaid expenses and other current assets			104
Property, plant and equipment			86
Identifiable intangible assets			12,210
Other assets			3,000
Total assets acquired			22,278
Accounts payable			(1,048)
Payroll and related expenses			(512)
Deferred revenue			(386)
Other current liabilities			(576)
Net assets acquired			19,756
Goodwill			7,259
Total purchase consideration			$ 27,015

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Fair Value Measurements - Assets and Liabilities Carried at Fair Value Measured on a Recurring Basis (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	$ 276,621	$ 237,002
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Foreign currency forward contracts	27
Total assets	276,648	237,002
Foreign currency forward contracts		36
Total liabilities		36
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member] | Municipal notes and bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	142,931	124,640
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	4,094	11,708
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	44,021	36,373
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	50,979	32,699
Carrying Value [Member] | Fair Value, Measurements, Recurring [Member] | Corporate bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	34,596	31,582
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Foreign currency forward contracts	0
Total assets	0	0
Foreign currency forward contracts		0
Total liabilities		0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Municipal notes and bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Quoted Prices in Active Markets for Identical Assets (Level 1) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Foreign currency forward contracts	27
Total assets	276,648	237,002
Foreign currency forward contracts		36
Total liabilities		36
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Municipal notes and bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	142,931	124,640
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	4,094	11,708
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	44,021	36,373
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	50,979	32,699
Significant Other Observable Inputs (Level 2) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	34,596	31,582
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Foreign currency forward contracts	0
Total assets	0	0
Foreign currency forward contracts		0
Total liabilities		0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Municipal notes and bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Asset-backed securities [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Certificates of deposits [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Commercial paper [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	0	0
Significant Unobservable Inputs (Level 3) [Member] | Fair Value, Measurements, Recurring [Member] | Corporate bonds [Member]
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items]
Available-for-sale debt securities	$ 0	$ 0

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Marketable Securities - Schedule of Marketable Securities by Category (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	$ 276,526	$ 236,649
Gross Unrealized Holding Gains	176	372
Gross Unrealized Holding Losses	81	19
Fair Value	276,621	237,002
Municipal notes and bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	142,821	124,387
Gross Unrealized Holding Gains	128	257
Gross Unrealized Holding Losses	19	4
Fair Value	142,930	124,640
Asset-backed securities [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	4,090	11,679
Gross Unrealized Holding Gains	4	29
Gross Unrealized Holding Losses	0	0
Fair Value	4,094	11,708
Certificates of deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	44,003	36,349
Gross Unrealized Holding Gains	19	24
Gross Unrealized Holding Losses	1	0
Fair Value	44,021	36,373
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	50,961	32,690
Gross Unrealized Holding Gains	19	12
Gross Unrealized Holding Losses	0	3
Fair Value	50,980	32,699
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
Amortized Cost	34,651	31,544
Gross Unrealized Holding Gains	6	50
Gross Unrealized Holding Losses	61	12
Fair Value	$ 34,596	$ 31,582

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Marketable Securities - Schedule of Amortized Cost and Estimated Fair Value of Marketable Securities Classified by Maturity Date (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Available For Sale Securities Debt Maturities Fair Value [Abstract]
Amortized Cost, Due within one year	$ 195,632	$ 170,099
Amortized Cost, Due after one through five years	80,894	66,550
Amortized Cost, Due after five through ten years	0	0
Amortized Cost, Due after ten years	0	0
Amortized Cost	276,526	236,649
Fair Value, Due within one year	195,733	170,321
Fair Value, Due after one through five years	80,888	66,681
Fair Value, Due after five through ten years	0	0
Fair Value, Due after ten years	0	0
Fair Value, Total marketable securities	$ 276,621	$ 237,002

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Marketable Securities - Summary of Estimated Fair Value and Gross Unrealized Holding Losses of Marketable Securities in Unrealized Loss Position (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Schedule of Available-for-sale Securities [Line Items]
In Unrealized Loss Position For Less Than 12 Months, Fair Value	$ 59,714	$ 32,450
In Unrealized Loss Position For Less Than 12 Months, Gross Unrealized Losses	81	19
In Unrealized Loss Position For Greater Than 12 Months, Fair Value	0	0
In Unrealized Loss Position For Greater Than 12 Months, Gross Unrealized Losses	0	0
Municipal notes and bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
In Unrealized Loss Position For Less Than 12 Months, Fair Value	30,626	8,641
In Unrealized Loss Position For Less Than 12 Months, Gross Unrealized Losses	19	4
In Unrealized Loss Position For Greater Than 12 Months, Fair Value	0	0
In Unrealized Loss Position For Greater Than 12 Months, Gross Unrealized Losses	0	0
Certificates of deposits [Member]
Schedule of Available-for-sale Securities [Line Items]
In Unrealized Loss Position For Less Than 12 Months, Fair Value	4,603
In Unrealized Loss Position For Less Than 12 Months, Gross Unrealized Losses	1
In Unrealized Loss Position For Greater Than 12 Months, Fair Value	0
In Unrealized Loss Position For Greater Than 12 Months, Gross Unrealized Losses	0
Commercial paper [Member]
Schedule of Available-for-sale Securities [Line Items]
In Unrealized Loss Position For Less Than 12 Months, Fair Value		8,862
In Unrealized Loss Position For Less Than 12 Months, Gross Unrealized Losses		3
In Unrealized Loss Position For Greater Than 12 Months, Fair Value		0
In Unrealized Loss Position For Greater Than 12 Months, Gross Unrealized Losses		0
Corporate bonds [Member]
Schedule of Available-for-sale Securities [Line Items]
In Unrealized Loss Position For Less Than 12 Months, Fair Value	24,485	14,947
In Unrealized Loss Position For Less Than 12 Months, Gross Unrealized Losses	61	12
In Unrealized Loss Position For Greater Than 12 Months, Fair Value	0	0
In Unrealized Loss Position For Greater Than 12 Months, Gross Unrealized Losses	$ 0	$ 0

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Derivative Instruments and Hedging Activities - Forward Contracts and Related Fair Values (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Derivative Instruments And Hedging Activities Disclosure [Abstract]
Notional amount	$ 11,397	$ 37,580
Fair value of asset (liability)	$ 27	$ (36)

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Goodwill and Purchased Intangible Assets - Changes in the Carrying Amount of Goodwill (Details) $ in Thousands	6 Months Ended
	Jun. 26, 2021 USD ($)
Goodwill Roll Forward
Beginning balance	$ 306,632
Goodwill acquired during the period (Note 2)	7,259
Ending balance	$ 313,891

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Goodwill and Purchased Intangible Assets - Schedule of Purchased Intangible Assets (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Finite Lived Intangible Assets [Line Items]
Finite-lived intangibles assets, Gross Carrying Amount	$ 420,809	$ 408,599
Finite-lived intangibles assets, Accumulated Amortization	161,523	136,842
Finite-lived intangibles assets, Net	259,286	271,757
Identifiable intangibles assets, Gross Carrying Amount	467,409	455,199
Identifiable intangibles assets, Accumulated Amortization	161,523	136,842
Identifiable intangibles assets, Net	305,886	318,357
Developed technology [Member]
Finite Lived Intangible Assets [Line Items]
Finite-lived intangibles assets, Gross Carrying Amount	331,747	326,877
Finite-lived intangibles assets, Accumulated Amortization	132,270	110,851
Finite-lived intangibles assets, Net	199,477	216,026
Customer and distributor relationships [Member]
Finite Lived Intangible Assets [Line Items]
Finite-lived intangibles assets, Gross Carrying Amount	74,701	69,261
Finite-lived intangibles assets, Accumulated Amortization	23,267	20,654
Finite-lived intangibles assets, Net	51,434	48,607
Trademarks and trade names [Member]
Finite Lived Intangible Assets [Line Items]
Finite-lived intangibles assets, Gross Carrying Amount	14,361	12,461
Finite-lived intangibles assets, Accumulated Amortization	5,986	5,337
Finite-lived intangibles assets, Net	8,375	7,124
In-process research and development [Member]
Finite Lived Intangible Assets [Line Items]
Identifiable intangibles assets, Gross Carrying Amount	46,600	46,600
Identifiable intangibles assets, Net	$ 46,600	$ 46,600

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Goodwill and Purchased Intangible Assets - Schedule of Estimated Future Amortization Expenses (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Finite Lived Intangible Assets Future Amortization Expense [Abstract]
2021 (remainder)	$ 24,548
2022	48,830
2023	48,355
2024	42,669
2025	26,119
2026	24,926
Thereafter	43,839
Finite-lived intangibles assets, Net	$ 259,286	$ 271,757

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Balance Sheet Details - Schedule of Inventories (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Inventory Details [Abstract]
Materials	$ 128,389	$ 124,926
Work-in-process	54,706	44,829
Finished goods	23,886	21,462
Total inventories, net	$ 206,981	$ 191,217

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Balance Sheet Details - Schedule of Property, Plant and Equipment, Net (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 138,644	$ 132,866
Accumulated depreciation and amortization	(50,629)	(44,916)
Total property, plant and equipment, net	88,015	87,950
Land and building [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	48,188	47,544
Machinery and equipment [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	57,061	52,833
Furniture and fixtures [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	3,985	4,013
Computer equipment and software [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	15,651	15,549
Leasehold improvements [Member]
Property Plant And Equipment [Line Items]
Property, plant and equipment, gross	$ 13,759	$ 12,927

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Balance Sheet Details - Schedule of Other Assets (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Other Assets [Abstract]
Operating lease right-of-use assets	$ 20,449	$ 19,669
Other	4,360	1,668
Total other assets	$ 24,809	$ 21,337

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Balance Sheet Details - Schedule of Accrued Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Accrued Liabilities Current [Abstract]
Payroll and related expenses	$ 32,026	$ 30,270
Warranty	7,611	6,062
Other	1,320	743
Total accrued liabilities	$ 40,957	$ 37,075

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Balance Sheet Details - Schedule of Other Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Other Liabilities Current [Abstract]
Customer deposits	$ 10,949	$ 15,177
Current operating lease obligations	$ 5,121	$ 4,470
Operating Lease Liability Current Statement Of Financial Position [Extensible List]	onto:OperatingLeaseLiabilityCurrentMember	onto:OperatingLeaseLiabilityCurrentMember
Income tax payable	$ 1,076	$ 4,109
Accrued professional fees	1,259	1,184
Other	5,931	3,559
Total other current liabilities	$ 24,336	$ 28,499

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Balance Sheet Details - Schedule of Other Non-Current Liabilities (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Other Liabilities Noncurrent [Abstract]
Non-current operating lease obligations	$ 16,365	$ 16,455
Operating Lease, Liability, Noncurrent, Statement of Financial Position [Extensible List]	onto:OperatingLeaseLiabilityNonCurrentMember	onto:OperatingLeaseLiabilityNonCurrentMember
Unrecognized tax benefits (including interest)	$ 2,765	$ 3,812
Deferred revenue	1,716	1,292
Other	7,049	6,153
Total other non-current liabilities	$ 27,895	$ 27,712

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Commitments and Contingencies - Textual (Details)	6 Months Ended
	Jun. 26, 2021 USD ($)
Commitments And Contingencies [Line Items]
Sold receivables amount	$ 6,226,000
Due from unrelated third parties	0
Liabilities recorded for obligations	$ 0
Percentage of maximum borrowing capacity of value of eligible securities	70.00%
Available line of credit	$ 99,400,000
Available interest rate on line of credit	1.80%
Minimum [Member]
Commitments And Contingencies [Line Items]
Warranty period	12 months
Maximum [Member]
Commitments And Contingencies [Line Items]
Warranty period	14 months

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Commitments and Contingencies - Schedule of Changes in Warranty Reserves (Details) - USD ($) $ in Thousands	6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020
Commitments And Contingencies Disclosure [Abstract]
Balance, beginning of the period	$ 6,485	$ 6,348
Accruals	3,560	2,794
Warranty liability assumed in acquisition	407
Usage	(2,229)	(2,327)
Balance, end of the period	$ 8,223	$ 6,815

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Revenue - Schedule of Disaggregation of Revenue by Timing of Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Disaggregation Of Revenue [Line Items]
Total revenue	$ 193,387	$ 134,948	$ 362,666	$ 274,876
Transferred at Point in Time [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	182,133	131,796	343,294	265,541
Transferred over Time [Member]
Disaggregation Of Revenue [Line Items]
Total revenue	$ 11,254	$ 3,152	$ 19,372	$ 9,335

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Revenue - Schedule of Changes in Deferred Revenue (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Deferred Revenue Disclosure [Abstract]
Balance, beginning of the period	$ 22,429	$ 18,032	$ 15,626	$ 15,093
Deferred revenue assumed in acquisition			386
Deferral of revenue	15,117	8,818	34,348	23,252
Recognition of deferred revenue	(14,640)	(8,956)	(27,454)	(20,451)
Balance, end of the period	$ 22,906	$ 17,894	$ 22,906	$ 17,894

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Share-Based Compensation - Summary of Restricted Stock Unit Activity (Details) - Restricted Stock Units (RSUs) [Member]	6 Months Ended
	Jun. 26, 2021 $ / shares shares
Activity for RSUs [Roll Forward]
Number of Shares, Beginning balance (in shares) | shares	964,000
Number of Shares, Granted (in shares) | shares	285,000
Number of Shares, Vested (in shares) | shares	(404,000)
Number of Shares, Forfeited (in shares) | shares	(46,000)
Number of Shares, Ending balance (in shares) | shares	799,000
Weighted Average Grant Date Fair Value for RSUs [Roll Forward]
Weighted Average Grant Date Fair Value, Beginning balance (in dollars per share) | $ / shares	$ 31.37
Weighted Average Grant Date Fair Value, Granted (in dollars per share) | $ / shares	69.47
Weighted Average Grant Date Fair Value, Vested (in dollars per share) | $ / shares	30.74
Weighted Average Grant Date Fair Value, Forfeited (in dollars per share) | $ / shares	37.61
Weighted Average Grant Date Fair Value, Ending balance (in dollars per share) | $ / shares	$ 45.67

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Share-Based Compensation - Textual (Details) - Restricted Stock Units (RSUs) [Member] - USD ($) $ in Thousands	6 Months Ended	12 Months Ended
	Jun. 26, 2021	Dec. 26, 2020
Share Based Compensation Arrangement By Share Based Payment Award [Line Items]
Total unrecognized compensation cost related to restricted stock units granted	$ 27,391	$ 19,135
Unrecognized compensation cost related to restricted stock units, weighted average period	1 year 9 months 18 days	1 year 8 months 12 days

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Other Expense, Net - Schedule of Other Expense, Net (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Other Income Expense [Abstract]
Foreign currency exchange losses, net	$ (328)	$ (1,271)	$ (1,599)	$ (1,305)
Other	39	73	66	139
Total other expense, net	$ (289)	$ (1,198)	$ (1,533)	$ (1,166)

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Income Taxes - Details of Income Tax (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Income Tax Disclosure [Abstract]
Income before income taxes	$ 35,956	$ 7,418	$ 62,558	$ 3,414
Provision (benefit) for income taxes	$ 905	$ (6)	$ 3,394	$ 394
Effective tax rate	3.00%	0.00%	5.00%	12.00%

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Income Taxes - Textual (Details) - USD ($) $ in Thousands	Jun. 26, 2021	Dec. 26, 2020
Income Tax Disclosure [Abstract]
Deferred tax assets, valuation allowance	$ 14,254	$ 14,238

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Earnings Per Share - Schedule of Basic and Diluted Earnings Per Share (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands	3 Months Ended				6 Months Ended
	Jun. 26, 2021	Mar. 27, 2021	Jun. 27, 2020	Mar. 28, 2020	Jun. 26, 2021	Jun. 27, 2020
Earnings Per Share [Abstract]
Net income	$ 35,051	$ 24,113	$ 7,424	$ (4,404)	$ 59,164	$ 3,020
Basic earnings per share - weighted average shares outstanding	49,193		48,736		49,105	49,417
Employee stock options, employee stock purchase grants and restricted stock units - dilutive shares	508		278		540	365
Diluted earnings per share - weighted average shares outstanding	49,701		49,014		49,645	49,782
Earnings per share:
Basic	$ 0.71		$ 0.15		$ 1.20	$ 0.06
Diluted	$ 0.71		$ 0.15		$ 1.19	$ 0.06

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Accumulated Other Comprehensive Income - Components of Accumulated Other Comprehensive Income, Net of Tax (Details) $ in Thousands	6 Months Ended
	Jun. 26, 2021 USD ($)
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	$ 1,264,746
Balance	1,329,563
Accumulated Foreign Currency Translation Adjustments [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	4,479
Net current period other comprehensive loss	(1,362)
Reclassifications	0
Balance	3,117
Accumulated Net Unrealized Gains (Losses) on Available-for-sale Marketable Securities [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	89
Net current period other comprehensive loss	(698)
Reclassifications	0
Balance	(609)
Accumulated Other Comprehensive Income (Loss) [Member]
Accumulated Other Comprehensive Income Loss [Line Items]
Balance	4,568
Net current period other comprehensive loss	(2,060)
Reclassifications	0
Balance	$ 2,508

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Segment Reporting and Geographic Information - Additional Information (Details)	6 Months Ended
	Jun. 26, 2021 Segment
Segment Reporting [Abstract]
Number of reportable segments	1

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Segment Reporting and Geographic Information - Schedule of Revenue from External Customers by Products and Services (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Segment Reporting Information [Line Items]
Total revenue	$ 193,387	$ 134,948	$ 362,666	$ 274,876
Sales [Member] | Product [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage	100.00%	100.00%	100.00%	100.00%
Systems and Software [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 162,898	$ 108,247	$ 304,407	$ 222,577
Systems and Software [Member] | Sales [Member] | Product [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage	84.00%	80.00%	84.00%	81.00%
Parts Revenue [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 18,697	$ 16,329	$ 36,115	$ 29,904
Parts Revenue [Member] | Sales [Member] | Product [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage	10.00%	12.00%	10.00%	11.00%
Service Revenue [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 11,792	$ 10,372	$ 22,144	$ 22,395
Service Revenue [Member] | Sales [Member] | Product [Member]
Segment Reporting Information [Line Items]
Concentration risk, percentage	6.00%	8.00%	6.00%	8.00%

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Segment Reporting and Geographic Information - Schedule of Revenue from External Customers Attributed to Foreign Countries by Geographic Area (Details) - USD ($) $ in Thousands	3 Months Ended		6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020	Jun. 26, 2021	Jun. 27, 2020
Segment Reporting Information [Line Items]
Total revenue	$ 193,387	$ 134,948	$ 362,666	$ 274,876
South Korea [Member]
Segment Reporting Information [Line Items]
Total revenue	41,299	22,964	91,828	43,721
Taiwan [Member]
Segment Reporting Information [Line Items]
Total revenue	48,501	31,997	84,793	67,178
China [Member]
Segment Reporting Information [Line Items]
Total revenue	42,274	27,001	68,053	58,384
United States [Member]
Segment Reporting Information [Line Items]
Total revenue	25,700	22,378	51,180	42,026
Europe [Member]
Segment Reporting Information [Line Items]
Total revenue	14,446	10,089	31,832	25,158
Japan [Member]
Segment Reporting Information [Line Items]
Total revenue	17,386	13,908	25,251	28,935
Southeast Asia [Member]
Segment Reporting Information [Line Items]
Total revenue	$ 3,781	$ 6,611	$ 9,729	$ 9,474

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Segment Reporting and Geographic Information - Schedule of Revenue by Major Customer by Reporting Segments (Details) - Customer Concentration Risk [Member] - Sales [Member]	6 Months Ended
	Jun. 26, 2021	Jun. 27, 2020
Samsung Semiconductor [Member]
Concentration Risk [Line Items]
Customer concentration risk percentage	22.00%	18.00%
Taiwan Semiconductor Manufacturing Co. Ltd. [Member]
Concentration Risk [Line Items]
Customer concentration risk percentage	16.00%	17.00%

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Share Repurchase Authorization - Textual (Details) - USD ($)	Jun. 26, 2021	Nov. 30, 2020
Shares Repurchase Authorization [Line Items]
Amount available for future repurchase	$ 100,000,000
Maximum [Member]
Shares Repurchase Authorization [Line Items]
Stock repurchase, authorized amount		$ 100,000,000

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Share Repurchase Authorization - Summary of Share Repurchases (Details) - USD ($) $ / shares in Units, $ in Thousands	3 Months Ended	6 Months Ended
	Jun. 27, 2020	Jun. 27, 2020
Disclosure Share Repurchase Authorization Summary Of Stock Repurchases Details [Abstract]
Shares of common stock repurchased	632,000	1,882,000
Cost of shares repurchased	$ 18,385	$ 52,000
Average price paid per share	$ 29.08	$ 27.62