Industry Update Semiconductor and Enabling Technology

Industry Update

06/07/2021

Gus Richard Semiconductor and Enabling (408) 499-9163 [email protected] Technology Pivot to Packaging Technology Benefits AMD, Ticker Price Rating Price Target CAMT and VECO AMD $81.58 OP $116.00 CAMT $37.42 OP $41.00 Summary INTC $57.37 UP $42.00 AMD unveiled a chip at Computex last week that utilizes TSMC’s stacked chiplets technology, 3DFabric. 3DFabric uses direct copper-to-copper VECO $24.37 OP $32.00 bonding that delivers better energy efficiency and signal integrity than the INTC's Foveros microbump process. AMD expects to be in production by year-end and 3DFabric is expected to provide a process generation improvement in performance. Packaging is an emerging battlefield in leading-edge logic. AMD and CAMT are the biggest winners, in our view. Key Points AMD's Computex Announcement: Last week AMD demonstrated a Ryzen 5000 series processor that incorporates TSMC’s face-to-face vertically stacked chiplet technology, 3DFabric. The chip stacks SRAM over CPU cores, V-Cache. 3DFabric is a direct copper-to-copper bond and uses less energy, is denser, and has better signal integrity than Intel’s Foveros micro bump technology. AMD’s V-Cache supports more than 2 terabytes of bandwidth. Also, a key chiplet advantage versus a monolithic die is smaller chips that have higher yield and lower cost. V-Cache is expected to enter production later this year. We believe 3D chiplet gives AMD roughly a process node improvement in performance versus chips without this packaging technology.

What Products Will Use V-Cache: AMD can use V-Cache with CPU, GPU, and FPGA. At Computex, AMD demonstrated V-Cache on Ryzen 5000 series prototype used in a gaming PC. We believe that 3D V-Cache could be used in chips for the Frontier supercomputer that is being sold to Oakridge National Labs or in the El Capitan supercomputer for Lawrence Livermore Labs. While we are not sure what the cost added for 3D V-Cache is given the performance improvement of 3D V-Cache it is likely to spread quickly across AMD’s high-end product lines.

Impact On Capital Equipment: Intel indicated it would invest $3.5B to scale up its Rio Rancho fab for Faveros. Over the next three years, TSMC is building 2 new packaging facilities. CAMT sells inspection and metrology systems for packaging as well as macro-defect inspection tools used in front-end fabs. We believe that CAMT is already benefiting from the increased spending of these two companies. VECO received orders for 5 lithography systems last quarter from an OSAT 4 of which were shipped in Q1. Also, VECO is seeing increased interest from IDMs and Foundries for lithography systems used in packaging applications. Any uptick in the VECO's lithography business would be an upside to our expectations.

IMPORTANT DISCLOSURES AND ANALYST CERTIFICATION ON PAGE 4 06/07/2021

Why V-Cache is Important: AI, cloud computing, big data analytics, and autonomous vehicles are data- intensive applications that require high memory bandwidth. Cache (SRAM) is a fast memory used to store data and code that is frequently needed by a CPU. It reduces the need to access a computer's slower main memory. Moving data off-chip requires 10x more power than moving data on-chip. Onboard cache (SRAM) increased die size lowering yield and increases cost. Vertically stacked face-to-face chiplets improve bandwidth between processor and memory while minimizing the amount of energy required to move data between die, and reduces die area improving yield. V-Cache could significantly improve the performance of a CPU, GPU, or FPGA. V-Cache is also just one possible application of 3D stacking RF, analog and/or logic can also be stacked to improve signal integrity, bandwidth, and reduce power consumption.

INTC's Vs TSMC's 3D Chiplets: Both INTC and TSMC have developed face-to-face stacking technology, Intel’s technology is called Foveros and TSMC’s is 3DFabric. First introduced in 2019, Foveros is an advanced 3D face-to-face die stacking packaging process technology that uses fine-pitched, 36-micron, microbumps. TSMC’s hybrid bonding solution called SoIC enables a thermo-compression bonded die was announced in 2020. This technology is a direct copper-to-copper bond capable of 0.9um pitch. TSMC 3DFabric reduces thermal power loss and has a much higher interconnect density. INTC is working on silicon photonics in package and has already internally demonstrated the technology. It expects to have SiP in production by 2025. If INTC pulls SiP in package off it could drive a significant performance advantage over 3DFabric.

AMD Advantage over INTC: We believe that AMD is a preferred customer at TSMC as it exclusively uses TSMC for leading-edge logic, unlike INTC or NVDA. TSMC is at least a process node ahead of INTC. Adding to AMD's manufacturing advantage is 3DFabric. This results in better performance and higher yields and likely lower cost. While it goes unnoticed by most investors, INTC's design process is antiquated. Much of INTC's IP is handcrafted and redesign for each new implementation. Intel's design process lacks automation in some parts of its design flow. Intel internal fabricated designs take longer and require more manpower to complete than a chip designed in TSMC's design environment. INTC's design environment is a closed ecosystem whereas AMD leverages TSMC's Open Innovation Platform. OPI includes TSMC's IP Alliance program with IP from virtually every leading IP supplier. Finally, EDA companies prioritze working with TSMC as there are more customers and more revenue in TSMC's ecosystem than in INTC's.

AMD: Risks to the achievement of price target Intel Corporation dominates the microprocessor market and employs aggressive business practices that are very difficult to compete against. Intel currently has over 75% market share which allows them to exert influence over computer manufacturers and their channels of distribution. Intel also has control over industry standards which causes companies like AMD to delay access to such standards, putting them at a disadvantage.

Advanced Micro Devices relies on foundries to manufacture its products. AMD relies on these companies to deliver quality products in a timely fashion. If these third-party companies are unable to deliver on time, AMD will then not be able to supply their products on time.

AMD is currently attempting to refocus its business model to address markets beyond the PC market. With Intel driving down profit margins for their PC market segment, AMD is currently reaching out to different markets that have higher growth rates. In these markets, AMD is required to forecast customer needs to create products that there isn’t yet demand. If they are unable to accurately forecast future consumer needs they will fall behind the industry and become obsolete.

Dependance on TSMC for wafer supply.

CAMT: Risks to the achievement of price target CAMT is dependent upon semiconductor industry; unfavorable economic conditions and/or low capital expenditures may negatively impact its operating results

CAMT has several competitor some much larger competitors with greater financial resources. Competitors include: Rudolph Technologies, Inc., ATI Electronics Pty Ltd, KLA-Tencor Corporation, ASTI Holding Limited and Toray Industries, Inc.

CAMT's headquarters is located in Migdal Ha'Emek, in the northern part of Israel. Any event affecting this facility, including a natural disaster, labor stoppages or armed conflict, may disrupt or indefinitely discontinue CAMT ability to fulfill manufacturing demands and generate revenues, thus negatively impacting the business. INTC: Risks to the achievement of price target Transition to a fabless/fab lite Company Slow down in DCG growth Decreased in PC growth rates Larger than expected Market Share loss Intel separates the Company into a manufacturing company and a fabless semiconductor company

VECO: Risks to the achievement of price target The adoption of EUV

Macro impact of COVID-19

Sustainability of the energy-assisted magnetic recording capacity ramp

Competition in the lithography market

Growth in the VCSEL demand for 3D sensing applications.

The company operates in the highly cyclical capital equipment market used to manufacture an array of components used in electronic components.

The ability to accurately forecast and execute product transitions to meet change customer requirements.

Analyst Certification I, Gus Richard, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report. Important disclosures

Rating and Price Target History for: Advanced Micro Devices, Inc. (AMD) as of 06-04-2021

06/07/18 07/26/18 07/30/18 09/27/18 10/23/18 10/25/18 01/30/19 05/01/19 11/21/19 01/21/20 01/29/20 03/13/20 04/29/20 07/29/20 OP:$18.5 OP:$18 OP:$26 MP:$30 MP:$26 OP:$26 OP:$28 OP:$36 MP:$36 MP:$42 MP:$45 OP:$52.5 OP:$67.5 OP:$80 100

0 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 08/24/20 10/28/20 01/27/21 03/25/21 04/28/21 MP:$80 MP:$75 MP:$84 OP:$96 OP:$116

Created by: BlueMatrix

Rating and Price Target History for: Camtek Ltd. (CAMT) as of 06-04-2021

05/29/18 10/31/18 12/07/18 02/13/19 08/06/19 02/21/20 05/11/20 08/05/20 10/28/20 02/10/21 04/28/21 OP:$12 OP:$13 OP:$15 OP:$16 OP:$14 OP:$17 OP:$15 OP:$18 OP:$22 OP:$33 OP:$41 40 35 30 25 20 15 10 5 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2

Created by: BlueMatrix

Rating and Price Target History for: Intel Corporation (INTC) as of 06-04-2021

04/27/18 06/18/18 07/27/18 09/13/18 12/04/18 01/25/19 07/26/19 08/16/19 10/25/19 01/24/20 01/27/20 03/31/20 07/24/20 10/23/20 11/02/20 MP:$53 UP:$45 UP:$46 MP:$46 UP:$42 UP:$38 UP:$48 MP:$48 OP:$69 OP:$70 MP:$70 MP:$60 UP:$48 UP:$46 MP:$46 70 65 60 55 50 45 40 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2 01/22/21 02/01/21 03/24/21 04/23/21 MP:$57 UP:$46 UP:$48 UP:$42

Created by: BlueMatrix

Rating and Price Target History for: Veeco Instruments, Inc. (VECO) as of 06-04-2021

04/19/18 08/02/18 11/01/18 12/20/18 05/07/19 08/06/19 02/14/20 02/12/21 05/05/21 I:OP:$21 OP:$15 OP:$11 OP:$14 OP:$21 OP:$19 OP:$20 OP:$26 OP:$32 25

5 Q1 Q2 Q3 2019 Q1 Q2 Q3 2020 Q1 Q2 Q3 2021 Q1 Q2

Created by: BlueMatrix

Explanation of Ratings: Outperform (BUY) – Outperform the S&P 500 by at least 10%. Market Perform (HOLD) – Perform within 10% above or below the S&P 500. Underperform (SELL) – Underperform the S&P 500 by at least 10%.

Rating Distribution Breakdown as of 06/07/2021 IB Serv./ Past 12Mos. Rating Category Count Percent Count Percent Buy [OP] 184 75.10% 45 24.46% Hold [MP] 59 24.08% 2 3.39% Sell [UP] 2 0.82% 0 0.00%

Important Disclosure: The analyst responsible for preparing this research report receives compensation that is based upon various factors including Northland's institutional trading commissions and total revenues which may be generated by Northland's investment banking activities. Northland Securities makes a market in the subject companies' securities: AMD, CAMT, INTC and VECO Northland Securities intends to seek compensation for investment banking services from the subject companies in the next three months: AMD, CAMT, INTC and VECO Northland Securities has received compensation for investment banking services from Camtek Ltd. in the past 12 months.

Northland Securities co-managed a public offering of securities for the subject company in the past 12 months: CAMT

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