Nanometrics Investor Presentation

Needham 16th Annual Growth Conference

Timothy J. Stultz, President and CEO

January 16, 2014

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Forward-Looking Statements

This communication contains forward-looking statements within the meaning of the safe harbor provisions of the Private

Securities Litigation Reform Act of 1995, including, but not limited to statements regarding Nanometrics’ (“us” “our” or

“the Company”) future financial results, including, but not limited to our market share; industry demand and growth.

These statements are not guarantees of future performance, involve certain risks, uncertainties and assumptions that are

difficult to predict, and are based upon assumptions as to future events that may not prove accurate. Therefore, actual

outcomes and results may differ materially from what is expressed herein. In any forward-looking statement in which

Nanometrics expresses an expectation or belief as to future results, such expectation or belief is expressed in good faith

and believed to have a reasonable basis, but there can be no assurance that the result will be achieved. The risks and

uncertainties include, but are not limited to: our ability to achieve desired product mix and pricing; our ability to achieve

desired market position; growth in target industries; levels of capital expenditures in our target industries; customer

adoption of certain technologies; market acceptance and timing of acceptance of our new products; interruptions or

changes to supply chain; our ability to identify, complete and integrate acquisitions; and other economic, business,

competitive and/or regulatory factors affecting Nanometrics’ businesses generally, including those set forth in

Nanometrics’ filings with the SEC, including its Annual Report on Form 10-K for its most recent fiscal year, its most recent

Quarterly Reports on Form 10-Q and its Current Reports on Form 8-K. All forward-looking statements included in this

communication are based on information available to Nanometrics on the date hereof. We disclaim any intent or

obligation to update publicly any forward-looking statements, whether in response to new information, future events, or

otherwise.

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Flagship Products:

Industry-Leading

and Highly

Differentiated

NANO: Leading Solutions for In-Line Process Control

Non-Destructive, Optical Technologies Ellipsometry Scatterometry Interferometry Photoluminescence Inspection

Atlas / Lynx

Addressing Leading-Edge

Applications and Critical

Technology Inflection Points

SPARK NanoCD UniFire IMPULSE

3D Device Structures: FinFET / V-NAND /

Advanced Packaging

Complex Lithography: Multiple Patterning / EUV

Advanced Materials: High-K / Metal Gates

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2013 Key Initiatives

FinFET OCD Proliferation

V-NAND Penetration

Advanced 3D Packaging Adoption

Increase Foundry Penetration

Selections, Qualifications or Tool-of-Record

Achievements

Expanded to 3 Key Accounts

3 Atlas OCD Accounts

1 IMPULSE Account

Expanded to 7 UniFire Accounts and 2 SPARK Accounts

Expanded to 4 Atlas OCD Accounts and 3 UniFire Accounts

1 IMPULSE Account

Initiatives and Tailwinds Exiting 2013

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Increased Penetration into Pure-Play Foundry

Portion of NANO Foundry Revenues Serving Pure-Play Foundries

FY '11

Pure-Play Foundry

Other Foundry

FY '12

Pure-Play Foundry

Other Foundry Pure-Play

Foundry

Other Foundry

FY '13 [Outlook]

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3D Technologies Driving Growth Opportunities

Node Shrinks Continue

FinFET Memory Density Increasing

V-NAND 3-D Device Integration

Advanced Packaging Foundry Penetration

3D on all

Roadmaps

For 16nm

and below

Expanded Role of Integrated Metrology

CMP

Lithography

Etch

Deposition

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V-NAND Transition Drives Increased Demand for Process Control

Samsung – August 2013

Flash Memory Summit

■ V-NAND Architecture Enables:

– Scalable bit density

– Lower power consumption

– Higher data rates

– Lower cost/bit

■ Process Implications:

– ~20% increase in process

steps favoring:

• Deposition

• Etch

• Process control

– V-NAND enabling architecture

steps are OCD-controlled:

• Many layer etch

• High aspect ratio structures

– V-NAND extensions drive

additional control:

• 24 layer – Now

• 32 layer – 2015

• 48 layer – Future

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All Leading-Edge Logic is Converting to FinFET

■ Market Drivers:

– Increasing adoption at Foundry

– Product design wins ramping

for market

– Technology integration in 2014

– Production ramps in 2015

■ Process Implications:

– FF process flow is more

complex than planar

– 3D architecture poses complex

metrology challenges

– Increasing reliance on OCD for

critical layer process control

Samsung Analyst Day – 2013

ARM TechCon 2013

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NANO is the Leader in OCD Solutions for FinFET

ATLAS II+ – Process Control for

all Critical Steps

– Fab Deployment:

• Transistor

• Lithography

• Contact

• BEOL

10nm: Replacement Channel Future: NanoWire

16/14nm: FinFET

IMPULSE – Integrated Solutions

for Critical Lot and

Wafer-to-Wafer Control

– Fab Deployment:

• CMP

• Track

• Etch Lithograpy: (Track) Gate Etch:

(Critical Etch) Metal CMP:

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Accelerating Adoption of OCD at the Leading Edge

-

100

200

300

400

500

600

YE 2009 YE 2010 YE 2011 YE 2012 YE 2013

NA

NO

Pro

du

ctio

n O

CD

Re

cip

es

4X nm 37 %

3X nm 50 %

2X nm 102 %

1X nm 185 %

CAGR by node:

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Device

Type Node

Sampling

Steps/

Parameters

Relative

Intensity

(current node)

Segment

Opportunity/

10K wspm

NAND 1X/1Y 10/5 1.0 $4M - $6M

VNAND 1X 12/5 1.1 $5M - $7M

DRAM 3X/2X 20/5 1.2 $5M - $8M

FOUNDRY 2X/2Y 20/10 1.6 $6M - $10M

FOUNDRY 1X/1Y 25/10 2.0 $8M - $12M

LOGIC 2Y/1X 30/10 2.4 $10M - $15M

OCD: Key Enabling Technology for All Device Types

Source: Company Estimates wspm: wafer starts per month capacity

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Expanding Role of Advanced Process Control (APC)

Metrology Data

Feedback Loop

■ APC Drives Increased

Opportunity for:

– Standalone Systems

– Integrated Thin Film & OCD

– In-Situ Thin Film Systems

Adoption of In-line,

Integrated & In-Situ

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Advanced 3D Packaging – An Emerging Market

■ Advanced Packaging Enables:

– Higher performance

– Lower power consumption

– Smaller form factor

Interposer / 2.5D

3D Stacked Die

Multi-Die Package

■ Metrology Opportunities:

– High value point in process

sequence requires ~ 100%

inspection – either full wafer or

field-by-field

– UniFire qualified for TSV and

micro-pillar applications

– SPARK qualified for wafer bond

uniformity applications

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TSV Formation

Backside TSV Reveal &

Passivation

Cu Pillar Formation

Wafer Thinning

µBump De-Bonding

SPARK 3D Stacking

UniFire + SPARK: The Complete Solution

– Backside processing

– De-bonding

– Edge trim, glue

dispense

– Temporary bonding

integrity

– Post-thinning

inspection

– De-bonding residuals

Wafer to Carrier

Bonding

UniFire – TSV and µBump

– Via lithography

metrology

– Via etch critical

dimension/depth

– Bump topography

– Wafer-wafer overlay

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Positive Spending Environment Entering 2014

$34.8 $24.0 $13.2 $30.2 $33.7 $29.1 $28.9 $33.0 $0

$5

$10

$15

$20

$25

$30

$35

$40

2007 2008 2009 2010 2011 2012 2013 2014 Est.

Wafer Fab Equipment Spending (WFE) $B

Source: Average WFE estimate from at least 10 industry analysts as of December 2013.

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Rapid Consolidation of Semiconductor Capital Spending

Source: Capex by company obtained from press releases, SEC filings and conference call transcripts. Total Capex for

each period is an average from at least 10 industry analysts as of December 2013.

3%

10% 5% 6%

11%

9% 18% 18% 4%

14%

19% 22%

6%

4%

12%

19%

76%

63%

45%

35%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2000 2007 2011 2014 Est

All Others

TSMC

Samsung

Intel

SK Hynix

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0%

2%

4%

6%

8%

10%

12%

Q2'10 Q3'10 Q4'10 Q1'11 Q2'11 Q3'11 Q4'11 Q1'12 Q2'12 Q3'12 Q4'12 Q1'13 Q2'13 Q3'13

Samsung Qtrly Capex % of Total Spent NANO Revs Rec'd from Samsung as % of 4yr Total

Process Control Spending Patterns During Investment

Cycle Drive Underperform/Outperform Periods

Quarterly Revenues from Samsung and Samsung Capex (Each as a % of Total Across 3 Year Cycle) Calculated as Rolling Average of Current Quarter, Last Quarter, Forward Quarter

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Several Quarters of Sequential Revenue Growth Expected

$ in

Mill

ion

s

* Midpoint of Q4’13 revenue and non-GAAP gross margin guidance provided as of October 29, 2013. ** Non-GAAP gross margin excludes Amortization of Intangible Assets and, for Q3’13, certain E&O charges. A non-GAAP reconciliation is attached to this presentation and also is available at www.nanometrics.com.

Gro

ss Margin

%

0%

5%

10%

15%

20%

25%

30%

35%

40%

45%

50%

55%

$-

$5.0

$10.0

$15.0

$20.0

$25.0

$30.0

$35.0

$40.0

$45.0

$50.0

$55.0

Q4'12 Q1'13 Q2'13 Q3'13 Q4'13

Midpoint *

Revenues Non-GAAP GM% ** Product GM% Service GM%

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Outperformance Period Currently Underway

Strong Growth Trajectory Entering 2014

Significant Achievements and Tailwinds Exiting 2013

Technology Changes Driving Growth Opportunities

OCD Leadership Position and Increasing Industry Adoption

Expanding Penetration into Foundry

Thank You

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Revenue Segmentation Reflects Concentration of Spending

25%

40% 0

11%

25%

South Korea N. America EMEA ROW

Total Revenues

by Geography Q3 ‘13

44%

24% 0

0

32%

South Korea N. America ROW

59% 11%

7%

23%

Automated Integrated Mat. Char. Service

65% 7%

7%

21%

Automated Integrated Mat. Char. Service

Total Revenues

by Product/Svc

8%

29%

40%

14%

9%

DRAM Flash Logic/IDM Foundry LED/Discrete/Si

10%

27%

32%

23%

7%

DRAM Flash Logic/IDM Foundry LED/Discrete/Si

Product Revenues

by End Market

FY 2012

Mat. Char. = Materials Characterization Metrology Systems

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