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FormFactor Goes All-In on Photonics—Will Keystone Pay Off?

FormFactor has been making strategic headlines this December with its announcement to acquire Keystone Photonics, a move that could reshape its position in the advanced semiconductor packaging ecosystem. The deal comes on the heels of FormFactor’s Q3 earnings beat and an optimistic Q4 outlook, where management reaffirmed its focus on achieving target-model gross margins of 47% and diversifying beyond DRAM into GPU and CPU verticals. The acquisition is aimed at strengthening FormFactor’s foothold in the rapidly evolving silicon photonics and co-packaged optics (CPO) landscape, areas where the company is already piloting its new Triton system with key customers. Keystone Photonics brings integrated photonics IP and fab-compatible technology that aligns with FormFactor’s strategy to move from lab to fab in optical test. As demand for energy-efficient data transmission and higher test complexity accelerates due to AI and HPC workloads, this acquisition may serve as a force multiplier—if integrated effectively.