Q1 2025 BE Semiconductor Industries NV Earnings Call
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Operator: Good morning, good afternoon, ladies and gentlemen, and welcome to BASIC quarterly conference call and audio webcast to discuss the company's 2025 fourth quarter results. You can register for the conference call or log into the audio webcast via BASIC's website www.basic.com.
Speaker Change: Good morning, good afternoon, ladies and gentlemen, and welcome to the basic quarterly conference call and audio webcast to discuss the company's 2025, but what the results you can register for the conference call are logged into the audio webcast why bases that's fine Ww.
Operator: Joining us today are Mr. Richard Blakeman, Chief Executive Officer, and Mrs. Andrea Kopp, Senior Vice President Finance. Currently, all participants are in listen-only mode.
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Speaker Change: Joining us today are Mr. Richard Glickman, Chief Executive Officer and Mr. Andrea.
Speaker Change: Senior Vice President Finance.
Speaker Change: All participants are in listen only mode.
Operator: As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission from the company.
Speaker Change: As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission from the company.
Richard Blakeman: I will now turn the call over to Mr. Richard Blickman. Please go ahead, sir. Thank you for joining us today. We will begin by making a few comments in connection with the press release issued earlier today, and then take your questions. I'd like to remind everyone that on today's call, management will be making forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements reflect Bayes' current view. and assumptions regarding future events. many of which are by nature inherently uncertain and beyond basis control. Actual results may differ materially from those in the forward-looking statements due to various risks and uncertainties.
Speaker Change: I will now turn the call over to Mr. Richard.
Speaker Change: Please go ahead Sir.
Richard Glickman: Thank you.
Speaker Change: Thank you for joining us today, we will begin by making a few comments in connection with the press release issued earlier today and then take your questions I'd like to remind everyone that on today's call management will be making forward looking statements.
Speaker Change: Statements other than statements of historical facts may be forward looking statements forward looking statements reflect basis current view.
Speaker Change: And assumptions regarding future events.
Speaker Change: Many of which are by nature inherently uncertain and beyond basic control actual results may differ materially from those in the forward looking statements due to various risks and uncertainties.
Richard Blakeman: including, but not limited to, factors that are discussed in the company's most recent, periodic, and current reports filed with the AFM. Such forward-looking statements, including guidance provided during today's call, speak only as of this date. And BAESI does not intend to update them in light of new information or future developments, nor does BASI undertake any obligation to update the forward-looking statement.
Speaker Change: Clothing, but not limited to factors that are discussed in the company's most recent periodic and current reports filed with the F. <unk>.
Speaker Change: Such forward looking statements, including guidance provided during todays call speak only as of this date and basically does not intend to update them in light of new information or future developments, nor does basically undertake any obligation to update the forward looking statements.
Richard Blakeman: For today's call, we'd like to review the key highlights of our first quarter ended March 31st of this year and update you on the market, our strategy, and the outlook. First, some overall thoughts on the first quarter. Beijing reported solid first quarter results, important new advanced packaging orders in a challenging market environment. Revenue of 144.1 million euros was down one and a half percent versus the first quarter last year due to the ongoing weakness in mobile and automotive end-user markets, partly offset by strong revenue growth from hybrid bonding and other AI-related computing applications. In contrast, orders increased 3.3 percent versus the first quarter last year and 8.2 percent versus the fourth quarter last year, due primarily to increased bookings by Asian subcontractors and AI-related data center applications.
Speaker Change: For today's call, we'd like to review the key highlights of our first quarter ended March 31st of this year.
Speaker Change: Update you on the market our strategy and the outlook.
Speaker Change: First some overall thoughts on the first quarter basically reported solid first quarter results important new advanced packaging orders in a challenging market environment.
Speaker Change: Revenue of almost a 44.1 million euros was down 1% versus the first quarter last year due to the ongoing weakness in mobile and <unk>.
Speaker Change: Oh to motive and usual markets, partially offset by strong revenue growth from hybrid bonding and other AI related computing applications. In contrast orders increased Shreveport, 3% versus the first quarter last year, and eight 2% versus the fourth quarter.
Speaker Change: Last year due primarily to increased bookings by Asian subcontractors in the yard related data center applications.
Richard Blakeman: Basics profitability in the first quarter of this year remained at attractive levels despite ongoing weakness in mobile, automotive, and Chinese end-user markets, and expanded R&D investment in next-generation assembly solutions. Net income of 31.5 million euros decreased 7.4% versus the first quarter of last year, primarily due to lower revenue and gross margins realized partially offset by an 8.9% decrease in operating expenses. Basis gross margin has trended towards the lower end of our target range over the past three quarters due to primarily a less favorable product mix. particularly with respect to high-end smartphones and NetForex headwinds, beginning in the second half of 2024, from adverse movements in some of our principal transaction currencies versus the euro.
Speaker Change: Basics profitability in the first quarter of this year remains at attractive levels. Despite ongoing weakness in mobile automotive and Chinese end user markets and expanded the R&D investment in next generation Assembly solutions nothing.
Speaker Change: Net income of 31 5 million euros decreased 7.4% versus the first quarter of last year, primarily due to lower revenue and gross margins realized.
Speaker Change: The offset by an eight 9% decrease in operating expenses.
Speaker Change: Basis gross margin has trended towards the lower end of our target range over the past three quarters due to primarily a law.
Speaker Change: Less favorable product mix.
Speaker Change: Particularly with respect to high end smartphones and that's Forex headwinds beginning in the second half of 2024 from adverse movements in some of our principal.
Speaker Change: Transaction currencies versus the euro.
Richard Blakeman: On a sequential basis Q1-25, operating expense growth of 10.3% versus the fourth quarter of last year was due to higher consulting It was at the lower end of guidance as we continued to control overhead development despite increased R&D investment. In addition, cash flow generation remains positive with net cash increasing by 10.8% versus the fourth quarter last year to reach 159.4 million euros which represented 26.3% of our latest 12 months revenue. As such, we continue our highly attractive capital allocation policy. In Q1 2025, we repurchased 22.1 million euros. of our shares bringing total cumulative purchase to 51.4 million euros under the current 100 million euros program.
Speaker Change: On a sequential basis Q1, 'twenty five operating expense growth of 10.3% versus the fourth quarter of last year was due to higher consulting costs.
Speaker Change: It was at the lower end of guidance as we continue to control overheads development Despite increased R&D investments.
In addition, cash flow generation remains positive with net cash increasing by 10%.
Speaker Change: First as to the fourth quarter last year to reach $59 4 million euros, which represented 26, 3%.
Speaker Change: Our latest 12 months revenue.
Speaker Change: As such we continue our highly attractive capital allocation policy.
Speaker Change: In Q1, 25, we repurchased $22 1 billion euros.
Speaker Change: Well, if our shares bringing total cumulative purchase to $51 4 million euros.
Richard Blakeman: Further, at our AGM today, shareholders approved the proposed dividend for 2024, which will distribute 172.5 million euros in cash to shareholders, which equals 2.18 euros per share.
Speaker Change: The current 100 million euros program.
Speaker Change: Further at our AGM today shareholders approved the proposed dividend for 2024, which will distribute 172 5 million euros in cash to shareholders, which equals two point 18 euros per share NAV.
Richard Blakeman: Next, I'd like to speak a little bit about the current market environment and our strategy. Tech Insights currently forecasts a 13% assembly market upturn in 2025, followed by a 26% increase in 2026. Most analysts continue to expect significant growth in advanced packaging for AI applications in 2025 and a second half upturn in mainstream assembly markets. However, the slope of the current trajectory anticipated for mainstream markets this year is subject to many variables, including the potential impact of tariffs on a global trade. Despite near-term uncertainty, we believe that the long-term fundamentals of our market remain strong due to the ongoing AI built onshoring of advanced packaging fabs in the US and Europe, and increased adoption of hybrid bonding and other next-generation assembly systems for new AI, logic, memory, and consumer use cases.
Speaker Change: Next I'd like to speak a little bit about the current market environment and our strategy.
Speaker Change: Second sites currently forecast, a 13% assembly market upturn in 25, followed by 26% increase in 'twenty six.
Speaker Change: Most of the analysts continue to expect significant growth.
Speaker Change: Advanced packaging for AI applications in 2025.
Speaker Change: In the second half, a turn and mainstream assembly markets.
Speaker Change: However, the slope of the current trajectory anticipated for mainstream markets. This year.
Speaker Change: Objective, many variables, including the potential impact of tariffs on our global trade.
Speaker Change: Despite near term uncertainty, we believe that the long term fundamentals of our market remained strong due to the ongoing build out.
Speaker Change: I'm sure of advanced packaging Fabs in the U S and Europe and increased adoption of hybrid bonding and other next generation Assembly systems for new AI logic memory.
Richard Blakeman: Of note, significant progress was made on BASIC's wafer-level assembly agenda this quarter, as we received hybrid bonding orders from two leading memory producers for HBM4 applications, as well as follow-on orders from a leading Asian foundry for logic applications. Further important announcements were made by two leading semiconductor producers with respect to future hybrid bonding applications, such as ASICs and co-packaged options. In addition, a leading U.S. logic manufacturer successfully began production of AI-related logic devices utilizing BASIS hybrid ponders in integrated production lines. Finally, Applied Materials announced on April 14 a 9% ownership position in Bayesie. Bayesie and Applied Materials have been successfully collaborating since 2020 to develop the industry's first fully integrated equipment solution for dye-based hybrid polymer.
Speaker Change: And consumer use cases.
Speaker Change: Off note significant progress was made on bases wafer level somebody agenda. This court.
Speaker Change: As we received hybrid bonding orders for two leading.
Speaker Change: From two leading memory producers for H B M. Four applications as well as follow on orders from a leading Asian foundry for logic applications.
Speaker Change: Further important announcements were made by two leading semiconductor producers with respect to future hybrid bonding applications, such as ethics and co package optics and <unk>.
Speaker Change: Asian, leading U S logic manufacturer successfully began production of AI related logic devices utilizing basis hybrid boneless.
Speaker Change: Greater production lines.
Speaker Change: Finally applied materials announced on April 14 at 9% ownership position and Basie.
Speaker Change: Basically at applied materials have been successfully collaborating since 2020 to develop the industry's first fully integrated equipment solution for dye based hybrid bonding.
Richard Blakeman: The collaboration brings together applied expertise in front-end wafer and chip processing with BASY's leadership position in bonding, accuracy, and speed. We welcome their shareholding as a strategic long-term investment and view it as further validation of our wafer-level assembly technology and strategy.
Speaker Change: The collaboration brings together apply <unk> expertise in front end wafer and chip processing with bases leadership position.
Speaker Change: The accuracy and speed.
Speaker Change: Welcome their shareholding as a strategic long term investment view.
Our view it is further validation of our wafer level Assembly technology strategy.
Richard Blakeman: Now a few words about the guidance. BASIS business development this year reflects the contrasting growth trends seen in the assembly equipment market between AI and mainstream applications. The timing and trajectory of a mainstream assembly upturn is more difficult to predict now given new tariff uncertainties. However, demand for advanced packaging for AI applications remains strong given upcoming new device introductions and use cases planned in 26 to 28 time periods. We continue to assess the potential impact of tariffs on basic customers, supply chain, and end-user markets. For the second quarter 25, we forecast that revenue will be flat plus or minus 10% versus the first quarter of 25, with gross margins in the range between 62% and 64%.
Speaker Change: Now a few words about the guidance basis business development. This year reflects the contrasting growth trends seen in the assembly equipment market between.
Speaker Change: Mainstream applications.
Finding a trajectory of a mainstream assembly upturn is more difficult to predict now given new tariff uncertainties. However demand for advanced packaging for AI applications remained strong given upcoming new device introductions.
Speaker Change: And use cases plant in 26 to 28 time periods, we continue to assess the potential impact of tariffs on basic customers supply chain and Jewish markets.
Speaker Change: For the second quarter 'twenty five.
Speaker Change: Forecast that revenue will be flat, plus or minus 10% versus the first quarter of 2005 with gross margins in the range between 60% to 64%.
Richard Blakeman: In addition, aggregate operating expenses are forecast to decrease 0% to 10% versus the first quarter this year, primarily due to a reduction in consulting cost.
Speaker Change: In addition aggregate operating expenses are forecast to decrease the zero to 10% versus the first quarter. This year, primarily due to a reduction in consulting cost.
Operator: That ends my prepared remarks. I'd like to open the call for questions. Operator. Thank you. If you would like to ask a question or make a contribution on today's call, please press star 1 on your telephone keypad. To withdraw your question, please press star 2. We kindly request you to limit the number of questions to 2 questions per person. You will be advised when to ask your question.
Speaker Change: That ends my prepared remarks, I'd like to open the call for questions operator.
Speaker Change: Okay.
Speaker Change: Yeah.
Speaker Change: Thank you.
Speaker Change: If you'd like to ask a question or make a contribution on todays call. Please press star one on your telephone keypad to be doing a question. Please press star we kindly request you to limit the number of question to two questions per person you will be at wise went to Ostial question.
Nigel Van Kooten: We will take our first question from Nigel Van Kooten. Morgan Stanley, your line is open. Please go ahead. Hi, thank you. Good afternoon.
Yeah.
Moderator: We will take our first question from Nigel when Goldman Morgan Stanley. Your line is open. Please go ahead.
Richard Blakeman: I've got a question on the hybrid bonding orders you've received for HBM. My understanding is correct. Both customers already received tools a couple of years ago, and were also working with you in Singapore and Austria. So now they put in new orders. Can you provide some context what you think that means, what stage of development they are and if you have any clarity on their intent and have a follow-up, thanks. Well, as we all know, the preferred technology to stack memory is a reflow process. TC, thermal compression, is used by all three major memory manufacturers today because the cost.
Hi, yes. Thank.
Speaker Change: Thank you good afternoon I've got a question on the hybrid bonding orders you've received for H B M.
Speaker Change: My understanding is correct both customers already received a couple of years ago, and we're also working with you in Singapore and Australia.
Speaker Change: So now they put a new orders can.
Speaker Change: Can you provide some context, what do you think that means what the stage of development they are in.
Speaker Change: If you have any clarity on their intent and I have a follow up thanks.
Speaker Change: Well as we all know the preferred technology.
Speaker Change: Stack memory is a refill process D C thermal compression a used by all three major memory.
Speaker Change: There are factors today, because the cost.
Richard Blakeman: simply more advantageous than using a hybrid bonding process. Pirate is better because it has less. metal in between the contacts because a reflow process. is reflowing a soft metal and driving current through a circuit, you need simply more current and that means that the performance of a hybrid-bonded device is better. Theoretically, then, a reflow-bonded device. The cost is also a factor of 4, some people say 6, higher using a hybrid process compared to a reflow process. So nothing new in the past year. exactly a year ago. released their standards to allow 16-stacking. of devices using this reflow process.
Speaker Change: Yes.
Speaker Change: You said pretty more advantageous than using a hybrid bonding process.
Speaker Change: Hybrid is.
Speaker Change: It's better because it has less.
Metal in-between contacts because a rifle approach says it's worth.
Speaker Change: Keep throwing a soft metal.
Speaker Change: Driving current store circuits youll need to simply more clubs.
Speaker Change: It means that the performance so far I have it on the device is better.
Speaker Change: C erratically than a lethal bullets device.
Speaker Change: The cost is also the effect of for some people say ethics are you using a hybrid course as compared to a LIFO approaches.
Speaker Change: So nothing new in the past year.
Speaker Change: Exactly a year ago J D.
Speaker Change: Released their standards to allow 16 stepping.
Richard Blakeman: It resulted in a height above the standard. So the industry has been developing, which is very, very understandable, this technology, which is proven in the next generation. And at the same time, they are developing the hybrid bonding process as an alternative. Number one, for a better performance, less energy consumption, less heat dissipation required. And so all of them are testing this hybrid bonding as a next step. preferred solution. And you can see in this quarter. continued testing, and also taking a latest machine. So we're talking about single machines, not the whole production facility. But these are testing machines, which should provide the answer.
Speaker Change: Of devices using this week flow process resulted in a height above the standard.
Speaker Change: So the industry has been developing.
Speaker Change: It's very very understandable this technology, which is proven in our next generation and at the same time. They are developing the hybrid bonding process as an alternative number one for a better performance.
Speaker Change: Less energy consumption less heat dissipation required.
Speaker Change: And so all of them are testing.
This hybrid bonding is it next week.
Speaker Change: Preferred solution.
Speaker Change: And you can see in this quarter.
Speaker Change: Continued testing and also taking our latest machine. So we're talking about single machines not filled the hole production facility.
Speaker Change: But these are testing machine, which you provide the answer.
Richard Blakeman: And the second part of this year is for HBM4, a certain part using a hybrid bonding, and another part using the conventional process, a TC process. So it's important to understand. what this means. It means simply continuing development, testing the benefits. understanding better how we can impact the cost, and in preparation of a next step in stacking 20 dies, where it is likely that a reflow process has hit certain limits, and then hybrid bonding is the only way to go.
Speaker Change: And the second part of this year.
It's four H, we have before.
Sure Tom Barth.
Speaker Change: Using a hybrid bonding.
Speaker Change: And another part using the conventional process T C process.
Speaker Change: So it's important to understand.
Speaker Change: What this means it means simply continuing development testing the benefits.
Speaker Change: Understanding better how we can impact the cost.
Speaker Change: The preparation of a next step and stacking 'twenty dyes, where it is likely that it will.
Speaker Change: So process is it sort of limits and then hybrid bonding is the only way to go.
Nigel Van Kooten: So that's, in a nutshell, where we are. Understood. That was actually very helpful.
Speaker Change: So that's in a nutshell why are we are.
Richard Blakeman: I do have a quick clarification, I guess. I think you've just repeated, customers are still looking at sort of a dual parallel track for 4 or 4E, 16 high. I think you're involved at least at one customer on both sides, also TCB, so maybe can you provide any color on your TCB developments within memory and also where you think sort of both tracks stand? I think you've sort of implied that there may be some testing going on already at 16, but the big implementation is beyond that. Did I understand that correctly? And then also, how do you look at, how do you look at your, you know, Bezis TCB venture?
Speaker Change: Understood that that was actually very helpful.
Speaker Change: Do you have.
Speaker Change: A quick clarification I guess I think you just repeat it customers are still looking at sort of a jaw parallel track for four 416 hi. Thank.
Speaker Change: Thank you were involved with at least one customer on both sides of the TCP.
Speaker Change: So maybe can you provide any color on your T C b.
Developments with within memory, and also where you think sort of both struck stand I think you've been sort of implied that there may be some testing going on already at 16, but the big implementation is beyond that.
Speaker Change: Did I understand that correctly and then also how do you look at how do you look at your best.
Richard Blakeman: Thanks.
Richard Blakeman: Well, um... Our TCB is a continuation of focusing on this reflow for the past 25 years. And you have seen, in this first quarter, significant increase in demand for mass reflow flip chip machines. TC is used for those processes where mass reflow is. too critical to accomplish with smaller bump at pitch. So we entered the TC world 12 years ago, and we have developed six years ago a next generation TC. which can produce at smaller bump at pitches than the current market supply. And that process is coming into the window of those customers. gradually, as we reported in the last quarter.
Speaker Change: <unk> T C b venture.
Speaker Change: Well.
Speaker Change: Our T C. B is a continuation of.
Speaker Change: Focusing all this we flow for the past 25 years.
Speaker Change: And you have seen in this first quarter a significant thing.
Speaker Change: Increase in demand for more Sweetveld flip chip machines.
Speaker Change: P C.
Speaker Change: It's used for those processes, where masri flow.
Speaker Change: Is.
Speaker Change: Two critical to accomplish with smaller bolt that pitches.
Speaker Change: So we entered the D C World 12 years ago.
Speaker Change: We have developed six years ago and next generation T C.
Speaker Change: Which ken.
Speaker Change: Produce at smaller bump that pitches than.
Speaker Change: The current markets suppliers.
Speaker Change: And that process is coming into the window of those customers.
Richard Blakeman: So we have said all along that the first half of this year, 2025. should also make clear whether this next generation is being adopted for HBM4 to a certain extent. So that will be exciting to understand in the next few months what will happen.
Speaker Change: Gradually as we reported in the last quarters.
Speaker Change: We have said all along that the first half of this year 25.
Speaker Change: Should also make clear whether this next generation D C.
Speaker Change: It's being adopted for H b.
Speaker Change: Four to a certain extent.
Speaker Change: So that will be exciting to understand it in the next few months what will what will happen.
Richard Blakeman: Basie has, in its offering, all three. So we have mass-refill, flip-chip. many, many years and today very successful. We have TC, which is also very Successful in focusing on the next generation. We shipped another system this quarter which already has produced data for BOMPED pitches well below the current. next generation, so below 20 micron bond pad pitch. Data has been produced below 10 micron bond pad pitch, so that system comes very close to hybrid bonding. So to offer the customers both solutions. in a reflow process and the most advanced hybrid bonding process. But this year, again, will be a very important year to understand how much of HBM4 will be reflowed.
Speaker Change: Basie has in its offering.
Speaker Change: So all suite so we have.
Speaker Change: So we felt it yet.
Speaker Change: For many many years and today very successful we.
Speaker Change: We have D C, which is also very.
Speaker Change: Successful.
Speaker Change: Focusing on the next generation.
Speaker Change: We shipped.
Other system this quarter.
Speaker Change: Which already has produced data for bump that pitch is well below the current next.
Speaker Change: Next generation, so below 20, micron boom that pitch.
Speaker Change: Data is being produced below 10, micron boom, but it showed that system comes very close to harvest boldly.
Speaker Change: So to offer their customers both solutions.
Speaker Change: In a lethal process and most of that falls out.
Speaker Change: But building process.
Speaker Change: But this year again will be very important here to understand how much of HBM before.
Richard Blakeman: and which are the machines used in the industry by which competitor. And then, which part may be hybrid bonded? Is that HBM4E? Or is that for the next generation? So we will update you quarter by quarter.
Speaker Change: We'll be re float.
Speaker Change: Which are the machines used in the industry by which competitor.
Speaker Change: And then which part may be hybrid boom, that's is that H b M for E.
Speaker Change: Or is that for the next generation.
Richard Blakeman: Also in the next month, we have the Capital Markets Day. So an exciting development in the memory front.
Speaker Change: So we will update you quarter by quarter also in the next months, we have the capital markets day.
Speaker Change: So an exciting developments.
Nigel Van Kooten: Perfect. Thank you very much.
Speaker Change: And the memory firms.
Speaker Change: Perfect. Thank you very much.
Charles Sir: We will take our next question from Charles Sir, Needham & Company. Your line is open, please go ahead. Hey, thanks for taking my questions. Richard, congrats on the two additional hyperbinding orders from two memory customers. Sounds like you are expecting maybe they will be qualified for HBM44E generation, the earliest. But if I look at NVIDIA's latest roadmap update, the Rubin, Rubin Ultra, HBM4 will come to the market second half, 26. HBM4E is like second half, 27. And memory makers probably need to start production a little bit before those NVIDIA product availability timeline. So I wonder, what's your thought on getting your hyperbinding tools in right now?
Speaker Change: We will take our next question from Charles Sir.
Speaker Change: Needham and company. Your line is open. Please go ahead.
Speaker Change: Okay. Thanks.
Speaker Change: Thanks for taking my questions Richard.
Speaker Change: Richard Congrats on the two additional hybrid bonding orders from two memory customers.
Speaker Change: It sounds like a U or you are expecting maybe they will get they will there'll be qualify for H B Fuller fourth E generation the early on but.
Speaker Change: But if I look at the VTS.
Speaker Change: The latest roadmap update the real valuable ultra HD for well come to the market second half 'twenty six H B O four years like second half 'twenty seven yeah memory makers, probably need to stop production a little bit before those of ETF product availability timeline.
Speaker Change: So wonder what's your thought.
Charles Sir: Is it enough time for you to get qualified for the 44E generation? How much confidence do you have in that timeline? Thank you.
Speaker Change: Getting our hybrid bonding tools in right now is that enough time.
Speaker Change: For you to get qualified for the for the generation of how much confidence you have in that timeline. Thank you.
Richard Blakeman: Well, that's, of course, a very important question. So there are two. Two important factors, number one is what is the window? of introduction that is often up for revision because it is not only the boomer but there are many other processes. And number two is the competitive landscape. What is available by what time? So, as I said, also in response to the earlier question. It will be very. exciting in the next couple of months to see how the industry will fill in. this the month and which processes will be used. That's as much as I understand today.
Speaker Change: Well that's of course, a very important question so the two.
Speaker Change: Two important factors number one is what is the window.
Speaker Change: Of introduction that debt is Austin.
Speaker Change: Up for revision because it is not only the boomer, but there are many other processes.
Speaker Change: And number two is the competitive landscape what is available.
Speaker Change: At what time.
Speaker Change: So as I said.
Speaker Change: All of a sudden response to the earlier question.
Speaker Change: It will be very.
Speaker Change: Exciting in the next couple of months to see.
Speaker Change: Oh, the industry will fill in.
Speaker Change: This demands.
Speaker Change: Which.
Speaker Change: Processes will be used.
Speaker Change: That's as much as I am.
Speaker Change: Miss them today.
Charles Sir: Thanks.
Richard Blakeman: Maybe a second question, Richard. I think in your earnings press release last quarter, you talk about maybe a second half recovery for the mainstream business, but obviously the language in the press release in the current quarter turned a little bit more cautious, so you're no longer saying you're expecting maybe a second half recovery. I wonder what you think about the potential revenue trajectory for the mainstream business. Do you think at least the second half can be flattish over the first half, or any additional color on the second half would be great? Maybe let me add one thing.
Speaker Change: Okay.
Speaker Change: Thanks.
Speaker Change: Maybe a second question Richard.
Speaker Change: I think your.
Speaker Change: Our earnings press release last quarter.
Speaker Change: You talk about maybe a second half recovery for the mainstream business, but obviously.
Speaker Change: The language in the press release, the current quarter turned a little bit more cautious or you are no longer saying, you're expecting maybe a second half recovery.
Speaker Change: Wonder what do you think about that perpetual revenue trajectory for the mainstream business can be do you think at least the second half can be flattish over the first half.
Speaker Change: Or any any additional color on the second half would be great.
Richard Blakeman: The reason why I ask this is when I look at the consensus revenue numbers, it looks like a lot of my peers are modeling a much bigger second half revenue estimates. What's your thought? Any color you can provide would be great. Thank you. Well, it's, I think, fair to say that since February 20, And on April 23, in the world, a lot has happened. And there are major, major impacts. to be. let's say expected or considered, however you want to phrase that. of these different terms. If you look in the historical perspective, any disruption to an economical situation.
Speaker Change: Maybe it's maybe let me add one thing that the reason why I ask this is why I look at the <unk>.
Speaker Change: Revenue numbers.
Speaker Change: It looks like a lot of that.
Speaker Change: But.
Speaker Change: My peer start modeling a much bigger second half.
Speaker Change: Revenue estimates.
What's so what's your thought on any any color you can put buy would be great. Thank you.
Speaker Change: Well, it's I think fair to say that since February 20.
Speaker Change: And April 23 in the World a lot has happened.
Speaker Change: And there are major made.
Speaker Change: Major impacts.
Speaker Change: To be.
Speaker Change: Let's say expected or considered it however, you want to phrase that.
Speaker Change: All of these different tariffs.
Speaker Change: If you look at the historical perspective, any disruption to an economical.
Richard Blakeman: is for our industry. nine out of ten, I would say ten out of ten, has a negative impact. So more cores. And that is why we are, let's say, probably more careful than simply following the statistical trends in this industry. That often results in when things have crystallized. that you may have an even steeper recovery. So that could also very well happen. Take the 2008, 9, the financial crisis. as a reference. or take for that matter, 2019, 20, and then the impact of COVID. So. these impacts. Our first. Closing some caution, and then After the again a stronger increase.
Speaker Change: Situation.
Speaker Change: It's for our industry.
Speaker Change: Nine out of 10.
Speaker Change: 10 out of 10.
Speaker Change: The negative impact so more caution.
Speaker Change: And that is why we are let's say.
Speaker Change: Probably more careful.
Speaker Change: And then simply following the statistical trends in this industry.
Speaker Change: That often results in when things have crystallized.
Speaker Change: That you may have.
Speaker Change: Steeper recovery.
Speaker Change: So that could also very well have to take the 2008 nine financial crisis.
Speaker Change: As a reference.
Speaker Change: Or take.
Speaker Change: For that matter 2019 'twenty.
Speaker Change: And then the impact of Covid.
Speaker Change: So.
These impacts.
Speaker Change: Our first.
Speaker Change: Okay.
Speaker Change: Some caution.
Speaker Change: And then.
Speaker Change: After the.
Richard Blakeman: So, our question is, because of this... phenomenon. We also see that as customers. We mentioned in the call, February 20. that already before the Trump terrorist. There was a big, yeah, let's say slowdown in automotive. Also disappointing in high-end smartphones. Not a big, big year to be expected. So why with all this terror of uncertainty? Would all of a sudden the market look better in the second half? We do see, and you see that in our order intake, some improvement year over year, quarter over quarter. But as long as it is single digit, it is not a very strong upturn.
Speaker Change: Again, a a strong word.
Speaker Change: Inquiries.
Speaker Change: So our question is because of this.
Speaker Change: Phenomena, we also see that the customers we mentioned in the call February 'twenty.
Speaker Change: That already before the Trump tariffs.
Speaker Change: There was a big year.
Speaker Change: Let's say slowdown in automotive also disappointing and high end smartphones, another big big year to be expected.
Speaker Change:
Speaker Change: So why with all this tariff uncertainty.
Speaker Change: Would all of a sudden the market look better in the second half.
Speaker Change: We do see.
Speaker Change: You'll see that in our order intake some improvements year over year quarter over quarter.
Speaker Change: But as long as it is single digits. It is not right.
Richard Blakeman: and when you would see second half of this year. a major uptick, you should see orders increase. dramatically in the first and the second quarter. because there's a need to. So in a longer answer, Charles, I hope that you are right. that we do see a strong recovery in the second half. Bayesian has demonstrated we can ramp very quickly. We're also prepared for that, of course. but in the current state of tariffs and economies. and a lower dollar. that usually has a negative effect.
Speaker Change: Its still up there.
Speaker Change: And when you.
Speaker Change: You would see second half of this year.
Speaker Change: A major uptick you should see orders inquiries.
Speaker Change: Dramatically.
Speaker Change: In the first and the second quarter.
Speaker Change: Theres a liter.
Charles: So in a longer answer Charles I hope.
Speaker Change: You are right.
Charles: But we do see a strong recovery in the second half.
Speaker Change: He has demonstrated weekend ramp very quickly.
Charles: We're also prepared for that of course.
Charles: But in the current state of tariffs.
Charles: Economies.
Charles: The lower dollar.
Charles: That usually has a negative effect.
Charles Sir: Thank you, Richard.
Charles Sir: Thank you, Charles.
Charles: Thank you Richard.
DDS Simmerman: We will take our next question from DDS Simmerman, Bank of America. Your line is open, please go ahead. Yes, thank you. Good afternoon, Richard. I just had a question on the first quarter order. Did it play out the way you expected, or did you see any push-outs from anyone, whether it's the IDMs or the subcontractors? The reason why I'm asking is because it's really in response to the previous question. It's really because if the customers are worried about tariffs, in some they might pull in, as they've done probably for SEMIs. But when it comes to back-end capacity, they probably pushed out, not knowing exactly how it's going to play out.
Charles: Yeah.
Charles: Thank you Charles.
We will take our next question from <unk> Bank of America. Your line is open. Please go ahead.
Speaker Change: Yes. Thank you good afternoon, Richard just had a question on Colombia first quarter older.
Speaker Change: Did it play out the way you expected or did you see any push outs from anyone whether its the idea until the subcontractors. The reason why I'm asking is because.
Speaker Change: It's really in response to the previous question.
Speaker Change: Because.
Speaker Change: If the customers are worried about tariffs in some respect they might pull in as they see as they've done probably for studies, but when it comes to backend capacity, they probably two steps rights not knowing exactly how it's going to play out. So if we were to have a bit more clarity on those tariffs and who knows that might happen do you think that they come back.
Richard Blakeman: So if we were to have a bit more clarity on those tariffs, and who knows, that might happen, do you think that they come back quickly in Q2 to actually cater for the seasonal uptake for smartphones and PCs that you normally see, especially smartphones for basic?
Speaker Change: Quickly in Q2 to actually gets us all the seasonal uptake for smartphones and Pcs that you normally see especially smartphones for basic I've got a follow up as well. Thank you.
Richard Blakeman: I've got a follow-up as well. Thank you. Yeah, that is what I tried to explain just now. if you look back in whatever downturn scenario we've had in the past many, many years. You have the hesitation because our customers don't. let's say have the confidence in the end market demand, you sense that it takes longer? Also take the Intel-specific situation and Intel restructuring, whether it's announced or not, but people expect a major, a major. let's say restructuring impact. that usually slows down orders for some time, but then it catches up. But it always gets, we have this nice slide in the deck going back to 2006.
Speaker Change: Yeah that is what I tried to explain just now.
Speaker Change: If you look back in and whatever.
Speaker Change: I'll turn scenario, we've had in the past many many years.
Speaker Change: You'll have the hesitation because our customers don't.
Speaker Change: Let's say has the confidence in the end market demand.
Speaker Change: The sense that it takes longer.
Speaker Change: Also take the Intel specific situations.
Speaker Change: Phil.
Speaker Change: Restructuring, but its announced or not but people expect a major.
Speaker Change: Sure.
Speaker Change: Let's say restructuring impact.
Speaker Change: That usually slows down orders for some time, but then it catches up.
Speaker Change:
DDS Simmerman: I invite you to look at that quarter by quarter and you see those impacts in every cycle along the way. And always, the recovery is very steep. The question is however will that be in the second half of the first half of next year, but it will recover. No, no, I get that. Sorry, sorry, trying to be a bit more precise on that. Did the quarter play out the way you expected, e.g., you know, did you miss by 10 million, 20 million or just help us understand how much you think your orders miss so we can try to understand how much it can it can sort of recover if and when tariffs are a bit more clear.
Speaker Change: But it always gets we have this nice slide in the deck going back to 2006 I invite you to look.
Speaker Change: Fourth it by quarter.
Speaker Change: And you'll see those impacts.
Speaker Change: Every every cycle along the way.
Speaker Change: And always the recovery is very steep.
Speaker Change: The question is however will that second half of the first half of next year, but it will recover.
Speaker Change: No no I get that Oh, sorry, sorry to trying to get a bit more precise on that did the quarter play out the way you expected EG did you Miss by a 10 million 20 million or just help us understand how much you think you. All just me. So we can try to understand how much you can each of them sort of recover eastern wind towers saw this more.
Richard Blakeman: Well, revenue was fine, was OK. It was also, yeah, more or less in the middle of the guidance. So that was not disappointing. Orders. I just. phrased it in other words, but we feel some delay. How much the delay is? whether it's 10 million or 20 million, it could very well be. On the other hand, look at the orders and the guidance. So we received in orders much less than what we guide, so we expect. Some orders still to come. and that will, if all goes well. may well have an upside and we got a plus minus 10 percent.
Speaker Change: Clear.
Speaker Change: Well, whereas in the U S.
Speaker Change: Wells five wells Okay.
Speaker Change: It was also more.
Speaker Change: More or less in the middle of the guidance.
Speaker Change: So that's a little smoke disappointing.
Speaker Change:
Speaker Change: Orders.
Speaker Change: Just.
Speaker Change: Phrased it in other words, but we feel some delay.
Speaker Change: Much that delay is.
Speaker Change: What it's $10 million with $20 million it could very well be.
Speaker Change: On the other hand look at the the order send the guidance. So we received in the orders.
Speaker Change: Much less than both weak items, so we expects.
Speaker Change: Some orders still to come.
Speaker Change: And that will if all goes well.
Richard Blakeman: On $144 million, the order intake was much less. So that more or less gives you the answer, D.B. Okay. But the bottom line is that we feel there's some caution, let's put it that way. Yeah, I think it makes complete sense.
Speaker Change: Meanwhile, hasn't upside that'd be kind of plus minus 10%.
Speaker Change: 144 million.
Speaker Change: The order intake was much less.
Speaker Change: So that's more or less issued yes of DVA.
Speaker Change: Okay. So the bottom line is that that we feel there's some caution let's put it that way.
DDS Simmerman: And sorry, just as a quick follow-up, on the hybrid bonding side from Foundry customers, you said you saw some follow-up orders. Can you elaborate a little bit? Is it coming for AI applications, computing applications, co-packaged optics? Just give us a sense of also the magnitude of that contribution to revenues in the second half, please. Well, we've said all along that that customer in Taiwan is not very transparent in terms of the end application. The end application we hear from their customers. So whether that's AMD or whether that's NVIDIA, NVIDIA, as we all know, is developing very much on this co-packaged optics.
Speaker Change: No I think it makes complete sense and I'm, sorry, just as a quick follow up.
Speaker Change: On the hybrid pumping side from foundry customers, who said you saw some follow up.
Speaker Change: Orders can you elaborate a little bit is it coming for AI applications computing applications.
Speaker Change: Package optics, just give us a sense of what sort of magnitude of that contribution to revenues in the second half. Please thank you.
Speaker Change: Well, we've said all along that that customer.
Speaker Change:
Speaker Change: And Taiwan is not very transparent in terms of <unk> and the application. The end application we hear from their customers. So whether that's M D or whether that's video video as we all know is developing right my children co package optics.
Richard Blakeman: We also know from high-end smartphone applications where certain modules are being assembled using the hybrid technology. So there's an ever-growing application field using hybrid bonding. currently a fleet of 50. A few more systems will be added. August-September, if all goes according to plan. There's a big program for 26. There's a site announced advanced packaging, which potentially is twice the size of the site which currently is operating the hybrid bonding systems. So there are big plans and a lot of development. And that should kick in somewhere, 26. But then you should receive orders in the later part of 25.
Speaker Change: We also know from high end smartphone applications, where certain modules are being assembled using the hybrid technology.
Speaker Change: So there's an ever growing.
Speaker Change: Application fields using hybrid bonding.
Speaker Change: Currently our fleet of 50.
Speaker Change: A few more systems will be added.
Speaker Change: August September.
Speaker Change: If all goes well.
Speaker Change: According to plan.
Speaker Change: Theres a big program for 26, there's a site announced.
Speaker Change: Packaging, which potentially is.
Speaker Change: Twice the size of the site, which currently.
Speaker Change: Is operating the hybrid bonding systems.
Speaker Change: So the big months.
Speaker Change: A lot of development.
Speaker Change: And that should kick in somewhere 26.
Speaker Change: So then you should receive orders in the later part of 'twenty five.
Richard Blakeman: But anyway, that is what we understand today.
DDS Simmerman: Okay. All right. Thanks very much, Richard. Thank you, D.J.
Speaker Change:
Speaker Change: But anyway, that's that is what we understand today.
Speaker Change: Okay.
Speaker Change: Okay.
Robert Sanders: We will take our next question from Robert Sanders, Dutch Bank. Your line is open. Please go ahead. Yeah, hi, good afternoon. Hi, Richard. I just have two questions.
Alright, thanks very much Richard.
Speaker Change: Thank you <expletive>.
Speaker Change: We will take our next question from Robert Sanders Deutsche Bank. Your line is open. Please go ahead.
Richard Blakeman: Firstly, if you could just talk a bit about Hynex, they're in a quite public dispute with Hanmi at the moment. I was just wondering if that could potentially create an opportunity for you, either in TC or hybrid bonding. And then the second question would just be, if you could just confirm that you had mid-single digit orders in the quarter, just to help our modeling for hybrid bonding, that would be great. Thank you. The last is even more precise, yeah, in the middle, it's single digit, on the Hynek situation. and that is public knowledge. They are like the other two, developing both technologies and continuing using the MUF process and reflow.
Robert Sanders: Yeah, Hi, good afternoon, Hi, Richard.
Speaker Change: I just had two questions firstly.
Speaker Change: If you could just talk a bit about hynix staring up quite public dispute with a hand me at the moment I was just wondering if that could potentially create an opportunity for you.
Speaker Change: Either in Tc or hybrid bonding and then the second question would just be if you could just confirm that you had mid single digit orders in the quarter I just just to help our modeling for hybrid bonding that'd be great. Thank you.
Speaker Change: Yeah. The last this is.
Speaker Change: It's even more precise.
Speaker Change: Yeah in the mid single.
Speaker Change: Single digits.
Speaker Change: On the high Tech situation.
Speaker Change:
And that is public knowledge. They are they are like the other two developing both technologies.
Richard Blakeman: And they are also. Continuing to test hybrid bonding solution. They're also preparing local supply and a second source. So that fits into the total picture that 25 may well show some direction in those three continuing to use reflow plus starting to more seriously develop hybrid bonding stack. So partly relying on our. The AMET Centre of Excellence in Singapore, also development in Raatsveld. And that's where it's done.
Speaker Change: Continuing using the <unk> process flow.
Speaker Change: And they are also.
Speaker Change: Continuing to test hybrid bonding solutions.
Speaker Change: They are also preparing local supply and then a second source.
Speaker Change: So that fits into the total picture that 25 may well show some direction.
Speaker Change: Those suite.
Speaker Change: Continuing to use we float glass.
Speaker Change: Starting to more serious see develop hybrid will be sticky.
Speaker Change: So partly rely on arm.
The <unk> center of excellence in Singapore.
Robert Sanders: On the dispute you are mentioning, yeah, there's, and we've mentioned that in every call, the current landscape of TC bombers is able to produce with a certain bomb pad pitch and a certain process. but that's not good enough for the next generation. It needs to be a type of bumper pitch. It needs to be fluxless. Then which fluxless solution? Is it a plasma solution? or is it some type of chemical solution? that that is currently in full swing and some. are more advanced in their solutions offering than others. Great. Thanks a lot. Thanks.
Speaker Change: Also development the households.
Speaker Change:
Speaker Change: And that's where it stands.
Speaker Change: On the dispute you are mentioning yes, there is and we've mentioned that didn't have a cool the car.
Speaker Change: <unk> landscape.
Speaker Change: Or do you see boneless is able to produce with us sort of bone pad pitch and a certain process.
Speaker Change: But that's not good enough for the next generation.
It needs to be tied to both the pitch it needs to be a flux US then which flexes solution is it the last mile solution.
Speaker Change: Or is it some type of chemical solutions.
Speaker Change: That is currently.
Speaker Change: In full swing and some.
Speaker Change: Or are more advanced in their solutions offering than others.
Aditya Muthuku: We will take our next question from Aditya Muthuku, HSBC. Your line is open, please go ahead. Yeah, good afternoon, guys. Thank you for squeezing me in. So firstly, Richard, maybe when I look at the roadmaps for AI accelerators, Rubin Ultra, which is meant to ship in the second half of 2027, is expected to be the first accelerator that uses 16 high HBM. Until then, the market seems to be dominated by 12 high HBM. So given this backdrop, even if hybrid bonding gets qualified for 16 high HBM, despite all the short timelines, would it be fair to assume that hybrid bonding will not be used in volume production until 2027?
Speaker Change: Great. Thanks, a lot.
Speaker Change: Thanks.
Speaker Change: We will take our next question from RVP are meant to cool.
Speaker Change: HSBC. Your line is open. Please go ahead.
Speaker Change: Yeah. Good afternoon, guys. Thank you for squeezing me in so firstly.
Speaker Change: Richard maybe when I look at the Roadmaps for AI accelerators.
Speaker Change: Ruben Ultra which is meant to ship in the second half of 2027 is expected to be the first accelerates other to use of 16 high H B M. Hum.
Speaker Change: Until then the market seems to be dominated by 12, five height, Hi, H P M.
Speaker Change: This backdrop, even if hybrid bonding gets qualified.
For 16 high H B M. Despite all the short.
Richard Blakeman: Or do you think it could still be earlier, maybe with some test versions of 12 high HBM? And I've got a follow-up. Yeah, well. The way you summarize it is pretty much how it is presented to us. And again, we come back to the basic reason why using. Hybrid bonding and stacking is simply the performance. So. Is there a differentiator using a hybrid building process which is more expensive? compared to a reflow. And that is up. for the debate at each of the three producers. And that's where we are continuously doing tests in the hybrids, but also in the TSC.
Speaker Change: Short timelines would it be fair to assume that a hybrid bonding will not be used in volume production until 2027.
Speaker Change: Or do you think it could still be eylea, maybe with some bhushan. So some test Russians of.
Speaker Change: Wildfire H P M.
Speaker Change: And I've got a follow up.
Speaker Change: Yeah well.
Speaker Change: The way you you summarize it is pretty pretty much how it is presented to us.
Speaker Change:
Speaker Change: And again, we come back to the basic.
Speaker Change: Reason why using.
Speaker Change: Hybrid bonding stacking is simply the performance so.
Speaker Change: Is there a differentiator using a hybrid bullneck process, which is more expensive.
Speaker Change: Compared to Refloat.
Speaker Change: And that is up.
Speaker Change: Further debate at each of the three.
Speaker Change: Producers.
Speaker Change: And that's where we.
Richard Blakeman: So. In another way of putting it, it's on everyone's mind, huh? But how it will sort itself out is not yet clear.
Speaker Change: Our continuously.
Speaker Change: Doing tests in the hybrid but also in the T C.
Speaker Change: So.
Speaker Change: Another way of putting it is.
Speaker Change: So on everyone's mind too.
Aditya Muthuku: Understood. And as a follow-up, you mentioned earlier that smartphone applications are looking at hybrid bonding. TSM on their last call, not this one, but in the previous quarter, they were specifically asked if they see smartphones going to hybrid bonding any time soon, and they basically said no. So I don't know, are these use cases being developed by somebody else? Thank you. in Taiwan. Well, they're good questions. Number one. There is no final answer in whether it will be used or not at this moment. So they're all testing. They're all understanding the benefits of one over the other.
Speaker Change: But how it will sort itself out is not yet clear.
Speaker Change: Understood.
Speaker Change: A follow up you mentioned earlier that smartphone applications silicon that hybrid bonding.
Speaker Change: T S M on the last call not not want this one but.
Speaker Change: In the previous quarter. They were specifically asked if they see smartphones cutting type of bonding anytime soon and they and they basically said no. So I then or is this are these use cases being developed by somebody else.
Speaker Change: And Ah Ah maybe not your main customer in Taiwan.
Speaker Change: And also I just wondered if you might be able to comment on the competition from China.
Speaker Change: It seemed to be a lot of companies coming up in China addressing hybrid bonding. Thank you and apologies for the tough question.
Speaker Change: No.
Speaker Change: Good question number one.
Speaker Change: There is no final answer in.
Speaker Change: Whether it will be used or not at this moment, so they're all testing still.
Richard Blakeman: So the hybrid polymer process over reflow. They're all aware of the... The performance increase, cost is a major issue right now because it has to take place in cleanroom and there is a factor of 4 to 6 more cost. To ask the question, will it be included in the iPhone 2025? The answer is no. We have always said, going back capital markets days, I think three years. maybe even four, that we expect 2027 to be the first in using. So you have to be also... aware that this testing is ongoing? And that doesn't mean that this is.
Speaker Change: Understanding the benefits of one over the other so the hybrid Goldman approach us.
Speaker Change: So.
Speaker Change: You're all aware of the.
Speaker Change: Yes, the performance increase cost is a major issue right now because it has to take place in clean room and there is effect of four to six more of a cost.
Speaker Change: No.
Speaker Change: Who asked a question will it be included in the iPhone 2025, the answer is no.
Speaker Change: We have always said.
Speaker Change: Going back to capital markets days, I think three years.
Speaker Change: Maybe even before.
Speaker Change: We expect 2027 to be the first and using debt.
Speaker Change: So you have to be.
Speaker Change: Oh so.
Aditya Muthuku: Well, maybe not used this year, but it can very well be next year or the year after. Please help me with your second question. Hello, sorry. Can you repeat your second question? Yes, apologies, I was on mute. I was just saying, recently there's been a lot of news flow around hybrid bonding competition coming out of China. I'm probably going to mispronounce the names, but the names I've seen are Tuojing, Shanghai, Yinguan, and a couple of others. So I just wondered if you could give us your thoughts on how you see hybrid bonding competition arising out of China.
Speaker Change: Where that this testing is ongoing.
Speaker Change: And that doesn't mean that this is.
Speaker Change: Well, maybe not use this year, but it can very well be next year or do you get the Austin.
Speaker Change: Please help me with your second question.
Speaker Change: Hello, sorry.
Speaker Change: Can you repeat your second.
Speaker Change: Yes, I apologize I was on mute Oh, she's saying recently, there's been a lot of news flow around hybrid bonding competition coming out of China, I'm, probably going to mispronounce the names, but the names are seen at torching Shanghai <unk>.
Speaker Change: Go on.
Speaker Change: And a couple of others.
Richard Blakeman: Well, there's of course a lot of activity, not only in China, but also outside of China. Everyone now understands that hybrid bombing at some point for the applications we discussed earlier is a fact of life. So, anyone building a precise boulder is developing also a hybrid version. So that's not new. How advanced they are is still a big question, but you can expect more competition coming from every region. We are currently, with the 100 nanometer, well advanced in comparison to everyone else. And certainly when we will ship the first 50 nanometer. which should be by the end of Q3, early Q4.
Speaker Change: So I just wondered if you could give us your thoughts on how you see hybrid bonding competition arising out of China.
Speaker Change: Well there's of course, a lot of activity not only in China, but also outside of China, everyone now understands that hybrid bonding.
Speaker Change: At some point for.
Speaker Change: The application, we just applications we discussed earlier.
Speaker Change: As a fact of life.
Speaker Change: So anyone building a precise bone, though is is developing also.
Speaker Change: Great.
Speaker Change: Ocean.
Speaker Change: So that's not new.
Speaker Change: <unk>.
Speaker Change: How advanced they are still a.
The big question.
Speaker Change: But you can expect more competition coming from every region.
Speaker Change: We are currently with some it nanometer well advanced in comparison to everyone else.
Speaker Change: And certainly when we will ship the first 16 nanometer.
Richard Blakeman: That is not available at anyone else in the world. Also, 100 nanometer is not the standard used by anyone else. So we continuously build on our lead. We follow closely the roadmap of TSMC, and we also fulfill that roadmap. In China, the status today is with many of the devices, like also the coals. is a reflow process. So a TC process, a mass reflow process. not yet in production, an HB process. a hybrid-only approach. We are very successful in the Chinese market today, delivering a lot of mass reflow flip-chip systems. We have two types, we have the 2100 and we also have the quantum.
Speaker Change: Which should be by the end of Q3 early Q4.
Speaker Change: That is no.
Speaker Change: Available at anyone else in the World also hundred nanometer is not the standard that's used.
Speaker Change: Anyone else.
Speaker Change: So we have we continuously built on our lead.
Speaker Change: We follow closely the roadmap both TSMC and we also fulfilled that roadmap.
Speaker Change: And China the status today is with many of the devices like also the Kohl's.
Speaker Change: If we slow process. So a T C process a mouse we felt process.
Speaker Change: Not yet in production and H b process.
Speaker Change: Our hybrid bonding approach us.
Speaker Change: We are very successful in the Chinese market today.
Speaker Change: Living a lot of mass re flow flip chip systems.
Richard Blakeman: which are used for similar 2.5D modules in China. So. The process of reference, having a market share of close to 100%.
Speaker Change: Two types, we have to 'twenty, one onwards, and we also have the quantum.
Speaker Change: Which are used for a similar two and a half the modules in China.
Speaker Change: So.
Aditya Muthuku: But anyway, your question is absolutely right. But with bombers forever, we have seen Chinese competitors. trying to capture a certain segment in this market. Understood, thank you.
The process of reference having a market share of close to all my questions.
Speaker Change:
Speaker Change: But anyway. Your question is absolutely.
Speaker Change: Right.
Speaker Change: But with bonus for ever we've seen Chinese competitors.
Speaker Change: Trying to capture a certain segment in this market.
Ruben Devos: We will take our next question from Ruben Devos, Capital Chiru. Your line is open, please go ahead. Yes, yes, good afternoon. Thanks for letting me on. I just had one regarding the co-packaged optics. I think in your prepared comments you talked about two leading semiconductor producers that have made announcements. I think you've alluded to a video in this call and I think Intel has also been quite explicit on its roadmap with hybrid bonding applications into ASICs and co-packaged optics. Could you maybe talk about your engagement with those two, but also maybe with some others that might also be candidates?
Speaker Change: Understood. Thank you.
Speaker Change: We will take our next question from Ruben tables Kepler. Your line is open. Please go ahead.
Ruben: Yes, yes. Good afternoon. Thanks for letting me on I just had one regarding the co packaged optics I think Kim you in your prepared comments you talked about two leading semiconductor producers that have made announcements I.
Speaker Change: Thank you alluded to I mean video on this call and I think until there's also been quite explicit on its roadmap with hybrid bonding applications into a six and co pack is optics.
Ruben Devos: I'm just thinking Marvel or AMD and these types of names.
Speaker Change: Yeah could you.
Speaker Change: Maybe talk about your engagements with those two but also maybe with some others that might also be candidates I'm, just thinking Marvel or AMD in these types of names.
Richard Blakeman: And then just on a follow on that, I think last year at the Investor Day, you talked about sort of the market scenarios for hybrid bonding, but you always excluded co-packaged optics. Yeah, very curious to hear your thoughts on how you think that size of the market could be maybe relative to, for instance, the HBM market or the high-end logic market with server processors. Thanks. Well, we did not, I cannot remember that we left co-packaged optics out of the potential market applications. It's more, well, there are two areas in this application field. There is these connectors.
Speaker Change: And then just on a follow on on that I think last year at the Investor Day.
Speaker Change: You talked about sort of the market scenarios for hybrid bonding, but you're always exclude co packaged optics I'm very curious to hear your thoughts on how you think that size the size of that market could be maybe relative to for instance, the AGM market or the high end logic market with silver processing. Thanks.
Speaker Change: Well, Oh, we did not I cannot remember that's the law.
Speaker Change: Left co packaged optics out of the well.
Speaker Change: Potential markets.
Speaker Change: Applications, it's more.
Richard Blakeman: where we are forever with photonics applications which is done. with 2 micron, 1 micron precision. We have major market positions in those applications with a broad range of customers, also the top ones. Those are those connectors which are included in the data center processors directly, and then we have co-packaged optics, where we are also engaged with the customer you just mentioned, and also the other one, since early days. So, that is a very... Yeah, let's say interesting markets, which is also in early days. we have to write. technology for that, also the customers for many, many years.
Speaker Change: Well that two areas in this in this.
Speaker Change: Application field there is these connectors.
Speaker Change: We are forever with.
Speaker Change: Photonics.
Applications, which is.
Speaker Change: With them.
Speaker Change: Two micron one micron precision.
Speaker Change: We have major.
Speaker Change: Market position in those applications with <unk>.
Speaker Change: A broad range of customers also the top ones.
Speaker Change: Oh is that those connectors, which are included in the.
Speaker Change: Data center processors directly.
Speaker Change: <unk>.
Speaker Change: And then we have co packaged optics, where we are also engaged with the customer you just mentioned and also the other one.
Speaker Change: Since early days.
Speaker Change: So that that is a way.
Speaker Change: Yeah, let's say interesting markets.
Speaker Change: Which is also in the early days.
Speaker Change: We have to right.
Richard Blakeman: So at the next capital markets day, we will make very clear to you what the potential of that market may well be. and what are the different processes, but it's a key focus of our product strategy. All right, great. I'm looking forward to that.
Speaker Change: Technology for that also the customers for many many years.
Speaker Change:
Speaker Change: So at the next capital markets day, we will make very clear to you.
Speaker Change: What the potential of that market.
Speaker Change: They will be.
Speaker Change: And what are the different processes.
Ruben Devos: Then the second question just on applied material. I believe you've been working with them since 2020. Could you walk us through how that collaboration has evolved in the past five years and how that has taken a stake? Do you see that more as a strategic edge or could it be the first step toward maybe deeper integration? How are you thinking about your independence long term as packaging and maybe process control starts to converge? Thanks.
Speaker Change: But it's a key focus of our product strategy.
Speaker Change: Alright, great looking forward to that.
Speaker Change: Yeah.
Speaker Change: Then the second question just on applied.
Speaker Change: Cereal.
Speaker Change: I believe you've been working with them since 2020.
Speaker Change: Could you walk us through how that collaboration has evolved in the past five years.
Speaker Change: And not at the taken a stake.
Speaker Change: Do you see that more as a strategic hedge or or could it be the first step towards maybe deeper integration.
Speaker Change: Yeah, how are you thinking about your independent as long term as a.
Richard Blakeman: Well, that's a very big question, but let me start with the beginning. We started nine years ago with TSMC to develop this hybrid bonding. for Yeah, CPUs for logic devices because the smaller bumper pitches required a different process. As soon as that became, let's say, into an end market device in 2019, I remember vividly the first discussion we had with Applied And how can we work more closely, or let's say work together? in a closer way for the industry to support the adoption of this technology. with offering number one process development applied as a center of excellence in Singapore.
Speaker Change: As packaging, maybe process control starting to converge. Thanks.
Speaker Change: Yeah.
Speaker Change: Well, that's a very big question, but let me start with the beginning.
Speaker Change: We started.
Speaker Change: Nine years ago with TSMC to develop this hybrid bonding.
Speaker Change: Four.
Speaker Change: Yes Cpus.
Speaker Change: Logic devices, because the smaller bolt that pitch is required.
Speaker Change: Arent process.
Speaker Change: As soon as that became.
Speaker Change: Let's say into and end market device in 2019.
Speaker Change: Remember vividly the first discussion we had with applied.
Speaker Change: And how can we work more closely.
Speaker Change: Or let's say work together.
Speaker Change: In a closer way before the industry to support the adoption of this technology.
Richard Blakeman: and at the same time support the development of automated lines because that improves the process window and the process quality. So from then on, 2020, we formalized that cooperation just before COVID broke out. And ever since, we have worked very closely on a weekly basis, a review, in bringing this technology to ever next and higher levels. It also has created in the market a clear model whereby a front-end company having the experience with front-end processes operating in front-end FAT. and a beckoned company for which this next generation has to be developed. So that has worked step by step.
Speaker Change: With offering.
Speaker Change: Number one process development bright as a center of excellence in Singapore.
Speaker Change: And at the same time support the development of automated lines, because that improves the process window and the process quality.
Speaker Change: So from then on 2020, we formalized that corporation, just before Covid broke out.
Speaker Change: And ever since we have worked very closely.
Speaker Change: Although weekly basis review.
Speaker Change: And bringing this technology to ever.
Speaker Change: And the higher levels.
Speaker Change:
Speaker Change: It also.
Speaker Change: It has created in the market are clear.
Speaker Change: Model, whereby the form tens.
Speaker Change: Company, having the experience with front end processes operating and front end fabs.
Speaker Change: In our backend company for which this next generation has to be developed.
Richard Blakeman: customer by customer in the logic arena, in the memory arena, also in other areas. And we are very positively surprised by... Applied Announcing and Ownership. a stake of 9% in Bayesian. That will only intensify our cooperation. and leads to leadership position ever more into this market. So that's what it is. Okay, thank you very much.
Speaker Change: So.
Speaker Change: That has worked step by step.
Speaker Change: Customer by customer and allergic arena.
Speaker Change: Memory Arena.
Speaker Change: Other areas.
Speaker Change: And we are very positively surprised.
Speaker Change: Right.
Speaker Change: Applied and I was saying.
Speaker Change: Ownership.
Speaker Change: Stake of 9% and.
Speaker Change: In Beijing.
Speaker Change: That's the only intensify our corporation.
Speaker Change: And leads to leadership position ever more into this market.
Martin Marendel-Calhoun: We will take our next question from Martin Marendel-Calhoun.
Speaker Change: So that's that's what it is.
Richard Blakeman: Aldo BHF, your line is open. Please go ahead. Hi, thanks for taking my questions. My first question is on memory. What do you think are the key advantages in memory that allow you to win orders versus competitors for hybrid bonding? Because in logic, it's maybe a bit more obvious, as the precision requirements are higher. And it seems that there is a technological gap between busy and competition in that aspect for hybrid bonding. But in memory, I'm curious to know about what makes the difference to win over competition. Well, on memory, number one, the dies are thin.
Speaker Change: Okay. Thank you very much.
Speaker Change: We will take our next question from Martin Mariner Callahan Aldo BHF. Your line is open. Please go ahead.
Christian: Hi, Thanks for taking my questions myself Christian is on many movie.
What do you think other key advantages in many movies that through Youtube.
Christian: Although she is a competitor for hybrid bonding it doesn't even know Jake it's maybe a bit more of your says it's a question of requirements are higher and it seems that there is a technological gap between busy and competition that the spectral hybrid bonding that's memory I'm curious to know about what makes the difference to to win over competition.
Richard Blakeman: So the complexity is different. So on logic, you have more context. Memory, you have less context. but the device is thinner. So the... stacking is. very much. Influenced by how you are able. to control this variation in ultra-thin devices. And one of the advantages of a reflow process And that means a soft metal in between the two guys. accommodates for some of the delta in signal. With hybrid bonding it has to be completely flat. You have less room. to accommodate the variation in thickness. But. The process itself is better because you need less current. produce less heat, so the performance of a hybrid-bonded device is better than that of a reflow-bolted device.
Christian: <unk>.
Christian: Well on memory number one the die size sooner.
Christian: So the complexity is different so on logic you'd have more contexts memory, yeah, let's contacts.
Christian: But the device is C&I so the.
Christian: Stacking.
Yes.
Christian: Very much.
Christian: Influenced by how your April.
Christian: To control this variation in to us in devices.
Christian: And one of the advantages of the reef low approaches.
Christian: And that means a silver medal in between the two dice.
Christian: Accommodates for some of the Delta in sickness.
Christian: With high grade gold Nuggets has to be good.
Christian: Lately flat you'll have less.
Christian: Yeah.
Christian: To accommodate the variation and sickness Buck.
Christian: The process itself is badly.
Christian: Because you need less clearance.
Christian: Let's see so the.
Christian: Performance of a hybrid boom that device.
Richard Blakeman: And then you have to. The cost is in fact four, six more expensive using hybrid. So the whole memory world is. Developing on an ongoing basis. The advantages of both processes. and understanding when are crossroads in using one over the other. In logic, you concluded already yourself. That decision is more close and has been made by many customers as we explained in detail. Intel finally also moving second half of last year at TSMC already three years earlier. And the advantages are ever more clear, because you have closer contacts. The bump at pitches are smaller. And you have simply less issues with heat.
Christian: It's better than that of a leaf will build that deep.
Keith Weiss: Keith Weiss.
Keith Weiss: And then you have to cost.
Keith Weiss: Pulse is effective for six more expensive using hybrid.
Keith Weiss: So the whole.
Keith Weiss: The memory World is.
Keith Weiss: Developing ongoing basis.
Keith Weiss: The advantages.
Keith Weiss: Both processes.
Keith Weiss: And understanding when a crossroads in using one over the other.
Speaker Change: Allergic you concluded already yourself.
Keith Weiss: That decision.
Keith Weiss: It's more close and has been made by many customers as we explained in detail. Intel Finally also moving second half of last year.
Keith Weiss: At TSMC already three years earlier.
Keith Weiss: N D advantages are ever more clear because you have closer contacts the bump that pitches are smaller.
Richard Blakeman: So. That is where we are today. And BASI, again, follows both roadmaps. So the reflow process, from what I mentioned also earlier, mass reflow, it starts, flip chip, then TC, individual devices. then hybrid bonding and that is the complete offering.
Keith Weiss: And you'll have simply less issues with with heat.
Keith Weiss: So.
Keith Weiss: That is where we are today.
Keith Weiss: Basically again follows both road map so the reef low approaches from what I mentioned also earlier masri flow starts flip chip then T C individual devices.
Martin Marendel-Calhoun: I have a follow-up on your U.S.
Keith Weiss: And then hybrid building and that is the complete offering.
Richard Blakeman: customer. What do you think needs to happen with your U.S. customer before receiving a follow-up order for hybrid bonding? Do you think they will wait to see what the commercial success of their new CPU using hybrid bonding? Do you think they need to figure out what restructuring they need to do first, or do you think they will necessarily have new capacity soon as their new products now move more and away from TCB and transition more and more to hybrid bonding?
Speaker Change: Okay. Thank you very much and I I have a follow up on the on your risk costs are now what do you think needs to happen with your U S system there'll be felt like soothing a photo with all deaths for hybrid learning do you see that we'd wait to see what is the commercial success of down you see people using hybrid.
Speaker Change: Thank you.
Speaker Change: Do you think they need to figure out what's doing the need to do first of all do you think they wouldnt necessarily had new capacity soon.
Richard Blakeman: It's about, as you have just summarized, they are sampling the market with hybrid-bonded devices, clear water forests. We will understand, that's what we are told, towards the early part of the summer. how successful that is and what we can expect. In terms of capacity increase, we are currently running every single day and all test devices tested with customers. And then there's the next device already. let's say presented. which will be more for high-end computer applications, not so much for data centers. It's hard to forecast how successful that will be. But there's an enormous amount of pressure, commitment to make this all work.
Speaker Change: New products now move more and more away from JCB and condition mine not to hybrid bonding.
Speaker Change: It's about the issue as you have just summarized.
Speaker Change: They are sampling the markets with the hybrid bond.
Speaker Change: It is clear also forged.
Speaker Change:
Speaker Change: We will understand that's what we're told.
Speaker Change: Towards the early part of the summer.
Speaker Change: How successful that is and what we can expect.
Speaker Change: In terms of capacity.
Speaker Change: Inquiries. We are currently running every single day.
Speaker Change: We'll test devices tested with customers.
Speaker Change: And then there's the next few months.
Speaker Change: Already.
Let's say presented.
Speaker Change: Which will be more for high end computer applications, not so much with data centers.
Speaker Change: It's hard to forecast how successful that will be.
Martin Marendel-Calhoun: Thank you very much. That's all I have for you today. Thank you.
Speaker Change: But there is an enormous amount of pressure commitment to make this all work.
Madeleine Jenkins: We will take our next question from Madeleine Jenkins UBS. Your line is open. Please go ahead. Hi, thanks for taking my question. I just have one. We've been hearing that the Koreans are potentially working on a sort of combined HBM solution, so the hybrid bonding and TCB are in the same kind of HBM stack.
Speaker Change: Okay. Thank you very much that's helpful.
Martin Mariner: Thank you Martin.
Speaker Change: And in basketball.
Speaker Change: We will take our next question from Matt Olney Jenkins UBS. Your line is open. Please go ahead.
Matt Olney: All right. Thanks for taking my question I just have one we've.
Richard Blakeman: I just kind of wanted to get your view on the technical side, what the viability of this is, and also if it's something you've been involved with. Thank you. We have been involved in development stage. There are many different ways to skin a cat. So, yeah, this fits into the category, what's all possible and what makes sense.
Speaker Change: We've been hearing that the trends of such a whack yana instead of combined H P. M solution set of hybrid bonding and T C b or in the same kind of H P. On stock I, just kind of wanted to get your view on like on the technical side, what the viability of that says I don't want to say something ive been involved with thank you.
So we have been involved in development stage.
Speaker Change: Yeah.
Speaker Change: There are many different ways to skin a cat.
Richard Blakeman: The excellent thing of our Center of Excellence in Singapore from Applied Materials is that there is a center of all kinds of those developments for the industry. We've added into our part also the TC NEXT product. which then allows customers to develop both and exactly addressing. those two, combination of those two processes. How far that will go?
Speaker Change: I see.
Speaker Change: Uh huh.
Speaker Change: So.
Speaker Change: Yes, this fits into the category.
Speaker Change: What's possible and what makes sense.
Speaker Change: The.
Excellent thing of our center of excellence.
Speaker Change: Singapore from applied materials.
Speaker Change: Is that that is the center of all kinds of those developments for the industry.
Speaker Change: We've added into our part also the T C next products.
Speaker Change: Which.
Speaker Change: Then allows customers to develop both an exactly addressing.
Richard Blakeman: Where you will also see that is at IMEC. We shipped, as I mentioned earlier, the first quarter of the latest TCNEX. They're already producing, already when the system was in output, all kinds of devices.
Speaker Change: Those two.
Speaker Change: A combination of those two processes, how far that will go.
Speaker Change: Where you will also see that you said I think we shipped as I mentioned already in the first quarter. The latest T. C. Next.
Richard Blakeman: But we will share more data about that at the capital market stage. Okay, thank you Richard. Thanks, Melvin.
Speaker Change: They're already producing already when the system most of the households, all kinds of devices.
Speaker Change: We will share more data about that at the capital markets day.
Martin Youngflesh: We will take our next question from Martin Youngflesh, BNB Paribas, your line is open, please go ahead. Yeah. Hi. Good afternoon. Thanks for letting me on.
Speaker Change: I can't Thank you Richard.
Speaker Change: Thanks Amanda.
Speaker Change: [laughter].
Martin Youngflesh: I just have one quick one on the Q2 guidance. If you could just run us through the moving parts here, quarter on quarter. So, would you expect hybrid bonding shipments to be relatively flat, quarter on quarter, given the remaining shipments to the Taiwanese and also the US IDM? So, basically, does the midpoint of the guidance imply flat mainstream and flat hybrid bonding, quarter on quarter, or is it not the right way to think about it? And maybe if you can also tell us the backlog of the hybrid bonders that you should now have. Is it in the teams?
Speaker Change: We will take our next question from Martin Young Flinch.
Speaker Change: Partly about your line is open. Please go ahead.
Speaker Change: Yeah, Hi, good afternoon, thanks for letting me on that one.
Speaker Change: One quick one on the Q2 guidance if you could just one one as to the moving parts here quote unquote us So what do you expect.
Speaker Change: Funding shipments to be relatively flat quarter on quarter, given the remaining shipments to the time when he starts with the U S. IDM. So basically that's the midpoint of the guidance implied that.
Speaker Change: That mainstream.
Richard Blakeman: Thank you. But we are not providing. specific information about what we ship or what we schedule to ship, but your assessment is also quite interesting. And it ties to an earlier comment. If there is a recovery, partly, which are quick turnaround machines, then you can see a positive effect. on which there may result in the higher end of the current.
Speaker Change: It bonding quote unquote, all isn't that the right way to think about it and maybe if you could also.
Speaker Change: The backlog of the hybrid bond that you should not have is within the team. Thank you.
Speaker Change: Well we are not.
Speaker Change: Fighting.
Speaker Change: Specific information about yeah, what we shipped.
Speaker Change: Reschedule tissue.
Speaker Change: Your assessment is also quite interesting.
Speaker Change: And it ties to an earlier comment.
Speaker Change: If there is a recovery well hartley.
Speaker Change: Which are quick turnaround machines, then you can see a positive effect.
Richard Blakeman: How many hybrids are still in backup? We don't disclose. But the key of your question, if I understand it correctly, the wide guidance range. is typically or is because of this. Uncertainty, will the second half. of this year show a recovery in the mainstream business. If that happens, we have quick turnaround of epoxy boulders, soft-solder boulders, flip-chip boulders, not to forget. Coating activity, yeah, continues.
Speaker Change: Which then May result in the higher end of the car.
Speaker Change: That's.
Speaker Change: How many hybrids are still in backlog, we don't disclose.
Speaker Change: But the key part of your question, if I understand correctly the wide guidance range.
Speaker Change: Typically or is because of this.
Speaker Change: Uncertainty will be the second half.
Speaker Change: This year's show a recovery in the mainstream business if that happens we have quick turnaround of epoxy boneless social the business.
Richard Blakeman: So that's the reason why we guide this range plus minus 10%. Okay, got it.
Speaker Change: Flip chip bone, there's not going to get.
Speaker Change: Quoting activity.
Speaker Change: Yeah continues.
Speaker Change:
Martin Youngflesh: But just to follow up the order to the U.S. IDM, has that been fulfilled as of Q1? Can you comment on that? No, there are still a few systems in Q2, but I could say 80% have been shifted. Sounds great. Thank you very much. Okay, sounds good. Thank you.
Speaker Change: So.
Speaker Change: That's the reason why we guide this this range plus or minus 10%.
Speaker Change: Okay got it but just to follow up.
Speaker Change: The audit of the U S. IBM has that been for six of the Q1 can you comment on that.
Speaker Change: No there's still a few systems in Q2, but the.
Speaker Change: I could say, 80% has been shipped.
Speaker Change: Sounds great. Thanks very much.
Operator: Thanks for tuning in. We will take a while. Sorry.
Speaker Change: And exactly according to plan, what we have shared the last Oh.
Speaker Change: Dates.
Team Schultz: We will take our final question from Team Schultz, Malandra, Redburn Atlantic. Your line is open, please go ahead. Yeah thank you so much for just squeezing me in here at the end. I had two quick questions, please Richard if I could. First one, if we just leave hybrid bonding to one side and look at the core, sort of much well-established business, could you just maybe share with us any colour you have in terms of the utilisation rates that are on that? I think if we look at foundries, they're running at about 80 percent.
Speaker Change: Okay sounds good thank you.
Speaker Change: Thanks Lloyd.
Speaker Change: So we will take off.
Speaker Change: Sorry.
Speaker Change: We will take our final question from team shows Melinda right, but Atlantic. Your line is open. Please go ahead.
Speaker Change: Yes. Thank you so much for squeezing me in here at the end.
Speaker Change: I had two quick questions. Please Richard if I could first one.
Speaker Change: If we just believe hybrid bonding.
Speaker Change: To one side and look at the core sort of much well established business.
Richard Blakeman: I'm just curious if you could share some kind of flavour of what the specialist test assembly packaging industry is tracking at.
Speaker Change: Could you just maybe share with us any color you have in terms of the utilization rates.
Speaker Change: I think if we look at foundries that running at about 80% I'm. Just curious if you could share some kind of flavor of what the specialist.
Richard Blakeman: And then the second, maybe more forward-looking question I had was on the launch of the Gen 2 or the introduction of your new hybrid bonding platform, and I just wondered if you'd be able to share with us what the sort of expected timeline would be, when is the first tool coming, how long should we think about sort of eval qualification, and just kind of how that plays out through 2025 and into 2026. Thanks again. Excellent. Well, the first, why are we a bit cautious? Utilization rates, yes, are somewhere in the 80 percent. But if you look at the data provided by the industry, on inventory and pricing.
Especially this test assembly packaging industry is tracking at and then the second maybe more forward looking question I had was on the launch of the Gen. Two with the introduction of a new hybrid.
Speaker Change: Our hybrid bonding platform.
Speaker Change: Just wondering if you'd be able to share with us.
Speaker Change: The sort of expected timeline would be when when is the first two coming how long should we think about sort of eval qualification.
Speaker Change: Just kind of how that plays out through 2025 and enter 2026. Thanks again.
Speaker Change: Excellent.
Speaker Change: Well the first why are we a bit cautious.
Speaker Change: Utilization rates, yes.
Speaker Change: Somewhere in the 80%, but if you look at the data provided by the industry.
Richard Blakeman: And pricing has gone down again recently in the latest data from March. January, February looked up, March went down. That is, yeah, let's say an overall picture, which doesn't tell you there's an immediate short. But that's hard to tell whether customers are reacting more cautiously because of the overall situation, we don't know. But in any case, for certain areas, there are shortages. One of them is the AI devices. As I mentioned earlier, there are Chinese versions, which are definitely in high demand. But then that's not the general market. Automotive, we've also not seen yet. We've seen technology buys new devices, power modules.
Speaker Change: Hum.
Speaker Change: Inventory.
Speaker Change: And pricing.
Speaker Change: Pricing.
Speaker Change: Has gone down again recently.
Speaker Change: The latest data from March <unk>.
Speaker Change: January and February looked up March went down.
Speaker Change:
Speaker Change: That debt is yeah, let's say, an overall picture, which doesn't tell you there is an immediate shortage.
Speaker Change: But that's hard to tell whether customers are reacting more cautiously because of the.
Speaker Change: Overall situation.
Speaker Change: We don't know.
Speaker Change: But in any case for certain areas. There is shortage is one of them as T E. I D prices as I mentioned earlier.
Speaker Change: There are Chinese versions.
Speaker Change: Which I definitely.
Speaker Change: And the high demand.
Speaker Change: And.
Speaker Change:
Speaker Change: But then that's not the general markets automotive.
Richard Blakeman: But the big volume is still to come.
Speaker Change: We've also not seen yet.
Operator: Then, we intend to ship the 50 nanometer generation tool by the end of September, early October. And what the plan is, is that throughout 2026, That tool will be made fully production ready in Taiwan. and used for. Mainstream production 27 for those devices under 2 nanometer design geometry. So. That is well on track. And we will continue to update you on that program. Great. That's very helpful. Thank you. Thank you, Tim. Thanks, everyone. Excellent questions. If you have more questions, don't hesitate to contact us directly. Thank you for joining today's call. You may now disconnect.
Speaker Change: We've seen technology buys new devices power modules.
Speaker Change: But the big volume is still to come.
Speaker Change: Then we intend to ship the 15 nanometer generation two by the end of September early October and what the plan is is that throughout 2006.
Speaker Change: That too will be made fully production ready in Taiwan.
Speaker Change: <unk> used for.
Mainstream production 2007.
Speaker Change: For those devices under two nanometer design geometry.
Speaker Change: So.
Speaker Change: That is well on track.
Speaker Change:
Speaker Change: And we will continue to update you on the progress.
Speaker Change: Alright, that's very helpful. Thank you.
Speaker Change: Thank you Tim and thanks, everyone.
Speaker Change: Excellent questions. If you have more questions don't hesitate to contact us directly.
Thank you.
Speaker Change: Thank you for joining today's call you may now disconnect.
Speaker Change: Thank you.
Speaker Change: [music].
Speaker Change: Okay.