Q2 2025 BE Semiconductor Industries NV Earnings Call
Unknown Executive: Recording is on. Good morning, good afternoon, ladies and gentlemen, and welcome to Basie's conference call and audio webcast to discuss the company's 2025 second quarter results. You can register for the conference call or log in to the audio webcast via BASE's website.
Your line is muted call recording is on.
Speaker Change: Good morning. Good afternoon, ladies and gentlemen, and welcome to basis conference call. And audio webcast to discuss the company's 2025 second quarter results.
Speaker Change: You can register for the conference call or log in to the audio webcast via basis website.
Unknown Executive: Joining us today are Mr. Richard Blickman, Chief Executive Officer, and Mrs. Andrea Coop, Senior Vice President Finance. Currently, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. and discuss and instructions will follow at that time.
Speaker Change: Joining us today are Mr. Richard lickman chief executive officer and Mrs. Andrea senior, vice president Finance.
Speaker Change: Currently all participants are in a listen-only mode.
Later, we will conduct a question and answer session and discuss
Unknown Executive: As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in a whole or in part without permission from the company. I would 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 Bayesian's current views and assumptions regarding future events. many of which are by nature inherently uncertain and beyond Basie's control. Actual results may differ materially from those in the forward-looking statements, due to various risks and uncertainties, including, but not limited to, factors that are discussed in the company's most recent periodic and current report filed with the AFM.
Speaker Change: an instructions will follow at that time.
Speaker Change: As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in a whole or in part without permission from the company.
I would 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
Speaker Change: Forward-looking statements reflect basis, current views, and assumptions, regarding future events.
Speaker Change: many of which are by Nature inherently uncertain and Beyond basis controls,
Speaker Change: Actual results May differ materially from those, in the forward-looking statements, due to various risks and uncertainties including but not limited to factors that are discussed in the company's most recent periodic and current reports filed with the AFM.
Unknown Executive: Search forward looking statements. including guidance provided during today's call. speak only as of this date, and BASI does not intend to update them in light of any new information. or future developments, nor does BASIC undertake any obligations to update the forward-looking statement.
Speaker Change: Set, forward-looking statements.
Speaker Change: Including guidance provided during today's call.
Speak only as of this date and basically does not intend to update them in light of any new information.
Richard Blickman: I would now like to turn the call over to Mr. Richard Blickman. Thank you all for joining us today. For today's call, we'd like to review the key highlights for our second quarter and six months ended June 30, 2025, and update you on the market, our strategy, and the outcome.
Or future developments nor does Stacey undertake any obligations to update the forward-looking statements.
Speaker Change: I would now like to turn the call over to Mr. Richard Sigman.
Speaker Change: Thank you.
Richard Blickman: First, some overall thoughts on the second quarter and the first half year 25. Basie reported the second quarter revenue, operating income and net income of 148.1 million, 43.5 million and 32.1 million euros respectively. Revenue and operating results were at the midpoint of prior guidance in a mainstream assembly equipment market still affected by soft demand for mobile and automotive applications.
Speaker Change: Thank you all for joining us today. For today's call, we'd like to review the key highlights for our second quarter and 6 months, ended June, 30, 2025 and update. You on the markets, our strategy, and the Outlook,
Speaker Change: first, some overall thoughts on the second quarter and the first half year 25,
Richard Blickman: market development in Q2. This year was also affected by increased customer caution due to global trade tensions. Q2 2025 revenue and operating income grew sequentially by 2.8% and 10.7%. Respectively, as we saw an increase in shipments to Asian subcontractors for AI-related data center applications, combined with a 4.3% decrease in sequential operating expenses. Orders for the quarter decreased by 3% versus the first quarter as weakness in mainstream computing and mobile applications. Partial set by new orders for Basie's TCB next year. For the first half year, revenue of 292.2 million euros decreased by 1.8% versus the first half last year, reflecting broader assembly market trends as weakness in mobile and, to a lesser extent, automotive end markets was significant.
Speaker Change: Busy reported the second quarter Revenue, operating income and net income of 10048.1, million 433.5 million, and 32.1 million euros, respectively revenue, and operating results were at the midpoint, of Prior guidance in a mainstream assembly, equivalent markets, still affected by Soft demand for mobile and Automotive applications.
Speaker Change: Market development in Q2.
Speaker Change: This year was also affected by increased customer caution due to global trade tensions.
Speaker Change: Q2, 25 revenue and operating income, grew sequentially by 2.8% and 10.7%.
Speaker Change: Respectively. As we saw an increase in shipments to Asian subcontractors for AI, related data, center applications combined, with a 4.3% decrease in sequential operating expenses.
Speaker Change: Orders for the quarter, decreased by 3% versus the first quarter as weakness in mainstream Computing and mobile applications. Those partially or set by new orders for basis TCB next system.
Richard Blickman: offset by growth in hybrid bonding systems revenue, which more than doubled versus the first half last year. Orders decreased by 17% due to the timing of customer orders for hybrid building systems and a lack of new product introductions in high-end smartphones. The first half, 25% operating and net income decreased by 8% and 16.2% respectively versus the first half last year. primarily due to lower revenue and a 2.7 point reduction in gross margin from a less favorable product. adverse net forex effects from the decline of the U.S. dollar versus the euro, an increased interest expense related to Basie's senior note issuance in July last year.
Speaker Change: For the first half year revenue of 292.2 million euros, decreased by 1.8% versus the first half last year, reflecting broader assembly market, trends, as weakness in Mobile and to a lesser extent automotive and markets will significantly offset by growth in hybrid bonding systems Revenue, which more than doubled versus the first half last year.
Speaker Change: Orders, decreased by 17%.
Speaker Change: Due to the timing of customer orders for hybrid Building Systems and a lack of new product, introductions in high-end smartphones.
Speaker Change: The first half, 25 operating.
Speaker Change: And net income decreased by 8% and 16.2% respectively versus the first half last year primarily due to lower revenue and a 2.7% reduction in gross margin.
From a less favorable product mix at first. Net Forest, Forex effects from the decline of the US dollar versus the Euro and increased interest, expense related to basye senior note issuance in July last year.
Richard Blickman: Liquidity remains strong with cash and deposits $490,000. 490.2 million euros at the end of June 2025, increasing by 90.6% versus June 30, 2024. The sequential decrease in cash and deposits at quarter end reflected the timing of the annual dividend payment along with the purchase of our Durban, Netherlands facility for 14.9 million euros.
Richard Blickman: As of June 30, 2025, €72.2 million of the current €100 million... Share repurchase authorization has been used to repurchase approximately 644,000 ordinary shares at an average price of 111.96 euros per share. As of June 30, 2025, Bayesian held approximately 2 million shares in treasury, equivalent to 2.5% of shares outstanding.
Speaker Change: Quality remains strong with cash and deposits. 492.2 490.2 million euros. At the end of June 2025 increasing by 90.6% versus June 3024, the sequential decrease in cash and deposits at quarter end reflected the timing of the annual dividend payment along with the purchase of our Darvin, Netherlands facility for 14.9 billion euros,
Speaker Change: as of June, 3025, 72.2 million euros of the current 100 million
Speaker Change: Share repurchase authorization has been used to repurchase, approximately 644,000 ordinary shares at an average price of 1111.96 Euros per share.
Speaker Change: As of June 3025, basically held approximately 2 million shares in treasury equivalent to 2 and a half percent of shares outstanding.
Richard Blickman: Next I'd like to discuss the current market environment in Australia. Tech Insights currently forecasts assembly market growth of 9% in 2025 which is below last quarter's forecast of 30%. driven by a push out of the anticipated mainstream assembly upturn to the second half. Participated Growth 25 is focused primarily on AI and data center logic and memory applications. They expect cumulative growth in the 26-29 period of 60... percent based on continued advancement in ARU's case. new product introductions in 26-28 period, and a cyclical recovery of mainstream assembly applications. We expect to exceed market growth rates given our leadership position in advanced packaging.
Speaker Change: Next, I'd like to discuss the current market environment and our strategy.
Speaker Change: Second sites currently forecast. Assembly market growth of 9% in 25 which is below last quarters, forecast of 13%.
Speaker Change: Driven by a push out of the anticipated. Mainstream assembly of turn to the second half of this year.
Speaker Change: Anticipated growth. 25 is focused primarily on AI and data, center logic and memory applications.
Richard Blickman: We believe the outlook for Basie's business in the second half of 2025 has improved in recent weeks based on customer feedback and order trends subsequent to quarter end. Extended CAPEX budgets for AI infrastructure have been confirmed by each of the leading industry players in recent quarters, with new use cases emerging in cloud and edge computing along with co-packaged systems. Advanced packaging is one of the key ways to achieve AI systems. differentiation, develop innovative consumer edge AI devices and provide the most energy efficient data center performance. Advanced packaging demand for AI applications remains strong, given new device introductions expected 2026 to 2028 period.
Speaker Change: They expect cumulative growth in the 2629 period of 63% based on continued. Advancements in AI, use cases, new product, introductions and 2628 period, and a cyclical recovery a mainstream assembly applications. We expect to exceed market growth rates, given our leadership position in advanced Packaging
Speaker Change: We believe the outlook for basis business in the second half of 2025, has improved in recent weeks based on customer feedback and Order Trends subsequent to quarter end.
Speaker Change: Extended capex. Budgets for AI infrastructure. Have been confirmed by each of the leading industry players in recent quarters with new use cases emerging in cloud and Edge Computing along with Co packaged Optics.
Speaker Change: as far as packaging, is 1 of the key waves to achieve AI systems differentiation, develop Innovative consumer Edge, AI devices and provide the most energy efficient Data Center performance,
Speaker Change: Advanced packaging demand for AI applications remain strong.
Richard Blickman: We believe we are well-positioned in the fastest-growing advanced packaging market segments, including data centers for Tonics, AI, and Ops. and Mobile Devices. and EV slash autonomous driving. As such, orders for hybrid bonding systems are expected to increase significantly in the second half twenty-five versus both first half twenty-five and second half twenty-four. In both Advanced Logic and HBM4 memory applications, S-Customers advanced their technology roadmaps for new product introductions in 26 and 27. Customer interest in our TC NEXT system for both memory and logic applications has also expanded. DCNEXT cycle times have improved with shipments anticipated in Q4 this year from orders received in the second quarter.
Speaker Change: Given you device. Introductions expected 2,000 2026 to 2028 period. We believe We are. Well, positioned in the fastest growing Advanced packaging market segments, including data centers for Tonks, Ai and art species and mobile devices and evolving.
Speaker Change: As such orders for hybrid Building, Systems are expected to increase significantly in the second half.
Speaker Change: 25 versus both first, half 25 and 2nd of 24.
Speaker Change: In both Advanced logic and hbm 4 memory applications as customers Advanced their technology roadmaps for new product, introductions in 26 and 27.
Speaker Change: Customer interest in our TC next system for both memory. And logic applications has also expanded significantly.
Richard Blickman: We also anticipate increased orders for 2.5D at VON. Packaging systems for AI-related data center applications from both global RDMs and Asian subcontractors.
Speaker Change: DC next cycle times have improved with shipments anticipated in Q4 this year from orders received in the second quarter this year.
Speaker Change: We also anticipate increased orders for 2 and a half D advanced.
Richard Blickman: In addition, there are early signs of a recovery in our mainstream assembly markets, principally related to increased demand by Asian subcontractors for high-end mobile applications and high-performance Applications for Consumer Markets.
Speaker Change: Packaging Systems for AI related data center applications from both Global idms and Asians subcontractors.
Richard Blickman: Now a few words about the guidance. For the third quarter 2025, we anticipate that revenue will decline by approximately 5-15% versus the second quarter of this year based on the order book at quarter end. However, orders in the third quarter twenty-five are expected to increase significantly. on a sequential basis due to increased demand for hybrid bonding to an RFD-Advanced Packaging App. Beijing's Gross March is anticipated to decline to a range between 60 and 62 percent in the third quarter due to the adverse impact of a 12 percent decline in the value of the U.S. dollar versus the euro in the first half of 2020.
Speaker Change: In addition, there are early signs of a recovery in our mainstream assembly markets principally related to increased Demand by Asian subcontractors, for high-end mobile applications and high performance Computing applications for Consumer markets.
Now a few words about the guidance, for the third quarter of 2025, we anticipate that Revenue will decline by approximately 5 to 15% versus the second quarter of this year. Based on the order book at quarter end
Speaker Change: However, orders in the third quarter of 25 are expected to increase significantly.
Richard Blickman: Operating expenses in the third quarter are expected to be flat, plus or minus 5% versus the second quarter. Despite Increased R&D Spread.
Speaker Change: So this is due to increased demand for hybrid bonding 2 and a half D, Advanced packaging applications basis. Gross margins is anticipated to decline to arrange between 60 and 62% in the third quarter due to the adverse impacts of a 12% decline in the value of the US dollar versus the Euro in the first half of 25.
Richard Blickman: That ends my prepared remarks.
operating expenses in the third quarter, I expected to be flat plus or minus 5% versus the second quarter despite increased R&D spending
Unknown Executive: I would like to open the call for some questions. Operator. Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press key pound five on your telephone keypad. We kindly remind you that you are limited to one question and a follow-up. If you wish to withdraw your question, please press Keep pound six on your telephone keypad.
Speaker Change: That ends my prepared remarks. I would like to open the call for some questions, operator.
Speaker Change: Ladies and gentlemen, we are now ready to take your questions if you wish to ask a question, please press 2 pound 5 on your telephone keypad.
Speaker Change: We kindly remind you. That you are limited to 1 question and a follow-up.
Speaker Change: If you wish to withdraw your question, please press
Speaker Change: Key pound 6 on your telephone keypad.
Speaker Change: This call is being recorded, your line is muted.
Nigel van Putten: The next question comes from Nigel Van Putten from Morgan Stanley, please go ahead. Hi. Hi, good afternoon. Thanks for additional color on the expected hybrid bonding orders. So if I sum this up, second half is going to be stronger than both the first half of 25 and the second half of 24. That's helpful.
Speaker Change: The next question comes from Nigel, van putten from Morgan Stanley, please go ahead.
Speaker Change: Hi um hi, good afternoon. Um, thanks for additional caller on the expected hybrid bonding orders. So
Speaker Change: What if I sum this up? Second half is going to be stronger than both the first half of 25 in the second half of 24. That's helpful. Um,
Nigel van Putten: Can I just sees you and asks, what about the first half of 24 when you received a sizable order from one customer? Should we think similar ballpark, higher, lower? Any additional color will be helpful.
Can I just?
Richard Blickman: Thanks, and I have a follow-up. Well, that's always hard to tell. It's usually orders in... sequence in lumps, as they call it, quarter by quarter. but it can be somewhat higher or somewhat lower.
Tease you and ask. What about the first half of 24? When you received a sizeable order from 1? Customer should we think similar ballpark, higher lower, any additional color will be helpful. Thanks and I have a follow-up.
Speaker Change: Well.
Speaker Change: um,
Speaker Change: it's usually orders in, um,
Speaker Change: In um, sequence in in lumps as they call it quarter by quarter.
um,
Richard Blickman: So what has been the trend so far? The highest we received was 26 from one customer in one quarter. And then, typically, somewhere between 12 and 20, in other historical, let's say, order patterns. But we also mentioned, we don't expect from only one customer. We expect from other customers, but those are not bigger volumes. They are below five orders systems at a time. So your question is a very good one, but that leads to, in summing that up, somewhere in that range. But what is more important is that we also see continued adoption in more applications in logic, but also now an ever more serious commitment in the stacking of memories, the HBM4, also confirmed publicly by the Korean companies.
Speaker Change: but it can be somewhat higher or somewhat lower. So what has been the trend so far? The highest we received was 26 from 1 customer in in 1 quarter.
Speaker Change: And then typically somewhere between 12 and 20 um in other historical uh let's say order patterns mhm but we also mentioned, we don't expect from only 1 customer, we expect from other customers but those are not bigger volumes.
Speaker Change: They are below 5 orders, uh, systems at a time.
Speaker Change: Um,
So your question is a very good 1?
Speaker Change: But that uh leads to in in uh something that up um uh somewhere in that range.
Speaker Change: um,
Speaker Change: of all this more important is that we also see continued adoption.
Richard Blickman: And that could also lead to... orders which we have no clear feasibility yet. and respect to the intended for you.
Speaker Change: In, um, more applications in logic, but also now than ever more serious commitments in the stacking of memories, the hbm 4, also confirmed publicly by, um, the Korean companies.
Speaker Change: um, and that could also lead to um,
Speaker Change: Um, orders which, which we have no clear visibility yet. Um um in respect to to the intended forums.
Richard Blickman: That's really helpful.
Sandeep Deshpande: I have another question on the the order book of, you know, you reported in the second quarter 25. The orders out of China and the rest of Asia are picking up, but the rest of the world, including Europe and the US, dropped quite significantly. Now, if I'm not mistaken, that's usually driven by two US customers, one in mainstream compute and one in mobile, and you highlighted as much in the prepared remarks.
Speaker Change: That's that's really helpful. Um I have another question um on the the order book of you know you reported in the second quarter of 25. Um,
Speaker Change: The orders out of China and rest of Asia are picking up, but the rest of world including you, um, Europe and US dropped, quite significantly. Um, now if I'm not mistaken that usually driven by, by 2 Us, customers,
Sandeep Deshpande: But considering some worries in the market about especially that mainstream compute customer, should we expect this to remain at a additional color you could provide? Because yes, I understand that conditions in especially mobile haven't really picked up, but it is, I think, one of the weakest orders intakes from that region in a while. So any color will be helpful. Thanks.
Speaker Change: Uh 1 a mainstream computer, and 1, a mobile and yeah you highlighted as much in the prepared remarks. But considering some worries in the market about a special that mainstream computer customer. Um, should we expect this to remain at a lower level going, you know, into the rest of the year or maybe even the next year? Like is there any additional quality? You could provide because
Speaker Change: Yes, we both. Yeah, I mean, I understand that conditions in especially mobile I haven't really picked up but it is I think 1 of the weakest orders intakes from that region in in in a while. So any color will be will be helpful. Thanks.
Richard Blickman: Yeah, to add to your observation, in Europe it's very much related to automotive industry being soft, but there are some early signs of some recovery for new products, mainly but Europe is, for that reason, low. US clearly two big drivers, one the compute and the other one the mobile, but there's also other customers as we know. But the one you're referring to, which starts with an I and ends with an L, yeah, we all know from daily publications that the situation is pretty unclear. One would... expect based on similar situations in the past with companies in our industry.
Yeah, to add to your, uh, observation in Europe. It's very much related to, uh, automotive industry being, um, being soft.
Speaker Change: But there are some early signs of of some recovery for new products, mainly
Speaker Change: But Europe is is for that reason uh low.
Speaker Change: Uh us clearly uh too big um drivers 1, the compute. Um,
Speaker Change: Um, and the other 1, the the mobile, but there's also other customers as we know, but the 1, you're referring to uh which starts with an i and ends with an L.
Speaker Change: Um yeah, we all know from the daily Publications that the situation is um pretty unclear.
um, 1 would um,
Richard Blickman: that the outcome will be a continuation with the high-end, with the applications which also are next-generation technology. and you may expect less investment than we already see that in the more mature and certainly the lower end products. We are less involved in that second category already for many years. Our engagement is more at that fourth. So we are anxiously waiting, and we're working day and night with that customer to see how the next round will be organized. For the time being, CAPEX is very low. That's also publicly known, which may at some point turn because the demand for semiconductors doesn't change.
Speaker Change: Expect based on, uh, similar situations in the past with, uh, companies in our industry.
Speaker Change: That the outcome will be a continuation with the high ends with the applications which also are Next Generation technology.
Speaker Change: And you may expect less investment than we already see that in in the more mature and certainly the lower end products.
Speaker Change: We are less involved in in that second category.
Speaker Change: Um, already for for many years, our our engagement is more at at that Forefront.
Speaker Change: So we are anxiously um waiting and we're working day and night with that customer um to see how how the um next round will be. Um organized for the time being capex is very low. That's also publicly known.
Speaker Change: um,
Speaker Change: which um,
Richard Blickman: On the mobile front, as we explained, for the outlook we see certainly demand for new features in next generation devices. where we are clearly involved, which is very positive, that this year is a soft year so far. It's also clear it's maybe a bit longer than what we had in previous cycles for high-end smartphones. Maybe that also has to do with the last peak in 21. So a longer lasting. let's say digestion of the features at that time. But there's a whole list which is publicly shared of features expected in next generation high-end phones and that should be.
Speaker Change: May at some point turn because the demand for semiconductors doesn't change.
Speaker Change: Um, on the mobile front.
Speaker Change: Um, as we explained. Um, for the Outlook, we see certainly demand for new features in Next Generation devices.
Where we are clearly involved, which is very uh positive.
Speaker Change: Um that this year is a soft year. Um um so far it's also clear it's maybe a bit
Speaker Change: Um, longer than what we had in in previous cycles for high end smartphones. Maybe that also has to do with the last Peak and 21.
Speaker Change: so, a longer lasting
Speaker Change: Um, let's say um um, digestion of the features at that time.
Speaker Change: But there's a whole list, which is publicly uh, shared or features expected in Next Generation.
Richard Blickman: The markets next. Understood. Thank you very much. Here before... Thanks, Richard.
Speaker Change: Iron phones. And that should be, um, a market next year.
Speaker Change: Understood where you see. Thank you very much initial development.
Speaker Change: Year before.
Unknown Executive: Next question.
Speaker Change: Thank you. Okay.
Speaker Change: Next question.
Sandeep Deshpande: The next question comes from Sandeep Deshpande from JP Morgan. Please go ahead. Hi, Richard. Just a quick question on your TC orders and the customer base there. I mean, you announced some in Q2 and you're going to ship them later this year. I mean, I guess they are part of that improvement in orders that you expect in the third quarter. I mean, how broad is the customer base there and is this going to be a significant contributor to your follow-up as well? It's slightly different than what is in your mind. So we did receive from that customer in the second quarter a nice order for five systems, $20 million plus.
The next question comes from Sandy. The Morgan please. Go ahead.
Sandy: Hi. Uh, hi Richard. Uh, just a quick question on, uh, your uh, TC orders and, uh, and the customer base there, I mean, you are now some in Q Q2 and you're going to ship them later this year. Uh I mean uh uh uh uh I guess they are part of that Improvement in orders, that you expect in the third quarter.
Sandy: But uh, I mean, how how broad is the customer base there? And is this going to be a significant contributor to your orders and the sales, uh, later this year or early next year and I have a quick follow-up as well.
Richard Blickman: And as we indicated, the shipment is expected Q3, Q4, probably at the end of Q3. And it depends a bit on how the buy-off evolves, whether we are... whether we are able to ship in Q3 or Q4.
Sandy: Uh, it's slightly, um, different than than was this in your mind. So we did receive from that customer in the second quarter. A nice order for 5 systems 20 million plus. Um, and as we indicated, um, the shipments is expected. Um, Q3 Q4
Sandy: probably at the end of of Q3, um, and it depends a bit on on how the bio um, um evolves whether we we are
Richard Blickman: That's why there's this range, a revenue between 5% and 15% less than Q2. Next, orders from that customer may be expected after installation of these five lines and successful product launch. As we indicated earlier, it's for a memory application. And that could then lead to orders probably earliest Q4, but maybe more realistic in Q1. And that can be a sizable expansion. Then we are gaining traction with this TC system, because remember it's developed for the next generation below 20 micron bone pad pitch. The world today is somewhere around 30, 35 micron as we understand. And that finds its way into the logic space.
Sandy: Q4, that's why there's this range, a revenue between 5 and 15% less than Q2.
Sandy: Next orders.
Sandy: From that customer, may be expected. After installation of these 5 lines and successful product launch.
Sandy: Um, as we indicated earlier, it's for a memory application, um, and that could then lead to orders. Probably earliest Q4, but maybe, um, more realistic in q1.
Sandy: And that can be a sizable expansion.
Sandy: Then we are gaining traction with this TC system because remember it's developed for the Next Generation below. 20 Micron bone pet pitch. The world today is somewhere around 30 35 Michael as we understand.
Richard Blickman: There's data available published by IMAC in Belgium on our equipment, which even successfully has bonded devices with bone pad pitches below 10 micron. So that fills the world between the inevitable hybrid bonding shift and extension of the reflow process in a TC technology for the next many years to come. So... So far, in both, because remember, the development started for Logic to be ready below 20 micron bombpet paper. And then, being tested already for stacking memories, and this will be for HBM4, probably 3 and 4. because the system offers significance.
Sandy: And um, that Finds Its way into the logic space. Um, there's data available published by iMac in Belgium on our equipment, which even successfully has bone net devices with bone, pet, pitches below 10 Micro so that fills the world between the inevitable hybrid building shift.
An extension of the, the Reflow process in a TC technology, um, for, for the next many, uh, years to come.
So,
Sandy: Successful.
Sandy: Um,
Sandy: so far in in both because remember the development started for logic to be ready, below, 20, Micron bumped pitch.
Sandy: Um and then being tested already for stacking memories and this will be for hbm 4, probably 3 and 4.
Richard Blickman: roomates, as we explained in the Capital Markets Day details, so I welcome you to look at that if you are interested in more details. But that's roughly the TC roadmap. Thank you, Richard.
Sandy: because the system offers, um, significant
Sandy: Rumors, as we explained in the capital markets day details.
Sandy: Um, so I welcome you to look at that if you are interested in more details but that's roughly the TC road map.
Richard Blickman: I mean, just quickly on following up on your hybrid bonding roadmap, I mean, there's this one memory customer who is looking at hybrid bonding for the HBM4 and beyond HBM4 plus or whatever. I mean, where is that in terms of, you know, qualification? Because that is, I think at the moment, simply a pilot line, there is no production planned yet. So where is that on track? You see, or is it too early to say? Number one, it's on track, and number two, if you follow the news in the last few days, it is both. steps up by the major Koreans, the two, that they will have these hybrid versions.
Speaker Change: Thank you, Richard. I mean, just quickly on following up on your hybrid bonding road map. I mean there's this 1, uh, memory customer who is looking at hybrid bonding for the, uh, hbm for and beyond hbm for Plus or whatever. I mean, uh, uh, I mean where is that in terms of, you know, qualification because that is I think at the moment it's simply a pilot line, there is no production planned yet so where is that on track you see or is it too early to say?
Speaker Change: Number 1. It's on track and number 2. If you follow the, the news in the last few days,
Speaker Change: It is both.
Speaker Change: Stepped up by.
Speaker Change: The uh, major Koreans, the 2.
Richard Blickman: available for customer sampling because simply the customers drive this demand. So that is in line with the road map. We have understood 26 qualification and mainstream production towards the end and also certainly in 27. That is how the road map for HBM today, hybrid bonding looks like. So developing in a certainly a positive way.
Speaker Change: That they will have these hybrid versions available for customer sampling because simply the customers drive this demand.
Speaker Change: So that is in line with the road map. We have understood 26 qualification and mainstream production towards the end. And, and also certainly in 27, that is how the road map for hvm today. Hybrid Building looks like
Richard Blickman: Thank you.
Speaker Change: Um, so developing in in a certainly a positive way.
Speaker Change: Thank you.
Speaker Change: Thank you.
Didier Scemama: The next question comes from Didier Scemama from Bank of America, please go ahead. Richard, thank you for taking my question. I've got two questions. First question on, let's say, your main advanced packaging customer for Logic customers. I think you mentioned that they opened or they are about to open a second factory, which would need about 100 systems at full capacity. Given what you told us today in terms of order intake, that should be meaningfully above you know, in the second half. Has your confidence that that factory will ramp in line with what you thought? I think you were thinking like it would take two years to fill in the gap.
Speaker Change: The next question comes from DDA say, mama from Bank of America. Please go ahead.
Speaker Change: Hi Richard. Thank you for taking my question. Um my I've got 2 questions. First question on. Uh let's say your Main advanced packaging customer for logic customers and I think you mentioned that the the opened or the Ala to open a second Factory uh which would need about 100 systems at full capacity.
Speaker Change: Given what you told us today, in terms of all the intake that should be meaningful about meaningfully above, um, you know, in the second half.
Richard Blickman: Has that confidence strengthened or is it still more or less the same as it was at the CMT? Well, if you look at the recent publication of the financials from this customer. You could expect that the. Timeline is intact. There are no negatives. signals we understood. In addition to that, The Global Demand is the Global Demand, and with the issues with the U.S. customer. Currently... as discussed in the previous question. It could well be that the beneficiary... of that is with. The other customers... But that's all to be seen. Key is that the adoption is continuing and also gaining.
Speaker Change: As you confidence that that Factory uh will ramp in line with what you thought. Uh I think it was thinking like you would take 2 years to fill in the app as that confidence strengthen. Or is it still more or less the same as it was in the CMD?
Speaker Change: Well, if you look at the
Speaker Change: Customer.
Speaker Change: You could expect that that.
Speaker Change: Timeline is intact.
Speaker Change: There are no negative.
Speaker Change: Um, signals, we understood in addition to that.
Speaker Change: The global demand is the global demand and with the issues with the US customer.
Speaker Change: Currently.
Speaker Change: As discussed in the previous question.
Speaker Change: It could well be that the beneficiary.
Speaker Change: Of that is is um, with the other customer.
Speaker Change: But that's all to be seen. Um key is that the adoption is continuing?
Richard Blickman: Base, on the other hand, TC Strip. is also. Thank you. in place, as we discussed also to the earlier question. There is no reason to answer your question in this way. to have in one month's time a different roadmap. more positive confirmation as we read it. then in another perspective. Okay, perfect.
Speaker Change: And also gaining.
Speaker Change: Base on the other hand. PC stretch is also, um, in place as we discussed. Also to the earlier question.
Speaker Change: um,
Speaker Change: there is no reason to answer your question in this way.
Speaker Change: To have him 1 month's time, a different road map. It's more a positive confirmation as we read it.
Speaker Change: then, um, in in another, um,
Speaker Change: Perspective.
Didier Scemama: My second question is on gross margin.
Richard Blickman: So Richard, I mean, just help us understand a little bit what happened in the in the gross margin this quarter, and maybe just give us your thoughts as to whether you will take any actions to improve the cost structure in COGS, or how we should, sorry, how we should be thinking about gross margin in Q4 into next year. Should we go back to the 62 to 64, or even like the higher level that you were thinking about at the CMV? Well, there are two aspects which are key to gross margin, as we know very well.
Speaker Change: Okay perfect. My second question is on gross margin. So Richard, um, I mean just help us understand a little bit. What happened in the in the, in the
Speaker Change: In the gross margin, this quarter and maybe just give us your thoughts as to, whether you will take any actions to improve the cost structure in cogs, uh, or how we should should, sorry how we should be thinking about gross margin, uh, in Q4 into next year. It should go back to the 62 to 64 or even like the the higher level that you were thinking about at the CNB.
Richard Blickman: Number one is pricing power. a rising power in a world which is... let's say, continued in, let's say, a softer mode is what it is. You can only distinguish yourself by better, better. Yeah, let's say specs and cost of ownership, that's the way you succeed on the top line. on the cost side, it's a never ending... battle, and a very positive one, where on the one hand we are successful because at Buyer's Markets today. On the other hand, with the development of the dollar, as it did in the past four months, it is very hard to translate that immediately into, yeah, let's say, least effect, but if we look at it, what happened so far, that we more or less...
Speaker Change: Well, there are 2 aspects which are key to gross margin as we know, very well. Number 1 is pricing power.
Speaker Change: and pricing power in a world, which is, um, let's say continued in in let's say, a shorter mode is, is
Speaker Change: Is is what it is. Um you can only distinguish Yourself by better better better.
Speaker Change: Yeah, let's say specs and and cost of ownership that's the way you succeed on the top line.
Speaker Change: On the cross side. It's a never-ending.
Battle, and a very positive 1.
Speaker Change: Where on the 1 hand, we are successful because it's a buyer's market today.
Speaker Change: Um,
Speaker Change: On the other hand, with the development of the dollar, as it did in the past, for a month, it is very hard to um translate that immediately.
Speaker Change: Into um um yeah let's say least effect. But if we look at it, what what happened? So far,
Richard Blickman: Yeah, I have between 2% and 3%. The effect of a dollar which has declined by more than 12% That still tells you that. allow that we adjust our prices, which are in euros because we're a euro-based company. to, yeah, different exchange rates. But, um... And to say that again, your prophet is in your call. So everyone is extra challenged.
Speaker Change: That we more or less.
Speaker Change: Yeah, I have between 2 and 3 percent effects of a dollar which has declined by more than 12%.
Speaker Change: Um,
Speaker Change: that, that still tells you that that the
Speaker Change: the first reason, the product positions.
Speaker Change: Allow that we adjust our prices, which are in Euros because we're a gyro based company.
Speaker Change: To to yeah. Different exchange rates.
Speaker Change: but um,
Speaker Change: It's and to say that again, your profit is in your cost.
Richard Blickman: How can we improve our operating models for every one of our systems? to improve those margins over time.
Speaker Change: So, everyone is extra challenged.
How can we improve our operating models, for every 1 of our systems?
Speaker Change: To improve those margins over time.
Richard Blickman: Okay, I think it's his video course module we're going to go up to. Well, that depends on two things. Number one, do we maintain... and that's the dollar finally settled. But we'll enjoy that together, Didier. Yeah, absolutely. All right.
Speaker Change: Okay, I'll take it. Is your gross margin.
Speaker Change: That depends on 2 things. Number 1, do we maintain?
Speaker Change: The product position.
Richard Blickman: Thanks so much, Richard. Thank you.
Speaker Change: Thank you.
Unknown Executive: Any next questions?
Speaker Change: Any next question.
Madeleine Jenkins: The next question comes from Madeleine Jenkins from UBS, please go ahead. Hi Richard, thanks for taking my question. So I just have a few on the new flip chip tool that you announced at your CMD. I'm just kind of wondering when you're expecting to see the order ramp from this and you know the comments you made about improving 2.5D demand. Is this more a kind of a share gain or is this actual kind of capacity being added? That would be interesting, thank you.
Speaker Change: The next question comes from Moline, Jenkins from UBS, please? Go ahead.
Moline Jenkins: Hi Richard. Um, thanks to my question. So I just have a few on the new flip chip tool. That you announced at your CMD. I'm just kind of wondering when you're expecting to see the order ramp from this. And, you know, the comments you made about improving 2.5d demand. Is this more kind of a share gain? Or is this actual kind of capacity being added? That would be interesting. Thank you.
Richard Blickman: Well, that's an excellent question. Number one... It is not based on a new system. This is, well, it's not old, but it's the top in the world. And we have, and we said that in earlier calls. and a very high market share for these two and a half. which must re and Beth. Yeah, continuing. So whether we gain share, I think we will. because it's also broad, as we explained, it's not only one customer, it's many subcontractors who are all tooling up. And they select our systems, which is also perfect. But then the new system, which you refer to, is going to be launched.
Moline Jenkins: Well, this is an excellent question. Number 1.
Moline Jenkins: It is not based on the new system. This is well, it's not old but it's the top in the world and we have and we've said that in earlier calls.
Moline Jenkins: And and and very high market share for these 2 and a half D which are Mass refloat.
Moline Jenkins: And that.
Moline Jenkins: Is.
Moline Jenkins: yeah, continuing
Moline Jenkins: So whether we gain share, I think we will.
Moline Jenkins: Because it is, um, it's it's also broad as we explained. That's not only 1 customer, it's many subcontractors who are all tooling up.
Moline Jenkins: and um,
Moline Jenkins: They select our systems which, which is also perfect. But then the new system, which you refer to is going to be launched.
Richard Blickman: Q1 next year. It will have tighter specs. The current systems are somewhere in the three micron accuracy space. The new one is one micron accuracy. It also has other options. It's called Flex because the customer can handle more device types. But we explained some details in the CMD, but we're happy at another moment to show you some more details. That offers further expansion of market share, because that's all directly tied to these 2.5D modules, which is the way forward. So, yeah, that's what it is. Perfect. Thank you.
Q1 next year, it will have tighter specs. The current systems are somewhere in the 3. Micron accuracy space. The new 1 is 1, Micron accuracy. It also has other options. It's called Flex because you can the customer can handle more device types.
Moline Jenkins: It's a bit a combination of an MMA and a flip chip but we explained some details in the CMD but uh we're happy at another moment to show you some more details that were a few that offers further expansion of market share.
Moline Jenkins: Because that's all directly tied to these 2 and a half the modules which is the way forward.
Moline Jenkins: um,
Moline Jenkins: so yeah, that's that's what it is.
Richard Blickman: And just, I guess, a follow up on that. Is this also a tool that could be used in sort of high-end mobile applications? You know, when Apple changed their packaging, is this something that could be inserted? Exactly. So it is for. you could say chiplet type of architecture. and also 2.5D, so stacked version. which gives the customer more ability to combine different. The eyes to be placed and also components. so that fits exactly in those categories. in the real mainstream high volume. Consumer and Product. awards, whether that is mobile or edge. AI Mobile. HAI, probably another portable device.
Moline Jenkins: Perfect. Thank you and just I guess a follow up on that. Is this also a tool that could be used in sort of high-end mobile applications? Um and you know when Apple changed their packaging is is this something that um could be inserted? Thank you.
Moline Jenkins: Exactly. So it is for um you could say, chiplet type of architecture.
Moline Jenkins: And also 2 and a half D, so stacked versions.
Moline Jenkins: Which gives the customer more ability to combine different.
Moline Jenkins: Size to be placed and also components.
Moline Jenkins: So that fits exactly in those categories.
Moline Jenkins: In the real mainstream high volume.
Moline Jenkins: Consumer and products.
Moline Jenkins: Other words that whether that is mobile or Edge,
Moline Jenkins: Ai mobile.
Richard Blickman: That's where it's intended for, and at the same time, don't forget. The glasses, the Google glasses, but now also others, that also has a very strong focus. Perfect. Thank you, Richard.
Moline Jenkins: H AI probably in in other portable devices.
Moline Jenkins: That's why it's intended for and at the same time, don't forget.
Moline Jenkins: the glasses, the Google Glasses, but also others
Moline Jenkins: That also is has a, has a very strong Focus.
Perfect. Thank you. Richard.
Richard Blickman: Thank you, Madeleine.
Moline Jenkins: Thank you, Moline.
Martin Jungfleisch: The next question comes from Martin Jungfleisch from BNP Paribas, please go ahead. Yeah, hi, good afternoon. Thanks for taking my questions. The first one is mainly on the expected orders you were talking about. So can you just confirm that These orders, or some of these orders, have already been signed in early Q3, or is there an expectation that these will be signed in Q3 or Q4? That is the first question.
Speaker Change: The next question comes from Martin, yum flesh from BNP paraba, please go ahead.
Martin: Yeah. Hi. Um, good afternoon. Thanks for taking my questions off to you. Um, the first 1 is is mainly on the expected orders. Um, you were talking about so can you just confirm that? Um,
Richard Blickman: I have a follow-up. Well, certainly we have received already orders until date in Q3, and as was mentioned in one of the sentences. It also accelerated from the first day of the quarter. So customers. decided not to place in Q2 but to place in Q3. So some of it you can you can qualify as being. Ordered in Q3, which may have been ordered in Q2. But anyway, it certainly is abroad, as we said before. for many applications. And that should be significantly higher than the second quarter.
Martin: These orders are some of these orders have already been signed in early Q3, or it's an expectations. That these will be signed in Q3 or Q4 that is the first question. I have a follow up.
Martin: certainly we
Martin: Received the ready orders until date in Q3 and as well as mentioned in 1 of the centers.
Martin: It, it also.
Martin: Um um, accelerated from the first uh, day of the quarter. So customers?
Martin: decided not to place in Q2 but to place in Q3
Martin: ordered in in Q3, which may have been ordered in Q2,
um,
but anyway, it it certainly is is abroad as we said before.
Martin: For many applications.
Martin: Um,
Martin: And and that should should be significantly higher than than the second quarter orders.
Unknown Executive: Okay, thanks.
Martin Jungfleisch: And then just a follow-up question on the Q3 guidance and the full year. And for Q3, you're expecting revenues to decrease quarter on quarter, but at the same time, you're also saying you're seeing early signs of recovery in the mainstream business. So how should we think about the seasonality of the mainstream business now for the next quarters, given that signs of the early recovery? that's something different than over the past couple of quarters or past couple of years now. Now, well, the emphasis is on AI and very careful. certain areas like automotive, for instance. It does not further decline.
Martin: Okay, thanks. And then, um, just a follow-up question on the Q3 guidance. Um, and the 4 year. And for, for Q3, You're Expecting revenues to decrease, quote, unquote, by the same time. You're also saying, um, you're seeing early signs of recovery in the mainstream business. So um, how should we we think about the the the seasonality of the mainstream business now, for the next, uh, quarters given that signs of the early recovery?
That's something a different and over the past couple of quarters or past couple of years now.
Speaker Change: No. Well the emphasis is on AI and and very careful.
Richard Blickman: You see some improvement. Same with high-end smartphones, which was very soft until date. So you see a pattern which may be similar to 2019, where we had a pickup. towards the later part of Q3. now may be a bit earlier, coming out of a downturn, and that then, if all goes well, Tech Insights forecast should lead to. a higher growth in 2026. what you could, let's say, analyze as a cyclical trend. But today, there's a lot more in the world happening, which makes this. Uncertain On the other hand, people expect that by that time we should have some more clarity.
Certain areas like Automotive. Uh, for instance um it does not further decline, you see some improvements,
Speaker Change: same with high-end smartphones, which was very soft until
date.
Um,
so you, you see a pattern, which may be similar to 2019,
Speaker Change: Where we had a pickup?
Speaker Change: To which the later part of Q3.
Speaker Change: Which now may be a bit earlier coming out of a downturn.
Speaker Change: and that then, if all goes well and and
Second sides forecast should lead to.
Speaker Change: A higher growth in in 2026, that that is.
Speaker Change: What you could let's say analyze as as a, as a technical Trend. But today, there's a lot more in the world happening which makes this
Speaker Change: Uncertain.
Speaker Change: On the other hand, people expect that by that time we should have some more clarity.
Martin Jungfleisch: But anyway, your guess is mine. Makes sense.
Speaker Change: But anyway, okay, your guess is mine. Um,
Unknown Executive: Thank you.
Unknown Executive: Thank you, Martin.
Makes sense. Thank you.
Martin: Thank you, Martin.
Charles Sheave: The next question comes from Charles Sheave from Needham & Company. Please go ahead. Richard, I have two questions. Maybe the first one, you talked about the HVM-related hybrid bonding orders seems to be improving into Q3 and you talked about some of the recent news out of Korea. Based on our understanding, you do have a couple tools of install base at two of the HVM customers. You guys have made very significant progress there.
Charles Shei: The next question comes from Charles shei from Neiman Company. Please go ahead.
Richard Blickman: But I think the burning question for me and obviously for a lot of investors is any progress is with the HVM leader in hybrid bonding and are they still in the face of testing mainly in Singapore? And when do you think that you can ship an evaluation system to that HVM leader? Thank you. Well, excellent, and you're absolutely right. That is a very important development to watch. Number one, which is encouraging, is supposedly they have shared at a conference. that hybrid bonding readiness is for them a must because their customers are demanding a hybrid bonded version.
Charles Shei: Reach at, uh, I have a 2 questions. Um, maybe the first 1, um, you, you talked about the HPM, uh, related hybrid, bounding orders. Uh, seems to be improving into Q3, um, and, uh, you talk about the, some of the recent news, um, um, out of Korea, uh, based on our understanding, you do have, um, uh, uh, couple, uh, tools of the install base at 2 of the hbm, customers, uh, you got some have made the very, uh, very significant progress there. But, uh, I think the burning question for from me and obviously, from a lot of investors is, um, any progress, uh, is with the hbm leader, um um uh in in hybrid bonding and um, are they still in the face of testing mainly in Singapore? And uh, when do you think that you can ship an evaluation?
Charles Shei: System to that the HPM leader.
Charles Shei: Thank you.
Charles Shei: Well excellent and and you're absolutely right.
Charles Shei: That is a very important development towards in this quarter.
Charles Shei: Number 1, which is encouraging is supposedly. They have shared at a conference
Charles Shei: That hybrid bonding Readiness is for them. A must because their customers are demanding, a hybrid bonded version.
Charles Shei: um,
Richard Blickman: Then we know. that and we've been developing this on an ongoing basis. that traction is gaining at the others. So. As I said earlier, it is according to what we expect. in our beautiful roadmap since about four years. focusing on further. Adoption in 25-26. and then having production. devices available towards the end of next year and certainly in 27. That roadmap is what we hear. The activity around that is increasing. and has increased this quarter significantly. And that's also in line with the publication. So basically, it's part of that whole... The only question is, how much share will we be offering?
Charles Shei: Then we know.
Charles Shei: That and we've been developing this on an ongoing basis.
Charles Shei: um,
That traction is, is gaining at the others.
Charles Shei: So,
as I said earlier, it is according to what we expect, um, in in our beautiful road map since about 4 years,
Charles Shei: um,
Charles Shei: all focusing on further.
Charles Shei: Adoption in 2526.
Charles Shei: And then having
Devices available towards the end of next year. And certainly in 27,
Charles Shei: That road map is what we hear.
Charles Shei: The activity around, that is increasing.
And has increased this quarter significantly.
Charles Shei: And that's also in line with the Publications.
Charles Shei: so basis is part of that whole, um,
Charles Shei: development.
Richard Blickman: Will this be, yeah. Major, are we the process of reference? or somebody else, we don't know. But we are in a good position. The data we can achieve is very solid. Process window is increasing. So, that looks gross. Thanks, Richard.
Charles Shei: The only question is, how much share will we be offered?
Will this be? Um, yeah.
Charles Shei: And major. Are we are? We the process of reference?
Charles Shei: Or somebody else. We we don't know yet.
Charles Shei: But we are in a good position. The data we can achieve is very solid.
Charles Shei: Process window is increasing.
So, that looks promising.
Charles Sheave: So maybe the second question I want to ask a bit more about the mainstream business. I think your first half 25 revenue is, I mean, yes, it's down a little bit versus first half 24, but largely flat, let's call it flat. But you are saying hybrid bonding revenue doubled from the first half 24 level.
Richard Blickman: Obviously, we don't know the hybrid bonding revenue baseline from first half last year, but it kind of implies a very big decline in the mainstream business in first half 25. My math is telling me it's down 20% from a year ago. And if that number is right, your mainstream business is basically back to the 2019 level. Is it right? Or is it that bad for the mainstream business in first half 25?
Thanks reset. Um, uh, so maybe the second question, I want to ask a bit more about the, the mainstream, um, business. Um, I think your first half 25 revenue is, I mean, yes, it's down a little bit versus first half 24, but the largely flat, let's call it flat, but you are saying, hybrid bonding Revenue doubled from the first half of 24/11.
Richard Blickman: And we really want to know like how bad the mainstream is.
Richard Blickman: So, you know, the thing is, the bad news today, maybe it will become good news tomorrow. But we really want to know. Yeah. Well, that's absolutely right. For certain areas, you're spot on. The industry, and look at automotive is a beautiful example. Look at our key customers in that area. The world is not growing in that area.
Charles Shei: Uh, obviously we don't know the hybrid bonding Revenue baseline from first half last year, but but it kind of implies a very big decline in the mainstream business and first half 255. My math is telling me it's down 20% from a year ago. And if that number is right, your mainstream business is basically back to the 2019 level, is it, is it right? Or is it that bad or for the mainstream business in first half 25, uh, uh and and, and we really want to know like how bad the mainstream is. So, so, you know, the thing is, the bad news today. Maybe it will become good news tomorrow but we really want to know. Yeah.
Charles Shei: Well, that's absolutely right for certain areas. You're you're you're you're spot on.
Charles Shei: The industry. Um,
Charles Shei: and, and look at Automotive is, is a beautiful example. Look at our key customers in, in that area.
Charles Shei: Um,
Charles Shei: Um, the world is is is not growing in that area.
Charles Shei: but then,
Richard Blickman: Yeah, let's be very positive about the development in the new. Ariel. So...
Charles Shei: Yeah, let's be very positive about about the development in the new.
Richard Blickman: Thank you. Yeah, you can also say it in this way, if we would not have... Successful Advanced Packaging AI. The numbers would look different, yes, certainly.
Speaker Change: Ariel. So
Charles Shei: um,
Speaker Change: Yeah, you can also say it in this way, if we would not have the successful Advanced packaging, AI the numbers would look different. Yes certainly
Richard Blickman: But is that a concern going forward? We don't think so because if you look at our margins... is a microbusiness compared to the conventional business. Still much small. So also the conventional business for new device development, whether it's in the lead frame world or whether it's in the substrate world. Look at the flip chip success in many applications. Yeah, it's at low levels, but it...
Charles Shei: um,
Charles Shei: but is that is that a concern going forward?
Charles Shei: we don't think so, because if you look at our margins, still the new
Submicron business compared to the conventional business.
Charles Shei: Is still much smaller.
Charles Shei: So also the convention business for new device development.
Charles Shei: Whether it's in lead frame world or whether it's in the substrate world. Look at the flip chip flip chip success in many applications.
Charles Shei: um,
Charles Shei: um,
Richard Blickman: They're afraid. Yeah, successful new product launch. which should be increased in volume in the next round.
Charles Shei: yeah, it's it's at low levels but it it
Charles Shei: they're very
Yeah. Successful new product launches, which should be increased in volume in the next round.
Charles Sheave: Maybe, Richard, just really want to confirm, is the mainstream really down 20% young year in the first half of 2025 or higher or lower? Well, we haven't figured out those numbers in detail, but it could well be somewhere around that. Chinese subcontractors were very low as well. So I would have to calculate to give you a precise number. But... as a trend. certainly the case. Yeah, thanks, Richard.
Speaker Change: Maybe you reached out, but just really want to confirm that is, is the mainstream really down 20% year.
Charles Shei: Uh, in the first half. 25 or higher or lower.
Charles Shei: well, we have
but it could well be somewhere somewhere around that.
Charles Shei: Thanks.
Charles Shei: Chinese subcontractors were very low as well.
Charles Shei: So I would have to calculate to give you a precise number.
Charles Shei: but um,
As a trend. It's it's it's
Charles Shei: it's certainly the case.
Unknown Executive: That's all from me. Thanks, Charles.
Speaker Change: Yeah, thank you. That's all from me.
Speaker Change: Thanks Charles.
Unknown Executive: Any last questions?
Martin Marandon: The next question comes from Martin Marandon from OttoBHF, please go ahead. Hi, thanks for taking my question. The first one is on the mainstream business. I just wanted to know what do you think the next upturn will look like for the mainstream business and notably for mobile? Because in the past, I mean, we saw quite a brutal growth in the upturn, you know, growth like 50 to 60 percent sometimes for the mainstream business. But maybe the pace of innovation in the mobile space has slowed down a bit to some extent. But at the same time, we see new AGI functionalities, new type of chiplet packaging, etc.
Any last question, the next question comes from Martin Miranda from Auto BHS, please go ahead.
Hi. Uh thanks for for taking my question. Uh the the phone first 1 is on the the mainstream, uh business. Um,
Speaker Change: I, I just wanted to know, what do you think the next turn will look like for the mainstream business, and for, for mobile. Because in the past, I mean, we saw quite a brutal growth in the upturn, you know, growth like 50 to 60%, uh, sometimes for the mainstream business, but maybe the pace of innovation in the mobile space has slowed down.
Richard Blickman: So, do you think the next upturn for mobile will look like the previous one? Well, it's also a very good question, usually with an extended down... The pattern is that. is also lowered. We see that right now with Tech Insights numbers, which we shared, that they lowered, of course. What happened this year so far? and then they lowered the forecast for next year. That always. is following that same trend, and that's when the tide turns. You will see the opposite. You will see... On the one hand, a... a new product launch success But then you also have a sort of catch-up investment round because not everything is new.
Speaker Change: A bit to some extent. But at the same time we see new AGI uh functionalities new type of triplet packaging, Etc. So yeah, it's just do. Do you think the next up? Turn for mobile will look like the previous ones.
Speaker Change: Well, it's also very good question. Usually, with an extended downturn.
Speaker Change: the pattern is that the
Speaker Change: Expected upturn.
Speaker Change: Is also lowered. We see that right now with tech insights numbers, which we shared
Speaker Change: That they lowered, of course.
Speaker Change: What happened this year so far?
Speaker Change: And then they lowered the forecast for next year.
Speaker Change: That always.
is is following that same Trend and this, when the tide turns,
Speaker Change: You will see the opposite.
Speaker Change: you will see, um,
Speaker Change: on the 1 hand a, um,
a new product launch success.
Speaker Change: But then you also have an sort of catch up um, investment around.
Richard Blickman: and which is then unexpected. But that's typically how this industry works. So you have to analyze these cycles. from the start to. next start through a cycle. How that forecasting develops, and it's very interesting that at the end... People start to look ever more dark to whether this is a growth industry at all. But somebody mentioned 19. I did also myself, I think you had a similar sort of. But then, yeah, we had the abnormality of a cold. Whether this time we will have an abnormality, who knows? That's it.
Speaker Change: Um, because not everything is new.
Speaker Change: Um, and which is then unexpected.
Speaker Change: um,
Speaker Change: but that's typically how this industry works. So you you have to analyze these Cycles.
Speaker Change: From the start to a next start through a cycle.
Speaker Change: How that forecasting develops. And it's very interesting that at the end,
People start to look ever more dark to whether this is a growth industry at all.
Speaker Change: But somebody mentioned 19. I did also myself, I think
You had a similar sort of.
Speaker Change: but then yeah, we had the abnormality of a CO
Speaker Change: Whether this time, we will have an abnormality.
Speaker Change: Who knows?
Speaker Change: Um,
Unknown Executive: Good.
Speaker Change: but that, that
Unknown Executive: Historically, we have this nice slide going back to 2006. You have these movements, 50 up, 50 plus down. is what happened. Okay, very helpful.
Speaker Change: Historically, we have this nice side going back to 2006.
You, you have these movements 50 up, 50 plus down.
Speaker Change: Is, is what happens?
Richard Blickman: And I have a quick follow-up on silicon photonics. Whether you think for the next couple of years, let's say, that the market, the addressable market for BASIC would be bigger for flip chip or for hybrid burning tools? Because we know that hybrid burning will be addressing the switches, notably, but flip chip, maybe the addressable market is bigger in terms of products because it's transceiver applicable, et cetera. So what do you think would be the bigger market for BASIC? Well, if you look at it today, you're absolutely right. Flip chip is the bigger market, and that could very well be continuing for the next...
Speaker Change: Okay, they had 4 and I have a quick follow-up on on Silicon, photonics.
Speaker Change: Um, whether you think for the next couple of years, let's say that the market the addressable market for for busy will be bigger for for flip ship or for hybrid bending tools because we know that hybrid bending is addressing, the will be addressing the switches notably. But but flip sheet may be, the addressable Market is bigger in terms of products because it's transferable Etc. So uh what what what do you think will be the bigger market for for basic?
Uh, if you look at it today, you're absolutely right. Slip chip is is the bigger the bigger market and that could very well be.
Richard Blickman: 1-2 years, but then when dimensions decrease. You will certainly move to hybrid bonding specs. And that is also developing very positively for us. So you have the one, yeah, the two applications, one is the co-package. which is still a bit further out and you have to connect.
Speaker Change: Uh, continuing for the next uh, 1 2 years. But then, when Dimensions decrease,
Speaker Change: You will certainly move to hybrid building specs.
Speaker Change: And that is also developing very positively for us.
Speaker Change: So you have to walk the yeah. The 2 applications have 1 is the cooperation takes
Speaker Change: which is still a bit further out, and you have to connect first
Unknown Executive: Thank you very much.
Unknown Executive: Thanks for watching.
Speaker Change: Okay, thank you. Thank you hon where we are involved since over.
Speaker Change: Thanks Martin.
Tim Schulze-Mellander: The next question comes from Tim Schulze-Mellander from Rothschild and Co. Redburn. Please go ahead. Hi there. Thanks for taking my questions. I had two, please.
Redbarn: Co Redbarn. Please. Go ahead.
Tim Schulze-Mellander: Maybe just the first on the Gen 2 hybrid bonding tool. I think there was some talk that maybe it could be a kind of September type timeframe, so maybe just kind of six weeks away. And I just really wanted to think about that timeline. Might that cause customers to delay order placement? Or is the tool eval and sort of industrialization timeframe sort of long and that it doesn't disturb near-term demand? And then how to follow up, please. Excellent. We have always. let's say, qualified this first tool as a development. So, um... It will take At least nine months.
Hi there, thanks for taking my questions. Um, I had 2, please, um, maybe just the first
Redbarn: On the Gen 2.
Hybrid bonding tool. I think there was some talk that maybe it could be a kind of September type time frame. So maybe just kind of 6 weeks away. Uh, and I just really wanted to think about that timeline. Might that cause customers to delay or the placement or is the tool even sort of industrialization time frame sort of long and that it doesn't disturb near-term demand and then had a follow-up, please.
Redbarn: Well, excellent. Um, we have always um
Speaker Change: Let's say qualified this first tool as a development tool.
Redbarn: so,
Redbarn: um,
Redbarn: It will take.
Richard Blickman: after shipments, probably a year before the tool has... being qualified to use in production. So cannibalizing, or changing... foreseen in a year.
Redbarn: At least 9 months.
Redbarn: After shipments.
Redbarn: probably a year before the 2 has, um,
Redbarn: Been qualified to use in production.
Redbarn: so cannibalizing or changing
Richard Blickman: But what If you look at that second generation has two... main targets. Number one is to be able to place even preciser than we place today. So from 100 to 50, not a problem. But then, also, and that's because... also named Generation 2, explained in the C.M. Capital Markets Day. Because of the design and also the dynamics and the balancing, et cetera. The machine should run. with a larger. process window, so a higher throughput. So reducing, ultimately, the cost of ownership. The cost of the machine is certainly higher than that of generation 1+, the 100 nanometer.
Um, it's it's not foreseen in a year.
but,
Redbarn: What?
Redbarn: if you look at,
Redbarn: That second generation has 2.
Redbarn: Main Targets number 1 is to be able to place even preciser. Then we place today. So from 100 to 50 nanometers.
Redbarn: But then also, and that's because it's also named generation 2 explained in the CM Capital markets day.
Because of the design and also the Dynamics and the balancing Etc.
Redbarn: The machine should run.
With a larger.
Redbarn: Process window. So a higher throughput.
Redbarn: So reducing ultimately the cost of ownership.
The cost of the machine is certainly higher than that of Generation 1. Plus the 100 nanometer.
Richard Blickman: But that challenge we will face, which is a very positive challenge. Hopefully. Once the system is becoming in the stage where it is production qualified. So we will find out and we will share in the next quarters the progress. Probably early October, whether it's late September. Don't know yet, but you can see it on the floor, so it's getting there, but it's a real milestone. in higher accuracy and especially because of stability, higher throughput. Awesome. That's really, really helpful.
Redbarn: But that challenge, we will face which is a very positive challenge.
Redbarn: Hopefully.
Redbarn: um once the system is is becoming in the stage where it is production um uh qualified
Redbarn: So we will find out and we will share in the next quarter as to progress.
Shipment.
Probably early October when it's late September.
Redbarn: Don't know yet. But but you can see it on the floor.
Um, so it's getting there.
Redbarn: Uh, but it's a real milestone.
Redbarn: In a higher accuracy and especially because of stability higher throughput.
Richard Blickman: And then maybe just one quick housekeeping one, I think in response to Didier's questions, you talked about euro pricing, but you also talked about FX impacting on margins. Apologies if I missed it, but could you just maybe just help me sort of understand maybe the magnitude or what the mechanics are for Q3, or if I just misunderstood the pricing currency? Thank you. Well, we we are of course in a dollar The semiconductor industry, per definition, is a dollar. Our business in the same way. So we set. prices because we're a Euro-based company and price in Euros, we offer that to customers and there's also always this close when the exchange rate being requested.
Speaker Change: Awesome. That's that's really really helpful and then maybe just 1 quick housekeeping 1 I think in response to DD's questions you talked about Euro pricing but you also talked about FX impacting on margins apologies if I missed it but could you just? Um maybe just helped me sort of understand maybe the magnitude or what the mechanics are for for Q3 um or if I just misunderstood the pricing currency. Thank you.
Well we we are of course in a dollar world.
Speaker Change: The semiconductor industry for definition is a dollar world.
Speaker Change: our business in the same way, so we we
Speaker Change: Set.
Speaker Change: Prices because we are Europe based company in price in euros.
we offer that to customers and there's also always this closed when the exchange rate varies at time of ordering by plus minus 200% and adjustment is is uh,
Speaker Change: Is being requested.
Richard Blickman: and that you should be. Let's say, because the swings are not that big. that usually can be organized. With the big swing we have had in negative sense for the dollar in the past four or five months, that has caused some delay in that process. Customers have a certain price for a machine in their budget. and others, and the price has to be increased. Since we are in a specific equipment business. These are not standard machines. Part of it. Based on many criteria, but also competition facing exchange rate issues. That settles at some point. and we have to be a bit smarter to build better machines and at lower cost.
Speaker Change: and that usually,
Speaker Change: Let's say because the swings are not that big.
That usually can be can be organized.
Speaker Change: With the big swing, we have had in negative sense for the dollar in the past 4 or 5 months.
That that has caused some some delay in that process. So,
Speaker Change: Customers have a certain price for a machine and their budgets.
Speaker Change: In dollars and that price has to be increased.
Speaker Change: since we are in in a specific,
Speaker Change: uh, equipment business and these are not standard machines, only part of it.
Speaker Change: Uh, facing uh, exchange rate issues.
Speaker Change: Um, that settles at some point.
Richard Blickman: So that was my discussion with Didier. Got it. That's very clear. Thank you so much. That's very good. Thank you so much. Thank you.
Speaker Change: And we have to be a bit smarter to to build better machines at lower cost.
Speaker Change: so, that was my discussion with DDA,
Speaker Change: Got it, that's very clear. Thank you so much.
Speaker Change: Thank you. So
Speaker Change: thank you.
Unknown Executive: Well, that brings us to the end of. Paul, or is there one final question? There are no more questions currently, you can now...
Speaker Change: Well, that brings us to the end of the
Call or is there 1 final question?
Speaker Change: There are no more questions currently we can now
Unknown Executive: handover for closing remarks. Thank you very much and if there are any further questions, don't hesitate to contact us. Thank you for attending. Bye-bye. The host has ended this call. Goodbye.
Speaker Change: hand over for closing remarks.
Speaker Change: Thank you very much and if there's any further questions, don't hesitate to contact us.
Speaker Change: Thank you for attending byebye.