Q3 2025 BE Semiconductor Industries NV Earnings Call

October 23, 2025

Speaker #1: Your line is muted . Call recording is on .

Speaker #2: Good morning . Good afternoon , ladies and gentlemen , and welcome to Basie s conference call and audio webcast to discuss the company's 2025 third quarter results .

Operator: Good morning. Good afternoon, ladies and gentlemen, welcome to Besi's conference call and audio webcast to discuss the company's 2025 Q3 results. You can register for the conference call or log into the audio webcast via Besi's website besi.com. Joining us today are Mr. Richard Blickman, Chief Executive Officer, and Mrs. Andrea Kopp-Battaglia, Senior Vice President, Finance. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. 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 will now hand the word over to Mr. Richard Blickman. Mr. Richard Blickman, go ahead.

Operator: Good morning. Good afternoon, ladies and gentlemen, welcome to Besi's conference call and audio webcast to discuss the company's 2025 Q3 results. You can register for the conference call or log into the audio webcast via Besi's website ww.besi.com. Joining us today are Mr. Richard Blickman, Chief Executive Officer, and Mrs. Andrea Kopp-Battaglia, Senior Vice President, Finance. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. 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 will now hand the word over to Mr. Richard Blickman. Mr. Richard Blickman, go ahead.

Operator: Good morning. Good afternoon, ladies and gentlemen, and welcome to BE Semiconductor Industries N.V.'s conference call and audio webcast to discuss the company's 2025 third quarter results. You can register for the conference call or log into the audio webcast via BE Semiconductor Industries N.V.'s website, www.besi.com. Joining us today are Mr. Richard Blickman, Chief Executive Officer, and Mrs. Andrea Kopp, Senior Vice President Finance. Currently, all participants are in a listen-only mode. Later, we will conduct a question and answer session, and instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without permission from the company. I will now hand the word over to Mr. Richard Blickman. Mr. Richard Blickman, go ahead.

Speaker #2: You can register for the conference call or log in to the audio webcast via Basie's website . Joining us today are Mr. Richard Blickman , Chief Executive Officer and Mrs. Andrea Cole , Senior Vice President , finance .

Speaker #2: Currently , all participants are in a listen only mode . Later , we will conduct a question and answer session and instructions will follow at that time , as a reminder , ladies and gentlemen , this conference is being recorded and cannot be reproduced in whole or in part without permission from the company .

Speaker #2: I will now hand the word over to Mr. Richard Blickman . Mr. Richard Blickman , go ahead .

Speaker #3: Thank you . Thank you all for joining . I'd like to remind everyone that on today's call , management will be making forward looking statements .

Richard Blickman: Thank you. Thank you all for joining. 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 Besi's current views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond Besi'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 reports filed with the AFM. Such forward-looking statements, including guidance provided during today's call, speak only as of this date, and Besi does not intend to update them in light of the new information or future developments, nor does Besi undertake any obligation to update the forward-looking statements.

Richard Blickman: Thank you. Thank you all for joining. 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 Besi's current views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond Besi'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 reports filed with the AFM. Such forward-looking statements, including guidance provided during today's call, speak only as of this date, and Besi does not intend to update them in light of new information or future developments, nor does Besi undertake any obligation to update the forward-looking statements.

Speaker #3: All statements other than statements of historical fact , may be forward looking statements . Forward looking statements reflect bases , current views and assumptions regarding future events , many of which are by nature inherently uncertain and beyond .

Speaker #3: Base'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 reports filed with the AFM .

Speaker #3: Such forward looking statements , including guidance provided during today's call , speak only as of this date , and Basie does not intend to update them in light of the new information or future developments , nor does Basie undertake any obligation to update the forward looking statements .

Speaker #3: For today's call , we'd like to review the key highlights for our third quarter and nine months ended September 30th , 2025 , and update you on the market .

Richard Blickman: For today's call, we'd like to review the key highlights for our third quarter and nine months ended September 30, 2025, and update you on the market, our strategy, and outlook. First, some overall thoughts on the third quarter. Besi reported Q3 2025 revenue and operating results within prior guidance in an assembly equipment market showing early signs of recovery. Order levels improved significantly Q3 2025 with bookings of €174.7 million, increasing by 36.5% and 15.1% versus Q2 2025 and Q3 2024, respectively. For the quarter, revenue decreased by 10.4% and 15.3% versus Q2 2025 and Q3 2024, respectively, reflecting continued weakness in mainstream assembly markets, particularly mobile and automotive applications and lower hybrid bonding revenue. Operating income was at the high end of guidance, reflecting higher than anticipated gross margins and operating expense developments slightly better than forecast.

Richard Blickman: For today's call, we'd like to review the key highlights for our Q3 and nine months ended 30 September 2025, update you on the market, our strategy, and outlook. First, some overall thoughts on the Q3. Besi reported Q3 2025 revenue and operating results within prior guidance in an assembly equipment market showing early signs of recovery. Order levels improved significantly Q3 2025, with bookings of EUR 174.7 million, increasing by 36.5% and 15.1% versus Q2 2025 and Q3 2024 respectively. For the quarter, revenue decreased by 10.4% and 15.3% versus Q2 2025 and Q3 2024 respectively, reflecting continued weakness in mainstream assembly markets, particularly mobile and automotive applications and lower hybrid bonding revenue.

Speaker #3: Our strategy and outlook . First , some overall thoughts on the third quarter . Busy reported Q3 25 revenue and operating results within prior guidance in an assembly equipment market showing early signs of recovery .

Speaker #3: Order levels improved significantly Q3 25 , with bookings of one . 74.7 million , increasing by 36.5% and 15.1% versus Q2 25 and Q3 24 , respectively .

Speaker #3: For the quarter , revenue decreased by 10.4% and 15.3% versus Q2 25 and Q3 24 , respectively , reflecting continued weakness in mainstream assembly markets , particularly mobile and automotive applications , and lower hybrid bonding revenue .

Speaker #3: Operating income was at the high end of guidance , reflecting higher than anticipated gross margins and operating expense developments . Slightly better than forecast .

Richard Blickman: Operating income was at the high end of guidance, reflecting higher than anticipated gross margins and operating expense developments slightly better than forecast. The improved order outlook this quarter was principally due to a broad-based increase in die attach bookings by Asian subcontractors for mostly 2.5D data center applications, and renewed capacity purchases by leading photonics customers. We also noticed improvement in more mainstream electronics and automotive applications. A push-out to Q4 2025 of certain anticipated hybrid bonding bookings limited even stronger order development during the call.

Speaker #3: The improved order outlook this quarter was principally due to a broad based increase in dietary bookings , by Asian subcontractors for mostly two and a half D data center applications and renewed capacity purchases by leading photonics customers .

Richard Blickman: The improved order outlook this quarter was principally due to a broad-based increase in die attach bookings by Asian subcontractors for mostly 2.5D data center applications and renewed capacity purchases by leading photonics customers. We also noticed improvement in more mainstream electronics and automotive applications. A push out to Q4 2025 of certain anticipated hybrid bonding bookings limited even stronger order development during the call. During the quarter, Besi's results for the first nine months of 2025 reflected similar trends experienced in Q3 2025, with revenue of €425 million and orders of €434.6 million decreasing by 6.4% and 6.5%, respectively, versus the comparable period of the prior year. In general, weakness in mobile and automotive applications this year has been partially offset by significantly increased die attach orders by Asian subcontractors for AI-related computing applications.

Speaker #3: We also noticed improvement in more mainstream electronics and automotive applications . A push out to Q4 25 of certain anticipated hybrid bonding bookings limited even stronger order development .

Speaker #3: During the call during the quarter , basis results for the first nine months of 2025 reflected similar trends experienced in Q3 25 , with revenue of €425 million and orders of €434.6 million , decreasing by 6.4% and 6.5% respectively .

Richard Blickman: During the quarter, Besi results for the first nine months of 2025 reflected similar trends experienced in Q3 2025, with revenue of EUR 425 million and orders of EUR 434.6 million, decreasing by 6.4% and 6.5% respectively versus the comparable period of the prior year. In general, weakness in mobile and automotive applications this year has been partially offset by significantly increased die attach orders by Asian subcontractors for AI-related computing applications. Year to date 2025, net income of EUR 88.8 million decreased by 27.6% versus the comparable 2024 period, primarily due to lower revenue, lower gross margins realized principally due to adverse Forex effects and higher interest expense net related to our Senior Note issuance in July 2024.

Speaker #3: Versus the comparable period of the prior year . In general , weakness in mobile and automotive applications , this year has been partially offset by significantly increased detach orders by Asian subcontractors for AI related computing applications .

Speaker #3: Year to date , 25 net income of €88.8 million decreased by 27.6% versus the comparable 2020 . Four period , primarily due to lower revenue , lower gross margins realized principally due to adverse forex forex effects and higher interest expense .

Richard Blickman: Year-to-date 2025 net income of €88.8 million decreased by 27.6% versus the comparable 2024 period, primarily due to lower revenue, lower gross margins realized principally due to adverse forex effects, and higher interest expense net related to our senior note issuance in July 2024. Liquidity remains strong with cash and deposits of €518.6 million at September 30, increasing €28.4 million or 5.8% versus June 30 this year due to cash flow from operations more than doubling versus the second quarter of this year. In addition, we completed our €100 million share buyback program October 2025 and authorized a new €60 million program with an anticipated completion date of October 2026. Next, I'd like to discuss the current market environment and our strategy.

Speaker #3: Net related to our senior Note issuance . In July 24th . Liquidity remained strong , with cash and deposits of €518.6 million at September 30th , increasing 28.4 million , or 5.8% , versus June 30th .

Richard Blickman: Liquidity remains strong with cash and deposits of EUR 518.6 million at 30 September, increasing EUR 28.4 million or 5.8% versus 30 June this year, due to cash flow from operations more than doubling versus Q2 this year. In addition, we completed our EUR 100 million share buyback program 25 October and authorized a new EUR 60 million program with an anticipated completion date of October 2026. Next, I'd like to discuss the current market environment and our strategy. TechInsights currently forecasts assembly market growth of 1.8% in 2025, which is below last quarter's forecast of 9%, driven by a push-out of the anticipated assembly upturn to 2026. Forecast growth is focused primarily on AI and data center logic and memory applications.

Speaker #3: This year due to cash flow from operations , more than doubling versus the second quarter of this year . In addition , we completed our 100 million share buyback program October 25th and authorized a new €60 million program with an anticipated completion date of October 2026 .

Speaker #3: Next , I'd like to discuss the current market environment and our strategy . Take insights . Currently , forecasts Assembly market growth of 1.8% in 2025 , which is below last quarter's forecast of 9% , driven by a pushout of the anticipated assembly upturn to 2026 .

Richard Blickman: TechInsights currently forecasts assembly market growth of 1.8% in 2025, which is below last quarter's forecast of 9%, driven by a push out of the anticipated assembly upturn to 2026. Forecast growth is focused primarily on AI and data center logic and memory applications. TechInsights now expects cumulative growth in the period 2026-2029 of 42% based on continued advancements in AI use cases, new product introductions in the 2026-2028 period, and a cyclical recovery in mainstream assembly applications. We expect to exceed market growth rates given our leadership position in advanced packaging. The semiconductor market has shown signs of normalization with inventory to booking ratios improving from above 2 in 2022 to below 1.5 currently. In addition, interconnect unit growth has also rebounded, improving from a low of roughly -20% in October 2023 to approximately +7% currently.

Speaker #3: Forecast growth is focused primarily on AI and data center logic and memory applications . Tech insights now expects cumulative growth in the period 20 2629 of 42% , based on continued advancements in AI use cases .

Richard Blickman: TechInsights now expects cumulative growth in the period 2026-2029 of 42% based on continued advancements in AI use cases, new product introductions in the 2026-2028 period, and a cyclical recovery in mainstream assembly applications. We expect to exceed market growth rates given our leadership position in advanced packaging. The semiconductor market has shown signs of normalization with inventory to booking ratios improving from above 2 in 2022 to below 1.5 currently. In addition, interconnect unit growth has also rebounded, improving from a low of roughly minus 20% in October 2023 to approximately plus 7% currently. These indicators points to a more positive assembly equipment environment as we look ahead to 2026.

Speaker #3: New product introductions in the 20 2628 period , and a cyclical recovery in mainstream assembly applications . We expect to exceed market growth rates given our leadership position in advanced packaging .

Speaker #3: The semiconductor market has shown signs of normalization with inventory to booking ratios , improving from above 2 in 2022 to below 1.5 . Currently in addition , interconnect unit growth has also rebounded , improving from a low of roughly -20% in October 2023 to approximately 7% currently .

Speaker #3: These indicators point to a more positive assembly equipment environment . As we look ahead to 2026 . Basic continued to make progress in its wafer level assembly activities in the third quarter , securing new customers and orders for both its hybrid bonding and DC next systems hybrid bonding adoption expanded with the placement of orders in the third quarter 25 by a new foundry customer .

Richard Blickman: These indicators point to a more positive assembly equipment environment as we look ahead to 2026. Besi continued to make progress in its wafer-level assembly activities in the third quarter, securing new customers and orders for both its hybrid bonding and TCnext systems. Hybrid bonding adoption expanded with the placement of orders in the third quarter 2025 by a new foundry customer. Progress also continues on integrated hybrid bonding production lines with Intel now operating six KNX lines with 30 hybrid bonding tools. Future hybrid bonding demand is also supported by recent announcements from AMD and Broadcom in collaboration with OpenAI. In addition, high-level discussions with major memory players are ongoing as HBM4 assembly processes start to take shape. TCnext progress continued with a new order received from a fourth customer.

Richard Blickman: Besi continued to make progress in its wafer level assembly activities in Q3, securing new customers and orders for both its hybrid bonding and TCB Next systems. Hybrid bonding adoption expanded with the placement of orders in Q3 25 by a new foundry customer. Progress also continues on integrated hybrid bonding production lines, with Intel now operating six Kinex lines with 30 hybrid bonding tools. Future hybrid bonding demand is also supported by recent announcements from AMD and Broadcom in collaboration with OpenAI. In addition, high-level discussions with major memory players are ongoing as HBM4 assembly processes start to take shape. TCB Next progress continued with a new order received from a fourth customer. The outlook for Besi's business in the second half of this year has improved based on Q3 order trends and continued order momentum to date in Q4.

Speaker #3: Progress also continues on integrated hybrid bonding production lines , with Intel now operating six next lines with 30 hybrid bonding tools . Future hybrid bonding demand is also supported by recent announcements from AMD and Broadcom in collaboration with OpenAI .

Speaker #3: In addition , high level discussions with major memory players are ongoing as IBM for Assembly processes start to take shape . These next progress continued with a new order received from a fourth customer .

Speaker #3: The outlook for Basie's business in the second half of this year has improved . Based on third quarter order trends and continued order momentum to date .

Richard Blickman: The outlook for Besi's business in the second half of this year has improved based on third quarter order trends and continued order momentum to date in the fourth quarter. The improved outlook reflects increased demand for advanced packaging capacity necessary to support the rapid expansion of data centers, software, and next-generation semiconductor devices required by the industry-leading AI players. Advanced packaging is one of the key ways to achieve AI system differentiation, develop innovative consumer edge AI devices, and provide the most energy-efficient data center performance. Now, a few words about our guidance. For the fourth quarter this year, we anticipate that revenue will increase by approximately 15% to 25% versus the third quarter of this year due to increased bookings levels. Besi's gross margin is anticipated to range between 61% and 63%.

Speaker #3: In the fourth quarter . The improved outlook reflects increased demand for advanced packaging capacity necessary to support the rapid expansion of data centers , software and next generation semiconductor devices required by the industry leading AI players .

Richard Blickman: The improved outlook reflects increased demand for advanced packaging capacity necessary to support the rapid expansion of data centers, software, and next-generation semiconductor devices required by the industry-leading AI players. Advanced packaging is one of the key ways to achieve AI system differentiation, develop innovative consumer edge AI devices, and provide the most energy-efficient data center performance. Now a few words about our guidance. For Q4 this year, we anticipate that revenue will increase by approximately 15% to 25% versus Q3 of this year due to increased bookings levels. Besi gross margin is anticipated to range between 61% and 63%. Operating expenses are expected to increase by 5% to 10% versus Q3, due primarily to higher R&D expenses. That ends our prepared remarks. I would like to open the call for questions. Oh, sorry, operator.

Speaker #3: Advanced packaging is one of the key ways to achieve AI system differentiation . Develop innovative consumer edge AI devices and provide the most energy efficient data center performance .

Speaker #3: Now , a few words about our guidance for the fourth quarter this year , we anticipate that revenue will increase by approximately 15 to 25% versus the third quarter of this year due to increased bookings levels .

Speaker #3: Basis gross margin is anticipated to range between 61 and 63% . Operating expenses are expected to increase by 5 to 10% versus the third quarter , due primarily to higher R&D expenses .

Richard Blickman: Operating expenses are expected to increase by 5% to 10% versus the third quarter due primarily to higher R&D expenses. That ends our prepared remarks. I would like to open the call for questions. Oh, sorry, operator.

Speaker #3: That ends our prepared remarks . I would like to open the call for questions . Oh , sorry . Operator .

Speaker #2: Ladies and gentlemen , we are now ready to take your questions . If you wish to ask a question , please press the pound five .

Operator: Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press key pound 5 on your telephone keypad. We kindly remind you that you are limited to 1 question and a follow-up per round. If you wish to withdraw your question, please press key pound 6 on your telephone keypad. Our 1st question comes from Didier Scemama from Bank of America. Please go ahead.

Operator: Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press key pound 5 on your telephone keypad. We kindly remind you that you are limited to 1 question and a follow-up per round. If you wish to withdraw your question, please press key pound 6 on your telephone keypad. Our first question comes from Didier Scemama from Bank of America. Please go ahead.

Operator: Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound five on your telephone keypad. We kindly remind you that you're limited to one question and a follow-up per round. If you wish to withdraw your question, please press pound six on your telephone keypad. Our first question comes from DJ Hegdemann from Bank of America. Please go ahead.

Speaker #2: For your telephone keypad . We kindly remind you that you are limited to one question and a follow up . Are round . If you wish to withdraw your question , please press KY six on your telephone keypad .

Speaker #2: Our first question comes from DJ Hazama from Bank of America . Please go ahead .

Speaker #4: Good afternoon, Richard. Thank you for taking my question. I just wanted to ask you a bit more about two things: the usual questions really, on the hybrid bonding and TCB.

Didier Scemama: Good afternoon, Richard. Thanks for taking my question. I just wanted to ask you a bit more about 2 things, the usual questions really. On the hybrid bonding and TCB Next side, maybe just give us a sense of your conversation with foundry customers, but also DRAM customers. How you're thinking about the bookings for those type of tools in Q4. Also related to the point you made earlier on this, you know, recent announcement by OpenAI and AMD. You know, we know that AMD has been a major customer of your hybrid bonding systems via TSMC. Can you tell us a little bit more about that? You know, whether the capacity is in place or whether you expect a material improvement in orders from TSMC to support that ramp.

[Analyst]: Good afternoon, Richard. Thanks for taking my question. I just wanted to ask you a bit more about two things, the usual questions really. On the hybrid bonding and TCnext side, maybe just give us a sense of your conversation with foundry customers, but also DRAM customers, how you're thinking about the bookings for those types of tools in the fourth quarter. Also, related to the point you made earlier on this recent announcement by OpenAI and AMD. We know that AMD has been a major customer of your hybrid bonding systems via TSMC. Can you tell us a little bit more about that, you know whether the capacity is in place or whether you expect a material improvement in orders from TSMC to support that ramp? Thank you.

Speaker #4: Next side, maybe just give us a sense of your conversation with foundry customers, but also DRAM customers. How you're thinking about the bookings for those types of tools in the fourth quarter.

Speaker #4: And then also related to the point you made earlier on this recent announcement by OpenAI and AMD , you know , we know that AMD has been a major customer of your hybrid bonding systems via TSMC .

Speaker #4: Can you tell us a little bit more about that ? You know , whether the capacity is in place or whether you expect a material improvement in in orders from TSMC to support that that ramp ?

Speaker #4: Thank you .

Didier Scemama: Thank you.

Speaker #3: Thanks . DJ . If you allow me not to go into specifics , customers , I am very happy to answer a bit more .

Richard Blickman: Thanks, DJ. If you allow me not to go into specific customers, I am very happy to answer a bit more in general terms. First of all, the hybrid bonding adoption for logic is continuing quarter by quarter, and we see that with adding another customer with several machines. Also, as we guide for Q4, we expect orders. One is a larger one, as we have discussed also in the previous call, and that may be related to those end products which you just refer to. At the same time, the adoption for HBM stacking is all pointing towards a critical evaluation year 2026.

Richard Blickman: Thanks, Didier. If you allow me not to go into specific customers, I am very happy to answer a bit more in general terms. First of all, the hybrid bonding adoption for logic is continuing quarter by quarter, and we see that with adding another customer with several machines. Also, as we guide for Q4, we expect orders. One is a larger one, as we have discussed also in the previous call, and that may be related to those end products which you just refer to. At the same time, the adoption for HBM stacking is all pointing towards a critical evaluation year 2026.

Richard Blickman: Thanks, DJ. If you allow me not to go into specific customers, I am very happy to answer a bit more in general terms. First of all, the hybrid bonding adoption for logic is continuing quarter by quarter. We see that with adding another customer with several machines. Also, as we guide for the fourth quarter, we expect orders. One is a larger one, as we have discussed also in the previous call, and that may be related to those end products which you just referred to. At the same time, the adoption for HBM stacking is all pointing towards a critical evaluation year 2026. The big three in that market, all three of them have publicly announced that hybrid bonded devices should be available in their program by the end of next year. That will be, as we have expected for many years, 2026-2027.

Speaker #3: In general terms . First of all , the hybrid bonding adoption for logic is continuing quarter by quarter , and we see that with adding another customer with several machines and also as we guide for the fourth quarter , we expect orders .

Speaker #3: One is a larger one . As we have discussed also in the previous call . And that may be related to those end products which you just refer to at the same time , the adoption for HBM stacking is all pointing towards a critical evaluation year 2026 .

Speaker #3: The big three in that market , all three of them have publicly announced that hybrid bonded devices should be available in their program by the end of next year , so that will be as we have expected for many years , 2020 607 that should be the adoption time using this hybrid bonding technology with all its advantages .

Richard Blickman: The big three in that market, all three of them have publicly announced that hybrid bonded devices should be available in their program by the end of next year. That will be, as we have expected for many years, 2026, 2027. That should be the adoption time using this hybrid bonding technology with all its advantages versus the TC solution. Reflow, and clarity we will share as quarters go on, and that should result in probably first orders for some initial capacities. The orders received so far, as we shared in previous quarters, are from two of the three who are evaluating in many different designs using the hybrid bonding technology and stacking the 12 and 16, and they even go up much further.

Richard Blickman: That should be the adoption time using this hybrid bonding technology with all its advantages versus the TC solutions, so reflow. Clarity, we will share as quarters go on, and that should result in probably first orders for some initial capacities. The orders received so far, as we shared in previous quarters, are from two of the three who are evaluating in many different designs using the hybrid bonding technology and stacking the 12 and 16, and they even go up much further simply to achieve data on a comparable basis on performance and, of course, on cost. That's the bigger picture in those two. The chiplet architecture, adding more different devices in different structures, is also continuing. We see ever more customers.

Speaker #3: Versus the solutions . So reflow and clarity , we will share as quarters go on . And that should result in in probably first orders for some initial capacities .

Speaker #3: The orders received so far as we shared in previous quarters are from two of the three who are evaluating in many different designs using the hybrid bonding technology and stacking the 12 and 16 .

Speaker #3: And they even go up much further simply to achieve data on a comparable basis on performance . And and of course , on cost .

Richard Blickman: Simply to achieve data on a comparable basis on performance and, of course, on cost. That's the bigger picture in those two. The chiplet architecture, adding more different devices in different structures, is also continuing. We see ever more customers. If you look at the total count now, around 16 having hybrid bonders for different type of applications and all developing applications in early stages, apart from the major volume in Taiwan. What we also discussed, the capacity having been set up in the US by one customer, but the others are testing, qualifying, and publishing data on using the hybrid bonding. That's for the hybrid bonding. If we look at TC next, the key issue in TC are basically there are two issues. One is going to a fluxless solution.

Speaker #3: So that's the bigger picture in in those two . Then the chiplet architecture adding more different devices in different structures is also continuing .

Speaker #3: And we see ever more customers . So if you look at the total count now around 16 , having hybrid polymers for different type of applications and all developing applications in early stages , apart from the major volume in Taiwan and what we also discussed , the capacity having been set up in the US by one customer .

Richard Blickman: If you look at the total count now, around 16 having hybrid bonders for different types of applications and all developing applications in early stages, apart from the major volume in Taiwan and what we also discussed, the capacity having been set up in the U.S. by one customer. The others are testing, qualifying, and publishing data on using the hybrid bonding. That's for the hybrid bonding. If we look at TCnext, the key issue in TC are basically, there are two issues. One is going to a fluxless solution. Our system is prepared for adding that to the system. At the same time, more accuracy required for bond pitches below 20 micron. Recent additional data has been published by IMEC in Belgium that on our system, successful products have been refloat down to below 10 micron bond pitch, even 7 micron bond pitch.

Speaker #3: But the others are testing , qualifying and publishing data on using the hybrid bonding . So that's for the hybrid bonding . If we look at DC next , the key issue in DC are basically there are two issues .

Speaker #3: One is , is going to a Fluxus solution . Our system is prepared for adding that to the system . And at the same time , more accuracy required for Von Pet pitches below 20 micron .

Richard Blickman: Our system is prepared for adding that to the system. At the same time, more accuracy required for bond pad pitches below 20 micron. Recent additional data has been published by imec in Belgium that on our system, successful products have been reflowed down to below 10-micron bond pad pitch, even 7-micron bond pad pitch. That should fill the gap between the necessary hybrid bonding and the reflow process as the world is using today, above 20-micron bond pad pitch. As you can see, another customer has been added. They all prepare for those two criteria required for next generation TC.

Speaker #3: Recent additional data has been published by Imec in Belgium that on our system, successful products have been reflowed down to below ten micron bump pitch.

Speaker #3: Even seven micron bond pitch . So that should fill the gap between the necessary hybrid bonding and the reflow process . As the world is using today .

Richard Blickman: That should fill the gap between the necessary hybrid bonding and the reflow process as the world is using today, above 20 micron bond pitch. As you can see, another customer has been added. They all prepare for those two criteria required for next-generation TC.

Speaker #3: Above 20 micron pitch . And as you can see , another customer has been added . They all prepare for those to . Criteria required for next generation DC .

Speaker #4: Very well . As a follow up , I just wanted to check also another thing . So my understanding is that this OpenAI AMD chip and let's forget the name of the customer .

Didier Scemama: Very well. As a follow-up, I just wanted to check also another thing. My understanding is that this OpenAI AMD chip, and let's forget the name of the customer, but it's a 3 if not 2 nanometer design. Are you ready to ship your 25 nanometer accuracy system in support of that customer? I've got a quick follow-up as well.

[Analyst]: Very well. As a follow-up, I just wanted to check also another thing. My understanding is that this OpenAI AMD chip, and let's forget the name of the customer, but it's a three, if not two nanometer design. Are you ready to ship your 25 nanometer accuracy system in support of that customer? I've got a quick follow-up as well.

Speaker #4: But it's a it's a three if not two nanometer design . So are you ready to ship your 25 nanometer accuracy system in support of that ?

Speaker #4: That customer . And I've got a quick follow up as well .

Speaker #3: Well , for hybrid bonding , the current , let's say , the majority of systems shipped so far is 100 nanometer accuracy . And the 50 will be shipped for evaluation qualification towards the end of this year .

Richard Blickman: Well, for hybrid bonding, the current, let's say, the majority of systems shipped so far is 100 nm accuracy. The 50 will be shipped for evaluation qualification towards the end of this year. That is in preparation for design structures below 2 nm, as we understand from customers. That's still some time out. Today, it's all 100 nm, basically the benchmark technology used for many applications and not just for 1 customer. We will see in the course of the coming quarters, a broader adoption for different types of devices. One of them has been announced publicly, the MI450. There's also a next one above 500, and they all use hybrid bonding as far as we are informed.

Richard Blickman: For hybrid bonding, the current, let's say, the majority of systems shipped so far is 100 nanometer accuracy. The 50 will be shipped for evaluation qualification towards the end of this year. That is in preparation for design structures below 2 nanometers, as we understand from customers. That's still some time out. Today, it's all 100 nanometer, basically the benchmark technology used for many applications and not just for one customer. We will see in the course of the coming quarters a broader adoption for different types of devices. One of them has been announced publicly and the MI450. There's also a next one, about 500. They all use hybrid bonding as far as we are informed.

Speaker #3: And that that is in preparation for design structures below two nanometers . As we understand from customers . So that's still some time out today .

Speaker #3: It's all 100 nanometer . Basically the the benchmark technology used for for many applications and not just for one customer . So we will see in the course of the coming quarters , a broader adoption for different types of devices .

Speaker #3: And one of them has been announced publicly . And the the mi 450 , there's also a next one above 500 . And they will use hybrid bonding as far as we are informed .

Speaker #4: That's right . And then my final question , Richard , at this time of the year , it depends . Sometimes it's in Q4 , sometimes it's in Q1 .

Didier Scemama: Perfect. My final question, Richard. At this time of the year, it depends, sometimes it's in Q4, sometimes it's in Q1, you start to get a feel for, you know, some, you know, flagship smartphone design upgrades, which typically leads to orders for you guys. Any feel for what it could mean for, you know, the new models that come in the later part of 2026? Could that be orders for you in Q4 or in Q1? Or is it too early to say?

[Analyst]: Perfect. My final question, Richard, at this time of the year, it depends. Sometimes it's in Q4, sometimes it's in Q1. You start to get a feel for some flagship smartphone design upgrades, which typically leads to orders for you guys. Any feel for what it could mean for these new models that come in the later part of 2026? Could that be orders for you in Q4 or in Q1, or is it too early to say?

Speaker #4: You start to get a feel for , you know , some , you know , flagship smartphone design upgrades , which typically leads to orders for you guys .

Speaker #4: And it feel for what it could mean for , you know , the these new models that come in the later part of 26 .

Speaker #4: Could that be orders for you in Q4 or in Q1, or is it too early to say?

Speaker #3: No ? The typical pattern for these new models is ordering Q4 , Q1 with then market launch in September . So delivery of systems in June for qualification July , August .

Richard Blickman: No. The typical pattern for these new models is ordering Q4, Q1, with then market launch in September. Delivery of systems in June, for qualification July, and August. We should understand much more in Q4 and when we release the numbers in Q1, end of February, where this is heading. If you follow the public domain, there's a lot of information about what will happen in this next generation. Probably different cameras, also foldable. That means different design of the infrastructure in these units. That could lead to a next round.

Richard Blickman: No. The typical pattern for these new models is ordering Q4, Q1, with then market launch in September. Delivery of systems is in June, for qualification July, August. We should understand much more in Q4 and when we release the numbers in Q1, end of February, where this is heading. If you follow the public domain, there's a lot of information about what will happen in this next generation. Probably different cameras, also foldable. That means different design of the infrastructure in these units. That could lead to a next round. Also this year in the generation for 2025, many, let's say, volume-related, but also slightly new versions in these modules in these phones have led to a very positive business, albeit at lower levels than at the peak year 2021-2022. The key is to understand what really changes are new machines required.

Speaker #3: So we should understand much more in Q4. And when we release the numbers in Q1 in February, we will see where this is heading.

Speaker #3: So if you follow the public domain, there's a lot of information about what will happen in this next generation, probably different cameras, also foldable.

Speaker #3: That means different design of the infrastructure in these units . And that could lead to to to a next round . But also this year in the generation for 2025 .

Richard Blickman: Also this year in the generation for 2025, many, let's say, volume related but also slightly new, versions in these modules in these phones have led to a very positive business, albeit at lower levels than at the peak years, 2021, 2022. The key is to understand what really changes. Are new machines required? As soon as new machines are required, that means an extra round. Currently, you can simply conclude that a lot is being manufactured on systems already installed. In many cases, retrofits have done the job in bringing successful the latest models to market.

Speaker #3: Many let's say . Volume related . But also slightly new versions in these modules in these phones have led to very positive business , albeit it at lower levels than at the peak year 20 2122 .

Speaker #3: So the key is to understand what really changes are new machines required ? And as soon as new machines are required that that means an extra round .

Richard Blickman: As soon as new machines are required, that means an extra round. Currently, you can simply conclude that a lot is being manufactured on systems already installed. In many cases, retrofits have done the job in bringing successfully the latest models to market.

Speaker #3: Currently you can simply conclude that a lot is being manufactured on systems already installed . And in many cases , retrofits have done the job in bringing successful the latest models to market .

Speaker #4: Perfect . Thank you so much , Richard and best of luck .

Didier Scemama: Perfect. Thank you so much, Richard, and best of luck.

[Analyst]: Perfect. Thank you so much, Richard, and best of luck.

Speaker #3: Thank you DJ .

Richard Blickman: Thank you, Didier.

Richard Blickman: Thank you, DJ.

Speaker #2: Our next question comes from Sandeep Deshpande from JP Morgan. Please, go ahead.

Operator: Our next question comes from Sandeep Deshpande from J.P. Morgan. Please go ahead.

Operator: Our next question comes from Sandeep Deshpande from JPMorgan. Please go ahead.

Operator: Our next question comes from Sandeep Sudhir Deshpande from JPMorgan Chase & Co. Please go ahead.

Speaker #5: Hi Richard , thanks for letting me on . My question is regarding your business with the older customers , such as in the the smartphone market , the autos market , etc.

Sandeep Deshpande: Hi, Richard. Thanks for letting me on. My question is regarding your business with the older customers, such as in the smartphone market, the autos market, et cetera. There seems to be some signs of life in the smartphone market. The question I have is that will those signs of life translate into orders for you, given that sometimes your orders are very much related to next generation product and whether that needs to wait until the new product comes out next fall? Is it likely to happen because of the volumes, or is that too early to say because it can happen because of the volumes? I have one quick follow-up.

[Analyst]: Hi, Richard. Thanks for letting me on. My question is regarding your business with the older customers, such as in the smartphone market, the autos market, etc. There seem to be some signs of life in the smartphone market. The question I have is that will those signs of life translate into orders for you, given that sometimes your orders are very much related to next-generation product and whether that needs to wait until the new product comes out next fall, or is it likely to happen because of the volumes, or is that too early to say because it can happen because of the volumes? I have one quick follow-up.

Speaker #5: there seems to be some signs of life in the smartphone market , but the question I have is that will those signs of life translate into orders for you ?

Speaker #5: Given that sometimes your orders are very much related to next generation product , and whether that leads to wait until the new product comes out next fall , or is it likely to happen because of the volumes ?

Speaker #5: Or is that too early to say ? Because it can happen ? Because of the volumes . And I have one quick follow up .

Richard Blickman: No. Some are related to volume, with the success which we have read in the public domain recently, that means, yeah, more volume and that means shortages in certain areas and that is definitely helping. As you said rightly, the key is to understand what are the real uses for the next model. That typically becomes more clear towards the end of Q4, Q1. Then we have a much better understanding, is there next year going to be a ramp in those applications or is it at similar levels? That's typically how it has developed over the past many cycles. Automotive. The developments in automotive are mostly at new power modules, also quite complicated modules. They're all for hybrid cars. That's what we hear.

Speaker #3: Some are related to volume . So with the success which we have read in the public domain recently , that means , yeah , more volume and that means shortages in certain areas .

Richard Blickman: Some are related to volume. With the success, which we have read in the public domain recently, that means more volume, and that means shortages in certain areas. That is definitely helping. As you said rightly, the key is to understand what are the real issues for the next model. That typically becomes more clear towards the end of Q4, Q1. Then we have a much better understanding if there next year is going to be a ramp in those applications, or is it at similar levels? That's typically how it has developed over the past many cycles. Automotive, the developments in automotive are mostly at new power unit modules, also quite complicated modules. They're all for hybrid cars. That's what we hear. Volume is still, let's say moderate, not any expansion to mention, but that is also clear from the announcements of the major customers in that space.

Speaker #3: And that that is definitely helping us . But as you said rightly , the key is to understand what are the real challenges for the next model and that typically becomes more clear towards the end of Q4 .

Speaker #3: Q1 , and then we have a much better understanding . Is there next year going to be a ramp in in those applications , or is it that similar levels ?

Speaker #3: That's typically how it has developed over the past many cycles . Automotive . The developments in automotive are mostly at New power units .

Speaker #3: Modules also quite complicated modules . They're all for hybrid cars . That's what we hear . Volume is still yeah , let's say moderate , not not in the expansion to to mention , but that is also clear from the announcements of the major customers in that space .

Richard Blickman: Volume is still, yeah, let's say moderate, not any expansion to mention, but that is also clear from the announcements of the major customers in that phase. There you can say still the turn of tides is expected early next year. Let's hope so. But, yeah, our success is always in these new technologies. Automotive, we mentioned also last quarter, we don't see further decline. We see stabilization, and we see new products where we are included. Also, new technologies, for instance, in soft solder, in bonding those high-powered devices. That's typically what the status is in automotive.

Speaker #3: So there you can say still , the turn of tides is , is to be to be expected early next year . Let's hope so .

Richard Blickman: There you can say still the turn of tide is to be expected early next year. Let's hope so. Our success is always in these new technologies. Automotive, we mentioned also last quarter, we don't see further decline. We see stabilization, and we see new products where we are included, also new technologies, for instance, in soft solder, in bonding those high-powered devices. That's typically what the status is in automotive.

Speaker #3: But yeah , our success is always in these new technologies . So automotive we mentioned also last quarter . We don't see further decline .

Speaker #3: We see stabilization and we see new products where we are included . Also new technologies . For instance in soft solder , in bonding , those high powered devices .

Speaker #3: So that's that's typically what , what the what the status is in automotive .

Speaker #5: Thank you . One quick follow up on the comment you made in your opening remarks on next . You said you've got this sold .

Sandeep Deshpande: Thank you. One quick follow-up on the comment you made in your opening remarks on TC-Next. You said you've got this sold, you know, you've got an order for another customer in TC-Next. I mean, can you help us understand totally how many customers you have on TC-Next? Is this, I mean, based on how you are seeing it play out, I mean, clearly it's early days yet, but could this become a major new revenue stream for you?

[Analyst]: Thank you. One quick follow-up on the comment you made in your opening remarks on TCnext. You said you've got this sold, you've got an order or an order for another customer in TCnext. Can you help us understand totally how many customers you have on TCnext? Is this, based on how you are seeing it play out, clearly early days yet, but could this become a major new revenue stream for you?

Speaker #5: You know , you've got an order or an order for a another customer in next . So , I mean , can you help us understand totally how many customers you have on next ?

Speaker #5: And is this , I mean , based on how you are seeing it play out ? I mean , clearly it's early days yet , but could this become a major new revenue stream for you ?

Speaker #3: Yeah , well , that that's hope . So that that will be the case . That's what we are aiming at . There are two again markets .

Richard Blickman: Yeah. Well, let's hope so. That will be the case. That's what we are aiming at. There are two, again, markets. You can say the logic market, and that is where you first reach the smaller bumped pitches, so below 20 micron. That is where the concept, the TC-Next, is aiming at the first place. At the same time, that system is uniquely capable to stack those dice in HBM application. It's also prepared to add the units required for a fluxless application. The development is in both directions. Time will tell. As I said earlier, 2026 is going to be a critical year for adoption of hybrid bonding in HBM stacking.

Richard Blickman: Yeah, let's hope so that that will be the case. That's where we are aiming at. There are two, again, markets. You can say the logic market, and that is where you first reach the smaller bond pitches, so below 20 micron. That is where the concept of TCnext is aiming at in the first place. At the same time, that system is uniquely capable to stack those dies in HBM applications, and it's prepared to add the units required for a fluxless application. The development is in both directions. Time will tell. As I said earlier, 2026 is going to be a critical year for adoption of hybrid bonding in HBM stacking. Depending on how that split will be at some point for HBM4, most will be, as everyone expects, in a reflow process, TC. There are different variations in those processes.

Speaker #3: You can say the logic markets and that is where you first reach the smaller pet pitches . So below 20 microns . And that is where the concept of DC next is , is aiming at in the first place .

Speaker #3: But at the same time, that system is uniquely capable of stacking those dice in the HCM application. It is also prepared to add the units required for a Fluxus application.

Speaker #3: The development is is in both directions . So time will tell . And as I said earlier , 26 is going to be a critical year for adoption of hybrid bonding in HCM .

Speaker #3: Stacking. Depending on how that split will be at some point for HCM, most will be as everyone expects in the reflow process PC.

Richard Blickman: Depending on how that split will be at some point for HBM4, most will be, as everyone expects in a reflow process, TC. There are different variations in those processes. As we all know, the three use a different process, but that's less critical. The machine typically for HBM3 is not. That's why it's in an early stage. An important year ahead of us to see where these applications can lead to major volumes.

Speaker #3: But there are different variations in those processes . As we all know , the three use a different process , but that's less critical .

Richard Blickman: As we all know, the 3U is a different process, but that's less critical. The machine typically for HBM3 is not, and that's why it's in an early stage. An important year ahead of us to see where these applications can lead to major volumes.

Speaker #3: So the machine typically for hvm three is not . And that's why it's in an early stage . But an important year ahead of us to see where these applications can lead to , to major volumes .

Speaker #5: Understood . Thank you so much for your responses .

Sandeep Deshpande: Understood. Thank you so much for your responses.

[Analyst]: Understood. Thank you so much for your responses.

Speaker #2: The next question comes from Ruben Defosse from chapter Chevreau . Please go ahead .

Operator: The next question comes from Ruben Devos from Kepler Cheuvreux. Please go ahead.

Speaker #6: Yes . Good afternoon Richard , I , I had one on on photonics . These orders , are they tied to Co-packaged optics pilots or are they for , let's say , the pluggable inside the AI data centers and yeah .

Ruben Devos: Yes. Good afternoon, Richard. I had one on photonics. These orders, are they tied to co-packaged optics pilots, or are they for, let's say, the pluggables inside the AI data centers?

[Analyst]: Yes. Yes. Good afternoon, Richard. I had one on photonics. These orders, are they tied to co-packaged optics pilots, or are they for, let's say, the plugables inside the AI data centers? Yeah.

Richard Blickman: These are-

Ruben Devos: Yeah.

Speaker #3: Oh sorry . You had an more part to your question or .

Richard Blickman: Oh, sorry. You had an more part to your question or?

Richard Blickman: Oh, sorry. You had more to your question, or?

Speaker #6: Yeah . Well just to follow up on photonics like these customers have resumed capacity purchases . I understood like is it for new platforms or is it really expansions on the installed base ?

Ruben Devos: Yeah. Well, just follow up on the photonics. Like, these customers that presumed capacity purchases, I understood. Like, is it for new platforms or is it really expansions on the installed base? That's, yeah, the first one.

[Analyst]: Just a follow-up on the photonics. These customers, they have resumed capacity purchases, I understood. Is it for new platforms, or is it really expansions on the installed base? That's the first one.

Speaker #6: Yeah , that's the first one .

Speaker #3: Well , it's for pluggable . So the connectors in in the data centers and it's partly add ons , but it's five customers .

Richard Blickman: It's for plugables. The connectors in the data centers, and it's partly add-ons, but it's five customers, as we explained in the previous quarter. They're all ramping up and very much on our systems. We have a major market share in that area. We expect that also to continue in Q4 because it's all tied to data center expansions.

Richard Blickman: Well, it's for pluggables. The connectors in the data centers and it's partly add-ons, but it's five customers, as we explained in the previous quarter. They're all ramping up and very much on our systems. We have a major market share in that area. Yeah, we expect that also to continue in Q4 because it's all, yeah, tied to data center expansions.

Speaker #3: As we explained in in the previous quarter . And they're all ramping up and very much on our systems . So we have a major market share in that area .

Speaker #3: So yeah , we expect that also to continue in in Q4 because it's all yeah , tied to data center expansions .

Speaker #6: Okay . And just thinking about sort of the mix shift that has been has taken place since , let's say , 2021 , when you sort of had the peak in mobile .

Ruben Devos: Okay. Just thinking about sort of the mix shift that has taken place since, let's say, 2021, when you sort of had the peak in mobile. I think it was 40% of your business and 20% compute. Now, you know, approaching the end of 2025, what do you think of that mix, you know, from what you've seen already so far, and particularly, you know, in Q3, you see more momentum there with orders obviously up, particularly the OSATs ordering. Like, how would you characterize maybe a bit that shift mix today? Do you see in general, like how do you assess the investment appetite, basically from the OSATs now for compute as what it was maybe, you know, 10 years ago in mobile?

[Analyst]: Okay. Just thinking about sort of the mix shift that has taken place since, let's say, 2021, when you sort of had the peak in mobile. I think it was 40% of your business and 20% compute. Now, you know, approaching the end of 2025, how do you think of that mix from what you've seen already so far? Particularly now in Q3, you see more momentum with orders, obviously up, particularly the OSATS ordering. How would you characterize maybe a bit that shift mix today? Do you see in general, how do you assess the investment appetite basically from the OSATS now for compute as what it was maybe a decade ago in mobile?

Speaker #6: I think it was 40% of your business and 20% compute . And now , you know , approaching the end of 25 , how do you think of that mix ?

Speaker #6: You know , from what you've seen already so far , and particularly you now in Q3 , you see more momentum with orders .

Speaker #6: Obviously up , particularly the offsets ordering , like how would you characterize maybe a bit that shift mix today ? And do you see in general like how do you assess the investment appetite basically from the offsets now for compute as what it was .

Speaker #6: Maybe, you know, a decade ago in mobile.

Speaker #3: That's a very good question . In . Clearly decade was very much focused on mobile . Every year . Next generation every three four years .

Richard Blickman: Huh. That's a very good question. In the world clearly decades was very much focused on mobile. Every year, next generation, every three, four years, a major, let's say, new, whether it's from 4G to 5G and before that, 3, also the cameras and the movies and all that has been a constant driver. That still is today. You can expect the 6G, but also the connection to wearables. What we haven't mentioned yet is the increasing development in wearables in the glasses. It started with Google Glass, now Meta glasses, where we are also very much involved. You see that developing along, yeah, let's say the development I would sometimes characterize in mankind using those devices.

Richard Blickman: That's a very good question. The world clearly, the last decade, was very much focused on mobile. Every year, next generation, every three, four years, a major, major, let's say, new, whether it's from 4G to 5G and before that, 3, and then also the cameras and the movies. All that has been a constant driver. That still is today. You can expect the 6G, but also the connection to wearables. What we haven't mentioned yet is the increasing development in wearables in the glasses. It started with Google Glasses, now Meta Glasses, where we are also very much involved. You see that developing along, let's say, the development I would sometimes characterize in mankind using those devices. Now we are in an AI phase, and that's more data using, again, data in whatever more intelligent ways. That is shifting then the percentage of revenue.

Speaker #3: A major , major , let's say new , whether it's from 4G to 5G and before that , three . And then also the cameras and the movies and , and all that has been a constant driver .

Speaker #3: And that's still is today . So you can expect A6G . But also the connection to wearables and what we haven't mentioned yet is the increasing development in , in wearables in the glasses .

Speaker #3: It started with Google Glasses . Now meta glasses where we are also very much involved . So you see that developing along . Yeah .

Speaker #3: Let's say the development I would sometimes characterize in mankind using those devices . Now we are in a AI phase and that's more data using again .

Richard Blickman: Now we are in an AI phase, and that's more data using again, yeah, data in whatever more intelligent ways. That is shifting then the percentage of revenue. Already last year, 43% was related to computing and data center high power computing, as opposed to many years before that, it was somewhere in the mid-20s. That's all a very positive development. We were for many years characterized that we were very much dependent upon the high-end smartphone cycles. Currently, that is far less. We have more, we have major drive in the whole AI world and with different technologies. We look upon it in that sense, with continued engagement in the forefront of the development of communication devices.

Speaker #3: Yeah , data in whatever more intelligent way . So and that is shifting then the percentage of revenue already last year , 43% was related to computing and data center .

Richard Blickman: Already last year, 43% was related to computing and data center high-power computing, as opposed to many years before that, it was somewhere in the mid-20s. That's all a very positive development. We were, for many years, characterized that we were very much dependent upon the high-end smartphone cycles. Currently, that is far less. We have more, we have major drive in the whole AI world and with different technologies. We look upon it in that sense with continued engagement in the forefront of the development of communication devices. We have automotive, which has dropped to below 20%, which was the average level, somewhere between 15 and 20. That's in a broader brush and how our business is developing.

Speaker #3: High power computing as opposed to many years before that . It was somewhere in the mid 20s . So that's all a very positive development .

Speaker #3: We we were for many years characterized as we were very much dependent upon the high end smartphone cycles . Currently , that is that is far less .

Speaker #3: We have more . We have major drive in the whole AI world . And with different technologies . So we look upon it in in that sense , with continued engagement in the forefront of the development of communication devices .

Speaker #3: And then we have automotive , which has dropped to to below 20% , which was the average level somewhere between 15 and 20 .

Richard Blickman: We have automotive, which has dropped to below 20%, which was the average level, somewhere between 15 and 20. That's in a broader brush, how our business is developing.

Speaker #3: So so that's in a broader brush . How how are business is developing ?

Speaker #6: Okay . Thank you .

Charles Shi: Okay. Thank you.

Ruben Devos: Okay. Thank you.

[Analyst]: Okay, thank you.

Speaker #2: The next question comes from Charles XI from Needham and Company . Please go ahead .

Operator: The next question comes from Charles Shi from Needham & Company. Please go ahead.

Speaker #7: Hi , Richard , congrats on the pretty strong guidance for for fourth quarter . Maybe I want to go back to the the major hybrid bonding order .

Charles Shi: Hi, Richard. Congrats on the pretty strong guidance for Q4. Maybe I wanna go back to the major hybrid bonding order. You expected that could arrive in Q3, but now looks like it's going to be a little bit later, given a push out. The question is this, how much confidence you have in getting that particular large order in the current quarter? Because last time I think, quite frankly, we were a little bit disappointed by the push out, but really hope that this time it's real and it's coming.

[Analyst]: Hi, Richard. Congrats on the pretty strong guidance for the fourth quarter. Maybe I want to go back to the major hybrid bonding order. You expected that could arrive in Q3, but now it looks like it's going to be a little bit later given the push out. The question is this: how much confidence you have in getting that particular large order in the current quarter? Yeah, because last time, I think, quite frankly, we were a little bit disappointed by the push out, but really hope that this time it's real and it's coming.

Speaker #7: You are expected that could arrive in Q3 , but but now it looks like it's going to be a little bit later given the push out .

Speaker #7: So the question was question is this how much confidence you have in getting that particular large order in the current quarter ? And because last time I think quite , quite frankly , we were we were a little bit disappointed by the by the push out .

Speaker #7: But really hope that this time it's real and it's coming .

Speaker #3: Well . You can also qualify that a bit in our own success in building machines . So at the very beginning , the throughput time to build these machines was over nine months closer to a year .

Richard Blickman: Well, you can also qualify that a bit in our own success in building machines. At the very beginning, the throughput time to build these machines was over nine months, closer to a year. Now since these 100 nanometer machines have become more standardized, we can turn them around in a six-month period. Which has the benefit for customers to align that more closely with their end customer demand and also the logistics. What we understood is that the initial delay because of certain manufacturing or building construction issues at that customer, and that is why the placement is somewhat delayed. That is our current view, supported by all the information directly from the customer.

Richard Blickman: You can also qualify that a bit in our own success in building machines. At the very beginning, the throughput time to build these machines was over nine months, closer to a year. Now, since these 100 nanometer machines have become more standardized, we can turn them around in a six-month period, which has the benefit for customers to align that more closely with their end customer demand and also the logistics. What we understood is that the initial delay was because of certain manufacturing or building construction issues at that customer, and that is why the placement is somewhat delayed. That is our current view supported by all the information directly from the customer.

Speaker #3: And now since these 100 nanometer machines have become more standardized , we can turn them around in a six month period , which has the benefit for customers to align that more closely with their end customer demand .

Speaker #3: And also the logistics . So what we understood is that the initial delay , because of certain manufacturing or building construction issues at that customer , and that is why the the placement is , is somewhat delayed .

Speaker #3: That is our current view , supported by all the information directly from the customer .

Speaker #7: Got it . So sounds like a two factors there . Customer clean delay . And also a factor . Your improve the manufacturing cycle time .

Charles Shi: Got it, Richard. Sounds like two factors there, customer clean room delay and also a factor you improved the manufacturing cycle time. They don't really need to place order well in advance. Did I understand correctly?

[Analyst]: Got it, Richard. It sounds like two factors there: customer clean room delay and also a factor you improved the manufacturing cycle time. They're not really, they don't really need to place order well in advance. Did I understand correctly?

Speaker #7: So they are not really they don't really need to place order well in advance . Did I , did I understand correctly .

Speaker #3: Yeah . So we are currently installing machines that same customer and those machines have been built in six slots and that is that is , is what is also one of the factors .

Richard Blickman: Yeah. We are currently installing machines at that same customer, and those machines have been built in six plus. That is what is also one of the factors.

Richard Blickman: We are currently installing machines at that same customer, and those machines have been built in six months. That is also one of the factors.

Speaker #7: Got it . So maybe a little bit of a more technical question regarding the Gen2 . The 50 nanometer accuracy tool . Well , you have been very consistent .

Charles Shi: Got it. Maybe a little bit of a more technical question regarding the Gen 2, the 50 nanometer accuracy tool. Well, you have been very consistent, I think, over the last 2 years that you expect to deliver the tool maybe the end of 2025. That timeline hasn't really moved, but at the same time, you know, people have high expectation about Besi and probably were wondering why the schedule didn't move up. Was that more of a customer roadmap issue or more of a little bit of a technical challenges on your side? Can you kind of shed some light on what's happening there with the 15 nanometer tool? I think on a related question, I think when you...

[Analyst]: Got it. Maybe a little bit of a more technical question regarding the Gen 2, the 50 nanometer accuracy tool. You have been very consistent, I think, over the last two years that you expect to deliver the tool maybe the end of 2025. That timeline hasn't really moved. At the same time, you know, people have high expectations about Besi, and probably were wondering why the schedule didn't move up. Was that more of a customer roadmap issue or more of a little bit of technical challenges on your side? Can you kind of shed some light on what's happening there with the 50 nanometer tool? On a related question, when your schedule didn't really move in, do you worry about a little bit increased competition? I think on the HBM side, the competitive landscape is well known. Lots of regional players there.

Speaker #7: I think over the last two years that you expect to deliver the the tool , maybe the end of 2025 , that timeline hasn't really moved .

Speaker #7: But at the same time , you know , people have high expectation about Betsy and the probably will wondering why the schedule didn't move up and was that more of a customer roadmap issue or more of a a little bit of a technical challenges on your side ?

Speaker #7: And can you kind of shed some light on what's happening there with the 50 nanometer tool ? And I think on a related question , I think when you when your schedule didn't really move in .

Charles Shi: When your schedule didn't really move in, do you worry about a little bit increase the competition? I think, on the HBM side, competition in the landscape, competitive landscape is well known. Lots of regional players there. In logic side, do you see any increased competition there, especially at the leading foundry customer? Thank you.

Speaker #7: Do you worry about a little bit of increased competition? I think on the HBM side, competition in the landscape, the competitive landscape, is well known.

Speaker #7: Lots of regional players there , but in logic side , do you see any increased competition there , especially at the leading foundry ?

[Analyst]: In the logic side, do you see any increased competition there, especially at the leading foundry customer? Thank you.

Speaker #7: Customer thank you .

Speaker #3: Well , these are very good questions . The first question on the timing of the 50 nanometer requirement , that's that's purely customer roadmap .

Richard Blickman: Well, these are very good questions. The first question on the timing of the 50 nanometer requirement, that's purely customer roadmap, and that roadmap has not changed. The roadmap is 2027 onwards, and so that tool has to be ready by the end of 2026, as we have shared. That is not being pulled forward. The adoption of hybrid bonding is ever more confirmed, and we see that with additional orders, additional customers. It's definitely logic oriented because that is where the most critical and the smallest geometries are requiring this technology. On HBM stacking, it is a bit less in a sense. The bond pad pitch is not that of a great issue, but there it's more the heat factor.

Richard Blickman: These are very good questions. The first question on the timing of the 50 nanometer requirement, that's purely customer roadmap. That roadmap has not changed. The roadmap is 2027 onwards, and that tool has to be ready by the end of 2026, as we have shared. That is not being pulled forward. The adoption of hybrid bonding is ever more confirmed, and we see that with additional orders, additional customers. It's definitely logic-oriented because that is where the most critical and the smallest geometries are requiring this technology. On HBM stacking, it is a bit less in a sense. The bond pitch is not that of a great issue, but there it's more the heat factor, so the performance of the device, which is driving using hybrid as opposed to a reflow process. On the competitive landscape, they're from the beginning.

Speaker #3: And the roadmap has not changed the roadmap is 27 onwards . And so that tool has to be ready by the end of 26 , as we have shared .

Speaker #3: That is not being pulled forward . The the adoption of of hybrid bonding is ever more confirmed . And we see that with additional orders , additional customers .

Speaker #3: It's it's definitely logic oriented because that is where the most critical and the smallest geometries are requiring this technology on HBM stacking it is a bit less in a sense , the bond pitch is not that of a great issue , but there it's more the the heat factor .

Speaker #3: So, the performance of the device, which is driven using hybrid as opposed to a reflow process on the competitive landscape, lets there from the beginning.

Richard Blickman: The performance of the device which is driving using hybrid as opposed to a reflow process. On the competitive landscape, there from the beginning, and Japanese competitor has been already for 8 years, sort of side by side. So far, our concept is certainly leading with a market share of over 80, maybe even some people say 90%. There has not been a change in that landscape. We have successfully moved the generation from 1 to 1 plus, so 150, 200 nanometer down to 100 nanometer. As far as we know, also from a cost of ownership, a throughput, our system is certainly in the lead. On the HBM, it's a different competitive lens and more Korean based.

Speaker #3: And Japanese competitor has been already for eight years . Sort of side by side so far our concept is is certainly leading with the market share of over 80 .

Richard Blickman: A Japanese competitor has been already for eight years sort of side by side. So far, our concept is certainly leading with a market share of over 80%, maybe even some people say 90%. There has not been a change in that landscape. We have successfully moved the generation from 1 to 1 plus, so 150, 200 nanometer down to 100 nanometer, as far as we know. Also, from a cost of ownership, a throughput, our system is certainly in the lead. On the HBM, it's a different competitive lens, a more Korean-based. Exciting will be in the course of this year how the evaluations will, let's say, develop in terms of side-by-side comparisons that will take place in Korea at the two major Korean customers. That will give us a better understanding of the competitive landscape. That's in a nutshell, Charles, where we're at.

Speaker #3: Even some people say 90% . There has not been a change in that landscape . We have successfully moved the the generation from 1 to 1 plus .

Speaker #3: So 150 to 100 nanometer down to 100 nanometer as far as we know . Also from a cost of ownership , a throughput , our system is certainly in in the lead on the HBM .

Speaker #3: It's a different competitive lens and more Korean based exciting will be in the course of this year how the evaluations will , let's say , develop in terms of side by side comparisons that will take place in Korea .

Richard Blickman: Exciting will be in the course of this year, how the evaluations will, let's say, develop in terms of side-by-side comparisons that will take place in Korea, at the two major Korean customers. That will give us a better understanding of the competitive landscape. That's in a nutshell, Charles, where we're at.

Speaker #3: The two major Korean customers . So that will give us a better understanding of the competitive landscape . So that's in a in a nutshell , Charles , where where we're at .

Speaker #7: Got it . So so in logic , no real change in HBM . It's always in a little bit of in some flux .

Charles Shi: Got it. In logic, no real change in HBM, it's always in a little bit of, in some flux. Thanks for the color.

[Analyst]: Got it. In logic, no real change. In HBM, it's always in a little bit of, in some flux. Thanks for the color.

Speaker #7: But thanks for the color .

Speaker #3: Thank you .

Richard Blickman: Thank you.

Speaker #2: The next question comes from Andrew Garnier from Citi . Please go ahead .

Operator: The next question comes from Andrew Gardiner from Citi. Please go ahead.

Speaker #8: Good afternoon , Richard . Thank you for taking the question . I wanted to come back to the the market slide that you put up every quarter in your in your deck .

Andrew Gardiner: Good afternoon, Richard. Thank you for taking the question. I wanted to come back to the market slide that you put up every quarter in your deck. You've highlighted that TechInsights have reduced expectations for this year, and I can see as well for next year, those have come down. I fully accept, right, Besi going to outgrow the market given your positioning in some of these areas, but expectations are pretty high out there at the moment for your revenue growth into next year. I'm just wondering if you can shed a little bit of light on how you are seeing things.

[Analyst]: Good afternoon, Richard. Thank you for taking the question. I wanted to come back to the market slide that you put out every quarter in your deck. You've highlighted that TechInsights have reduced expectations for this year, and I can see as well for next year, those have come down. I fully accept, right, Besi going to outgrow the market given your positioning in some of these areas, but expectations are pretty high out there at the moment for your revenue growth into next year. I'm just wondering if you can shed a little bit of light on how you are seeing things. You've talked about orders in the near term, but any indications from customers as to, you know, their thoughts into next year and what could help you to drive such outsized revenue growth into next year? Thank you.

Speaker #8: You've highlighted that tech insights have reduced expectations for this year . And I can see as well for , for next year , those have come down .

Speaker #8: I fully accept . Right . Bezzi . Going to outgrow the market . Given your positioning in some of these areas . But expectations are pretty high at there at the moment for your revenue growth into next year .

Speaker #8: I'm just wondering if you can shed a little bit light of light on how you are seeing things . You've talked about orders in the near term , but any indications from from customers as to , you know , their thoughts into next year and what could help you to drive such outsized revenue growth into next year .

Andrew Gardiner: You've talked about orders in the near term, any indications from customers as to, you know, their thoughts into next year and what could help you to drive such outsized revenue growth into next year? Thank you.

Speaker #8: Thank you .

Speaker #3: Well , always a very good reference is the order run rate . So if you look at the last quarter . Third quarter also our guidance in in broad terms for the fourth quarter , that leads to to levels , which yeah , quarterly run rates given indication on a yearly model .

Richard Blickman: Well, always a very good reference is the order run rate. If you look at the last quarter, Q3, also our guidance in broad terms for Q4, that leads to levels which, yeah, quarterly run rates give an indication on a yearly model. If you look at our revenue, let's say if you take the guidance for revenue Q4, and you take the midpoint, and you add it up with the first nine months, then you look at the run rate in orders. Also, let's say where those orders are coming from, and you, I think you also shared it in that sense, then we are benefiting from a part of the market which grows significantly more than the average assembly equipment market.

Richard Blickman: A very good reference is the order run rate. If you look at the last quarter, third quarter, also our guidance in broad terms for the fourth quarter, that leads to levels which, quarterly run rates give an indication on a yearly model. If you look at our revenue, let's say if you take the guidance for revenue Q4 and you take the midpoint and you add it up with the first nine months, and then you look at the run rate in orders, and also, let's say, where those orders are coming from, and you, I think you also shared it in that sense, then we are benefiting from a part of the market which grows significantly more than the average assembly equipment market. The TechInsights numbers are for the overall market.

Speaker #3: If you look at our revenue , let's say if you take the guidance for revenue , Q4 , you take the midpoint and you add it up with the first nine months , and then you look at the run rate in orders and also , let's say , where those orders are coming from .

Speaker #3: And I think you also shared it in that sense. Then we are benefiting from a part of the market which grows significantly more than the average assembly equipment market.

Speaker #3: So the tech insights numbers are for the overall market . And it's could very well be that that the mainstream market for less , let's say complicated devices is growing far less than than for the advanced , which has always been the case .

Richard Blickman: The TechInsights numbers are for the overall market, and it could very well be that the mainstream market for less, let's say, complicated devices is growing far less than for the advanced, which has always been the case. Based on, yeah, the current run rates, one, yeah, should see that development and also with the adoption of hybrid bonding, gaining more traction, more broadly, and also TC for that matter. Yeah, that's a bit different than the forecast which you see from the TechInsights. In this industry, I've never seen any forecast which is on the dot. It's usually either much too high or it is too low. It's a difficult time.

Richard Blickman: It could very well be that the mainstream market for less, let's say, complicated devices is growing far less than for the advanced, which has always been the case. Based on the current run rates, one should see that development and also with the adoption of hybrid bonding gaining more traction more broadly, and also TC for that matter. That is a bit different than the forecast which you see from the TechInsights. In this industry, I've never seen any forecast which is on the dots. It's usually either much too high or it is too low. It's a difficult time. If you also see this in respect of what's happening in the whole industry, and that in relation to the world, it's not that straightforward. It's never been that straightforward. Anyway, my message is our statement.

Speaker #3: So based on on yeah , the current run rates , one one . Yeah . Should see that that development and also with the adoption of hybrid bonding gaining more traction more broadly and also for that matter .

Speaker #3: Yeah , that's a bit different than the than the forecast , which you see from the . Tech insights . But in this industry I've never seen any forecast which is on the dot .

Speaker #3: It's usually either much too high or it is too low . It's a difficult time if you also see this in yeah , respect of what's happening in the whole industry and that in relation to the world , there .

Richard Blickman: If you also see this in, yeah, respect of what's happening in the whole industry, and that in relation to the world, yeah, it's not that straightforward. Well, it's never been that straightforward. But anyway. My message is, our statement, we expect based on the current evidence and trends, that we should be able to outgrow what is currently forecasted for the market.

Speaker #3: Yeah . It's not that straightforward . Well , it's never been that straightforward . But anyway , so my message is , are statement .

Speaker #3: We expect based on the current evidence and trends that we should be able to to outgrow what is currently forecasted for the market .

Richard Blickman: We expect, based on the current evidence and trends, that we should be able to outgrow what is currently forecasted for the market.

Speaker #8: Thank you for that color , Richard . Appreciate it .

Timm Schulze-Melander: Thank you for that color, Richard. Appreciate it.

Andrew Gardiner: Thank you for that color, Richard. Appreciate it.

[Analyst]: Thank you for that color, Richard. Appreciate it.

Speaker #2: The next question comes from Tim Schlosser . Melander from Rothschild and Co . Redburn . Please go ahead .

Operator: The next question comes from Timm Schulze-Melander from Rothschild & Co, Redburn. Please go ahead.

Operator: The next question comes from Timm Schulze-Melander from Redburn Atlantic. Please go ahead.

Speaker #9: Yeah . Hi there Richard . Thank you for taking my question . Maybe just the first one you talked about a new foundry customer to whom you've shipped hybrid bonding tool .

Timm Schulze-Melander: Hi there, Richard. Thank you for taking my question. Maybe just the first one, you talked about a new foundry customer to whom you shipped a hybrid bonding tool. Could you maybe just provide some color about the application and just kind of how meaningful that might be, and then I had a follow-up.

[Analyst]: Hi there, Richard. Thank you for taking my question. Maybe just the first one. You talked about a new foundry customer to whom you've shipped a hybrid bonding tool. Could you maybe just provide some color about the application and just kind of how meaningful that might be and then had a follow-up?

Speaker #9: Could you maybe just provide some color about the application and just kind of how meaningful that might be? And then I had a follow-up.

Speaker #3: We are not let's say we don't know the end customer in particular , but it looks like it's more in the mobile space .

Richard Blickman: Let's say, we don't know the end customer in particular, but it looks like it's more in the mobile space. So that is as far as we know. Systems are ordered. They will be delivered in Q1. So then we may well know more. Customers are pretty careful in sharing end customer and end product details. Even for many, we are not allowed to see it. It's usually with code names, so our service engineers also are not able to track that. One can understand also the reason why. In IDMs, it's a bit more easy because they typically have their end products. In foundries, that is a high level of secrecy.

Richard Blickman: We are not, let's say, we don't know the end customer in particular, but it looks like it's more in the mobile space. That is, as far as we know. Systems are ordered. They will be delivered in Q1. Then we may well know more. Customers are pretty careful in sharing end customer and end product details. Even for many, we are not allowed to see it. It's usually with code names. Our service engineers also are not able to track that. One can understand also the reason why. In IDMs, it's more.

Speaker #3: So that that is , as far as we know , systems are ordered . They will be delivered in Q1 . So then we may well know more , but customers are pretty careful in sharing and customer and end product details , even for many .

Speaker #3: We we are not allowed to see it . Usually with code names . So our service engineers also are not able to track that .

Speaker #3: And one can understand also the reason why in Idms it's a bit more . Yeah , let's say easy because they typically have their end products .

Andrea Kopp-Battaglia: Yeah, let's say easy because they typically have their end products. In foundries, that is a high level of, yeah, let's say, secrecy.

Speaker #3: But in foundries that is a high level of of yeah , let's say secrecy .

Speaker #9: Okay . That's really helpful . Thank you . And then just you referenced an order booking that slipped and looks like it's going to track into Q4 in terms of just the readiness of the customer .

Timm Schulze-Melander: Okay. That's really helpful. Thank you. Then just you referenced an order booking that slipped and looks like it's gonna track into Q4 in terms of just the readiness of the customer. Could you just maybe, is that an existing customer? Is it a chip maker or is it a packaging subcontractor?

Operator: Okay. That's really helpful. Thank you. You referenced an order booking that slipped, and it looks like it's going to track into Q4 in terms of just the readiness of the customer. Could you just maybe—is that an existing customer? Is it a chip maker or is it a packaging subcontractor?

Speaker #9: Could you just maybe is that an existing customer ? Is it is it a chip maker or is it a packaging subcontractor ?

Speaker #3: Well , it's a chip making foundry . And it's an existing customer . So that's as much as we can share .

Andrea Kopp-Battaglia: It's a chip making foundry, and it's an existing customer, so that's as much as we can share.

Richard Blickman: Well, it's a chip making foundry, and it's an existing customer. That's as much as we can share.

Speaker #9: Okay , okay . That's helpful because I think maybe one of the my last question , if we look at where the strength of sort of hybrid bonding engagement has been , it's been at those customers who are , you know , front end chip makers and you've referenced a couple , TSMC and Intel .

Operator: Okay. That's helpful. Because I think maybe one of the, and my last question, if we look at where the strength of sort of hybrid bonding engagement has been, it's been at those customers who are, you know, front-end chip makers, and you've referenced a couple, like TSMC and Intel. What would be the indication that the market is extending into subcons who, you know, the packaging specialists who don't naturally have sort of chip making front-end capabilities? Is that something that we can anticipate as sort of being in the 2026 timeframe? Or is that really sort of a much longer term kind of target that maybe follows whatever happens in high, high bandwidth memory? Thank you.

Timm Schulze-Melander: Okay. That's helpful because I think maybe My last question. If we look at where the strength of sort of hybrid bonding engagement has been, it's been at those customers who are, you know, front end chip makers, and you've referenced a couple, like TSMC and Intel. What would be the indication that the market is extending into subcons who don't, you know, the packaging specialists who don't naturally have sort of chip making front end capabilities? Is that something that we can anticipate as sort of being in the 2026 timeframe, or is that really sort of a much longer term kind of target that maybe follows whatever happens in high bandwidth memory? Thank you.

Speaker #9: What would be the indication that the market is , is is extending into subclans ? Who don't you know , the packaging specialists who don't naturally have sort of chip making front end capabilities ?

Speaker #9: Is that is that something that we can anticipate sort of being in a 2026 timeframe , or is that really sort of a much longer term kind of target that maybe follows whatever happens in high bandwidth memory ?

Speaker #9: Thank you .

Speaker #3: The largest subcon in in the assembly space has taken ownership of a hybrid polymer about a year ago . And is in the process qualifying devices for end customers .

Richard Blickman: The largest subcon in the assembly space has taken ownership of a hybrid bonder about a year ago and is in the process qualifying devices for end customers. It is very likely that you will see that trend, which has happened forever. Also you can see it in, for instance, 2.5D modules. 2.5D modules are now built at a whole range of subcontractors, the typical, the higher end ones, and that is where the growth in our orders in Q3 was very much coming from. For hybrid bonding devices, you can expect a similar trend. It may take a few years, but it's all a matter of cost, huh. That is a normal trend.

Andrea Kopp-Battaglia: The largest subcon in the assembly space has taken ownership of a hybrid bonder about a year ago and is in the process of qualifying devices for end customers. It is very likely that you will see that trend, which has happened forever. You can also see it in, for instance, 2.5D modules. 2.5D modules are now built at a whole range of subcontractors, the typical, the higher-end ones. That is where the growth in our orders in the third quarter was very much coming from. For hybrid bonding devices, you can expect a similar trend. It may take a few years, but it's all a matter of cost, huh? That is a normal trend. As I said, you see already preparation, because for those subcons, the high-end devices also offer the highest margin potential. There's a clear win situation on both ends in reducing cost.

Speaker #3: It is very likely that you will see that trend which has happened forever . And also you can see it in , for instance , two and a half D modules , two and a half D modules are now built at a whole range of subcontractors .

Speaker #3: The typical the higher end ones , and that is where the growth in our orders in the third quarter was very much coming from .

Speaker #3: So, for hybrid bonding devices, you can expect a similar trend. It may take a few years, but it's all a matter of cost.

Richard Blickman: For hybrid bonding devices, you can expect a similar trend. It may take a few years, but it's all a matter of cost, huh. That is a normal trend. As said, you see already preparation because for those subcons, the high-end devices also offer the highest margin potential. There's a clear win situation on both ends in reducing cost and that's the trend in many of our products.

Speaker #3: And that is a normal trend . And as said , you see already preparation because for those subconscious , the high end devices also offer the highest margin potential .

Richard Blickman: As said, you see already preparation because for those subcons, the high-end devices also offer the highest margin potential. There's a clear win situation on both ends in reducing cost and that's the trend in many of our products.

Speaker #3: So there's a clear win situation on both ends in in reducing cost and and that's that's the trend in in many of our products .

Andrea Kopp-Battaglia: That's the trend in many of our products.

Speaker #9: Got it. That's very clear. Thank you so much. Sorry.

Operator: Got it. That's very clear. Thank you so much. Sorry.

Timm Schulze-Melander: Got it. That's very clear. Thank you so much. Sorry.

Speaker #10: Yeah .

Richard Blickman: Yeah. It starts at IDM, then it moves gradually into the subcontracting arena.

Andrea Kopp-Battaglia: Yeah, it starts at IDF, then it moves gradually into the subcontracting arena.

Speaker #3: It starts at IBM, and it moves gradually into the subcontracting arena.

Speaker #9: Great . Thank you very much .

Operator: Great. Thank you very much.

Operator: Great. Thank you very much. The next question comes from Martin Jonklisch from BNP Paribas. Please go ahead.

Timm Schulze-Melander: Great. Thank you very much.

Operator: The next question comes from Martin Jungfleisch from BNP Paribas. Please go ahead.

Speaker #2: The next question comes from Martin Yong from BNP Paribas . Please go ahead .

Richard Blickman: The next question comes from Martin Hoffmann from BNP Paribas. Please go ahead.

Speaker #11: Yeah . Hi . Good afternoon . Thanks for taking my question . I have two follow ups from some earlier questions . Please .

Martin Jonklisch: Yeah. Hi, good afternoon. Thanks for taking my question. I have two follow-ups on, from some earlier questions, please. The first one is on the, on the hybrid bonding orders. Would you stick to your comments that you made during Q2 results, where you anticipated H2, hybrid bonding orders to increase significantly compared to H2 2024? Do you see now some orders to slip in even into Q1 2026?

Martin Jungfleisch: Yeah. Hi, good afternoon. Thanks for taking my question. I have two follow-ups on, from some earlier questions, please. The first one is on the, on the hybrid bonding orders. Would you stick to your comments that you made during Q2 results, where you anticipated H2, hybrid bonding orders to increase significantly compared to H2 2024? Do you see now some orders to slip in even into Q1 2026?

[Analyst]: Yeah. Hi. Good afternoon. Thanks for taking my question. I have two follow-ups on from some earlier questions, please. The first one is on the hybrid bonding order thing. Would you stick to your comments that you made during Q2 results where you anticipated H2, hybrid bonding orders to increase significantly compared to H2 at 2024? Or do you see now some orders to slip in even into Q1 2026?

Speaker #11: The first one is on the on the hybrid bonding orders . Would you stick to your comments that you made during Q2 results where you anticipated H2 hybrid bonding orders to increase significantly compared to H2 24 ?

Speaker #11: Or is there do you see now some orders to slip in even into Q1 26 ?

Speaker #3: No no no no , that's a very good question . It's very much as we said quarter ago . So there are more we expect in Q4 to come in .

Richard Blickman: No, no. No, no. That's a very good question. It's very much as we said a quarter ago. There are more we expect in Q4 to come in. It's not just the big order which slipped from Q3, hopefully to Q4, but there are several other customers, where we expect orders in Q4.

Andrea Kopp-Battaglia: That's a very good question. It's very much, as we said, a quarter ago. We expect more in Q4 to come in. It's not just the big order which slipped from Q3, hopefully, to Q4. There are several other customers where we expect orders in Q4.

Speaker #3: So it's not just the the big order , which slipped from Q3 . Hopefully to Q4 , but there are several other customers where we expect orders in Q4 .

Speaker #11: Okay , that sounds promising . Thank you . And then just secondly , on this , on this two and a half orders , and you've led this for for the big increase in Q3 , just wondering how sustainable are these order levels ?

Martin Jonklisch: Okay. That sounds promising. Thank you. Just secondly, on this 2.5D orders, I mean, you flagged this for the big increase in Q3. Just wondering how sustainable are these order levels? I mean, is this driven by a single customer or is this multiple customer? Also would you expect kind of this trend to continue into 2026?

Martin Jungfleisch: Okay. That sounds promising. Thank you. Just secondly, on this 2.5D orders, I mean, you flagged this for the big increase in Q3. Just wondering how sustainable are these order levels? I mean, is this driven by a single customer or is this multiple customer? Also would you expect kind of this trend to continue into 2026?

[Analyst]: Okay. That sounds promising. Thank you. On this 2.5D orders, you flagged this for the big increase in Q3. How sustainable are these order levels? Is this driven by a single customer or is this multiple customers? Would you expect this trend to continue into 2026?

Speaker #11: I mean , is this driven by by single customer or is this multiple customer . And also what you what you expect kind of this this trend to continue into 2026 .

Speaker #3: It's multiple customers . We mentioned several times that it is a group of five . Which we have been several . We have been engaged in since over ten years .

Richard Blickman: It's multiple customers. We mentioned several times that it is a group of 5, which we have been engaged in since over 10 years. It started off with Francisco already a decade ago, routers, and that has developed in ever smaller geometries now into data center connectors. That is a business which is growing, and it's not a one-time, but in cap goods, there's always this cyclical behavior. You have a growth period, and then you have capacity correction. As we got it, we expect some continuation of this trend on the short term.

Andrea Kopp-Battaglia: It's multiple customers, huh? We mentioned several times that it is a group of five, which we have been engaged in since over 10 years. It started off with, for instance, Cisco, already a decade ago, for routers, and that has developed in ever smaller geometries now into data center connectors. That is a business which is growing, and it's not a we don't expect that to be a one-time. In cap boots, there's always the cyclical behavior. You have a growth period and then you have a capacity absorption. As we guide it, we expect some continuation of this trend in the short term. With the further adoption of AI, and if you look at this in a broader perspective again, what the world is expecting in the next couple of years to do with AI in every different form, these data centers are expected to grow significantly.

Speaker #3: So started off .

Speaker #10: With .

Speaker #3: Cisco and already a decade ago , routers . And that has developed in every .

Speaker #10: Smaller .

Speaker #3: Geometries . Now into data center connectors . So that .

Speaker #10: That is a business .

Speaker #3: Which is growing, and it's not a we don't expect that to be a one-time occurrence, but there's always behavior. So you have a growth period.

Speaker #3: And then you have capacity absorption . But as regarded we we expect some continuation of this trend on the short term . But with the adoption of AI and if you yeah , look at this in a broader perspective again , what the world is expecting in the next couple of years to do with AI in every different form .

Richard Blickman: With the further adoption of AI and if you look at this in a broader perspective, again, what the world is expecting in the next couple of years to do with AI in every different form, these data centers is expected to grow significantly. In case we are able to maintain our market position, that should lead to continued business, albeit not in a straight line, but it will be in a growth pattern.

Speaker #3: These data centers is expected to grow significantly and in case we are able to maintain our market position , that should lead to to continued business , albeit not in a straight line , but typically in a growth pattern .

Andrea Kopp-Battaglia: In case we are able to maintain our market position, that should lead to continued business, albeit not in a straight line but completely in a growth pattern.

Speaker #11: That makes sense . Can you just tell me the lead time for the two and a Ph.D. tools ? Is it similar to to the mainstream market , or is it more closely aligned to the hybrid bundles .

Martin Jonklisch: That makes sense. Can you just tell me the lead time for the 2.5D tools? Is it similar to the mainstream market or is it more closer aligned to the hybrid bonders?

Martin Jungfleisch: That makes sense. Can you just tell me the lead time for the 2.5D tools? Is it similar to the mainstream market or is it more closer aligned to the hybrid bonders?

[Analyst]: That makes sense. Can you just tell me the lead time for the 2.5D tools? Is it similar to the mainstream market or is it more closely aligned to the hybrid bonding?

Speaker #3: Somewhere in between ? So we have for that's also a good question . We can turn around equipment for mainstream in in . Yeah , some even in six weeks , eight weeks .

Richard Blickman: Somewhere in between. We have for... That's also a good question. We can turn around equipment for mainstream in, yeah, some even in 6 weeks, 8 weeks, but this is typically 12, 16 weeks. That's why we cannot turn around the orders received in Q3 in a quarter. That's why the guidance 15% to 25% up. A major part will be shipped in Q1. That's how it works. We have machines which are more than a year, or more than 6 months, sorry. With new developments, it's more than a year. It varies between the shortest lead times is 6 weeks and yeah, usually to 12 to 16 weeks. That is what the pattern is.

Andrea Kopp-Battaglia: Somewhere in between. We have, for that's also a good question, we can turn around equipment for mainstream in, in, yeah, some even in 6 weeks, 8 weeks. This is typically 12, 16 weeks. That's why we cannot turn around the orders received in, in Q3 and a quarter. That's why the guidance is 15% to 25% up. A major part will be shipped in Q1. That's how it works. We have machines which are more than a year, or more than six months, sorry. With new developments, it's more than a year, but then it varies between the shortest lead times is 6 weeks. Usually, 12 to 16 weeks. That is what the pattern is.

Speaker #3: But this is typically 1216 weeks . That's why we cannot turn around the orders received in in Q3 and a quarter . That's why the guidance 15 to 25% up .

Speaker #3: So . A major part will be shipped in Q1 . So that's that's how it how it works . So we have machines which are more than a year or more than six months .

Speaker #3: Sorry. With new developments, it's more than a year. But then it varies, with the shortest lead times being six weeks.

Speaker #3: And yeah , usually to 12 to 16 weeks . That that is what what the pattern is .

Speaker #11: Okay. Cool. Thank you very much.

Martin Jonklisch: Okay. Cool. Thank you very much.

Martin Jungfleisch: Okay. Cool. Thank you very much.

[Analyst]: Okay. Cool. Thank you very much.

Speaker #3: Next question please .

Richard Blickman: Next question, please.

Andrea Kopp-Battaglia: Next question, please.

Speaker #2: We have time for one last question . And the question will be from Aditya Mitsuku from HSBC . Please go ahead .

Operator: We have time for one last question, and the question will be from Aditya Mittal from HSBC. Please go ahead.

Richard Blickman: We have time for one last question. The question will be from Adithya Metuku from HSBC. Please go ahead.

Speaker #12: Yeah . Good afternoon Richard . Thank you for taking my questions . Firstly , I just wondered if you could help us , you know , get some more clarity into 2026 when I look at your revenue run rate that you've guided to for the December quarter or the orders run rate that we've seen in the third quarter , and annualized , that I get to around 2,025% below consensus in terms of revenues for 2026 .

[Analyst]: Yeah. Good afternoon, Richard. Thank you for taking my questions. Firstly, I just wondered if you could help us, you know, get some more clarity into 2026. When I look at your revenue run rate that you've guided to for the December quarter or the orders run rate that we've seen in the third quarter, and annualize that, I get to around 20% to 25% below consensus in terms of revenues for 2026. I just wondered if you expect orders to pick up further in the December quarter, or will it kind of plateau at the high levels you've seen in the third quarter? Any color you can give and also any color you can give on how, any other drivers we should keep in mind when we think about 2026 growth? That would be helpful. I've got a follow-up.

Aditya Mittal: Yeah. Good afternoon, Richard. Thank you for taking my questions. Firstly, I just wondered if you could help us, you know, get some more clarity into 2026. When I look at your revenue run rate that you've guided to for the Q4 or the orders run rate that we've seen in the Q3, and annualize that, I get to around 20% to 25% below consensus in terms of revenues for 2026. I just wondered if you expect orders to pick up further in the Q4, or will it kind of plateau at the high levels you've seen in the Q3?

Speaker #12: So I just wondered if you expect orders to pick up further in the December quarter , or will it kind of plateau at the high levels you've seen in the third quarter , any , any color you can give and also any , any color you can give on how any other drivers we should keep in mind when we think about 2026 growth , that would be helpful .

Aditya Mittal: Any color you can give and also any color you could give on how any other drivers we should keep in mind when we think about 2026 growth that would be helpful. I've got a follow-up.

Speaker #12: And I've got a follow-up.

Speaker #3: Oh , excellent . Well , first of all , we try to share in the press release that that the order momentum continues into Q four .

Richard Blickman: Oh, excellent. Well, first of all, we try to share in the press release that the order momentum continues into Q4. Q3 is not the highest level. We also indicated that we see renewed drivers for growth in 2026, which are linked to mobile, for instance, but also in the careful mainstream recovery where we see the early signs. On top of that, we have the hybrid bonding continuation based on further adoption, and that could lead to a much, yeah, let's say, stronger growth in 2026 than what we have so far in 2025. Those are the... Don't forget the TCB Next.

Andrea Kopp-Battaglia: Oh, excellent. First of all, we try to share in the press release that the order momentum continues into Q4. Q3 is not the highest level. We also indicated that we see renewed drivers for growth in 2026, which are linked to mobile, for instance, but also in careful mainstream recovery where we see the early signs. On top of that, we have the hybrid bonding continuation based on further adoption, and that could lead to a much, let's say, stronger growth in 2026 than what we have so far in 2025. Don't forget the TCnext. Those drivers could result in, as I also answered to an earlier question, a business model more focused towards the high growth AI arena. At the same time, recovery for those applications where we have had in previous cycles significant growth in new model, usually, applications.

Speaker #3: So Q3 is not the highest level . We also indicated that we see new driver renewed drivers for growth in 26 , which are linked to mobile .

Speaker #3: For instance , but also in in careful mainstream recovery where we see the early signs . But on top of that , we have the hybrid bonding continuation based on further adoption .

Speaker #3: And that could lead to a much yeah , let's say stronger growth in 26 than what we have so far in 25 . So those are the and don't forget the TCE next .

Speaker #3: So those drivers could result in as I also answered to an earlier question in in a business model more focused towards the high growth AI arena .

Richard Blickman: Those drivers could result in, as I also answered to an earlier question, in a business model more focused towards the high-growth AI arena, and at the same time, recovery for those applications where we have had, in previous cycles, significant growth in new model, usually applications. That's in a broad brush what the market could develop in 2026. Albeit in an environment which we all know is under, let's say, also different, China. What we see is many customers are building next generation capacities outside China. With the current geopolitical situation, you can expect new capacities built in countries like Vietnam, but also India.

Speaker #3: And at the same time recovery for those applications where we have had in previous cycles , significant growth in new model , usually applications .

Speaker #3: So that's that's in in a broad brush . What the market could , could develop in , in 26 , albeit in a environment which we all know is , is under .

Andrea Kopp-Battaglia: That's, in a broad brush, what the market could develop in 2026, albeit in an environment which, we all know, is under, let's say, also, different, China. What we see is many customers are building next-generation capacities outside China. With the current geopolitical situation, you can expect new capacities built in countries like Vietnam, but also India. In India, there are five major customers setting up assembly capacities, starting with direct product moves from what is currently built in China, then built in India. That also offers additional growth in the change of infrastructure. There are many aspects which can have an influence on how 2026 will look like compared to 2025. We don't guide further than a quarter out. Since you ask what could be different in 2026, those are the aspects you can take into consideration.

Speaker #3: Yeah . Let's say . Also different . China . What we see is many customers are building next generation capacities outside China with the current geopolitical situation .

Speaker #3: You can expect new capacities built in countries like Vietnam , but also India , India . There are five major customers setting up assembly capacities , starting with direct product moves from what is currently built in China , then built in India that also offers additional growth in range of of infrastructure .

Richard Blickman: India, there are five major customers setting up assembly capacities, starting with direct product moves from what is currently built in China, then built in India. That also offers additional growth in the change of infrastructure. There are many aspects which can have an influence on how 2026 will look like compared to 2025. We don't guide further than a quarter out. Since you ask what could be different in 2026, those are the aspects you can take into consideration.

Speaker #3: So there are many aspects which can have an influence on on how 26 will look like compared to 25 , but we don't guide further than a quarter out .

Speaker #3: But since you ask what could be different in Q3, then those are the aspects you can take into consideration.

Speaker #12: Understood ? And then just as a follow up , I know last quarter you talked about price negotiations in light of the recent adverse effects moves .

Aditya Mittal: Understood. Just as a follow-up, I know last quarter you talked about price negotiations in light of the recent adverse FX moves. I wondered if you could give some clarity on how those negotiations are going, and when you might be able to get back into your 64% to 68% target range that you've previously provided. Thank you.

Operator: Understood. Just as a follow-up, I know last quarter you talked about price negotiations in light of the recent adverse FX moves. I wondered if you could give some clarity on how those negotiations are going, and when you might be able to get back into your 64% to 68% target range that you've previously provided. Thank you.

Speaker #12: I wondered if you could give some clarity on how those negotiations are going and when you might be able to get back into your 64 to 68% target range .

Speaker #12: That you've previously provided . Thank you .

Speaker #3: Well , interesting enough , if you look at the the dollar decline versus the euro with about 12% and a margin impact of around 3% gross margin .

Richard Blickman: Well, interesting enough, if you look at the dollar decline versus the euro with about 12% and a margin impact of around 3% gross margin. We have been able to offset that partly in new features, which always allow higher pricing, but also in carefully managing our supply chain. In that sense, those developments will continue in an environment where the market is, you could say, soft. If this is the low part of this cycle, then you have a significant upside potential. If you look at revenue levels, EUR 134 this quarter, what was it exactly? Which is, our peak was above EUR 200.

Andrea Kopp-Battaglia: If you look at the dollar decline versus the euro with about 12% and a margin impact of around 3% gross margin, we have been able to offset that partly in new features, which always allow higher pricing, but also in carefully managing our supply chain. In that sense, those developments will continue in an environment where the market is, you could say, soft. If this is the low part of the cycle, then you have a significant upside potential. Also, if you look at revenue levels, $134 million this quarter, what was it exactly? Our peak was above $200 million, huh? Capacity utilization is, of course, at a different level currently, and that all has an impact on the gross margin overall. If you compare this gross margin to peak levels, yes, the delta is larger than the 3%. I think once we reached 66%, we haven't reached 68%.

Speaker #3: So we have been able to offset that partly in in new features , which always allow higher pricing , but also in , in carefully managing our supply chain and in that sense , the those developments will continue in an environment where the market is is you could say soft .

Speaker #3: So in in if this is the low part of the cycle , then you have a significant upside potential . Also , if you look at revenue levels 134 , this quarter , what was it exactly ?

Speaker #3: Which is our peak was above 200 . Capacity utilization is is of course , at a different level . Currently . And that all has an impact on the gross margin overall .

Richard Blickman: Capacity utilization is of course at a different level currently, and that all has an impact on the gross margin overall. If you compare this gross margin to peak levels, yes, the delta is larger than 3%. I think once we reached 66%, we haven't reached 68. It also depends on the order mix. There are certain new developments which always have a somewhat lower margin, and over time that improves because of the full qualification of systems. Those are all impacts on those gross margins. Still gross margins well above 62% is a reasonable margin at this time.

Speaker #3: So if you compare this gross margin to peak levels , yes , the delta is larger than the 3% . I think once we reached 66% , we haven't reached 68 .

Speaker #3: It also depends on the order mix . There's certain new developments which always have somewhat lower margin , and over time that improves because of yeah , the the full qualification of systems .

Andrea Kopp-Battaglia: It also depends on the order mix, huh? There are certain new developments which always have a somewhat lower margin, and over time, that improves because of the full qualification of systems. Those are all impacts on those gross margins. Still, gross margins well above 62% is a reasonable margin at this time.

Speaker #3: So those are all impacts on those gross margins . But still gross margins well above 62% . Is is is a is a reasonable margin at this time .

Speaker #12: Indeed . Thank you .

Operator: Indeed, thank you.

Aditya Mittal: Indeed. Thank you.

Speaker #3: Any last question ?

Richard Blickman: Any last questions?

Andrea Kopp-Battaglia: Any last questions?

Speaker #2: I think we do not have any more time for any last questions , but I will hand the word back over to you , Mr. Blickman , for any closing remarks .

Operator: I think we do not have any more time for any last questions, but I will hand the work back over to you, Mr. Blickman, for any closing remarks.

Richard Blickman: I think we do not have any more time for any last questions. I will hand the word back over to you, Mr. Blickman, for any closing remarks.

Speaker #3: Well, thank you all for taking the time. And if you have any further questions, don't hesitate to contact us directly.

Richard Blickman: Well, thank you all for taking the time, and if you have any further questions, don't hesitate to contact us directly. Thank you for attending. Bye-bye.

Andrea Kopp-Battaglia: Thank you all for taking the time. If you have any further questions, don't hesitate to contact us directly. Thank you for attending. Bye-bye.

Speaker #3: Thank you for attending . Bye bye .

Operator: The host has ended this call. Goodbye

[Analyst]: The host has ended this call. Goodbye.

Q3 2025 BE Semiconductor Industries NV Earnings Call

Request a DemoDemo

BES

BE Semiconductor Industries

Earnings