AIXTRON SE (AIXA) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to AIXTRON's Q1 2021 Results Conference Call. Please note that today's call is being recorded. Let me now hand you over to Mr. Guido Pickert, VP of IR and Corporate Communications at AIXTRON, for opening remarks and introductions.

Thank you very much, operator. Welcome to AIXTRON's presentation of our first quarter 2021 results. I'd like to welcome the members of our Executive Board, Felix Grawert and Dr. -- sorry, Dr. Felix Grawert and Dr. Jochen Linck; as well as our VP of Finance and Administration, Charles Russell. As the operator indicated, this call is being recorded by AIXTRON and is considered copyright material. Please take note of our safe harbor statement, which can be found on Page 2 of our results presentation slide deck as it applies throughout the conference call. This call is not being immediately presented via webcast or any other medium. However, we will place an audio file of the recording or transcript on our website at some point after the call. I would now like to hand you over to Dr. Felix Grawert for opening remarks. Felix?

Thank you, Guido. And let me all welcome you to our first quarter 2021 results presentation. And I will start with an overview of the highlights in the quarter before handing over to Charles for more details on our Q1 '21 figures before I will give you an update on the development of our business and guidance for the year. Let me start by giving you an overview of the key developments in Q1 on Slide 3. In Q1 '21, we noted a continued strong order momentum throughout all our businesses, but in particular in gallium nitride power and 5G wireless. The overall semiconductor market is seeing very strong chip demand across the board, also incentivizing our customers to invest in their manufacturing capacity. Hence, orders in Q1 came in at EUR 124 million, surpassing the high level of orders seen in Q4 2020. As expected, we start the year '21 with a revenue figure well below the previous quarter. This is due to the fact that many customers had requested their systems to be shipped still in 2020, largely due to imminent production needs. For the coming quarters of 2021, we expect that revenues will increase each consecutive quarter. This is a pattern that we had seen in quite some of the last year. The strong momentum in Q1 and the current level of customer inquiries gives us confidence to firm up our guidance for orders and revenues. We expect orders and revenues to come out around the upper end of the respective ranges. This high expected level of revenue leads to a higher expectation of EBIT margin of 18% compared with 16% before. With regards to OLED, we have decided together with our joint venture partner, IRUJA, to focus our OLED subsidiary, APEVA, onto the China market. The reason for that is that we have not seen any further progress in the discussion with our key customer. And in the coming years, we expect a much bigger share of new investments into OLED production facilities to happen in China than in Korea. As a consequence of this change in target market, we focus APEVA on being a supplier of differentiated key components rather than offering fully integrated system solutions. Discussions with customers in China are ongoing. Nevertheless, we do not expect a successful conclusion before 2022. Therefore, we will keep the running cost of APEVA on the lowest possible level until then. This move results in a reduction of OpEx from the OLED business at AIXTRON as follows. In 2021, we expect to keep the overall cost for OLED within the high single-digit range that we had previously communicated for our OLED activities. This figure includes all expected costs for 2021, also onetime expenses. In 2022, OpEx will be reduced to a low single-digit amount until a customer project starts. At the same time, we can preserve the potential and upside from this technology. Let me give you also an update to the corona situation at AIXTRON. Our strong internal safety measures continue to prove effective in mitigating the risk of infections within our premises. We are offering regular testing of our employees at our headquarters twice a week. And we continue to not have recorded any significant effects related to COVID-19 on our operations and business. Also, our supply chain continues to be stable. However, we will continue to watch the development of the global pandemic very carefully, and we remain to be ready to take further measures if necessary. Before handing over to Charles for the financials, let me tell you that I'm glad to announce that Dr. Christian Danninger will take his position as CFO already at the beginning of May. With that, I'm handing over to Charles.

Thanks, Felix, and hello to everyone. Starting on Slide 4, our income statement. As expected, total revenue for the quarter was EUR 50 million compared with EUR 41 million in Q1 2020. Gross margin of 35% this quarter was 1% lower than the 36% in the same quarter last year. The difference is mainly attributable to the U.S. dollar-euro exchange rate effect between the 2 periods. And some additional costs were incurred also during Q1 2021 to prepare our production capacities for the increase in output planned for the second half of the year. Operating expenses in the quarter increased from EUR 16 million in Q1 2020 to EUR 18 million in Q1 2021. G&A expenses increased to EUR 6 million in Q1 2021 from $5 million in Q1 2020, influenced by higher variable compensation. R&D expense of EUR 12 million in Q1 was EUR 3 million lower than the comparable period in 2020. This is in line with the regular fluctuations we have in R&D and partly due to lower running costs of our OLED activities. Net other operating income was EUR 2 million in the quarter compared to EUR 6 million in the same quarter in 2020. Q1 2020 included a one-off benefit of EUR 3 million. We recorded an EBIT of minus EUR 1 million for the quarter, similar to the result in Q1 2020. The improved outlook has led us to recognize a further EUR 4.5 million of deferred tax assets, which leaves us with a net profit for Q1 2021 of EUR 4 million compared with a loss of EUR 1 million in Q1 2020. Turning to the balance sheet on the next slide. In line with the increased order intake, inventories have risen to EUR 97 million from EUR 79 million at the end of 2020. Advanced payments received from customers increased to EUR 101 million from EUR 51 million at the end of 2020. This relatively large increase is because some deposits have been received before the finalization of all the criteria needed to recognize the orders. Our cash balance increased to EUR 341 million at the end of the quarter, including EUR 60 million shown in other noncurrent assets on the slide. Moving to Slide 6, which shows our cash flow statement. Cash and investments increased by EUR 31 million in the quarter from EUR 310 million to EUR 341 million. The chief movements were the increase in customer deposits of EUR 50 million less the increased inventories for future shipments of EUR 18 million. With that, let me hand you back over to Felix.

Thank you, Charles. I would like to give you an update on the key developments in our addressed markets before concluding with the outlook for the rest of the year. As mentioned in the beginning, we are seeing strong momentum from all our end markets. The Q1 order intake was largely driven by systems for the production of gallium nitride power electronics. In 2020, we have seen the tipping point for adoption in this market. Our customer, the chip makers have achieved the reliability needed in target applications. Now we see GaN-based power electronics in the phase of rapid market adoption, displacing silicon power electronics in selected applications. Consumer electronic devices with compact fast-chargers for smartphones, tablets and laptops mark the starting point. This is what drives the big 2021 volume in GaN power. In the coming years, we expect adoption also in industrial end markets, for example, in power supplies for energy-efficient data centers and telecom base stations. Other applications on top will follow. Please bear in mind that according to Omdia, discrete silicon MOSFET alone were projected to have a market volume of USD 7 billion. In 2020, GaN and silicon carbide only represented about 7% of this market. We believe that the substitution of silicon power electronics by GaN and SiC power electronics creates a multiyear growth opportunity for us. Furthermore, in Q1 2021, we recorded strong orders from the 5G telecom and optical datacom markets. Both areas are driven by the worldwide 5G rollout and the rising need for fast data availability and increasing data volumes, for example, due to cloud computing and video stream. Finally, in Q1 '21, we have seen some order intake in the area of red LEDs, which are used in LED displays and an indoor farming. For the upcoming quarters, we see a return of laser demand from 3D sensing as well as further progress being made in the area of microLED. In summary, we are in a very pleasing environment currently and the sentiment is positive. With that, let me move to our guidance on Slide 7. As mentioned at the beginning, we expect orders to be around the upper end of the range of EUR 340 million to EUR 380 million due to the strong momentum. Revenues are expected to come in around the upper end of the range of EUR 320 million to EUR 360 million as well. Out of our backlog, we expect to ship to turn about EUR 180 million into 2021 revenues. Taking Q1 revenues and the assumed after-sales business into account, we still need to be -- need about another further EUR 90 million of orders to be converted into revenues to reach the expected revenue level. Our gross margin, we continue to expect around -- to be around 40%. Mainly due to the higher anticipated revenue level, the EBIT margin is now expected to be around 18% compared with 16% before. Please note that these forward-looking expectations are based on the budget rate of USD 1.25 to the euro. In summary, even though the year started slow in terms of revenues and EBIT, we are looking forward to significant growth of revenues and EBIT in 2021 compared to the previous years and with an increase in each consecutive quarter. With that, I'll pass back to Guido before we take questions.

Thank you very much, Felix and Charles. Operator, we will now take questions, please.

[Operator Instructions] And the first questioner is Janardan Menon from Liberum.

My question is -- my first question is a little bit on your capacity. So you started the year quite low on revenues in Q1, which means that you have quite a bit of a room to cover to reach the high end of your revenue guidance for the full year. So I was just wondering, based on your current capacity and your supply chain capacity, what is the maximum level of quarterly revenue that you can recognize, given your current capacity? And can you also give us an idea on what is your current capacity increase plans? And based on that, how will you have to pass -- how will your sort of revenue-generating ability per quarter or per year increase into future years?

Yes. Thank you very much for the question. This is a very good question, because as we mentioned, we expect the revenue in each quarter of this year to be larger than the revenue in the previous quarter in result to have a peak revenue in the fourth quarter. And as far as our capacity is concerned, out of our production facilities at AIXTRON, we have previously even shipped 450 epi tools. This will build a year of 2010. Nevertheless, of course, our supply chain and our manufacturing always need some time to ramp up and to prepare for such an output. And with respect to the guided revenue levels, we have secured the production capacities, and we also have secured the supply chain that the parts are coming in. So the guided revenue is well secured.

And are you increasing capacity at all at your own or at your suppliers right now?

We are increasing our capacity in form of some production slots in order to manage this balance, which is a low revenue in the Q1 and a high revenue in the Q4, yes. This is not evenly balanced, but as mentioned, within the year 2021, a peak in Q4, yes, and we prepare to have that Q4 peak secured. Yes, absolutely.

Understood. And then just on the margin side, so the increase from 16% to 18% is coming through entirely from the higher revenue expectation. And it doesn't have any impact on OpEx from the APEVA situation.

Exactly. You truly figured the situation. This is a fixed cost digression, yes. The block of fixed cost is exactly as before -- as expected before. However, it's now spreading over a larger base of revenue and of gross profit. And to the second part of your question, the OpEx expenses for APEVA will stay exactly in line with the level that we have indicated before, which is a high single-digit million euro amount in the year. Now also including the one-off effects in 2020, which then, of course, in the second half of the year lead to some savings. Yes. So we stay flat on the OpEx level to the level we had guided to the market before.

Understood. And the last question I have is just on your gross margin. You have achieved higher levels of gross margin in the past 40%. And I agree you're starting from a low level. But I'm just wondering, is there any conservatism on that 40%? Or is it -- are there any sort of headwinds that you see over the next 3 or 4 quarters, which could have a depressing effect on the margin?

The previously higher gross margin that you mentioned was a big part also driven by different exchange rates. If you remember, in the previous year, we were at a level of 1.07 to 1.10. And now for the upcoming 3 quarters, we are expecting an exchange rate of 1.25. So out of our revenue guidance, we have only secured or realized now EUR 50 million on the current exchange rate. And all the remaining is based on the 1.25, which of course, compared to the previous year is a headwind. And we now have to see how the U.S. dollar to euro exchange rate develops.

And next up is Uwe Schupp from Deutsche Bank.

Yes. 2 questions, firstly on OLED; and secondly, on the order guidance. Felix, can you shed some light on your thinking regarding the OLED project overall? Because I was wondering, wouldn't this have been almost the ideal time to say, okay, we have to admit defeat, our long-time customer basically didn't pursue the project. And for now, we are taking it -- following a bit -- following up a bit on a smaller scale. And if some revenue comes next year, then great. And if not, then not. In other words, why not make a finish here and kind of lower the expectation level somewhat? Because right now, you're saying, okay, maybe some revenue will be coming in '22, but I wonder if you're getting the benefit of the doubt here. And then I have a follow-up on OLED as well. That would be great.

Yes. Thank you. A very good question. So let me clarify on the running cost. So the running cost, now with the move we are taking, is being reduced to a minimum. As I mentioned, for 2021, the cost for the first quarter, the one-off effect for the second quarter and then the savings we are realizing in the third and fourth quarter together sum up to the high single-digit million amount. However, starting 2022 and following, we are reducing the run rate of cost to a low or very low single-digit million euro amount. I think that is also what your -- as your question implied, would be wise to do. We are doing that exactly. And only in the moment, when we secure a customer order, a follow-on customer order, then the project continues, and then there is a customer-specific R&D topics associated with that. Nevertheless, we do not expect that before 2022, simply because it's now about talking to a new customer, opening a new market, and we all know that currently travel to China is not possible due to the closed country and due to COVID and extreme travel restrictions. And this is also the reason why we clearly say we do not expect that before 2022.

Okay. And in terms of the onetime costs that you are seeing for the second quarter, would those be in the EUR 3 million to EUR 4 million area? Sorry, if you already said this on the call, I was slightly late.

Absolutely correct. That's the right number.

So that probably means -- I mean, it's a relatively high number. So it means you are laying off a fair amount of people. Is that correct?

A certain amount of people, correct.

Okay. And so going forward, you're saying, okay, on a quarterly run rate, the base -- the cost base should be more in the area of EUR 2 million to EUR 3 million per year?

Per year.

Okay. Got it. Okay. And then just secondly on the order guidance, you obviously had EUR 125 million almost in Q1. And the high end of your guidance is EUR 380 million, I'm not mistaken. So that implies obviously a slowdown in the second half. Are you just cautious here? Or is that what you're trying to tell the market?

In fact, our order momentum and the market continues to be strong, yes? And that's what we reflect in our guidance, which is about 25% higher than the previous year, yes. However, we do not have the full visibility yet at this point in time, how much will actually translate into order. And as you suggest with your questions, we should get more clarity throughout the second quarter.

Next up is Stephane Houri from ODDO.

Yes. I have 2 questions actually. The first one is on APEVA, first to know and clarify if you had anything in your forecast for APEVA this year. I think the answer is no, but I prefer to ask the question. And if you are talking to more than one potential customer? And also, if you think that Samsung has decided not to do OLED, because they prefer to go to microLED, which would benefit to you in -- maybe in the longer term. But at least it will be beneficial for you. That's the first question. And looking at the rest of the year and your order pattern, you basically think that the momentum is great in terms of order. Will it continue in GaN only? Or do you see orders in more domain? And notably, do you see the start of rising orders in silicon carbide.

Thank you. I clearly got the second question, but I didn't fully understand the beginning of your first questions. Could you help me with the beginning of your first question?

Yes, yes, sorry, maybe you couldn't hear me. But the question was to know if there was something in your forecast before for APEVA and if you had to get something. But I guess that the answer is no, but I prefer to ask the question.

The revenues. You mean, whether there was revenues for APEVA?

Yes, correct.

Okay. I get the point. We have always included APEVA in our full guidance. That was always a part of the guidance that we had given, both in terms of order intake and in revenues, yes? And the guidance or the firm-up of our guidance that we have taken now again, reflects, of course, that based on the measures that we are taking and based on the point that we say we do not expect an order before '22, of course, and this year, there will be no order intake for APEVA and no revenues for APEVA. So the firmed up guidance for revenue and orders fully comes from the MOCVD business, yes? And what you refer to a certain customer in Korea, very clearly, everybody or all customers or players who put their full attention now to the microLED market. Yet, in fact, AIXTRON is very well positioned in order to capture the momentum from this market. I think in this place, we have mentioned that we are currently working with all the players in the market who is exploring microLEDs. And yes, we very much look forward that we make our way into the display business, yes? In fact, this is a good momentum for us. With that, I come to your second question, which I read, whether we expect the momentum for gallium nitride power electronics to continue throughout the year. The answer is clearly yes, we do not expect that this is just a onetime effect in the first quarter. In fact, also in the second quarter, we expect a strong contribution from gallium nitride power electronics. Also in the third and fourth quarter, some good momentum from GaN power, simply because many customers, not only 1 or 2, but many customers globally, I mean the U.S., I mean Europe, I mean china and I mean Taiwan, literally very broad, are expanding their facilities in GaN power. And the other market where we see strong momentum throughout '21 is again, also throughout the year, the market for telecom/datacom for the communications market as well as the market for specialty LEDs, be it miniLED bit microLED. So it's a quite diverse mix, quite a broad mix across all our end markets, clearly led by the strongest peak also the strongest one on the GaN power.

And silicon carbide, will it be already this year? Or this is the next phase for next year?

I would say we would see stronger momentum in silicon carbide in '22 than '21.

Okay. And sorry, last point. So given all the things you've said, basically, it means that you may reach your orders -- the orders needed, the EUR 90 million you've just quoted in Q2 already. So you would have secured your full year guidance, right, or revenue?

This is the shippable order. And I mentioned in particular that each quarter successively will be stronger in shipments than the previous quarter. And especially, we have to really see what we can ship in the year. So remember whatever we received on the last day of the second quarter, if we still ship it in December, there's a 6-month time from order intake until the shipment. And bear in mind that very often, we talk about a time of 7 to 8 months. And that explains why we mostly say orders received in Q2 are still shippable. However, Q3 order intake then to the largest part becomes revenue in 2022, yes? This is the typical lead times that we have on our shop floor.

The next question comes from Charlotte Friedrichs from Berenberg.

The first question would be if you can give us a little bit more of an idea of the split of the order intake. I think you've already alluded that it was mostly gallium nitride power, but can you talk a little bit about how exactly the split looked like and how you expect this to develop over the year?

Very happy to do so. So in the third quarter, the split was just slightly below 50% for gallium nitride power that we mentioned; followed by the telecom/datacom, in this particular case for the radio frequency portion of telecom and datacom; and lastly, followed by a mix of order intake from the different segments of specialty LEDs, mostly microLED, yes? So those 3 were the main contributors for the order intake in the third quarter of the year. And if we look at the total year '21, we expect, again, of course, with 3 quarters still to come, yes, the forecast is not as precise as the actuals. But we still expect that GaN and silicon carbide power electronics together will make roughly a little less than half of the order intake; followed again by telecom/datacom, in this case, both the RF portion as well as the optical communications portion. So that will take the #2 place. And again, the specialty LEDs, both microLED but also miniLEDs, will take the third place. So you can say, if you look at the total year, first quarter is probably a good representative for the total year split.

Okay. Understood. And I'm not sure if I heard it correctly at the beginning of your presentation, you said with the APEVA business that you no longer are looking to do entire production lines, but rather focusing on smaller components. Can you elaborate a little bit on that?

Very well so. So we had focused our APEVA business with the formation of the joint venture in Korea on both the differentiated components, which are the key of what was produced in Germany, as well as the automation and handling systems and the big OLED chamber that have been contributed by our partner, IRUJA. What I mean with the big chamber, imagine a conference room, which is large enough to hold 10 or 15 people, yes, in COVID times, we barely use it. And that's about the size of such a system. And you can imagine the biggest profit potential or profit parts are in the differentiated key components. And the big steel and vacuum systems is in lower-margin parts. However, they need to be produced very close to the customer. Now with us moving from Korea and addressing the China market, very clearly in China, over the next years, analysts expect some EUR 8 billion -- or USD 8 billion, sorry, of CapEx in OLED systems. And we see that customers expect a certain degree of localization. And furthermore, we expect -- we see also certain price expectations of customers. And for that reason, we are now focusing on the differentiated components, which is the core of the OVPD technology, which is the differentiated element. And we go out of the part for all the other systems components, which are large, big and heavy, however, carry less of a margin. In numbers, we speak about a revenue potentially roughly half of the revenue that we -- level that we had expected before. However, in terms of absolute profit that can be realized, we only see or expect a minor decrease compared to the absolute profit that we had expected before. And I think with this split and with the cost reductions, OpEx cost reductions that come along with this move, you can very well follow the strategic rationale for this.

Our next question comes from David O'Connor from BNP Paribas.

Great. Maybe if I can go back on OLED again. Can you give us a bit more detail on what was the exact reason your Korean customer didn't adopt your technology? Was it a performance? Something in the technology that didn't work or integration or down to a cost issue? If you can give us a bit more color there. And then related to that, I mean, if your Korean customer didn't adopt OLED, what gives you the confidence that you think Chinese customers will now adopt the technology? And I have a follow-up.

Thank you very much. Our Korean customer has decided strategically to switch from OLED to microLED, because our Korean customer is focusing on the high end markets within the display arena. And they see that the OLED technology, all new investments are moving to China, because the Chinese display makers are mastering OLED roughly as well as the Korean display makers are doing. And they see no further potential to seek differentiation through OLED. So they are giving up their OLED program. And as they, on a strategic corporate level, give up the OLED program, they move away also from our system. So very clearly, it has nothing to do with the failure of our technology. We completed the qualification successfully in December, but with the strategy of our customer who is moving away from OLED and now into microLED, yes? And at the same time, that explains also why we move -- or we focus on the China market. The Chinese, on their end, they are still expanding in OLED. I mentioned a number earlier on. And they are several years behind the Korean display makers in terms of microLED.

That's very helpful. And then maybe separately on silicon carbide. You mentioned that you expect stronger momentum in 2022 on silicon carbide than this year. Can you give us a bit more color on what you're seeing to support that statement?

Yes. We see across the automotive industry a wide adoption now of battery electric vehicles. We all hear the announcements of carmakers about new models. Many of those models are ramping in '23, '24. And backwards calculating the component makers or the chip makers will significantly back their factories in '22 to prepare for that ramp of the car models, yes, just one year ahead. And that's the reason why we expect a strong momentum in '20 and rather here and there smaller or single-digit tool here to there expansions in '21, but the real strong momentum to come in '22.

Okay. Understood. And that's what your customers are indicating to you, correct, at this point?

Correct.

The next question comes from Lee Meyer from Lord, Abbett.

Yes. It appears as though the conversion of your order book and of your orders into revenue is a little bit low, and you talked about lead times. Are your lead times extending? And have you been affected by the shortage of semiconductors in any way, which is curtailing the production of your equipment?

Thank you very much. Very good question. No, let me come to the second part of your question first. We are not seeing any limits or shortages in supply. Or we are not, say, shifting revenue from one quarter to another because there is a component shortage or anything like that, as the second part of your question is indicating. In fact, we can ship through the days as our customers desire, yes? And this is very much in line with the guidance about the split of revenues or distribution of revenues throughout the 4 quarters of 2021. This is driven by the desire of customers when to receive their systems. And as you point out to the chip shortage, what we rather have seen is customers placing orders maybe a little earlier in advance to secure a spot in our factory. However, the customer only, for example, doing a -- building a new factory or expanding a facility, but the customer only having their facility ready in Q3 and Q4, however, already placing the order in Q1 in order to secure a spot. Because some customers may have thought, well, there is an overall shortage in the market. Well, maybe at AIXTRON, it also comes at some point. So we have seen some customers placing the orders earlier than usual, but this is not due to limitations on our side.

Okay. So lead times, in general, then have not extended. And you mentioned that there are 6 months or did you say 7 to 8 months?

7 to 8 months in the standard lead time.

And the next question comes from Jan-Erik Schmidt from LOYS AG.

I just have a quick question on the CapEx. You mentioned that there are still some investments in capacity that you kind of like cover up the Q4 peak revenue. Just wondering on the CapEx guidance then, what kind of number is expected for 2021 and maybe the coming years then.

In the previous years, our CapEx expenditure was typically on a level of EUR 10 million to EUR 12 million. And in 2021, we expect the CapEx expenditure around EUR 25 million. And the increase is partly driven by some moderate investments into our facilities. We mentioned that in this call. And also it's driven by some investments into our prototypes and building up and enhancing our laboratory in order to complement the renewal of our portfolio on the R&D side. Both effects that I think are very well mentioned and communicated to the market.

All right. And so after 2021, it's going to go down to EUR 10 million to EUR 12 million again?

I wouldn't dare forecast. I would rather hope that our revenue keeps increasing, and we further need some expansions on the production side. But we are now in the Q1 of '21, and I would not want to give an outlook for '22 already. That's clearly too early.

Okay. All right. And then just on the net working capital, you mentioned that you had a larger chunk of prepayments. So that effect is going to normalize over the course of the year, going back to normal levels? Or is that some sort of structural trend we might see? Or is that just kind of like a timing effect?

It's actually a timing effect. And I think that normally, we would expect to see somewhere around 40% customer deposits relative to the order backlog. And this is just a one-off event, I expect.

And next up is Malte Schaumann from Warburg Research.

The first one is on OpEx, just a clarification. Last year, you had kind of EUR 20 million related to OpEx, which is now expected to -- or guided to be less than EUR 10 million. So is it then fair to assume, owing to the fact that R&D should be significantly higher owing to the qualification works you're doing, that OpEx, in general, should be relatively flat on this year and there's a chance that OpEx should come down next year and then the OpEx OLED contribution and maybe lower qualifications have an effect?

In '21, we expect in roughly R&D expense around EUR 55 million and an OpEx level around EUR 80 million. And in '22, in next year, we expect these numbers to go down, R&D expense around EUR 45 million and OpEx level EUR 70 million, EUR 75 million.

Okay. Good. And then on 3D sensing, I mean, you mentioned all the other areas pretty active, less so on 3D sensing. Maybe it's because the strength of the other areas. But -- so what's your take on the opportunities you see in your pipeline in that area?

In 2019 and 2020, we have seen customers absorbing the overcapacity that was built up in 2018. So that segment, as everybody knows, was very slow for us. In 2020, we see this segment gradually coming back. We see some first customer inquiries here and there. However, we do not expect the 3D sensing to be a major part of our 2021 order intake or revenue. It's still a system here, a system there. It's a smaller amount. Nevertheless, '22 and following years, we expect the next wave of 3D sensing to come. From then new applications opening up, both on the world side and then gladly also in the contextual awareness of robots and autonomous driving.

Yes, okay. And a quick one on service revenues. I mean you see a significant expansion of business activities in this year and then going forward. So when should we then expect following that kind of a similar-wise in service and spare parts sales, I mean, not immediately, but at some point in time, one should expect that.

I would expect that '22, '23 in the 2 coming years to start having an effect on our P&L.

Thank you very much. With this, I would like to conclude today's call. Thank you to all of you for attending. Please note that our next earnings call will be on July 29, 2021, for our Q2 '21 quarterly results. Thank you, and bye-bye.