AIXTRON SE ($AIXA)

Ladies and gentlemen, welcome to the AIXTRON's Analyst Conference Call Q1 2026. Please note that today's call is being recorded. Let me now hand over to Mr. Christian Ludwig, Vice President, Investor Relations and Corporate Communications at AIXTRON for opening remarks and introductions.

Thank you, Anna. A warm welcome to AIXTRON's Q1 2026 Results Call. My name is Christian Ludwig. I am the VP of Investor Relations and Corporate Communications at AIXTRON. With me in the room today are our CEO, Dr. Felix Grawert; and our CFO, Dr. Christian Danninger, who will guide you through today's presentation and then take your questions. This call is being recorded by AIXTRON and is considered copyright material. As such, it cannot be recorded or rebroadcast without permission. Your participation in this call implies your consent to this recording. Please take note of the disclaimer that you find on Page 2 of the presentation document as it applies throughout the conference call. This call is not being broadcast via webcast or any other medium. However, we will make a transcript available on our website after the call. I would now like to hand you over to our CEO for his opening remarks. Felix, the floor is yours.

Thank you, Christian. Let me also welcome you all to our Q1 '26 results presentation. I will start with an overview of the highlights of the quarter and then hand over to our CFO, Christian, for more details on our financial figures. Finally, I will give you an update on the development of our business and guidance. Let me start by giving you an update on the key business development from the first quarter on Slide 2. The important messages for Q1 are strong new orders of EUR 171 million, driven by optoelectronics. Revenues of only EUR 59 million due to seasonality, but also limited demand for both power electronics segments. Nevertheless, this was expected as revenues came within our guided range of EUR 65 million plus/minus EUR 10 million. The gross margin came out at 18%, impacted by negative operating leverage due to low volume as well as a mid-single-digit euro million one-off cost item related to our announced personnel reduction. Despite the weaker start into the year, we confirm our new fiscal year guidance released mid-April with revenues of EUR 560 million plus/minus EUR 30 million before EUR 520 million plus/minus EUR 30 million. We announced a new greenfield site in Malaysia. With investments of approximately EUR 40 million in the next years, we will be ready for production by middle of '27. Also, after the reporting date, we successfully placed our first convertible bond in April at very attractive terms, enhancing our financial flexibility. Christian will now provide a detailed look into our financials on the following pages before I take over with an update on our markets. Christian?

Thanks, Felix, and hello to everyone. Let me start with the highlights of our revenue development on Slide 4. We had a weak quarter due to seasonal effects with revenues at EUR 59 million, down 47% compared to the EUR 113 million last year. But this was not unexpected as we are fully in line with the quarterly guidance of EUR 65 million, plus/minus EUR 10 million. The breakdown per application shows that 52% of equipment revenues come from optoelectronics, 31% from LED/microLED and 17% from GaN and SiC power, and a 1% contribution from R&D tools. The aftersales business contributed to a total revenues with EUR 24 million. As this business is much more stable, it only declined by 4% year-over-year, thus its share of revenues increased to 40%, up from 22% a year ago. Now, let's take a closer look at the financial KPIs of the income statement on Slide 5. I already talked about the revenue line. Gross profit in Q1 '26 was EUR 11 million. That implies that our gross margin in Q1 decreased by 12 percentage points versus Q1 2025 to 18%. But please recall, this is mainly due to 2 factors: the negative operating leverage of the revenue decline year-over-year and the one-off expense of a mid-single-digit million euro amount in connection with the announced personnel reduction in the operations area, both burden gross profit. OpEx in the quarter went up 7% to EUR 33 million, primarily driven by higher R&D spending compared to the previous year. The increase in R&D cost is mainly due to higher depreciation and higher material costs. For the full year, we expect R&D costs to be about EUR 10 million higher than in 2025. EBIT for the quarter was at negative EUR 22 million. The decline in the operating result compared to the previous year is mainly due to the lower gross profit, as already discussed. Now to our key balance sheet indicators on Slide 6. Working capital was down by more than EUR 76 million since end of 2025. Several balance sheet items contributed here. After the strong revenue number in Q4 last year, we now collected the outstanding payments and turned trade receivables into cash. At the end of March, trade receivables were down to EUR 84 million compared to EUR 131 million at the end of 2025. Advanced payments received from customers at quarter end were EUR 79 million, up about EUR 35 million from end of 2025, primarily driven by the increase in order intake. Advanced payments now represent about 22% of order backlog. Inventory levels were at EUR 295 million, slightly up from the EUR 284 million at the end of fiscal 2025. Trade payables have stabilized at EUR 36 million, slightly up from EUR 34 million at the end of '25. Adding it all up, our operating cash flow improved in Q1 to EUR 54 million, up by more than EUR 18 million versus last year's EUR 35 million. On the back of the improvement in operating cash flow, free cash flow also improved, came in at EUR 49 million compared to EUR 30 million last year. CapEx in Q1 was fairly stable year-over-year at around EUR 5 million. For the full year, we expect about EUR 55 million of CapEx. This consists of our baseline investments, plus about 2/3 of the announced EUR 40 million for the Malaysia expansion. At the same time, we have started the process of selling our site in Italy. Our cash balance, including other current financial assets as of March 31, 2026, increased accordingly to EUR 270 million compared to EUR 225 million at the end of December 2025. Our equity ratio continues to be at a very healthy level of 85%. Now, an update to the convertible bonds. Subsequent to the reporting date, we successfully completed the issuance of our inaugural convertible bonds in mid-April. We placed EUR 450 million with a 5-year maturity and a 0% coupon. This transaction is accretive to earnings from day 1 as the proceeds can currently be invested in low-risk money market instruments at yields of around 2%. We intend to use the proceeds for general corporate purposes, which may include investments into organic growth, potential M&A and also, when appropriate, share buybacks. With that, let me hand you back over to Felix.

Thank you, Christian. I would like to continue on Slide 8, and give you an update on key trends in our different markets. I will start with optoelectronics, which clearly was the most dynamic and decisive market for AIXTRON in the first quarter before we briefly touch GaN, SiC and LED/micro LED. In optoelectronics, Q1 marked a clear inflection point for the company. We saw exceptionally strong order momentum, with optoelectronics accounting for well over 2/3 of total order intake during the quarter. This performance was primarily driven by laser-related datacom applications, where customer demand exceeded our expectations. The catalyst for this is a fundamental shift in the data communication architecture of AI data centers. Until now, data in these systems have largely been transmitted via copper cables and only sporadically via optical connections and if so with comparatively low data rates, such as 100 gig. Now the industry is making a technological leap. In the future, optical connections with highest data rates, namely 800 gig and eventually 1,600 gig will increasingly be used there. This is not a gradual advancement, but a genuine architectural shift, and it is precisely this shift that is leading our customers in optoelectronics to massively expand their capacities. A huge number of additional wafer starts are required for this new type of connectivity, and this, in turn, triggers significant investments in new and expanded manufacturing capacities. Recent multibillion-dollar investments made by NVIDIA and other ecosystem players are accelerating capacity investments across the datacom value chain. This, in turn, is enabling laser manufacturers to expand their epitaxy capabilities directly benefiting AIXTRON. Therefore, we expect this wave of investment to continue over several years, extending well into '27 and beyond. In the first step, copper connections in the AI data centers will increasingly be replaced by fiber optics and slower optical connections get replaced by faster ones, the so-called scale up. In the next step, the industry plans to significantly increase the number of connections within these data centers once again to enable even more powerful and intelligent AI systems, the so-called scale out. And finally, data traffic between data centers will also increase sharply the so-called scale across. This too will require additional optical connections and more lasers. At product level, our G10 ASP platform continues to see very strong market acceptance and represented the majority of volume orders received in Q1. Customers are ramping aggressively to support the growing demand for EML and SiC-based lasers used in AI-driven data center infrastructure. From a technology perspective, most systems ordered today are initially configured for 4-inch wafers, but are already equipped with 6-inch conversion kits. This enables customers to transition rapidly as soon as larger wafers become available. Datacom lasers are a performance-driven application where yield is absolutely critical. These devices require multiple architectural growth steps, meaning that even marginal improvement at wafer level can have significant multiplied impact on final yields. This is where we clearly differentiate. Our system controls uniformity at wafer level rather than at batch level, enabling consistently superior results layer by layer, a key reason why customers increasingly standardize on our tools for advanced photonic devices. Overall, with many multi-tool orders extending beyond '26, we are confident that we are seeing the beginning of a new structural growth phase in optoelectronics. Now, let me turn to gallium nitride. In GaN, demand remained stable but soft in the first quarter, contributing just under 10% of total order intake. While near-term growth remains limited, we see customer utilization gradually improving, and we expect demand to pick up again at some point. This may be later in the year or in the first half of the next year as fab utilization increases. Strategically, AIXTRON remains well positioned across 150 and 200 millimeters and increasingly also 300-millimeter gallium nitride, with systems installed at multiple customers. In silicon carbide, market conditions remained soft in Q1, reflecting ongoing underutilization across the industry. Customer utilization rates in silicon carbide, however, are gradually improving. When exactly the increasing utilization converts into additional volume demand is too early to predict as of now. Importantly, industry analyst data confirms that AIXTRON tools remained the #1 choice in silicon carbide epitaxy during 2025, even in a difficult market environment. This once again underlines that during periods of underutilization, customers prioritize tools with the lowest cost of ownership. Looking ahead, new device architectures such as super junction silicon carbide are expected to significantly increase epitaxial complexity and layer count, a trend that clearly plays to the strength of our batch reactor technology. Finally, LED and microLED applications had no material impact on order intake in Q1 '26. Investment activity remains cyclical and at low levels, with spending largely driven by Chinese end users primarily focused on AR and smart glass applications. Several customers are also working on devices for datacom short-link applications, and we may see incremental orders later in the year or in '27, depending on the success of this technology. During the first quarter of '26, we also took an important strategic step to further strengthen AIXTRON's global footprint by deciding to establish a new manufacturing facility in Malaysia. The site in the Penang region will focus on assembly and testing of selected 100, 150 and 200-millimeter systems for our Asian customers and will allow us to leverage a highly developed local semiconductor ecosystem. This investment of around EUR 40 million, with start of operation planned for '27, enhances our competitiveness, improve supply chain resilience and brings us closer to our customers in Asia, while fully maintaining our strong R&D and production base in Europe. Importantly, this move has no impact on our financial guidance for '26. With that, let me now move to our guidance. We confirm our increased guidance for '26 as published mid-April. We expect revenues to come in at EUR 560 million in a range of plus/minus EUR 30 million. At the midpoint, this is an 8% increase to our previous guidance. We expect gross margin of about 42%, and an EBIT margin between 17% and 20%. The guidance for the gross margin and EBIT margin includes one-off expenses of a mid-single-digit million euro amount in relation to the announced personnel reductions in the operations area. The measure will lead to an annualized savings of a similar magnitude in the future. For Q1 '26, we expect revenues of EUR 110 million in the range of plus/minus [ EUR 10 million ]. Again, as stated before, the implications of the geostrategic turmoil are unclear. We continue to closely monitor the developments worldwide in the Middle East and particularly in connection with the conflict in Iran. Potential impact on energy prices, supply chain, financial markets as well as investment and demand behavior are continuously analyzed. If necessary, we will respond appropriately to risks that could negatively affect our business performance. And with that, I will pass it back to Christian before we take questions. Christian?

Thank you very much, Felix. Thank you very much, Christian. Anna, we will now take questions, please. And for fairness reasons, I would like to ask everybody to limit himself or herself to 2 questions in the first round so that we get a chance to get everybody who wants to ask a question also to ask his question. Thank you.

[Operator Instructions] There are a few questions already incoming. The first question is from Martin Marandon-Carlhian, ODDO BHF.

My first one is on opto. I understand that you have a very good visibility, and you already talked about visibility beyond '26. But I think at the last earnings call, you did not fully commit to growth on that division in '27, considering the very high comps in '26. So, I guess maybe it has changed. But also more broadly, when customers like Lumentum or Coherent talk about more or less doubling capacity again next year, is there any reason why that will not translate proportionally in terms of orders due to improving yields or the transition towards 6-inch wafers, for instance? And I have a follow-up.

Yes. Thank you very much for the question, Martin. In fact -- so the transparency from customers now through '26 and also '27 significantly has improved. I think the key point was the announcement of NVIDIA to make those investments into Coherent and Lumentum, which we saw early March. And since then, literally, many of our opto customers, not only the 2 names, but also the other big names have been in very close contact with us with orders, multi-tool orders, multi-tool orders for '26, also multi-tool orders extending well into 2027 and others sharing forecasts in '26 or across '26 and '27. So the transparency, as you're assuming has, in fact, significantly increased over the last, I think, literally 8 weeks. And it really started only early in March. And now as we have this transparency, we have, as you hear from us, a high confidence for the '26. We've been able, thanks to the booming market on the opto side to increase our guidance. The power market remains soft, as I just highlighted, but the opto market is really increasing. And that also gives us at least a very positive feeling for '27 due to customer forecast and from customers already, literally orders going into '27.

Okay. And I know you don't give precise forecast or anything, but is it fair at this stage to assume growth in '27? Or is it maybe a bit too early to say?

You're asking very early about the question. I think we're seeing a good momentum of optoelectronics extending well into 2027. We can clearly say that. So, that leads me to believe that we have already a solid base for '27 from the optoelectronics. And as mentioned earlier, at some point, but we -- it's too early now to predict the exact timing. At some point, we expect the market for GaN power and silicon carbide power to come back. We don't know exactly when this is happening, whether this is at the end of '26, with revenues and orders in '27 or early '27. But I think at least there's a good probability that the power market is also coming back in '27. And if the power market -- if the power market comes on top in '27, if that really does materialize, then we would see a growth in '27 on top of it.

Okay. And the second question is on the convertible bonds. I mean, can you give maybe a bit more color on what do you think you would do with most of the EUR 450 million? You talked about M&A. So, what do you think could be the ideal target? What can it look like for AIXTRON? Is it to complement your existing MOCVD market or potentially go into different materials and so on? And also when you talk about share buyback, do you aim for this to be quite a regular policy? Or do you anticipate to be more opportunistic about it?

Martin, very good questions. To be honest, that wasn't really planned, the convertible. We just saw a really great opportunity over the last weeks that we couldn't resist. We all lived together through heavy volatility over the last years, which we not always liked. But now we have been able to leverage that volatility for a really great deal. So, I mean, overall, that gives us additional financial flexibility for basically no cost and direct earnings is directly accretive to earnings. And that's basically what it is, yes. So it was just an opportunity, a ball laying there that we had to kick into the goal, to be honest. So, there's not too much more behind it. So, there's no direct other opportunities that we are pursuing here. On the share buyback, maybe to complete that, I mean, that is something that might become an issue -- a topic in the future, probably not at the share price level right now.

The next question is from Gustav Froberg from Berenberg.

I'm just trying to understand the magnitude of the opportunity on the equipment side in opto a bit better. And I wanted to ask, do you have a sense of the installed base of AIXTRON machines used in data center and optical networking applications today, if you completely exclude anything that goes into consumer VCSEL applications? That's my first question.

Honestly, that's a very difficult question. And also, I don't know whether that question is helpful if you're trying to triangulate something and correlate that to demand. Let me explain to you why. The optoelectronics market is a market, which is characterized by a very high technical complexity, many layers being done. And there is many, many, many old systems of AIXTRON out there. Some systems are running at customer sites for something like 30 years because the customers, if you think about optical communications for like an undersea cable across the ocean, very long qualification and a huge hesitance by customers to change. So, there's many tools out there, which may be just running, let's say, once a week for like a day or something like that, just to produce a few devices to keep a certain design for a certain customer running. So the installed base of tools, which is out there is not really an indicator about what could be filled up. I think a certain part of the installed capacity, I would say, of the more recently installed capacity, let's say, capacity from the, I don't know, last 5 years, like last 8 years may now be filled and may be utilized for the current volume and for the current boom. But I think systems, there may be many, many, many, many, many systems from the last 20, may not even 30 years out there, but they will not be used now for the newer generations of tools. Also, on the laser devices, the complexity of designs has significantly increased. Sophistication has increased. So, I would say, yes, there is a certain set of tools, which now still be used and filled in terms of capacity but also what I hear from customers in terms of demand, I would say, a very fast order approximation, a lot of the capacity which needs to be brought online needs to be also newly installed. Sorry for the long answer. I try to give you a bit the background of what's going on.

No, that's super helpful. And then just the last follow-up for me. Based on what you know today, how much do you think the tool and equipment market needs to grow in order to meet the upcoming demand for the next couple of years? Are we talking about a doubling of the number of equipment needed, a tripling of the number of equipment needed? Just anything ballpark-wise would be very helpful to understand.

That's a very good question. I think in the end, it depends. It's unfortunately, in our area, always a bit difficult to say, right? Because there's questions of yield of wafer size and many other variables, right, which go well beyond what we can influence or what we do influence directly with our equipment, but many elements which lie more in the hands of our customers and their processes and process flows after our tools and things which are not in our hands, we can only take guesses. I would say, if you assume a market on the optoelectronics side somewhere in the range, my first guess, 80 to 100 tools for the laser communications, I think that might be a good approximation of order. And maybe it's 1/3 less or 1/3 more, but just to give you a house number.

But 80 to 100 needs to be installed or it's already installed?

It needs to be installed every year.

Next question is from Adithya Metuku, HSBC.

Firstly, just a clarification on the previous answer you gave, 80 to 100 tools that need to be installed. Are you talking about G10 tools? Or are you -- are the G4 equivalents? If you could just clarify that, that would be helpful. And then I've got a question.

I was talking about G10.

G10. Okay. So essentially, give or take, EUR 4 million. So that alone, you're looking at EUR 300 million to EUR 400 million opportunity per year. Is that the right way to think about it?

Not too far off.

Okay. Okay. Then maybe just following on from another question that was asked previously. You said earlier that your order intake from optoelectronics was EUR 118 million in the quarter. Visibility is rising. Clearly, if you listen to Lumentum, Coherent, Applied Opto and the others out there, they'll all be deploying more next year than what they're going to take this year. So if I take the EUR 118 million, call it EUR 120 million, nice round numbers, I can work my brain around easier mathematics. EUR 120 million, if you assume it stays flat, is there any reason why your optoelectronics revenue next year can't be at EUR 480 million next year? What would be your pushback to that argument?

Honestly, you're thinking further into the future and a more precise detail than I have been. Thanks for asking the question. Honestly, my thoughts haven't evolved so far that I could give you a credible answer.

Okay. And then just a quick clarification on the second quarter. When I think about the Q-on-Q increase, you talked about opto coming in and contributing. But would opto be the biggest driver of the sequential increase in revenue? Or could that -- or is there a significant chunk also coming from GaN?

So, I think for the year 2026, what we see at this point in time, opto is clearly the driver. And please also take into account, opto has many subsegments, right? We are currently talking about the lasers for the data communications. We also still have some customers doing some work on VCSELs. As I mentioned in my prepared notes, we have some customers playing at this point in time on a lower level on LED/microLED, which now has turned more to AR glasses, right, very small displays also with the vision to say, let's use the AI, just voice input rather than keyboard input, right, and then use the AR glasses. There still is a market on plain-vanilla red LEDs, which also typically takes quite a number of tools, quite some wafer area. This is set on gallium arsenide. So the opto overall is the biggest part. Lasers is a subsegment of that, currently the booming and fast subsegment, but the other markets are also there. Let's not forget that. So very clear, come back to your question. In '26, opto is by far the strongest segment, very, very clear. And as I said before, also the question on Martin earlier on gallium nitride and silicon carbide will come back on top of that at some point. We don't know exactly at which point in time, and also we don't know exactly in which order of magnitude. And this was also the reason for us to add the strategic flexibility with our plant in Malaysia. At some point, big volumes may be coming. And then we want to be ready with a flexible supply chain to really catch the wave when the next wave is coming. And our strategy is we always want to prepare for a wave. We want to be ready to catch the wave in full. We want to catch a good market share. We don't want to disappoint any customers. We really want every customer who wants to order. We want to give the customer a tool when exactly he wants it. This is also a big and important capability. And therefore, we cannot predict the future. We can just prepare to be ready when the future comes.

Got it. Very clear. Since you mentioned microLED, can I ask a follow-up or I can rejoin the queue if you want me to.

Please rejoin the queue. Be fair to the others. But we will be happy to take your question at the end again.

We are moving on to the next question. It's from Om Bakhda, Jefferies.

My first question was on gallium nitride. And specifically, you mentioned that utilization rates have been improving in the quarter. And so I was wondering, have you been getting any sort of feedback from gallium nitride customers as to if the timings have improved because you mentioned sort of second half this year, first half next year on orders. So, are you getting any increased visibility on that end from your customers?

Unfortunately, not yet. As said, we see some tools and utilization improving, but we don't know exactly. The one thing is we see how tools are filling. But the question is then, is it just the capacity installed at the customer good enough? Or is the customer preparing for a ramp because the customer of our customer is coming with big orders where the customer needs an expansion. Normally, things don't just linear improve. But normally, we know in our industry, right, at some point, somebody has a big design win. So, somebody then has a big contract to fulfill. And then if such a big design win and contract has to fulfill, that's a trigger point for next stage of a capacity expansion. So, this is kind of how it works. And our transparency and visibility into this dynamic, which happens again besides our customers on their customer -- customer of customer side, so to say, is quite limited. So, we don't know.

That's super helpful. And then my follow-up is on sort of your inventory levels. So in the previous upcycle in silicon carbide, we saw that your inventories in 2023 increased by roughly EUR 150 million. And as you mentioned, you're sort of now preparing for the growth that you're expecting to come in the medium term from both opto and GaN. And so as we look through 2026, do you think that you'll be then taking the steps to increase your inventory levels through the years that you're ready for the growth in 2027 and 2028?

No, we are changing our model and we have done a lot of work on operations in the soft years, in the last 2 soft years. And the last upturn, we were not prepared for. We've done now in the last 2 years, done a lot of work on our operations side. We've improved our internal processes. We've closer worked with our suppliers. Yes, at some point, when our shop floor is full of machines because we are shipping more in a quarter due to the simple WIP, there may be some increase. But we have changed our operations from a build to inventory build to stock to a build-to-order model by reducing throughput times, reducing build times and so on and so forth. So, the next ramp, I don't want to go to such high inventory levels as we have seen in the past. This was not healthy. And we rather want to work with a stronger, more streamlined operations on this side. It's too early to quantify the effects in the details. But from a direction, I do not want to repeat the mistakes of the past.

Next question is from Andrew Gardiner, Citi.

I have one related to that last point. It's just around your production capacity as things sit today, what you're preparing for over the second half of this year and into the first half of next year? And in particular, as the Malaysia site starts to ramp, what will that mean in terms of the incremental capacity? If you're at mid EUR 500 million to EUR 600 million of revenue for this year, what is the -- given the changing business model that you've just described, Felix and the new site being added, what's the theoretical uplift in terms of your annual revenue capacity?

It's very, very far up. Think of us the first order from where we are today that capacity is not a limit.

Okay. And well, that's good to hear. I suppose maybe asking it another way, what the catalyst for the Malaysian site, was this something that has been in the works for some time and it's just a coincidence that the announcement is happening just as we're also seeing this huge ramp in terms of Opto demand? Or have you been able to react quite quickly to the change in market dynamics and find the site and get moving in terms of the capacity expansion?

Thanks a lot. Very good question. Well, the trigger point for the Malaysia site is not -- the Opto demand or the spike in Opto demand is not the trigger point for the Malaysia site. This is uncorrelated, if you want to say so. So, what we have seen is rather, we have seen and got signals from customers that they see over the next 2, 3, 4 years, more on a strategic level that they see potential upsides for the power electronics in particular, but also for some segments on the optoelectronics and customers came and said, look, one, if you are able to serve markets at a lower price point, well, there could be much, much, much and very significant upside on this one. We've been asking ourselves, well, how could we -- we clearly want to take those upsides in terms of additional volumes, how can we come to price points that the customers have been asking us that they said, well, this is what they need such that they can address these and open up these new market segments. And we have then looked around the globe where -- what we could do, what we need to do in order to meet such price points. And we found the answer in the very strong Southeast Asian ecosystem, which allows, on the one hand, lower cost for the assembly of the products, but also has a very strong supply chain, a very cost-efficient supply chain, especially for more mature and older components. And that was for us from a strategic point, not from a short-term technical point, the reason to say let's open this plant in Malaysia in order to fully participate in the upcoming probably 2, 3, 4 year waves of power electronics volumes that is also set to come, as I mentioned, on top of what we see in optoelectronics now. It's a strategic move.

Next question is from Michael Kuhn, Deutsche Bank.

Starting with a shorter-term one. You still need EUR 185 million of orders for the midpoint of your guidance and that essentially to be written in the second quarter. And you're also talking about longer-term contracts, obviously. So, that sounds like order intake in Q2 might be EUR 200 million plus or even well above EUR 200 million. Is that a realistic way to think about it?

Honestly, I didn't do the math on the numbers yet. When exactly the orders are coming in.

Okay. But let's say, the logic, EUR 185 million that is still needed in terms of orders to get to this year's guidance and that this should happen in the second quarter, is that logic is right, or let's say, until early Q3?

Exactly. I think round about, you could say so, yes.

All right. Understood. And then, once back to capacity because you just said capacity is not a limit. I mean my understanding always was that there is still some limit. Still, let's say, you're, let's say, getting flooded with orders now north of EUR 200 million each and every quarter. So, would you be able in today's setup without having Malaysia yet, be able to, let's say, generate sales of EUR 800 million or well above EUR 800 million? Or let's say, where is the physical limits right now in terms of how many tools you can ship in a certain quarter, for example?

So, we always need a little bit of time to prepare our supply chain and to prepare everything and get ready for it. So, we cannot go from EUR 59 million in the first quarter to EUR 200 million something in the second quarter, right? That's something like that would not work overnight because it would be just inefficient to have people sitting around and waiting for the orders to come. And, however, as I mentioned, it's not the premises or the space or whatever that is limiting and out of our footprint, manufacturing footprint with enough ramping time, we are currently, for example, working out of a 1-shift model. We can go to a 2-shift model. We can go a 3-shift model. We can go to a 3-shift model plus Saturday work, 3 shift plus Sunday work. So, we could significantly increase the working hours, the effective working hours out of our existing premises if then the orders are there. So, coming back to your concrete question, EUR 800 million in a year means EUR 200 million per quarter. No problem. We have demonstrated EUR 200 million, I think, EUR 220 million, EUR 230 million or something like that recently in the fourth quarter, I think, of '24 was the last time we did it. So, if you just say, well, Aixtron do 250 in a quarter, yes, multiplate by 4, then you add 1,000, yes, but that's still all in a 1-shift model. So, and if you then go to a 2-shift model or would include weekends and so on, then you understand very easily why I say it's not a limit. And so with a bit of ramping time, we can also out of today's production footprint and facilities generate significant upswings. Maybe that allows -- gives a little bit of light on that question.

Then the next question is from Oliver Wong, Bank of America. Mr. Wong, please check if you are unmuted, we cannot hear you yet.

Operator, Anna, we'll take the next question then.

I wanted to circle back on the 80 to 100 G10 optical tools Felix gave. How should we frame that exactly? Is this something -- is this sort of the demand that you're seeing in the coming years? Should we think about it as in perhaps in this next year or closer to the lower end of that and perhaps toward '28 or in the higher end of that? And is there upside to that number?

So, the line quality was very bad. Let me try to repeat the question as I've gotten it and then you please correct me if I mistaken the question. What I understood is that you were asking about the 80 to 100 tools, how we should see it? What needs to happen more on the upper versus what needs to happen more on the lower. Is that the question -- is that question correct?

Yes. Yes. Exactly, yes.

Okay. So, honestly, I think it's -- you ask for a level of precision that we do not have. I think 80 to 100 somewhere is a ballpark number and please as a market. And please also take that I said the number is -- I expect the number to be around that level, maybe a 1/3 less, maybe a 1/3 more. So, you could say also 90 plus/minus 30%. So, you could say 60% to 120, if you want to say. So, right, to really be clear what I said earlier. And so, just to give a rough indication on the size of the opportunity. Now to your question, what needs to happen, whether this comes more to the lower end or what needs to happen for this to come out more on the higher end. Honestly, we don't know and also our customers don't know. The interesting point is, we have many discussions now in the last 8 weeks with all the major laser producers. And many say that they -- that even they don't know how much volume and output is needed because there's still many architectural questions of the network evolution, which are not so clear. We see now that agentic is shifting the model again a lot with much more CPUs needed in front of the GPUs of the network. Also agentic creating much more data traffic. On the other hand, the predictions of the industry apparently have been wrong until now. One customer explained to me that he said, look, all the data points have been derived essentially from the phase where all the LLMs were just being trained. And now we are seeing now that the AI is so good that people really start using the models at scale. And now as the models are being used, we see that's a completely different loading pattern of the network compared to the training phase. So, I think there is a very big error bar, as I understand also from our customers. And I have customers that said, look, on our long-term plans, I need 30, 40 additional tools. But honestly, Felix, I don't know whether I need them in the first half of '27 and the second half of '27 or maybe only in the second half of '28. That's the answer I get from the customers. I'd like to pass that on to you. There is a big market. We give you a rough quantification on it. But I think anything for detailing it out, at least when I talk to my customers and ask them, "Hey, give me a precise forecast, my customers tell me, Felix, I would like to, but I don't know it myself.

Got it. That's very helpful. And my second question is, I was wondering if you could give a bit more color on the mix of your customer base for Optos. Obviously, you have the 2 major indium phosphide players in the U.S. They're ramping up capacity significantly. Do you see sort of a broadening out of the customer base in Optos? Perhaps we've been hearing about perhaps Chinese laser manufacturers that they are also ramping up capacity. Just wondering kind of how you see that?

Good question. So, as always, we never give names, right? We always preserve customer confidentiality. I think that is clear. But what I can share is that today already from the orders that you have seen in the market opportunity that I was describing and our customer base is truly widespread and truly global. Let me give you some examples. There is multiple big names from the United States. I think throughout this call, many of those names have been put out and we have very big names of the Opto demand from Europe, of some U.S. players producing in European sites. We have a very strong demand with many big multi-tool orders, multiyear multitool from Japan. We all know that there's a very strong, very, very innovative optoelectronic industry grown over many, many years in Japan. The same holds true from customers, very well-established customers and producers from Taiwan. We know Taiwan has a very strong ecosystem. And in fact, and also, as you have indicated in your question and earlier in this call, China has a very strong electronic production base, and we have also strong multitool orders from China. So, we can say at this point in time that the opto demand that we are seeing is truly global. I think it happens also truly global in all parts of the world at the same time. That's not like a wave staging or one wave, one part has started, the others are behind and I think the whole industry at the same point is now waking up and starting the ramp. This is the view of the picture that we have.

Next question is from Craig Mcdowell, JPMorgan.

Just the first one on Optoelectronics. Just wondering from your discussions with customers, what are the main bottlenecks or constraints that they're talking about to receiving your tools? Are they talking about clean room capacity and so on? And how do you see sort of facility or clean room capacity through the next couple of years? And then second question I had was just on the middle lines of the P&L. Obviously, talking about pretty huge revenue numbers coming through from Opto. I'm just wondering what needs to go into the middle lines of the P&L to sort of capture that opportunity and to service that opportunity? What kind of degree of operating leverage should we expect from this large revenue number you put up?

Okay. Let me take the first question. I'll pass the second then to Christian. So, in terms of that bottleneck, I think it really varies customer by customer. So, some customers have existing fab capacity and clean room space. So, these guys can go directly order tools, install the tools and start to ramp. We see from other customers, and as I've highlighted with the previous question from Oliver, right, some customers -- it's global, it's truly global. Some customers don't have enough clean room space. So, some customers are now chasing clean room space or building new greenfield clean rooms or buying brownfield sites and retrofitting them. It's a truly diverse on that one. And the other topic is what we hear across all customer base is wafer supply is a shortage. I think the topic is very well known across the industry. Indium phosphide wafers are scarce because nobody was expecting this. However, of course, as always, the semiconductor industry, once there's a bottleneck, takes a lot of resources and resolves the bottleneck. So, I'm not concerned that this is going to cut off the boom or anything. I think investments are being made, money is available there, and we know that a lot of activities are ongoing. And I think that's the 2 main topics, literally clean room space and wafer supply. Apart from the normal challenges of growth, right, ramping significantly is short. I mean, I think everybody is quite busy and also the operations team of our customers are very, very, very, very busy these days I think, but that's clear. That's normal in a ramp in our industry.

Understood. Thank you.

And then taking over the question to the margins, the opto tools in general, running at the upper end of our margin profile. All of that development is fully reflected in our guidance and in the bandwidth of the guidance that we have put out. So, fully reflected no surprises coming from that. And please don't forget, in the guidance is reflected the one-off expense. So that's about 1 percentage point that is dragging down the margin. We have repeated that several times, so just remember what is that.

And so just on the middle lines of the P&L, maybe you're not expecting huge amounts of investment needed to sort of capture this opportunity?

And what do you mean with the middle line of the...

So, like SG&A, R&D, et cetera.

No, no, no, no, no. There's no impact on the OpEx. Of course, I mean, we are running the R&D -- in the SG&A, anyway not in the R&D, we are running our program. But giving you the number of around EUR 90 million, that's the number that we expect this year. No additional R&D expenses now expected from the Opto tool, that's fully reflected in the present.

The next question is from Martin Jungfleisch, BNP Paribas.

I just have 2 quick ones. The first one is also on Opto. I mean, based on your new guidance, obviously the business should probably more than double this year. And can you just disclose what is coming from tool sales and how much is coming from ASP or price? And should this ASP effect also last into 2027 as you grow the share of G10 tools in the mix? That's the first question.

I didn't get it in full because the complete upswing comes from tool sales. I didn't get it with ASPs. Can you repeat?

Yes. I guess like my question is basically, what is the mix between G10 and G4? And basically, what is driven by sales price this year and next year, so by ASP mix as you sell more G10, G4 tools?

I would say probably around 70% G10, 30% G4, maybe something like that. And now the G4, some of the G4s go into the laser segment because laser customers are still producing on the older series. Some of the G4s go into the -- what I mentioned earlier, red LED segment, which is a very cost-sensitive segment. So, the G4s had a -- can have very different margin profiles, and you can have the G4, which is kind of, let's call it, minimum and base configuration. If you open it up, yes, it's almost empty. And then you can have a laser G4 and it's just full. So, think of whatever put for the 150-horsepower versus a 400-horsepower into a car, different looks different under the -- in the car. So, bit of a variety on that one. In terms of mix effect, I think going forward, it will have a positive mix effect. But again, right, the G4s going into the LED segment, they are quite a drag because that's a margin weak segment. So, honestly, I don't have the full transparency to answer the question, real granularity, I just recognize.

Okay. No worries. And maybe just a follow-up on competition, right? I mean, given there's quite a strong growth in the Opto area, what's your view on competitors there? I think Veeco has recently announced a few orders for the MOCVD tools for indium phosphide. And I guess of that kind of market number you mentioned that you have 100 tools, is this -- what is your expected market share there also over the next couple of years? Do you see any players getting stronger maybe from China?

Yes. So, we take competition always very serious, and we make sure that we got all the steps of competition. In the orders being placed in the starting of the boom, we have not seen the competition yet. We are aware of tools that got ordered -- 2 competition tools that got ordered. We are not aware of more orders. So, we take them serious, but we really take care of our customers to make sure that we have a high market share.

The next is the follow-up from Adithya Metuku, HSBC.

Just one question really. Felix, you always give very technical answers, which I like. You talked about datacom applications for microLEDs. Can you talk a bit about what the use cases will be for microLEDs as opposed to lasers? Where will lasers be used? Where do you see microLEDs being used? And how does this affect tool demand from your perspective, if you were to sell, let's say, for 1.6 terabits per second link, I don't even know if microLEDs can be used, but assuming they can be used, like does it mean one machine, you sell an equal number of microLED machines and if the laser was replaced by microLEDs when compared to laser machines? Any color around what it means for you from a tool perspective would also be very helpful.

Yes. I'm very happy to take the question. So, I mean, as always, a technical evolution and innovation continues and things change over time. I think that's part of our industry. But I think to -- in the first order, I would see microLED and the lasers, what we are seeing now, the EMLs and the PICs and the co-packaged optics, I would see it as complementary. Let me explain why. Right now, what we are seeing for the scale up and for the scale across and is that we see the lasers being used to connect multiple GPUs, multiple racks in a data center and multiple servers in a data center. So, we talk about slightly longer length of kind of optical cables, if you want to say so. You can all imagine that, yes. We know the picture of how it looks inside and the hundreds of thousands of cables going to the backside of the rack. Now to our understanding and in fact and also these EMLs and PICs are being used, it's indium phosphide, what we are talking, indium phosphide wafers, it's alternate phosphide tools, the G10 ASP that's being used to that. And the microLED efforts for data communications that we are involved with is mostly gallium nitride based. So completely different material system, completely different tool. So, we talk about the G5+, for example, tool, not the G10 ASP. And what we see is that some customers, multiple start-ups are working on this microLED communication, however, for very short length. So, we are not talking about connecting one rack to another, let's say, a couple of meters away or a couple of hundred meters in a data center away, but we rather talk about connecting, let's say, high-bandwidth memory with the GPU. So, literally things that are co-packaged on an interposer with some, for example, a glass substrate. Some people also are trying to put 300-millimeter silicon carbide substrates to etch some wave guides into this, literally like semiconductor manufacturing techniques that's being deployed here, co-packaged things for the very short range in the end to have a higher bandwidth connect, for example, from high-bandwidth memory to the GPU and higher bandwidth means more speed or also benefit less energy consumed because the connection by optical can have less energy than if you do it by copper. But to a source order, I would say the aspiration for microLED in this is the very short haul versus what we talk now, the indium phosphide is rack to rack, server to server, data center to data center. It's longer haul meters, hundreds of meters, kilometers through optical cables. Again, I think that's the starting point and we all know that then over time, innovation continues and boundaries blur and boundaries get shifted and things change. But I think at least that's the activities that we are aware of now in the first quarter '26.

Understood. And do you have any timeline around when this might happen, microLED connections with each supply?

No, it's exploratory. I think, unfortunately, probably it's going to happen like it happened now. Sometimes it happens overnight, and then we have a ramp. I'm afraid it's going to happen like that. But I think it's not going to happen within this year.

Last question in the queue so far from Nigel Van Putten, Morgan Stanley.

I hate to say, but I also want to follow up on the Opto outlook and the 80 to 100 tools or 60 to 120. I can imagine that range being quite wide on an annual basis. But perhaps it's then good to talk about some of the underlying assumptions like I guess, in terms of form factor, is there any difference between EML CW? I think we've discussed this before, but it will be good to just get your latest views. And maybe more important, I can only imagine that these numbers include like a full scale-up opportunity rather than sort of the situation where we're in today. So, I guess maybe to add to that, I can imagine that 80 to 100 number to be maybe not completely applicable yet to the very near term, but more towards the end of the decade. I'll leave it there because there's a couple of questions in there already.

Yes. I do get your question. But unfortunately, I can only repeat and shine some more light on what we've indicated earlier on that, it's too early to predict because it depends on so many factors. And the one factor we've outlined is what happens on the scale up versus the scale across, right? The other factor is on the tool side, literally what speeds are the linkages happening, right? If you go to higher speeds, for example, you need stronger lasers because then the modulation consumes more energy. And that consumes more energy, you need to pump more light in, pump more light in, you need a bigger laser chip. For bigger laser chip, you need more wafers. Look, there is so many variables. So, we are -- I think we are probably just aware of a number of these variables. But in order to -- the error bars on each of these variables is adding up. I think we can only guess, make a rough assumption to give an order of magnitude. That's my attempt to give you an order of magnitude. But to put it in precise numbers, I think it's too early. It depends on too many factors.

No, no, I totally get that. That's why I was a bit surprised because 80 to 100 is actually a pretty narrow range. But this makes sense. So, I guess, yes, scale-up environment, scale across and the speed necessary, I guess those will be the most significant drivers from an end market perspective. And then on the supply side, it's more about yield, et cetera. So, I think you've said before that the industry is really good at solving bottlenecks. Today, it's more, as you said, clean room and especially the wafer substrates. So, have you been doing a lot of work over the last, I guess, 8 weeks and then maybe beyond that, I can imagine, of sort of working with customers or customers coming to you to see how they can improve yields in the process. Is that something you can provide a little bit more visibility on in terms of -- in the past, I think there were a view that yields are quite low in that indium phosphide space. There is a view that those can improve. But has there been sort of a push relatively recently where you guys are involved to make that happen?

Not so much. I think in the end, the processes that our customers are run have many, many, many, many, many, many steps. Sometimes not only one epi process, but sometimes multiple epi processes. And I think at this point in time, most of our customers are really focused on getting the ramp done to really achieve that. I think at some point, additional work will go and do a yield. But I think the yields are less a topic of the epi tools. I mean our tools are helping our customers to produce the best yield that's available in the industry. That's the reason why they choose the Aixtron tools. But I think when you talk about the yield or the line yield, which is all the process steps one after another, that's not only about the epi tool, but that's literally the connection of all the hundreds of process steps that they are running within a customer factory. And normally, especially in the Opto side, customers are running very different recipes. They all have their process secrets where they differentiate. I would say, especially our Opto customers are very, very secretive and are very keen on preserving their process recipes for themselves.

Thank you very much, ladies and gentlemen also from my side. As we have no more questions in the queue, I'm handing the floor back over to the host.

Thank you very much, Anna. Thank you all for listening and for the very good questions. If there are any questions still open, the IR department is at your disposal, please give us a call. We will be on the road in the next couple of weeks. So hopefully, I'll see a lot of you in person. And for those we do not see, we'll talk to you at the latest on our Q2 call, which will take place end of July. Have a great weekend for those at least who have the 1st of May holiday and for the rest, a nice Friday. Goodbye for now.