ASM International NV (ASM) Earnings Call Transcript & Summary

Good afternoon, and welcome to our Investor Day 2023. I am Victor Bareño, Head of Investor Relations at ASM. It's great to see so many of you here in person today. Many thanks for joining us. And also a warm welcome to everyone on the webcast. Before we get started on the presentation, I'd first like to go over a few housekeeping items and introduce the program for today. First, an instruction on safety for our guests here in the room. The exit is on this side of the room and also in the back. And in case of an emergency, please follow the instructions of the hotel staff. We also kindly request you to keep your phones on silent during the presentations and the Q&A. And let me now walk you through the program. We'll start with Benjamin Loh, our CEO, who will talk about the long-term trends in our industry, our growth through innovation strategy and how ASM remains well placed for continued outperformance. Benjamin will also provide more details about our commitment to sustainability. Next, Han Westendorp, our Corporate VP, Global Marketing, will discuss the outlook for the wafer fab equipment market and opportunities for us for continued growth. such as in the transition to gate-all-around. Han will be followed by Hichem M'Saad, our CTO and member of the Management Board, and he will talk more about the technology road map, innovation in our key products and also highlight a number of new exciting applications. After these presentations, we will have a break of 25 minutes. And after the break, we will continue with Kent Rossman, Senior VP, Global Operations; and a member of the Executive Committee, who will discuss how we continue to deliver on our customers' growth needs by building a resilient supply chain and expanding our manufacturing capacity. Kent will be followed by Hichem with his second presentation this time about ASM product sustainability. The actions that we are taking to reduce GHG emissions and the environmental impact of our products. Finally, our CFO, Paul Verhagen, will give a financial update and present our financial targets. Paul will also talk about sustainability initiatives. Specifically, our net 0 by 2035 targets. After the wrap-up by our CEO, we will have a Q&A session of 50 minutes in which we will be taking questions from the audience here in the room. We will have one Q&A session with a whole panel on stage. So if you have any questions during the presentations, please make a note and save them for the Q&A at the end. Let me also remind you of the forward-looking statements. The presentations and the Q&A today may contain information relating to ASM's future business and results in addition to historical information. Please also note that today's presentations are being webcasted. The recording of the webcast and the presentation slides will be available after the event. So with that, let's get started. And now I'd like to welcome Benjamin Loh to the stage. Benjamin.

First of all, good afternoon, and welcome to ASM's 2023 Investor Day. It's actually great to see everybody here in person. Two years ago, we had to do a small scale one in Amsterdam, partially because of Covid. So it's great that we can do it in live in person. The other thing is I want to thank everybody for taking the time to join us this afternoon. Very much appreciate it. As Victor has introduced the agenda. So we have put together a couple of topics and we will be going through them this afternoon. They basically [ weigh in ] from market technology trends or industry trends, sustainability. And we'll try to show you and explain to you how our growth to innovation strategy fit with all of this. I will start with an overview of what will be the presentations that will take place after me throughout the day. In other words, I'm going to frame today with the presentation that I will start with. And my colleagues will then elaborate on the specific topics in the area of responsibility and ending with Paul Verhagen, our CFO, basically giving the projections for 2027. Before jumping into the first presentation, I would like to just share 2 minutes of your time to take a look at the latest corporate video that we have made. Hopefully, you enjoyed it. [Presentation]

Hope we enjoy that as much as we do. We're really excited about the whole industry and what we can offer. I'm going to jump straight into my presentation. Growth to innovation. As I said, I am going to provide basically the framework so that the rest of my colleagues are going to take you through for the rest of the day. We're going to start with a couple of key takeaway messages, and I will also repeat them at the end because I think that's the most important. So if you fall asleep, just remember, these 4, 5, 6 messages. Semiconductor continues to grow. We are very bullish about the growth in the semiconductor industry despite what you call a downturn that we are facing this year. Secular trends remain. And in fact, when you look at AI, electric vehicles or electrification of the vehicles, it's even accelerating. We believe that our growth to innovation strategy is working. We are delivering results. If you look at the last 3 years, we have grown revenue with a CAGR of 35%. And if you stretch a little bit longer horizon, you'll see that we significantly outperformed WFE growth. I have a chart that speaks to that later on. We are witnessing a lot of technology inflections. Technology is changing fast and coming at us fast, but we are very well positioned. We are well positioned for the forthcoming transition to gate-all-around advanced memory with our ALD and with our epitaxy -- silicon epitaxy products, where in terms of ALD, we continue to maintain our market-leading share. And in silicon epitaxy, we are continuing to build and grow our share from there. We have also since last year, added a new product silicon carbon epitaxy in a very fast-growing market, and that's going to help boost our revenue as well going forward. And this is driven by electrification of vehicles and other power applications. Sustainability is something that is one of the 6 strategic objectives that we already shared in 2021. And I think we have made a lot of progress there, including the most recent, which is our net 2035 targets have been verified by science-based target initiative. And last but not least, we have also in this morning's press release, kind of upgraded our 2025 targets to EUR 3.0 billion to EUR 3.6 billion. And we are giving a new target for our new midterm, which is 2027 of EUR 4 billion to EUR 5 billion, growing at a CAGR of about 11% to 16% and we reiterate our operating margin of 26% to 31%. So before I go any further, just a quick introduction of my colleagues. So early last year, we decided to create what is called an executive committee within the company as the company was growing which consists basically of the 3 management board members, myself, Paul and Hichem. And we have also included 3 senior executives, 1 of Kent Rossman, who is also here with us, who runs our operations and will be also presenting to you what we are doing as far as supply chain operations and so on. And we have recently added a Edyta Jakubek, who is now our Chief People Officer. So maybe just to recap, what are the achievements that we have made since 2021. Revenue, I have spoken to that. And the subsequent slide will show the performance compared to WFE. We have invested significantly in growth and innovation. I think that's something that is the lifeline and because of all the opportunities in front of us, we continue to invest heavily in R&D. Growing our headcount by 54%. From an operating CAGR point of view, I think we are also doing well, and we have more than triple free cash flow during the last 3 years. Expansion of our facilities to make sure that we have enough capacity. I will show later on that we have completed our expansion in Singapore, and we have just broken ground in Korea. That's good enough to take us all the way until 2027 based on our plans. Last year was a little bit something new. First time in 18 years that we did acquisitions, and I will touch on that later on as well. But we have now with the acquisition of LPE entered the very rapidly growing silicon carbide market. Leadership in terms of logic/foundry and wins for, let's say, process total [ accord. ] We are coming to the end of the first 2 nanometer gate-all-around development, and we know where we stand. We continue to be in a very good position, maintaining our market share and have secured many wins. So we are waiting for customers to go into pilot and then subsequently high-volume manufacturing. One of the 6 strategic objectives that we have is also to increase our share in memory. And over the last 2 years, I think we have done that. First of all, through penetration of high-k metal gate and subsequently with ALD gap-fill in 3D NAND. I think that's helping us to increase our market share. And at the end of last year, memory became about 19% of our total equipment revenue. Last but not least, the net 0 target again. But at the same time, I think we have been trying to do as much as we can in terms of renewable electricity. And last year, we were at 76% and will continue to increase. So this is a chart that shows that over the last 7 or years or so, if you index WFE, you see that we are growing at twice the rate of WFE. And we do believe that going forward, we will continue to significantly outgrow WFE growth over the next couple of years. Maybe a little bit on what we see in the market, trends in general. I think digital transformation will continue to drive semiconductor usage. And the general consensus is that by the end of the decade, semiconductor sales is going to be almost twice of what it is today, hitting USD 1 billion and continuing to grow beyond that past the decade. We think that all these secular trends, whether it's AI, whether it's edge computing, cloud, -- they are all still very valid and still growing. So we are very bullish on this. What does this mean that for WFE spending. We think that WFE spending after coming down this year should start to recover starting from next year. Now of course, this is just a projection that we are getting from third-party data research companies, so still very much left to be seen. But there are a couple of factors that are driving WFE. Of course, you have the changing technology further scaling transition to gate-all-around. You also have multiyear investments that have been announced. Some of them actually don't come into a high-volume manufacturing until even 2027. Sovereign efforts is also helping to build more fabs. The good thing is a lot of them are on the leading edge. And last but not least, I think over the last couple of years, we have witnessed fairly significant investments are coming from China. And if we look at where our projections are, which my colleague Han will share with you, our 2025 projections are based on 2025 having a WFE of $100 billion. And for 2027 is based on $120 billion. AI will become, in our opinion, a very significant driver, and we are very excited about this. It's going to result in more data centers, more processing power, more high-speed stuff that is going to be required. And there is from Gartner that by 2027, at least 30% of all logic devices will have AI-specific functions. I think what is more important is what does it really mean for us? The good thing is all the AI stuff, especially the recent generative AI boom, they are all using advanced semiconductors. So GPUs, NPUs that are made at the leading edge nodes. At the same time, they require a lot of memory, high-speed, high-bandwidth memory as well, and that's also good for us in terms of adoption of high-k more metal layers and also adoption of silicon epitaxy. Our strategy hasn't changed. So 2 years ago, we shared probably for the first time, our growth to innovation strategy, the 6 pillars, and actually, it hasn't changed. The only change is that we have added selective growth now silicon carbon epitaxy. And that has been the only change due to the acquisition of LPE. Other than that, we are just busy executing on the strategy and trying to grow the company. And of course, the strategy is underpinned by certain -- a couple of key enablers, best people in flawless operation, leading-edge innovation, et cetera, and we continue to build on that. All this with the purpose of improving people's lives by advancing technologies and unlocking potential. Last year was the first time in 18 years that we made acquisitions in this company. And we did 2 acquisitions, Reno Sub-Systems in March, LPE in October. And going forward, M&A will be an opportunistic growth opportunity for us, but we are also very focused. We will only look at acquisitions that are in the semiconductor deposition space. either equipment or a technology that boost or enhance our equipment. That's what we will continue doing. So Reno Sub-Systems was a technology acquisition, and of course, LPE was an equipment acquisition that allows us also entry into the silicon carbide space. And with LPE's acquisition, we have now really entered into a very rapid -- rapidly growing market that is still evolving. And we are, I would say, doing significantly well since the closure of the acquisition in October last year. We have shared with everybody major customer wins in the U.S., in Europe, and we continue to have a lot of traction with the other major customers. So we are very bullish on this part of the market. And the main driver here is, again, electrification of vehicles renewables, power generation, et cetera. If you look at the portfolio of products that we have. So with the acquisition of LP, we now have added silicon carbon epitaxy. The rest kind of remains the same thermal ALD, plasma ALD, silicon epitaxy, PECVD and vertical furnace. We are also growing our spares and service business very well. If you look at the last 3 years, we have kind of grown at 17% CAGR. And we continue to target healthy growth over the next couple of years. Of course, we have kind of changed our model also a little bit over the last couple of years with outcome-based services, which gives us more traction, more long-term engagements with our customers, and that's been helping us. And we have a slide here that basically says, a lot of our spares and service business is increasingly being driven by outcome-based services. We came from a time when we were very transactional. And over the last 3 to 4 years, we have become much more focused on developing longer-term relationships with the customers, helping them to get better on [indiscernible] performance, reducing costs, better productivity whilst in the meantime, having a longer relationship with them. So that has been very helpful for us. And we do believe that over the next couple of years, we will continue to be able to build this. Capacity and my colleague Ken will talk about this. At the beginning of this year, we completed the fit-out of our Singapore facility that became ready at the end of 2020. So with that, we are basically fully fitted out in Singapore, and we have quite some capacity. And mainly, this is preparing for future growth. We do see the growth coming in the next couple of years, and we want to be ahead of it rather than behind. At the same time, we have broken ground on a new building in Korea. So even that -- even though that is mainly focused on expanding our R&D lab space capacity. It also adds manufacturing capacity. So with those 2 added together, we are very confident that we have enough capacity to meet our 2027 targets. People is really critical for the company. And I would say people really lies at the heart of our success, and we have been trying to do a lot. If you look at what has happened over the last 3 years, we have more or less doubled our headcount within the company. We had to hire a lot of people in very challenging circumstances, but I think we have been quite successful. Now hiring the people is one thing we have also been trying to build on the culture of the company, making sure the employees are engaged that they understand how they contribute to the strategy. We're also working on things like gender diversity inclusion. And if you look at, for example, our gender diversity, we are slowly creeping up. That's something that is also important for us. And of course, in terms of diversity, geographic or let's say, national diversity. We have 60-plus nationalities now working in the company. Sustainability is something that we have already decided 2 years ago when we did our Investor Day. It's going to be one of the 6 strategic objectives for us. And I think over the last 2 years, we have done a lot. Our sustainability strategy is focused on the 5 pillars: innovation, people, planet, responsible supply chain and governance. And I think in all areas, we have improved significantly. And we are still continuing to do a lot. My colleague, Hichem will also share with you, for example, in terms of embedding sustainability into our product design. What are we doing about that? So good to share with you that we are doing a lot there. We -- besides the net 0 2035 targets being verified by SBTi. We have also been fortunate that we were actually -- one of the founders of the semiconductor climate consortium. And in fact, my colleague now chairs the consortium on behalf of semi. We were one of the first together with 60 plus other companies. And the reason for doing that is if we want to get to net 0, we cannot do this by ourselves. It is an entire industry effort. So we need to work with the suppliers, we need to work with our customers. And hence, the birth of the semiconductor climate consortium. Again, I just want to end with the key takeaways. We believe semiconductors remain robust. Despite the downturn this year, I think the growth will come back very quickly and will continue to grow over the next couple of years. We are actually excited and bullish about our strategy. We think that we have delivered over the last 3 years with growth in revenue and have significantly outperformed WFE. In terms of the technology changes that are coming in front of us, we think that we are very well-positioned, whether it's the transition from FinFET to gate-all-around, whether it's advanced DRAM, advanced 3D NAND, I think we are all prepared and very well engaged with our customers for all the forthcoming opportunities. We continue to maintain and try to increase our share in ALD and at the same time, trying to increase our share in silicon epitaxy. Those are 2 of the 6 key targets that we have as our strategic objective. We have added silicon carbide, a fast-growing area that we are very excited about. The net 0 targets, I won't repeat that again. And last but not least, we upgrade our 25 targets Revenue-wise, we are going to target EUR 3 billion to EUR 3.6 billion. And for our new midterm '27 target, we are projecting EUR 4 billion to EUR 5 billion, which is a CAGR of 11% to 16%. And we reiterate our operating margin of 26% to 31%. With that, I'm going to hand over to my colleague, Han, that will talk to you about the market outlook, market share, et cetera.

Thank you, Benjamin. And also, first of all, I would like to thank you tremendously for all showing up here spending the time to listen to how we are doing and what our plans are. And also, in my case, I will start with key takeaways and also here please try to remember this, and you can fall asleep in between, how we wind them at the end. We see continued digitization growth in AI. I will speak somewhat in detail on AI. And what it could mean to us. Vehicle adoption trends are all expecting to continue to drive growth in semiconductors strongly in the coming years. In my presentation, I will update on the market size of single-wafer ALD. Two years ago, we gave an update on the size of that market to reach by 2025 between USD 3.1 billion and USD 3.7 billion in size. We are now updating, giving a first update for 2027, [ USD 4.2 billion to USD 5 billion ] size by 2027, and we're basically confirming the number for 2025. So our views on the size for 2025 have not changed since 2021 when we gave that forecast. We're updating it for '27 with the new numbers, USD 4.2 billion to USD 5 billion. Silicon epitaxy market. We are also updating the forecast that we gave 2 years ago for 2025. We're forecasting now a range from $1.9 billion to $2.3 billion by 2025. And by 2027, we forecast that size to go up somewhere between USD 2.3 billion and USD 2.9 billion, and we'll explain you the key drivers behind that market. The transition from FinFET to gate-all-around is ongoing or is being prepared, I should say. We are expecting pilot investments next year and full steam HVM in 2025. But of course, for years, we have been working with customers on qualification of certain applications that we have tried to have in that transition. And we will share with you that we are expecting a USD 400 million SAM increase a served available market increase as a result of the transition between single-wafer ALD and epi combined, and I'll speak to that more in detail later on. And then the market outlook for silicon carbide epitaxy is very strong. So I'll share with you a forecast, a third-party forecast on silicon carbide, silicon carbide devices. We will not be ready to really share with you a silicon carbide equipment forecast because the market is so much in development, very healthy development. But if we would share a forecast with you right now, it could be different 3 months from now. My colleague, Hichem will speak in detail on the technology -- the technology side of what we're doing in silicon carbide epitaxy. We are basically saying is that we believe we're gaining share in this market in this year, developments are going well. And it is a market that we are actually very pleased with that we stepped into also because of the synergies between silicon epitaxy and silicon carbide epitaxy. So the market outlook. So let's first look at the megatrends behind what's driving the semiconductor market. Smartphones have basically become a de facto requirement for life, even young kids, older people, everyone has a smartphone and already for a decade -- for a decade, 1.5 decades, continuous new capabilities are brought into the smartphones, which means IC development, chip development, and it also means more equipment that we provide. Security is also requiring more capability of chips, autonomous vehicles, electric vehicles, not only silicon devices, but also silicon carbide devices are needed here. And then, of course, AI, which is on the top right corner of this list, a tremendous boost behind the semiconductor market that we expect in the coming many years. Specifically on AI, you see in the wheel on the left-hand side, a human phase that I will speak to more in the -- on the next slide. But first of all, all of these trends that I shared are basically driving the semiconductor market to roughly double by 2030 compared to where we are today. And yes, there is basically a general understanding that, that development, that growth will continue beyond 2030. And one of the reasons is that artificial intelligence, basically to mimic or to copy or to help the human brain in many of the things that a human being is used to doing on his own 30, 40 years ago, tremendous development in this area. So this particular picture signifies that silicon. Silicon basically is in small pieces printed on this phase because all of this capability is driven by semiconductors, by silicon. So all of these different capabilities like machine learning or generative AI it's basically driven by silicon, which means more silicon fabs, which means more silicon equipment that we can provide. Also, if you look at the recent developments in the last 6 months, there is so much new capability being start off and being developed. Certainly, in a few years, there will be products delivered that we are participating in that are basically not invented yet today. If you look at, Benjamin showed this chart already, if you look at the development in logic chips. Gartner predicts that by 2027, more than 30% of semiconductor chips will have an AI function. So it means -- what it means for ASM, increased capacity. Many of these advanced learning chips, for instance, require advanced computation capability, a lot of memory capability, and that goes into the heart of what we do in ALD and epi. So many of the, let's say, ALD leading-edge ALD and epitaxy applications that we provide are needed to build those advanced chips used for AI. If you look at the wafer fab equipment forecast, wafer fab equipment forecast is down this year, but it's generally expected to rebound in 2024 and continue to grow thereafter. Many third-party forecast companies are sharing that view. We're sharing a 2 external forecasts. They differ in absolute value quite a bit. 2026, 2027, the difference in views between these companies is yes, could be because recently, [ TechInsights ] has updated its forecast for the future years. Gartner is expected to do that within the next week or 10 days. We have based our long-term plans on a WFE number for 2025 of $100 billion, which is -- and $120 billion for 2027 which is roughly the average of these 2 forecasts. So we use everything that we share in our forecast that number for 2025 and 2027 as the WFE base. And what you see also is a gate-all-around transition from FinFET to gate-all-around. This will start to play an increasing role in the actual investments in 2024 and beyond. So we'll expect pilot investments next year. But towards '25, '26 and '27, it is our expectation that roughly 40% of investments are driven by gate-all-around. So we share in this circle on the middle right, a number of 50 billion, 40% of that [ 120 billion ] WFE number is [ 48 billion ]. So roughly [ 50 billion ], a very sizable number is related to gate-all-around related investments. and that's smack in the heart of where we are developing our new ALD and Epi products. So growth opportunities. I'd like to speak now about growth opportunities. Here, I show on one slide a number of different applications where my colleague, Hichem M'Saad will speak more specifically on some of them. ALD hike gave an area that we have been active in for since the beginning, in the mid-2000s. And that is progressing from FinFET to gate-all-around right now. Hichem will speak about it. Gap-fill is an important application that drove quite a bit of 3D NAND business for us last year. ALD metal is also an area where we're very active, specifically on ALD metal -- we will -- Hichem will speak more about that later on. Silicon carbide power. So on the top -- on the bottom left, an example of device where a silicon carbide layer is shown as part of making a power device, Epi channel activity and selective ALD, also a key area that we are active in, and we will be sharing more about that later on. If you now look at the single-wafer ALD market, the size of it, this is what we showed 2 years ago in 2021. In 2020, the market was USD 1.5 billion in size, and we forecasted that market then to grow to $3.1 billion to $3.7 billion in 2025 with a larger than 55% market share. And driving this market are the different applications that are shown here on the right, in logic, foundry and memory metals, high-k [indiscernible] tuning and also metals in memory and selective ALD in both logic foundry and memory. Now let's first look at how the market has behaved since 2021. So last year, the market developed basically as forecasted, [ $2.6 billion ] was the size of the market. We have a 55% market share for 2025 and we still have that market share. We had that market share last year. And we confirm that market share for 2025. We also confirmed the size of the market for 2025. We have been in this market for a long time since the beginning. So we modeled the size of that market in detail, working with our early development groups with our product lines, with our sales, with customers. We have a good view of what applications are being worked on, what the applications are being considered and then assess whether certain applications will be adopted, whether we will win share, whether the competition will win. So basically, that is all behind these forecasts. So also for 2027, we have updated the market size now somewhere between $4.2 billion and $5 billion market size, and we are reconfirming also for 2027 a share of larger than 55%. The CAGR of that market is then from 22% to 27%, somewhere between 10% and 14%. So still overall, a very healthy development. We do the same thing for silicon. Silicon epitaxy, the market outlook we shared market was 0.8% in 2020. We forecasted that market to be somewhere between $1.5 billion and $1.8 billion in 2025, driven by leading-edge devices where epitaxy is used and non-leading-edge -- non-leading-edge, specifically non-leading-edge foundry. So basically, devices of the 28-, 14-nanometer, we call that non-leading-edge foundry and wafer power analog. Those 2 segments are driving that non-leading-edge market, and we have the leading-edge section. So let's first look now at what happened in 2022. In 2022, that market -- that Epi market grew very strongly. It ended up being $2 billion in size, strongly driven by the non-leading-edge market. There was growth in the leading-edge part of the market. So there was growth in investments. But by and large, that size -- the growth of that market was driven by non-leading edge, power wafer analog, there was healthy growth there. But the strongest momentum for us in that segment was in the wafer market. Very strong development of our Intrepid ESA system that we announced a few years ago, the non-leading-edge foundry market. There were stronger-than-expected investments there. Also driven partly by China in which we have a weak position. So as a result, our market share went up a couple of percent. It was around 14% in the year prior in '21. It went up a little bit 16% but that was our share in 2022. So now for 2025, we're providing an update of the size of that market to grow to $1.9 billion to $2.3 billion so larger than the forecast that we gave 2 years ago. And we're reconfirming the share target of 30% that we gave 2 years ago. So we're still aiming for a target of 30% share in the Epi market driven by leading-edge, so there is structural growth in that leading-edge section, which you can see on the chart, on the bottom greenish color, in that size. You see that's bigger than in 2022, where we expect to grow share and also in the non-leading edge section in the wafer power analog we could expect to continue to do well. And we also do not think that the strength in 2022 of that non-leading-edge foundry will sustain. So we also think that, that size of that portion of the market will not be as high as in 2022. So because there is -- we expect there to be a change in the market mix towards leading edge that we will grow share and maintain that size target of 30%. And then for 2027 we give you for the first time a forecast for that market to grow to somewhere between $2.3 billion and $2.9 billion by continued growth in the leading-edge epitaxy market driven before an important part but the transition from FinFET to gate-all-around. The wafer and power market also in silicon, we expect to do -- continue to do well and also in non-leading-edge foundry, that's an area where we don't expect that strength to remain. We will continue to have there a weak position, but the share growth for us will mostly be driven by the leading-edge portion is our expectation. So the CAGR for silicon epitaxy market from '22 to '27 because of its strength it had last year and the relative strength also still of that the non-leading-edge segment. We expect the CAGR to be 3% to 8%, but the leading-edge segment of that to be a 10% to 15%. It says 12% here, but we mean a 10% to 15% range CAGR for the leading-edge segment of the Epi market. If we look at the transition from FinFET to gate-all-around, and we look at what it means for us in terms of served available market between single-wafer ALD and Epi -- we forecast that the transition will be a $400 million increase of our served available market just by that transition from FinFET to gate-all-around. Gate-all-around is -- will have more ALD applications. We have a good view of that. We have assessed that is the size increase that we see in the served available market. And in that transition, we expect that we may maintain our leading share in single wafer ALD that we will grow our share in Epi, like I shared on the previous slide, that 30% share target, and we'll get to USD 400 million SAM increase, which is a very healthy development for us. And that's what it means for us that the industry is going to gate-all-around. Then on silicon carbide epitaxy. Silicon carbide epitaxy we're sharing here a forecast of silicon carbide devices. This is an external third-party forecast from the company [ Yole ] showing that between, let's say, automobiles, electric vehicles, inverters for that market, that market is strongly growing. There are other drivers for that market that are still relatively small, but expected to continue to drive it later on beyond this time horizon. And this is driving an enormous amount of development in silicon carbide epitaxy equipment. So the key drivers for this investment, again, our EV adoption, which is accelerating power devices for electric vehicles. And we experienced at the moment, a strong pool for our silicon carbide epitaxy equipment that is in need of let's say, better, overall better, more productive, providing silicon carbide epitaxy layer with fewer defects and Hichem will speak more in detail about that in his presentation. Then to summarize the key takeaways. We see continued digitization growth in AI in electric vehicles adoption trends that will continue to drive the semiconductor market. That means more fabs and more equipment. Market for single-wafer ALD. We're confirming the forecast for 2025 that we gave 2 years ago. The forecast for '27 is shared $4.2 billion to $5 billion with a 55% share target. Silicon Epi market is expected to grow to 1.9% to 2.3% by 2025, a higher target than 2 years ago. And the new target for '27 is $2.3 billion to $2.9 billion Epi market for 2027. The transition from FinFET to gate-all-around will deliver a $400 million SAM increase for us and then the market for silicon epitaxy is strong, supported by a growing market for electric vehicles and strength for us. We expect the strength in the silicon carbide epitaxy equipment. With that, I conclude my talk and hand it over to Hichem to continue the presentations.

Good afternoon, everyone. It's my pleasure to talk to you about the latest development we have in our R&D and also products. So let's first start with the key takeaways. First is that our products and RD portfolio are very well-positioned to capture growth opportunity in both logic and memory. The second takeaway is that we see trends toward new materials and 3D scaling actually accelerating with further adoption of ALD. And here, we see 3 inflection point. The first inflection point happening is that molybdenum ALD is replacing tungsten CVD and copper PVD in metallization. The second takeaway is that for ALD, selective ALD adoption is happening right now, and it's going to be in production in the first generation gate-all-around. And selective ALD has benefit of performance improvement and process simplification. The third takeaway is that with this very high aspect ratio device structure, there is a need of many new plasma ALD technologies. The third point is that we are in silicon Epi, we are poised to gain market share because of our closed loop unique -- closed loop wafer temperature control, which enables unmatched process control and capability. And we see also very good momentum in our furnace and PECVD products. In our furnace, we are seeing -- we introduced the Sonora and we see good momentum and also in PECVD with some niche application. As was shown earlier for silicon carbide Epi, we see significant market adoption at leading customers because of our unique silicon Epi reactor, which leads to best-in-class silicon carbide epitaxy. Last, we see opportunity happening in heterogeneous integration in area of ASM's strength. So let's look into first about this acceleration that's happening in both logic and memory. First, looking into the logic road map. Here, in the logic road map, you see that the FinFET is nearing its end of life. FinFET started in 2012. Now it's fifth generation with 3-nanometer. And in 2025, we're going to see gate-all-around in [ HVM ] production. Gate-all-around is going to be in pilot production in 2024 and it's going to be in HVM production in 2025. Then by the end of the decade, we're going to see CFET which is tracking of different gate-all-around on top of each other to be the next technology node. Then if you go into DRAM, the scanning in DRAM is really based on the [ 6 f-squared ] architecture. This architecture suffers from low capacitance and high leakage current. So the industry is looking how can we going to scale DRAM. And the first thing, they are looking into 4 f-squared, which is smaller cell sites. You go from 6 f-squared to 4 f-squared. So we have some shrinking of the cell to improve performance. But at the end of the day, DRAM is going to go to 3D, when most likely by the end of the decade and earlier 2030s. Then if you look into flash. Flash is the first technology that went into 3D, and the scaling happens by adding more and more layers. Right now, in production, there are 200-plus layers, and by the end of the decade, we're going to have 1,000 layers of -- for flash memory. So what does this 3D scaling means for opportunity in both -- largely for opportunities for ALD and Epi. So let's look into the gate-all-around structure for logic. In the gate-all-around structure, you have the gate-all-around device along with RC challenges we have in middle end of line and better usage of space in the back end of line to add functionality. These 3 things provide huge opportunities for ALD -- for more ALD layers. So let's focus right now on the gate-all-around device. And here, the gate stack is the heart of the gate-all-around device. And as you can see, there are many different colors. All of those colors are ALD layers. So it's very important to deposit these ALD layers and to have them wrap around the nano sheet. So this ALD layer have to have very good conformality. And some of the layers here is the [ dipoles ] and work function metals. The dipoles and work function metals, that's what controls the VT in your device, the threshold voltage, -- and from 1 generation to the other, you have more and more VTs. So the knobs that we're used to get the right VT in FinFET is actually no longer applicable for gate-all-around -- what does it means? It means for gate-all-around, you need additional dipoles and additional work function metal. Indeed, for each dipole layer, you actually need an additional pattern -- ALD patterning layer. At ASM, we've been developing this dipole and work function metal layers, and we have released a few of them to our customer in logic devices. The second thing that's happening in the gate-all-around is really around Epi. And here for the first time in the industry, the channel space area is actually defined by Epi. It's no longer defined by etch for the past 50 years. That was the case for the past 50 years. Now Epi is defining the channel with. And with that, we have what we call silicon germanium nanostructure, which they have to have very good uniformity. The other paradigm that's also happening in Epi is the deposition of 3D Epi sourced vein and very low resistivity. Next, -- the things that happen in gate-all-around are also happening in the metallization. And here, we see a new era in metal in the semiconductor industry, which is the adoption of molybdenum as a replacement for tungsten CVD and copper PVD. Why this is happening? This is happening because CVD tungsten and PVD copper suffer from higher resistance because they have to use barrier layer. So for example, Tungsten has to use titanium nitride barrier layer because Tungsten has fluorine and fluorine diffuses because fluorine comes from the precursor and copper, you need to have a 10-ton of nitride barrier, [ Tantalum ] nitride in copper. The reason you use Tantalum nitride barrier because to stop the copper diffusion. Copper wants to go everywhere. The fuse is like crazy. So we need to stop it, and we need to put Tantalum nitride. So when you add this barrier layer, the overall resistance of the metal is very high. Here comes around molybdenum. Molybdenum doesn't need any barrier layer. So when you replace copper, and tungsten with molybdenum, you have lower resistance. And this is what's happening right now in the industry. The other thing that we're saying is seeing right now is selective deposition, becoming more and more used for gate-all-around. And selective deposition, which is ALD's selective deposition is actually used to improve device performance and integrity. And here, I'm going to talk to you about 2 things [ dielect ] on dielectric that means to deposit dielectric film on dielectric. So to explain to you selective deposition, what the selective deposition means that means you deposit something on something else, okay? You don't deposit everything on the wafer. So I'm going to show you how we deposit a dielect on dielectric and also depositing molybdenum on dielectric. The third thing that's happening for gate-all-around is the addition of functionality in the back end of line. And there, you have 2 things for additional memory and the additional memory use NIM caps and the NIM caps needs ALD Hafnium oxide, titanium nitride electrodes -- it's all great ALD. And also for power management, you need lots of ALD with [ IGZO ] channels for the thin-film transistor. And then if you go to DRAM, the opportunity there is in DRAM for Epi and ALD, especially ALD is tremendous. Here for DRAM, we have the DRAM, as I mentioned earlier, it has a high leakage -- so to improve the leakage of the cell, you go to [ low-k spacer ]. It has low capacitance to increase the capacitance you go to ALD high-k. And also, you do -- you have high-quality oxides and you add Epi layers for storage node contact and [ mid line ] contact. Then for DRAM also, DRAM as everybody knows, high bandwidth DRAM is going into AI. But that AI for that and when high-bandwidth DRAM needs high-capacity and high-performance CMOS and high-performance CMOS needs ALD. So it needs high ALD high-k, hafnium silicate or hafnium oxide. It needs many dipoles. ALD dipoles with some [ lanthanum ] oxide, aluminum oxide and also work function metals. I also need some -- it also needs some Epi, especially [indiscernible] for strain enhancement in the channel. So we think we are very well-positioned with our leading innovation to address this technology node. Why do we think this? We think about this because for these different reasons. For reason #1 is that ALD is in our DNA. And for us, ALD started 30 years ago with our acquisition of Microchemistry Oy in Finland, which is the birthplace of ALD. Since then, we have opened R&D centers in both the U.S. and also in Asia. The second thing is that we have very long-term R&D in ALD and with working with some partners. One of them is the University of Houston, which is focusing on precursor for ALD. The other partner we have is IMEC, where we work on process development and process integration and device integration. So the combination of this long-term R&D and our own R&D makes us focused on developing new products and new precursors and also new plasma source in the industry. So from like 3 to 4 layers, 20 years ago, right now, we're working on 80-plus ALD layers in our lab for the next generation of logic and memory devices. The other thing that's happening, our strength in ALD is also reflected by our strength in our IP portfolio. And this is the third -- so this is data from LexisNexis which is generated this year, that shows the strength of our IP. And the bubble size an indication of how strong your [ ALD ] IP is. And the strength is really based on the number of citations that you have and the scope that your IP protects. So let's look into metal ALD, which is the first inflection point that's happening. And this is really a very exciting thing that's going on in ALD. If you look into the first year, if you look into the device structure on the left side, I'm sure this is like a cartoon showing you tungsten in the middle end of line. And at the back end of the line, you have single damascene and dual damascene with copper. As you can see, Tungsten has the green, that's the titanium nitride and copper has the black underneath it. That's the titanium nitride underlayer. So as I mentioned earlier, this underlayer increases the resistivity of the whole structure. What's happening in the gate-all-around node? And this is really a simplification of what I'm showing. In the gate-all-around node, we see that some of the Tungsten contact, the Tungsten contacts are actually moving to middle end of line. And in the back end of line, the copper dual damascene is actually we see that the Via is going to change to molybdenum. And some of the work that we have done, which shows in the graph on the right, with our IMEC partner shows that when you replace copper with molybdenum in the Via, your resistivity of the Via goes down by 20%. And this is really for CD of 10, which corresponds to 2-nanometer gate-all-around technology node. So replacing copper in the Via by moly, you improve your Via resistance -- and the device performance. Why? Because copper in the Via, Via is very, very small, and the tantalum nitride takes more of the area. So the overall resistance of the copper model is higher than molybdenum. So these are things that are happening. And what I'm showing you right now, this is the start. And in the future, you're going to see more and more moly in those orange areas. The second thing, which is very exciting right now, happening in selective ALD, which we actually we've been working on for many years. But right now, guys, it's happening. And it's happening and it's going to be in gate-all-around structures. Selective ALD overcomes many interconnects scanning challenges. Here, I'm going to give you 2 cases. The first case is metal on dielectric MOD. Here, like I mentioned earlier, in Via, you have copper and the barrier line you have tantalum nitride. As you shrink, you scale, you make it smaller. You see that the barrier is taking more of the area. That means the whole resistivity there becomes higher. If you can take the bottom of -- if you take out the bottom barrier, you only deposits the tantalum nitrite on the side wall, then you actually reduce your resistance and make it better. And I'm going to show you a case where we do this. We do metal on dielectric. And on the side, which is not shown here, that's the dielectric. The second case is really showing DoD or dielectric on dielectric. And here, one of the issue that's happening in the industry is actually -- is shown on the left side. On the top, you have a VX that's Via is aligned on top of the metal. That means you have -- you want to have Via on the metal, but there's a misalignment. As devices shrink, it becomes very difficult to have exactly good alignment. And that misalignment means that the contact between the Via and line becomes smaller, resistance goes up, and you have higher resistance and worst integrity. And the misalignment is really called -- is defined by EPE, which is the edge placement error. So what does DoD do? DoD solve this misalignment. By using DoD, we have been able to have fully self-aligned Via. How do we do this? We do this by depositing an aluminum oxide layer on top of the low-k. So when we put the Via on top of it, it goes directly to the line. And this picture here shows aluminum oxide on top of the low-k while there is no aluminum oxide on the copper lines down there. So how can we do this? How can we do this self -- this kind of selective deposition. Let's look into the process flow for the DoD -- simplified process flow. Here, from the left, you start with your structure. You have copper, and you have your low-k. And first, when you have copper, this wafer has copper, copper [ oxidize ]. So I have oxide on the copper and also copper diffuses everywhere. So even have copper residue on the low-k. So you take that wafer, you put it in your reactor and you do surface prep to remove the copper. And then you take the wafer to another reactor and you deposit an ALD film -- ALD inhibition film, whereby you deposit that ALD only on the copper line. And then you take the wafer to another reactor and you deposit your aluminum oxide. And of course, the aluminum oxide gets deposited in the low-k. After that, you etch away your inhibitor in a different reactor and you end up with aluminum oxide and then you continue your metallization for the self-aligned Via that I just showed you in the previous slide. Now if you can go look into the MOD or metal on dielectric. This is where we only deposit the tantalum nitride on the side wall and not deposit the tantalum nitride at the bottom of your structure. First, your incoming wafer has even Tungsten or molybdenum, metal oxidizes. So the resting there, that's an oxide. So you take the incoming wafer and you do surface clean in one reactor. After that, you deposit your inhibitor -- so the same inhibitor, the blue here is actually the same one we use for MOD is using for DoD. So we have developed this new inhibitor that deposit only on metal and it's an ALD inhibitor, and it's something that's really specific to our technology. And after that, after we deposit the inhibitor, you take the wafer out, the inhibitor is very stable in air. You take the wafer out and then you deposit your tantalum nitride on the side wall. And then after that, you move an inhibitor. This way, you only have tantalum nitride on the side. You don't have it on the bottom, and this way, you actually improve your resistance. So it's very exciting to do these kind of things. But in order for you to do these kind of things, you have to do deposition, inhibitor deposition, ALD deposition, clean, etch, et cetera. In order to do this, we have to develop a platform for it. And we have used our XP8 platform, and we extended to 6 facets. And with this platform, 6 facet, we can do all these different things. And here, on the bottom left, you can see different reactors. They are different because you have clean surface clean, you have inhibition, you have different ALD going on. And we are shipping this reactor as we speak to some of our customers. Now let's talk about the other -- the third inflection point that's happening in ALD. And that's the gut feel of the very high aspect ratio by new plasma technology. I've shown you earlier that everything is going 3D. Logic is going to 3D, 3D NAND is went to 3D and DRAM little by little is going to go there. But we have this very high aspect ratio. So if you look into the very high aspect ratio, you see them for a channel hole gap-fill. You need to do channel hole gap-fill. You have to do staircase gap-fill, for example, for VNAND. You have to use [ V liner ]. You have slit liner. And what we're talking about here, we're talking about 100 to 200 [ 2:1 ] aspect ratio. What does it mean? It means that we need to deposit films in the bottom of this structure. In order for us to have pieces go all the way down, you have to have a very high density. And the way to have very high density plasma density, you have to increase your frequency. All the plasma processes usually happen at [ 1,356 megahertz ]. But if you increase your frequency, as you can see on the graph here, as you increase your frequency, the plasma density increases. Once you increase the plasma density, then these pieces can go down in the structure. But once also when the plasma density, when the frequency goes up, you will see also the ion energy comes down. It's good for the ion energy to come down. Do you have less damage to the film that you deposit, but you don't want to have too much down because you want to have some ion energy to densify the film to make new film much better, higher quality. It's for that reason that we have developed new plasma ALD sources with different frequencies, 60 megahertz, 100 megahertz, [ 2 gigahertz ] to address these many challenges in the industry. The next challenge is also for gap-fill, happen in the gate-all-around. And in the gate-all-around, you don't have like vertical structure, you actually have [ reentrant ] profile. So the nanosheet, you have to deposit your ALD film between the nanosheet -- that means you need to open. So you have reentrant profile. It's very difficult to gap-fill in the reentrant profile you need to have to go to a different plasma technology, and that's radical plasma technology, which is developed by ICP or inductively coupled plasma. And as you can see on the left side as deposit film that's very small layer thickness that's ALD film that we have deposited with this technology. And after you etch it, you went etch, you put it in HF, okay? What you can see 2 things. You see that the film thickness is the same in the bottom of the deep into the structure and outside the structure. If you have normal ALD, you will see no thickness down in the cavity and much higher thickness outside. But this is not normal ALD. This is ICP ALD, and it has very good homogeneity and get very good film property. So this is the kind of technology we actually have to develop in ALD to be able to have this kind of line of film and gap-filled films in gate-all-around structure. So let's shift gears move from ALD to Epi. And in Epi, I want to talk to you about the opportunity we have in gate-all-around and in DRAM. So if you look into this slide, this slide shows the road map for both logic and DRAM. The first thing you can see is that, okay, opportunities for Epi in both logic and DRAM are increasing. The first thing you see is the gate-all-around structure, the 324 silicon-silicon germanium channel superlattice. That's what's happening in Epi. This is depositing silicon-silicon germanium channel. When you to the FinFET instead of having 3 to 4, you're going to have 12 to 16. But one thing I want to tell you, this 3 to 4 silicon-silicon germanium channel, if you -- in the FinFET, you might have only silicon channel or only silicon germanium channel or both or some customers of ours have no channels at all. So in gate-all-around, nobody cannot -- everybody needs to have this superlattice structure. So this is a significant improvement in -- significant increase in the gate-all-around Epi technology. The other thing we see in Epi in the second generation is the move to low temperature, LT, that's low temperature Epi. Because of thermal budget requirements, we have to go to a low temperature. But when you go to low temperature, you have to have the film property degrades -- so we have the precursor that we use or that the gases that we use at high temperature are no longer applicable for low temperature. So because of that, we have the developed new precursor, which we have developed new precursor, in order for us to give a low resistivity Epi at low temperature. And then in the DRAM, you see there are quite a few in high-performance DRAM. It use Epi the channel. It used Epi as [indiscernible], but also there are many new Epi application in DRAM, in the contact area, both for the storage node contact, which is very difficult to make and also in a [ mid ] line contact. So let's first look into these advanced Epi films in both logic and memory. Here, let's start with the first figure on the left-hand side. This is actually shown us CFET silicon-silicon germanium superlattice. And earlier, we showed you the GAA superlattice structure. Here we will show you CFET. And with the CFET, you're going to have even more germanium contact. In the gate-all-around structure, germanium can be between 20% to 30%. CFET it can be as high as 40%. For people in the Epi realm. They know that as you increase germanium, you have more defectivity. But this is a structure that shows that we can deposit very high concentration in germanium without any [ crystallographic ] defects. The top graph on the left-hand side, top left, showing you low-temperature SiP for [indiscernible] and also low temperature silicon germanium boron using the new precursor that I just talked to you about. Epi is also going to move into memory in the future, 3D DRAM, and for 3D DRAM, you need to have not only the 3 to 4 superlattice structure that I showed you for gate-all-around, you need to have 100 of those silicon-silicon germanium gate-all-around structure. The thicknesses of this is 8 micron. And this is some of the development we're generating right now. And if you take Zoom in some of the structure there, you can see the extreme pristine nonuniformity between silicon and silicon germanium. So the black that silicon, the white that's the silicon germanium contact. How can we achieve this kind of performance right now? The reason we can achieve this kind of Epi performance is because we have a differentiated technology. And our differentiated technology, we call it [ Torino CL ]. CL stands for close [ look ]. And this is the first and unique technology in the industry, whereby we measure and control the wafer temperature directly. Everybody right now, when we measure the Epi wafer temperature, we're actually not measuring the wafer temperature. We're measuring this susceptor temperature. So the wafer sits on the susceptor, and we have TC in the bag or [ pyrometer ] from the bag. And we're not -- and we measure the susceptor temperature. And from this susceptor temperature, we imply the wafer temperature. So we don't have direct measurement. We have changed that game and we actually have direct measurement of wafer temperature. And we don't have only measure the wafer on one point, we measured on 3 points. We have 3 pyrometry. One in the center, one in the edge and one are over 2 in the middle of the wafer. And this pyrometer measure the wafer temperature and can control it by changing the power, the plant power in such a way to achieve 0.1 degree Celsius delta on every part of the wafer. In CBD, 2-degree Celsius is okay. In Epi, 2 degrees Celsius delta on the wafer is a crime. Your wafer is not going to be good. Your Epi that you're going to have is very, very bad. So you need to have this kind of control and it's only with this technology that you can achieve this kind of control. So when you have this technology, you can achieve what we have on the left side, which is the thickness of the silicon-silicon germanium throughout the wafer. So this is line scan of throughout the wafer, 300-millimeter showing the silicon thickness of the silicon in the nanosheet structure and silicon germanium. On the Y axis, it goes from 95 to 105. So the nonuniformity is less than 1 [indiscernible]. That's less than 1 monolayer. So we have on 1 monolayer, that's why we call it monolayer control on Epi in our technology. So this Torino CL gives you this great control, but also it actually improves our process. For example, in the middle, we're showing the Torino CL, which is our technology versus the susceptor control, which is the -- what was used in the industry up to now. As you can see, you can actually reduce the time it takes to stabilize the temperature by 25%. Once you reduce the time, then you have higher throughput. When you have higher throughput, you have less energy usage. So actually, we have been able to reduce the energy usage on our Epi by about 35%. Next, let's talk about this niche application in PECVD and vertical furnace. First, let's talk about PECVD. PECVD, we look into, is there an inflection point we go and go after it. And 1 of them has actually happened a couple of years ago. And right now, we have developed this technology and we are [ PTOR ] in 1 key customer on this using what we call PECVD carbon gap-fill. The PECVD carbon gap-fill replaces the spin on carbon. Spin on carbon is used up to now in the industry, and it's going to continue to be used to pattern many structures. But once you go to smaller and smaller geometry and very high aspect ratio, spin on carbon has problems. It's not very planar. So you have to deposit make it much thicker. But since it's a spin on carbon, it's not strong, then you have to anneal it -- and after that, you have to [indiscernible] it and you continue with the -- with your lithography. As you can see, many steps. With our PECVD flowable carbon -- you just want that. You just deposit. It's flowable and it's very -- and it has a very good planarization. So it's followable and very good planarity. And as you can see, you can achieve very high -- very good gap-fill up to [ 16 to 1 ] aspect ratio, which means it's actually we can extend this to 3 to 4 generation from now and we've been shipping some of these tools to our customer. In vertical furnace, here in vertical furnace, we actually, in the past few years, what we have done, we have freshened up our lineup. In 200 millimeter, we have introduced the A400 DUO in 2019. This is in replacement to the A400C and A400 XT. And just last year, we replaced the A412 with the Sonora 300-millimeter. And what we have seen, we've seen extremely good acceptance of both this platform in the industry is f you look into the A400 DUO, this year, the A400 DUO is actually is the leading platform for all the more than more technologies, silicon carbide, gallium nitride power and MEMS. It's the leading platform. And for Sonora, we see significant acceptance in the industry and actually more and more customer and putting more application into this platform. Now let's talk about LPE for silicon carbide. And the question here, why did we buy LPE? One of the reason we bought LPE because it has the best reactor technology? And why does it have the best reactor technology? Because it's very similar to our silicon reactor technology. Now to be seriously, to be very serious, Epi, you have 2 technology to do. You have cross-flow reactor or you have perpendicular flow reactor. So the cross-flow reactor you have the wafer sitting there and the gases come in horizontally, parallel to the wafer and you deposit. So the cross-flow reactor, every silicon Epi reactor is a cross-flow reactor. So when we looked into LPE and we found out that they have this cross-flow reactor, we are very happy because the cross-flow reactor gives you the best defectivity, infirmed defectivity in the wafer. And if you have the best defectivity, lowest defectivity, that means you have the best Epi that means it's good stuff. And then the other technology is using actually perpendicular Epi. And for a particular flow reactor, that means you have the gases [indiscernible] of the wafer source perpendicular to the wafer. So when these pieces come to the wafer, they don't take their lowest energy state, and you have some vacancies and those vacancies give rise to crystallographic defect. And that's what happened in some of the journals of Applied Physics that shows in 2009, showing that if you have defects, what you call the triangle defect, these are the crystallographic defects, you have high leakage current and your Epi is not good. If you don't have those defects, you have lower leakage and you can -- and the device is very good. And indeed, we have actually have side-by-side comparison from our customer. This is customer data. I cannot show you exactly the numbers. But what I can tell you that this is in orange, that's our cross-flow reactor and the other one is a perpendicular flow reactor. As you can see, the triangle defect, which has the crystallographic defect, we are 30% lower than the other reactor. The downfall defects is the foreign material, this is the defects that fall on your wafer. We're actually 40% lower than the other technology. And of course, thickness uniformity is better and doping uniformity is better because you have a laminar flow, okay? So because of all of this, customers have seen this difference. And when they use our Epi, they have much better device performance. And for that reason, we're seeing extremely good acceptance of this Epi technology in the market. Last part of my presentation is just to talk to you about some opportunities we have in advanced packaging. Advanced packaging is growing. It's fun, but also it means many new materials, and we like it -- I personally like it very much because these films are very thick. And I'm working all the time on ALD, we're talking 10 [indiscernible] and then I find I have to deposit 40 microns. I'm very happy because we can sell more tools, okay? So the opportunity we have in packaging start with the first one. This is through silicon via the through silicon via needs oxide liner and very high aspect ratio. And what's best is you deposit ALD with some of the plasma technology that I showed you earlier, this is you can do this. And actually, we have some PTO [indiscernible]. And in oxide in this technology, in many of our customers. The second thing is really looking into the NIM caps and the deep trench capacitor that actually are being used right now in the interposer. And for these NIM caps, of course, NIM caps is high-k ALD and so on. So for this, we see many customers are using these NIM caps and deep trench capacitor and using our high-k material for this application. The third thing is actually in the space of chiplet isolation. Here you have many chips and you need to isolate them, one from the other, so they don't cross stock. And the way to do it is the deposit, very thick teos, 40-micron thick teos to isolate the different ships. So that's using the PECVD teos. The fourth application here we have is the backside power distribution network. This is the power via that Intel has come up with -- and here, there are many ALD applications in the liners and also the moly fill, okay? You can fill these aspect ratio with molybdenum. And we have many new engagement in this area. The other thing, we see engagement in Epi with our Epi in silicon photonics with germanium, you can use germanium as a photo detector from that point of view. Last but not least, hybrid bonding is really growing a lot. And here in order for you to do the hybrid bonding, you need to have dielectric layers. To end my presentation, I hope I've shown you in this presentation that we -- in our products, our technology road map is actually well positioned to capture many new opportunities. I hope that I have shown you that there are 3 inflection points right now in the industry. Number one, metal is changing. No longer Tungsten. Molybdenum is it and molybdenum is going to be in production in 2024 and 2025. The second thing that's happening is selective ALD. This is an area of growth. This is happening being adopted in gate-all-around and going to be in production in 2025. Last but not least, ALD is about new plasma sources. In order for us to deposit this very high aspect ratio in order for us to deposit in very oriented profile in gate-all-around, you need to have a new plasma source. And the number of plasma source and the complexity of plasma source in ALD is much bigger than what happened in CBD because the structure that we're talking about right now is such a crazy. It didn't happen in the CBD world. So that's why we need to have new plasma technology in order for us to be able to deposit these very confirmable ALD film. I hope that I've shown you that with our new Torino CL technology that we are very well poised to gain market share in Epi, and we feel very good about it. We have good momentum in our offering in furnace and also we have good momentum in our PECVD offering. Silicon carbide Epi is great. We love the technology. We love -- it gives a much better film and customers know it and see it, and they are adopting it. In the last, but not least, in advanced packaging. We have many new applications and many new films to target this growing technology. Thank you very much for your time.

Thank you, Hichem. We will now have a break of about 20 minutes. After that, we will continue with the second part of the program in the presentation. For the webcast audience, please be back at 10 past 3 for the guests here in the room, please join us for coffee or tea in the foyer. Thank you. [Break]

Okay. Welcome back, everyone. We will now continue with the second part of the program. Let me quickly show you the program again. So we will continue with Kent, who will talk about global operations, followed by the second presentation of Hichem about product sustainability, followed by Paul with a financial update. And after we wrap up by our CEO, Benjamin, we will move on to the Q&A. Kent?

Thank you, Victor. So about 4 years ago, I followed Hichem M'Saad here to ASM. And now I get to follow him on stage. It's a real honor. Although it's a tough act to follow, I'll say. I think Hichem talked about our products and technology innovation going on in the industry, which is unbelievable. I'm here to talk about operations, and we have to make whatever he thinks of and his team thinks of a reality in terms of supply chain and the ability to get out the door working. And what I will say is that innovation is also not lost on us. So we've got a lot of innovation that we're working on. We've got big plans, and I'm going to share a little bit of it with you today. So the key takeaways that I want to try to leave you with here today is, number one, the company has been growing very, very quickly and during really this COVID period since 2020 at a very, very high pace. And despite that and despite very significant supply chain headwinds, we've been able to keep up with customer demands. Actions have been taken so that going forward, we can really be ready in our supply chain for what we're calling the new reality, which is a very difficult climate that we've been in, and we believe will continue to be in for some time. As Benjamin mentioned earlier, we've recently finished an expansion in Singapore, and we've got an upcoming expansion in 2025 in Korea, which we believe sets us for hitting our targets of revenue in 2027. We have increased focus on manufacturing innovation, which I'll go through. And then ESG is becoming a critical requirement now as we look into the supply chain, it's no longer a nice-to-have. All right. In terms of the global operation, I wanted to start by showing you a global map of our sourcing. So this is where we buy our parts and assemblies from, globally. You can see we're very heavily footprinted in Asia, which is also where we're heavily footprinted from a manufacturing standpoint. And we've got significant supply base in the U.S. and then some also in Europe. Main manufacturing, where we do most of our manufacturing is in Singapore, followed by Korea, and then we've got a couple of sites in Europe, one in Milan and one in Elmira. We use a flexible outsourced model, which effectively means that we don't assemble and build everything in-house. We actually have suppliers, what we call contract manufacturers that do some of that for us upfront. In fact, about 60% of our assembly happens outside of our own doors before it enters our factory. We've got 1,400 employees in operations globally. And we've increased our output since 2020 by 80%. Now a lot of these pictures, I think, will resonate with you. I'm talking about supply chain headwinds now and what the new reality is, but I don't want to just rush through this and talk about supply chain effects. Although the human toll here is incredible, and it definitely overshadows anything I'm going to be talking about from a supply chain standpoint. In fact, I think the first one on here is probably touch every one of us in a very personal way. But what I will tell you is, again, we see this as a new reality. We see it as a difficult challenge. I think despite these headwinds, we've been able to deliver last year, delivering a 39% growth, far outpacing the rest of the industry in a supply chain constrained environment. And what I want to talk about is what we're doing going forward. Now any one of these is a significant event when it comes to supply chain disruption. But when you have all of these happening concurrently or in succession, it's really a major challenge that we've had to figure out how to overcome. So really, the past approach that we had, the supply chain had to adapt, all right? We've done a lot to look at supply chain differently. We've kept up our pace. And like I said, I think we've outperformed the industry pretty significantly in terms of delivering. But I can tell you, it was very painful taking this punch in the mouth, very, very painful for us. So what we're looking to do is innovate and look at our supply chain differently, in such a way that we're ready. We get another COVID, we get another group of problems like this or even worse, we want to be on the front lines of knowing how to get in front of it. So we can avoid the punches and bunches that we expect. So in the past, I would say we looked at ourselves as really sandwiched between our customers' needs directly and our first-tier suppliers, the ones that actually deliver directly to us. Everything below those guys, we more or less expected them to manage outside of a few key areas. So of course, the present, we've really exploded back into the supply chain deep, all the way to when minerals come out of the earth to make the parcel. We use to make our tools, we've got the entire supply chain mapped, and we look at it very carefully. We look for any vulnerabilities, risks, ESG, potential concerns. We have to think about geopolitics these days, potential trade barriers and tariffs and certainly any capacity bottlenecks. So we're working very deep in the supply chain to get a handle on it well ahead of time. And I'll talk a little bit about what we're doing differently going forward with this expanded scope. All right. So one thing we're doing is thinking about when we bring a part or an assembly out to our supply chain for the first time, are we bringing one that's going to work with the supply chain? So we've actually invested a lot. We've invested a lot to find ways to improve the manufacturability of the parts that we put into our new tools, improve the reliability of them as well and to commonalize, so that our parts -- we have less part numbers across all these products than we do today. That's a big focus of us. How we've done it? We brought in experts. We brought in experts that have 20-plus years of experience at suppliers are doing the work and working with suppliers from this end. They can look very differently at a part when it's in its design phase. Once the part is designed, a lot of the value is already captured. So we're working upstream with Hichem's teams to design things in such a way that they not only work for the product, but they work for the supply chain as well. So that's something quite different. We've got a team, what we call the centers of excellence of the supply chain. Now if you look at let's say, our scorecard of the supply chain back in middle of last year, it was rough. And when I say red, it means it was all hands on deck, trying to figure out how to get parts in how to still deliver the customer needs and getting that 39% growth year-over-year. A lot of work, a lot of pain, a lot of getting punched in the mouth. And you can see it was practically across the board. By the end of last year, we were in a little bit better position. You can see some of this turns yellow, and some of it even has a little bit of green for the first time in a few years, and we still have a couple of reds. Currently, we look at our supply chain in a way, mostly green to what we want to do. It doesn't require the expediting the micromanagement of the supplier, et cetera, to get these things in. But we still do have challenges. And I'll tell you, when it comes to specific commodities, and this is really all of the commodities of interest that I'm showing here, specialty materials, such as carbide, graphite, [ courts, ] in some cases, still are quite constrained. So it's still a challenge, but we are working very, very hard. And what we're doing differently, let's say, than we have in the past. I think the first one, the first now we've been using, of course, since the beginning of time, how do you get more capacity or supplier. What we're doing differently now is going down to the sub suppliers all the way down to the mining and making sure that we're working on that. We're innovating the part manufacturing techniques. So not only designing the part upfront to work better with supply chain technology that exists today or leveraging a new one that's coming about, but also to make the part manufacturing process itself innovative. So we have certain components already where suppliers globally that have done nothing but this for their whole lives would do it in a certain way or certain ways. And we've come up with new ways, new IP to bring to them that enable them to make our parts more robustly and more cost effectively for us and the ability to ramp more quickly. The other thing we've done, of course, from a BCP standpoint in the past is dual source parts. These days were actually multi-sourcing parts. We don't want to have eggs in one basket -- one geographic basket. We don't even want to have them to. So we've got a lot of multi-sourcing going on. We're improving our supplier efficiencies through working with them. We actually put people on the floor with them, looking at what they're doing and coming up with innovative ways to improve their efficiencies, again, help them help us. And then we're signing long-term agreements and some other even more creative approaches to making sure that when the next big boom comes and that's 39% year-over-year kind of incomes that we're ready with the supply that we need all the way through the entire supply chain. All right. We've been investing ahead of needs when it comes to manufacturing. This is a normalized plot of our manufacturing capacity starting in 2020, and you can see through 2027. Through 2025, we'll have increased our capacity by 3.7x in internal manufacturing capability within ASM. We believe that sets us up to hit the revenue targets that we have set for 2027. Now how do we get here? In 2021, we moved from a Yishun plant in Singapore to a Woodlands plant and opened up a level there that increased our capacity very significantly to 1.7x of what it was. The acquisition of LPE last year added some incremental manufacturing capacity. We opened the third level of the Woodlands facility. We did that back in January of this year. That added a significant global capacity to us, bringing this up to 3.3x. And then as Benjamin mentioned, Korea, we'll be bringing online in 2025 that will bring us the 3.7x that I have talked about. Now if you look at the demand profile we were at in 2020, it was getting a little tight in 2023, where we've got plenty of room in 2027, we've got room compared to where we expect to get. But I will say next year, we're going to be doing a very concerted analysis of where our next footprint should be and maybe even making decisions that could impact the 2027 investment. All right. Manufacturing innovation. First thing we're going to do is fully digitize what we're doing in the manufacturing floor within ASM. That will allow us to make sure we're efficient, understand the bottlenecks, really diagnose what's going on. If we have downstream problems with customer performance, we can work them back and look for where to improve it. So this is one major improvement we're working on. Employing AI, so we've got the big data collectors. We've got hundreds of sensors that are constantly kicking out oodles of data that otherwise goes generally lost. We're putting AI brains on this data, and we're looking for the types of trends that could have an impact to the performance of our tools downstream. We're fingerprinting, so we can learn a lot more going forward and adjust. Increasing factory [ automation, ] there's limited ability to do that on our own manufacturing floor, but as we go upstream and suppliers, we want to take the human error out as much as possible, full modular operation. So as our demand shifts from this product to that product, this customer to that customer, the more modular we are -- and we are modular today, but increased modularity will also be flexible and be able to meet the demands in a fast manner. And then where we're really heading, let's say, in the medium term, is getting to an AI-assisted final test. The idea here is we've got this brain of data, correlating things upstream of our factory and downstreams into customers with what kind of test should actually be done as the tool goes out the door and actually conducting the test. So it is -- we hope to completely innovate in this area and have a way to send more robust tools more efficiently than anybody has before. All right. And lastly, sustainable supply chain. As I mentioned, it's no longer a desired approach with our suppliers. It's a very much a requirement. Starting first with the carbon footprint with our net 0 goal for 2035. We work very closely with suppliers and third parties to make sure we're assessing them right. We put a lot of effort on this. And I can say that our supply base is actually quite willing and been very cooperative in getting back to us and working on this with us. So I think that's been very good. We've got very high rate of carbon disclosures in terms of surveys. We've got 100% renewable electricity being used in our Singapore factory. And if you look at the circular economy we put into our service business that Benjamin had talked about earlier, we believe we've managed to save 370 tons of carbon dioxide effectively by us bringing the part back from the customer that needs to be replaced, sending it back to our supply chain with something that will allow it to work like a new part again and putting it back into the customer over and over and over again. It not only saves cost, but it saves the environment very significantly. I think in terms of responsibility, treating people right, super critical. I think there's no question about that. So we are working, again, all the way down our supply chain to make sure that even down to the mineral mining and smelting of our metals that we are doing the right thing and that people are doing the right thing. And this is an area that I would say that we've uncovered some issues and risks that we need to mitigate and remove. And the other thing we've been doing is trying to save materials. And we've been using reusable crates, for instance, on lanes that make sense rather than crates that would be thrown away after you ship tools. And then lastly, on resiliency, other than what I talked about earlier on supply chain, from a resiliency standpoint, we're constantly sharing best-known methods with our customers, with our suppliers to help all of us get a little better at protecting ourselves from cybersecurity threats and also protecting our ability to operate, should we be threatened. One last thing on human rights. We put more due diligence on it all the time. There's been a lot of work that has went on to today. Going forward, if you look at what we're looking into the mining operations, we're going to continue to increase the minerals we're looking at. Today, we're looking at 3PG very aggressively. Our industry collaborations, I think we've been setting a very high standard in the industry of collaborating, and we're going to continue to put a lot of emphasis there. And we'll continue to look at our supply chain and make sure that everybody is on board with what needs to go down -- what needs to be done there. So hopefully, you'll -- these will be somewhat recognizable now. We're growing very quickly. We've been able to take the punch. We're looking to be better at not getting punched despite expecting a lot of punches and bunches coming at us. That's what we've been doing in terms of dealing with the new reality. Our expansions have us set to hit our revenue targets by 2027, though we might have increased footprint in manufacturing by then. And ESG is now a requirement and something we're working very closely throughout our entire supply chain with. Thank you very much. And actually, now I want to hand it over to the good Dr. Hichem M'Saad again.

Thank you, Kent. And good afternoon, again. It's my pleasure to talk about our product sustainability, which is becoming a very hot topic the past few years. So first, accelerating sustainability for us is really part of our strategic initiative, which is focused on people, planet, innovation, governance and supply chain. And the target for us, which is an aggressive target of net zero, 2035 for all scopes has been recently verified by SBTi just a few weeks ago. We have found out that the majority of our greenhouse gas emission is actually attributed to Scope 3, which means our products. So accordingly, we have a very strong focus right now on sustainability, on product sustainability. And we've been working with our customer and partners to make sure that sustainability is part of our product development, both at the product level which is on the fab level and also the sub-fab, which I'm going to talk about later on. So reducing Scope 3 footprint is also highly dependent on our customer, which, and also on the upstream value chain. In this presentation, I'm going to give you some example of the sustainability focus. I'm going to show you how we've been able to reduce plasma source -- have more efficient plasma source, more efficient use of chemicals and much better heating technology. So let's first talk about what's our usage of greenhouse gases. So looking into our emission. Emission is divided in 3 scopes: Scope 1, Scope 2 and Scope 3. So Scope 1 is the direct emission from the company-owned facility from what we own, and it's actually less than 0.1%. If you look into Scope 2, which is the indirect emission from the generation of emission from the energy that we purchase from our suppliers, it's about 0.5%. Last but not least, Scope 3 is actually 99%. And Scope 3 is the indirect emission from the downstream and upstream of our value chain. And if you take Scope 3 and you zoom in, you find out that -- zoom in using like emission of tons of carbon equivalent, you find out that the use of sold products is 59% of our Scope 3. So the product is the culprit. Second is the precious energy was at 33%. Transport of distribution is at 2% and capital goods is at 1%. And the rest, investment, business travel, fuel and energy, they constitute about 5%. So as you can see, the product is really the key in the emission. And our focus right now on sustainability is really focused on how can we make our product that we develop using much less energy and more sustainable. So that's our vision. So the vision is to develop differentiated products and processes while maximizing the energy saving through product innovation. Our aim is to develop these very high-quality film. At the same time, we want to lower the energy, you want to usage -- we want to lower the gas usage. We want to have less emission and also reduce the cost per wafer for the customer. So it's no brain, sustainability. It's good for the customer, good to the environment and also it makes our product much more competitive. So how do we look into the emission in our product? What contributes to this greenhouse effect of our product? First, we need to define what the product is. And the product is basically process modules or these are reactors, and they are connected with the platform. The platform, that's where the wafers gets moved -- the wafer get transported. And in that one, we have 4 energy sources. One of the energy source is electricity to power our products. The second one is the process chemistry. In process chemistry, we use gases, we use liquid and also use some even solid from that point of view. And also, we have cooling liquid. All these reactor have plasma or they have high energy, they happen at very high temperature. So we want to make sure that we can pull them down. Otherwise, you have too much heat. And with that, we have a cooling liquid to cool the reactor. The fourth energy source is actually in the carrier gases. And the carrier gases is the nitrogen, the helium, the argon, the CDA, which is a compressed dry air that are really necessary to power the tools. So the cooling liquid that we have that we use is actually -- is connected to a chiller, which is a heat conductor -- heat exchanger, which is in the sub-fab. So let me talk a little bit about the sub-fab. So every tool that we have is in the fab level. But the tool is connected to pumps. It's conducted to scrubbers. It's connected to abatement units. So where do we put all these pump and scrubbers and everything? We put them in the sub-fab. So you have one floor where the fab is, and underneath is where you have all the pumps and so on. That's why we call it sub-fab. And why do you sub-fab? So that the connection between the tool and the pumping exhaust and the abatement is very short. You don't want to make it on the same level. So once you do your reaction, chemistry, you have your deposition or whatever you have, then what you have? You have exhaust, you have the byproducts. In the byproducts, which are the unused gases and chemicals, they leave, they get pumped out. The pump that's in the sub-fab is powered with electricity and nitrogen. And the pump takes all these gases to the abatement. And in the abatement, they burn all these nasty gases and after that, it goes out without any greenhouse emission. So our scope is really looking into how can we reduce a emission from our products and also from the sub-fab. So our scope really is because the sub-fab component makes our tool -- and related to our tool, so we want to make sure that we concentrate on both, our product and the sub-fab part of the equation. So this is really -- this is shown here when you have the product level and the sub-fab level. So when you look into the sub-fab and the sub-fab, you have both the process module and the platform, we see 3 levels where we're working on sustainability. First, the design foundation. When you design a new tool, a new reactor, you want to make sure that it uses less energy. And one of the things you want to do, whenever you design something new, for example, you want to make sure that the reactor volume is very small. The smaller means you use less energy, use less [ bicursors. ] So that's some of the foundation. And the component selection, you want to make sure that the component that you select for your reactor or your platform, doesn't use -- is efficient. For example, if you're looking into RF generator, you want to make sure that RF generator has the highest efficiency. If you want to use a chiller, you want to make sure also the chiller has the highest efficiency. And also in the process optimization, when you develop your processes, you want to make sure that, okay, you use less gases, you control your process. You can go to low temperature, it's even better. So these are the kind of things that needs to happen from the get-go. On the sub level, sub-type level, you have also the company's selection, so the pumps, the abatement, the scrubber and so on. You want to make sure that these components use the least energy possible. And actually, we require from our supplier for -- from a supplier -- abatement supplier that they have much lower energy usage. The other thing that happened on the sub-fab is the recycling. In new product, you use nitrogen, for example. So you need to recycle nitrogen. We also use water recycling. In our lab in Phoenix, 90% of the water is actually recycled. And in a place like Arizona, when water is a very scarce resources, recycling is very important. So we recycle the water. And of course, if you can use renewable energy for this component, it's new better off. The third thing in the sub-fab is you want to make sure that this component that are in sub-fab are really synchronized with your tool -- operation of your tool. For example, if the tool is idle, then the pump needs to be idle. The abatement has to be idle, not powered down. And also, for example, when you use epi, epi use hydrogen and some processes use high hydrogen, some other process use very small amount of hydrogen. So the abatement unit, which really burns the hydrogen needs to know when are you running the high hydrogen process. So the tool, your tool needs to be synchronized with abatement. And if the abatement sees that your process is going to run very high nitrogen, then it goes into the high fire mode. And when you run lower hydrogen content, then you go to a lower fire mode. So this is a securitization that needs to happen between the sub-fab level and the product level. So that's why for us in order for us to reduce energy usage and precursor usage, we need to really work with the sub-fab component. So what's our strategy for sustainability, product sustainability? Our strategy is really based on 3 things; more efficient plasma sources, many of our products use lots of plasma, I talked earlier about plasma; more efficient use of chemistry; and more efficient thermal technology, our thermal technology, silicon carbide, vertical furnace, epi. These are all thermal energy. So if you look into the more efficient plasma sources, the plasma sources uses RF power. They use also matching network. You match the RF power to the matching network. You have RF generator, which are removed in the sub-fab, and you have the RF cables, which are long, like can be even 50 feet long. And then you have losses. So #1 thing for us to improve sustainability here is to reduce the RF energy usage per wafer. And how do we do this? Actually, the first thing we have done is actually using the technology from Reno Systems. Reno Systems is a company that we bought 1.5 years ago and actually has a unique technology with electronic variable capacitor -- every -- which is used for matching. Every other technology in the industry use VVC, which is a vacuum variable capacitor. This electronic variable capacitor is great for our plasma technology. I showed you earlier, there are many plasmas, and the plasma power can be very high. By using this EVC, we actually can reduce the reflected power by 5%. That's a huge when you have a very high power level you're running. And also, we can tune the power much faster, 100x much a fast thing. What does it mean? It means your process is shorter. You mean you use less energy. So the acquisition of Reno really helping us to reduce -- to improve sustainability for all of our plasma processes, be it ALD and also PECVD. The second one is more efficient use of chemicals. And using chemicals is very important right now in our industry. I can tell you, it's -- right now for me, it's the most important thing. Why? The reason for it is that, as I've shown you earlier, everything is going 3D. When you have these 3D devices and you need to do deposit, the surface area is huge. What does it mean? That means you're using more and more chemicals, okay? How can we reduce this chemical usage? And this chemical, to be honest with you, are not the best chemicals you can think of, okay? So we need to make sure that we have better usage of this chemical. And also when we develop a new process, a new film, the selection of the precursor is actually we look into sustainability to select which precursor from that point of view. So the less natural precursor is the one we select. And also, we need to make sure that, okay, in the reactor, we can purge these precursors much faster. So precursor dose per wafer, we need to reduce it. And in order to do that, we actually -- in our process, we need to modulate the residence time. And residence time is how much those speakers stay in the reactor. By optimizing your process, we've been able to reduce precursor consumption of 50%. If you reduce the precursor consumption of 50%, you have less abatement of the precursor. Abatement users lots of energy, so you reduce the abatement energy usage. The third part of our sustainability strategy is more efficient thermal technology. Our processes, as I mentioned, are very -- used lots of energy. Silicon carbide epi runs at 1,600 degrees Celsius. Silicon epi can be from 700 to 1,200 degrees Celsius. So this is loss of energy. So how do we choose the heating technology is very important. You use resistive heating, you use plasma heating, you use UV heating, a microwave heating. So the choice of the heating technology is very important. And we choose the technology that has the highest efficiency. And also, you want to go to low temperature processing. Everybody, I tell my guys, can you lower the temperature of any process you do. Why? Because you use this energy. But the problem is when you go to lower temperature, you usually really go to lower temperature, you have more impurity, and the film is not very good. Quality of the film degrades. So we have to develop new processes and new precursors to do that. So reducing the thermal energy per wafer is very important. So for example, the Turino CL that I showed earlier, the fact that you can get the temperature very, very quickly, you can achieve a much faster ramp that allows you to reduce the energy by 35%, I showed you earlier. And actually, with the combination of better cleaning, we can reduce the energy usage on our epi reactor by 50%. Now let's give you an example, a real example about sustainability. And in this case, we took the SONORA. The reason we took the SONORA, because this is a product that we released last year, 2022. And from the get-go, we put sustainability as part of our release criteria. And there are 2 things we looked into. We want to have higher throughput of the platform. Because when you have higher throughput, then you have less energy usage per wafer. The other thing I want to have -- we want to have much lower precursor usage. And for that, we want a much smaller medium environment, we want to make sure that also the medium environment is leak tight. We reduced the volume. We looked into our reactor and we changed it, make it -- made some differences in our reactor to reduce the precursor usage. So the combination of the higher throughput and lower precursor usage allowed us to reduce our energy usage by up to 40% in the one on the right, polysilicon deposition. This is less usage than the previous platform, which is the A412. This is using the exactly same process. We can achieve 40% less energy reduction. And for oxidation, we can achieve 14%. So if you go to this next slide, it shows you the energy sources for some of these 3 processes. These 3 processes, you have oxidation, which is chemical oxidation happening at 1,200 degrees Celsius. Silicon nitride polysilicon, these are CBD processes going at lower temperature. So that you see in all 3 cases that electricity is the highest energy usage for all the processes. And if you look into the definition with the 3 top electricity consumption, you see that heating element is the most one; second, vacuum pump; and third is the blowers. So the heating element, you see that the one -- the oxidation used 67% because use most heat, because oxidation happening at higher temperature. And the vacuum pump -- the pumping is only happening for nitride and poly. It's not happening in oxidation, because oxidation is an atmospheric process, so you don't need to pump anything. So we showed you the -- what we have done on the product. Right now in order for us to be successful on the product sustainability level, we need to make sure that we take care of other things. One of them is I want to make sure that we have reduction road map. And in other word, the only way to do a reduction in road map is to be able to measure every year use sustainability. So we have SEMI-S2 baseline for key applications. And every year, we have SEMI-S23 measurement on our processes to see the improvement from 1 year to the other. The second thing you need to monitor what you're doing. And here, we're putting some sensors in our tool, okay, to measure the gas flow, to measure the temperature between the tool and on the tool and also, between the tool and the sub-fab component. The third thing, we need to digitize. We have to have a database. And we like this database because the learnings that we have right now on reducing -- improving sustainability, we can actually use it for as a theoretical model for the next development of our processes. We need to be able to trace the chemical uses, okay? With this chemical, we measure somewhere in the sub-fab, which tool is coming from and what process is coming from? We want to make sure that we synchronize as I mentioned, between the sub-fab and the product. And here, we need to use smart communication. And actually, we're working with our [ some ] customer to see how the sub-fab component can work with your product. Are you going to use WiFi? Are you going to use other technology to do that? It's really -- there is lots of work from that point of view. Last but not least, we need to make sure that we measure the PFAS, the PIP and -- of our products and to make sure that we have screening from that point of view. So to conclude my talk, I hope we still have -- we have a very aggressive road map for Net Zero. I hope I showed you in my presentation that in the product point of view that we've taken it very seriously. There are many things that we are improving. And most importantly, it's -- our strategy is to reduce emission of 3 components; better plasma efficiency, better use of chemicals and more efficient heating technology. Thank you very much. Now I'm going to have our CFO, Paul Verhagen, to talk about the numbers.

Thanks, Hichem. So good afternoon, everybody. I'm happy to be able to present the numbers to you. You've got an update on the market opportunity, technology, operations, sustainability. And what I will try to do is to show you what that means in numbers. Five key takeaways. The first one, we believe that our growth through innovation strategy is creating significant value for all stakeholders. The second key takeaway, as you've seen, we've increased our '25 guidance upwards to EUR 3.0 billion to EUR 3.6 billion with the target range of growth and operating margin maintained. We've given you a view beyond '25 up to '27, where we target revenue of EUR 4 billion to EUR 5 billion, representing a CAGR of 11% to 16%. Operating margin maintained as well, but we have some more color, namely that we do expect an upward trend in the outer years towards '27. Annual CapEx, EUR 100 million to EUR 180 million, we used to have EUR 60 million to 100 million, and that's mainly to support growth, and I will come back on that one as well. Capital policy -- capital allocation policy, unchanged. So investment in growth remains a key priority, and excess cash will be returned to shareholders. And the fifth key takeaway is plan to achieve net zero target by 2035 for Scope 1, 2 and 3. And our plans have been verified by SBTi. Further few KPIs, just to show you that why we believe that our growth renovation strategy is actually creating value. These numbers are for the 3-year period, '20 to '22. So an annualized shareholder return of 34%. Total cash returns to shareholders EUR 0.5 billion. Accumulated free cash flow, EUR 660 million, 12% of revenue. That might sound a little low, maybe it is a little bit low, but that's because of the working capital build up. The last year, of course, before '20 was '19. We had a revenue of EUR 1.1 billion, and we grew to EUR 2.4 million in 2022. So that's an additional EUR 1.3 billion for which, of course, there is working capital needed. And you see in the footnote, if you exclude this change in working capital, it's actually 18% of revenue, close to EUR 1 billion free cash flow, excluding ASMPT dividends and excluding acquisitions. An average ROIC, also excluding ASMPT of 26% over this period. Revenue CAGR, you've seen that number a few times, 35%. Gross margin, operating margin, nicely within the guided range. And our renewable electricity over this period has been increased by 66%, so quite significantly. First, shareholder return, a very nice slide, obviously. This is normalized to start at [ 100 ] in January 2019. So if you would have invested $1 million or EUR 1 million, you would have had a return and see that capital growth to around $12 million over a 4-, 5-year period, significantly higher than what you would have if you would have invested in the SOX or in the AEX. As I said already, excess cash is returned to shareholders. We have a sustainable dividend policy. You see a gradual increase of our dividends. No increase in 2022. Why not? Because we did 2 acquisitions, and they were mainly funded by cash as you know. We issued a few new shares for LP, but the bulk was cash. We wanted to conserve some cash as well, and that's why we decided to keep the dividend equal to '21. And as you most likely have seen, we just completed our EUR 100 million share buyback that we announced in '21. Strong revenue growth, especially if you compare it to the WFE market. So we grew 35%, WFE market 23%, so significantly outgrown the WFE market. Key drivers for revenue. Obviously, the end markets. That's the most important one and also the most difficult one, especially today, to assess what's going to happen in these end markets, what's going to happen in communication, what's going to happen in computing, what's going to happen in all the end markets in which we play in? The growth and the composition of the WFE market is, of course, derived from that to a certain extent. And then more specific to ASM, of course, our leading share in ALD are growing share in Epi, of course, is important. There are selective growth in vertical furnace in PECVD, our growth in spares and services. Benjamin has shown that. But all these factors contribute, of course, to our revenue growth. Sustained healthy margins. We've guided 46% to 50% with the most important element there is our application mix. We've talked about that many, many times. Limited operating leverage in our gross margin because the bulk of what Kent does in his operations, at least in terms of cost, in terms of finance, is purchase material, purchase subsystem, purchase components, so it's variable. We have, of course, some fixed costs there. You've seen the factory expansion. We have depreciation, but still -- there is some benefit from operating leverage, but not a lot. Of course, productivity and supply chain improvements, of course, will help. Continued value engineering that we do with customer projects, can either maintain and/or improve the margin. And of course, sales price management, another important one, especially in the last 2 years where we've seen quite some inflationary pressure. And then for operating margin, of course, it's the development of gross margin, but also, of course, SG&A development and R&D, and I'll come back to that one. So first, SG&A. You have not seen a lot of operating leverage in the SG&A line in the last 2 years. We had to significantly actually step up investments to, one, grow in a controlled manner, but to also to prepare ourselves for the next wave of growth, and that's what we've done. And you see also where we invested it. It's actually across the board, most in sales and, yes, basically product and business development, which you would expect, I guess, with the growth that we've seen. The second biggest bucket is HR and recruitment costs. You've seen that we more or less doubled headcount over this period. It was an important area where we had to invest in and then, of course, strengthen and professionalize a number of the functions as you see here on the slide. Then on the level of investments, you see actually now for 4 quarters in a row that the investments in SG&A are leveling off. We are at a level of EUR 70 million to EUR 75 million per quarter. You see EUR 147 million and EUR 144 million, which, of course, is a big increase compared to where we were, let's say, in H1 2020. But at least now 4 quarters in a row, it's leveling off. It might go up still a little bit, but a big chunk of the investments for now have been done. Of course, at a certain moment in time, there will be new investments needed. But before that, you should see some benefits operating leverage with the revenue growth that we target. R&D is a different story. R&D is not leveling off. Actually, we're stepping up investments in R&D. You've seen Hichem's presentation. There's an enormous amount of opportunities out there. We are stepping up. We will move towards the high end of the range, maybe even slightly higher. And then over time, it will come down a little bit. But there is so much going on now. We need to try to capture these opportunities. So we are actually, try to stay within our range as guided. But in the, let's say, this year and next year, the other after most likely at the higher end of that range. And you see here the gross R&D, which in the first half of '23, moved up to 13.8%. And as you most likely know, but you can see it from the left part of my graph, the difference between gross and net is typically 2.5% to 3%. But the gross R&D is the real money we spend, it's the cash money that we spend in R&D. So I believe that's the most important number. The other one, of course, goes into the P&L, but growth goes into your cash flow. Working capital increased somewhat especially, of course, in the last 2 years. Kent talking about receiving punches and now trying to avoid bunches, especially inventory went up quite a lot. Still, I believe, in a controlled manner, it was a deliberate choice to do that to be able to deliver to our customers and to actually enable the growth that you've seen in the last 2 years. So you've seen that coming up a little bit. We see also some pressure on DSO, given the current market circumstances. So customers, of course, are trying to extend a little bit, not a lot, but now there is discussions going on so now and then. So you see the working capital moving up a little bit, but still nicely within the guided range, and we expect that to continue. Then 2 acquisitions in 2022, sort of LPE, EUR 470 million. And as you know, an earnout of up to EUR 100 million, which still needs to be paid. Strategic rationale, I think, is clear. And I think Benjamin talked about it. We want to access this high-growth silicon carbide and markets. It's a very interesting segment, also from a sustainability point of view, because it's an important enabler for, yes, electrification of transport and other markets. We believe because of the technology, it was the right acquisition, a very experienced team there. And with our footprint, our technology, a lot of synergies that we believe we can bring to the table for LPE. The other one was more a technology acquisition, Reno subsystems, price of EUR 42 million. As also Hichem showed, new PEALD applications are driving more complex process solutions, and this fitted perfectly in that for us. So it was really an important technology solution, also a company with strong IP and also a company that also contributes in terms of sustainability because of, let's say, yes, accelerated matching and improved cycle times. So it's less energy consumption and as a result, also improved sustainability. This is just a summary of our progress against our initial 2025 targets. So 9.7 green, 1 yellow, 1 red. So the SG&A is slightly higher than what we anticipated. Our target still remains high single digit. If we get there in 25%, I don't know. We'll see that, but it remains the target. But beyond 25%, we have the growth that is coming. For sure, we will get there, no doubt. And the other one, of course, is CapEx. We had underestimated the -- especially the investments we're doing now in our R&D footprint. I think manufacturing was clearly on our radar when we did our '21 Investor Day. But literally across the globe, everywhere we are outgrowing our facilities, given the number of opportunities, the number of tools that we need. Clean rooms are getting too small, so we need to upgrade and invest, and that's exactly what we are doing now. On all the others, I think we are on track. You've seen the numbers and looks all pretty green. The new targets for '25. So 2 things changed. The revenue, you've seen that EUR 3 billion to EUR 3.6 billion. Basically, it's the addition of LPE to our previous targets, which were 2.8% to 3.4%. And the CapEx, of course, increased to EUR 100 million to EUR 180 million. And you know for 2023. So for this year, we guided EUR 150 million to EUR 200 million. So this EUR 100 million to EUR 180 million is for beyond '24 and beyond. '27 -- EUR 4 billion, EUR 5 billion, representing a revenue growth of 11% to 16%. That's lower than the 16% to 21% that we used to have, but also the comp on the back of the 2022 numbers that you've seen that was 2 years or 3 years in a row, you had 35% CAGR. So it's not an easy comp to have that CAGR on but still significantly outgrowing the WFE market, at least that's our expectation. Gross margin maintained, SG&A high single digits, R&D high single digit to low teens and initially, you should expect that to be especially in the upper part of that range. Operating margin maintains with an upward trend expected. CapEx, I talked about, tax will come back and working capital basically remains as is. So no change there. Now here you see the revenue figures. Same drivers, I don't repeat them, but yes, from EUR 2.4 billion to EUR 4 billion to EUR 5 billion, it's 11% to 16% CAGR. WFE market based on this assumption would grow with a CAGR of 4%. So 11% to 16% is 3 to 4x faster. That's quite significant. That's what we currently based on our assessment and based on the numbers that we have believed. What is important to understand is that our revenue cost is really based bottom-up by application, by customer. So Holland team spent an enormous amount of work in there. It's -- we know pretty well what kind of players there will be. We know pretty well what that means in terms of revenue. The key uncertainty, of course, that we have is how do end markets develop. So how many tools and how much capacity built up will there be? That's always, of course, an assumption that is a little bit difficult to assess. But this is currently our best estimates and projection that we have. Margin maintained and the simple reason is, as I mentioned already, there is limited operating leverage at the gross margin level. The most important one, of course, is application mix. As you know, competition is also looking more and more at ALD. We are also entering areas where competition used to be strong. So also that, of course, is not always easy. So they will defend, of course, their positions. So to expect a significant increase in gross margin. I don't think at this stage, that would be very, very realistic. Of course, we continue to drive supply chain improvements. Kent has shown that to you. And what we've done, I think, reasonably well is offset the inflationary pressures that we've seen in the last 2 years by increasing sales prices. SG&A, high single digits and there, we should start to see real operating leverage going forward once the revenue starts to grow. For instance, in the second half of this year compared to what I just showed you in the previous slide with the half year SG&A, the percentage will go up. Why? Because we guided that revenue will come down 10% or more second half compared to first half. So you can expect, of course, that the SG&A as a percentage of revenue then will go up. R&D will grow with revenue for all the good reasons, it's a lifeline. It's important for us to invest in R&D to stay ahead of what's next. And that's what we try to do. Operating margin, yes, the key improvement and the reason why we actually add the additional color of the upward trend in the outer years is simply because of the operating leverage that we will see in our SG&A line. Maybe to refresh your memory, in 2018, so 5 years ago, our SG&A was still 15% of revenue. So it has come down, maybe not as much as you would like it to be, but it has come down. It will also come down further in the years to come. But again, the investment that was done in that line was needed for all the reasons that I mentioned. Tax. There's a lot of things happening in tax land, maybe the most important one is the global minimum tax. Of course, it will kick in starting next year, 15%. That in itself can have an impact on our tax rate. I mean, if you are in a country with certain tax incentives and if the overall tax rate that you pay is below 15%. Then, of course, you will see impact. If the overall is higher than 15%, then you will still benefit from incentives in the same manner as you have them today. So there will be most likely some upward pressure, but still, we believe it will be limited. So we still guide for high teens to low 20s. Allocation of profits between countries, of course, is important because it's different, again, different taxes between countries. We follow an Arm's Length transfer pricing principle as good as we can. We benchmark that and underpin that regularly to make sure that we update it where necessary. So we do that. We don't have any artificial tax, whatever structures in place. So it's really based on substance, what we do, which I believe is important and of course, we stay on top of all the tax developments that happen and try to, of course, manage that as good as we can and try to manage, optimize our ETR as good as we can, but within the rules of yes -- the tax rules that we have. Working capital. The absolute amount of working capital, of course, will go up. You saw in the free cash flow also in 2020, 2022. The free cash flow as a percentage of revenue with and without is quite substantial. I hope that the difference going forward will not be as large as what you've seen in the past because we had 2 effects. One, of course, was the growth, but the other one was also the -- just the increase in working capital because of all the supply chain challenges that we had to deal with. CapEx, EUR 100 million to EUR 180 million. You've seen our announcement on the Phoenix land. You've seen our announcement in the Korea, both R&D and manufacturing. We also have plans to expand in Europe further, not yet announced. We're evaluating that now. So once we know more, we will let you know, of course, there's continuous investments in products and our products, but also in metrology tools, but also in clean rooms. They need to become larger and larger. And as I said already, for this year, 2023 CapEx guidance is EUR 150 million to EUR 200 million. Capital allocation strategy unchanged. So growth, growth and growth, allocating money to R&D, to CapEx and opportunistically to M&A will continue. We want to keep a strong balance sheet, EUR 600 million net cash position around that level, sustainable dividends and excess cash returned to shareholders. And then on net 0, 2 or 3 more slides. I think what is important for us is that, one, we take sustainability very serious. It's now, I think, ingrained in the whole company. It's part of our product development strategy, as you've seen product development process, product improvement process. It's part of supply chain. We actually invested quite a lot. We added also quite a few people in this area, which is important. I mean, the semi industry has a footprint. The semi industry needs to attack that footprint. But I do believe that we are part of the problem, but we are a bigger part of the solution to basically meet all the computing power that the society needs. You need innovation, you need more powerful chips, you need scaling, you need new materials and that's exactly where we are very well positioned to deliver on that. So that's our aim to do that. Our target is verified by SBTi in July '23, which was a big deliverable. And you need to deliver a lot of material to them. You are challenged, you get questions. So they go through it in great detail. It's not an easy exercise, but we managed to get it verified. In all our key sites, we have 100% renewable electricity and by 2024, which is next year it's around the corner. We want to be 100% based on the renewable electricity as you've seen in the recent presentation, Scope 3 is by far our biggest challenge, and that's something we cannot do by ourselves. We need our customers. We need our upstream supply chain. That's why we've also taken the initiative with some other players to actually create and fund the Semiconductor Climate Consortium because that brings the whole supply chain together, various work streams will start working there to actually drive sustainability and, of course, ultimately, to achieve our net 0 target, but we cannot do it by ourselves. We will do whatever we can to work with our customers, to work with our suppliers, but we're also dependent on them so that you should recognize as well. Near-term actions, most, I think, have been covered. It's a lot of work. It's something we like to do. We put the people in place to actually manage this to get it done. So it should be doable. We are now completing energy audits for all our sites to see what can we do further to improve energy efficiency with the expansion that we have. Of course, we put new buildings in place with the high sustainability standards with that in itself will already help and will contribute, but still Scope 1 and Scope 2 is less than 1%. So the real challenge is the Scope 3, and that's where we need, again, customer suppliers, and we do, of course, our part as well to get that improved. And with that, my key takeaways. We believe that our strategy is working and that we are creating value. We have increased our revenue targets for '25, introduced new targets for '27, capital allocation policy, unchanged and our plan to achieve net 0 by 2035, verified by SBTi. So thank you.

So I was just taking a look and I think it was about 142 slides. So I hope we did not overload you. But the intention, of course, is to share with you as much information as possible. And as I said at the beginning, I hope me and my colleagues have been able to explain to you what is our view of the market, the outlook, the technology trends, the industry trends and how our strategy growth through innovation fits into it. If I were to summarize what we are really trying to convey to you, is that we are very bullish as far as the semiconductor industry is concerned. Despite short-term headwinds, we think that the industry is poised for a lot of growth. And having said that, I also believe that we, as a company, we are very well positioned in terms of the technologies that are coming. My colleague, Hichem has shown you, and it's very exciting stuff like metals, stuff like selective ALD, all the great stuff that actually Hichem and team have been working on for already a couple of years that is now right for us to harvest. So we are very excited about that. And our biggest play, even though it's a leading-edge logic, foundry and memory, you probably got a glimpse from part of this presentation that we are also trying to explore some smaller areas. Maybe they are not as big as advanced logic/foundry type of size, but it is meaningful and it is also leading edge stuff like advanced packaging, heterogeneous integration. We are not doing the full value chain. We do what we can. And of course, we have started to become opportunistic in terms of our growth strategy and we will continue to look at M&A that fits well, just like what we have done last year. LPE as an acquisition was great for us because it allows us to develop and explore the synergies that we think are there, but at the same time, to look at the market that will add a chunk of meaningful revenue to our portfolio as well. And last but not least, we are going to continue to focus on the other factors. Paul ended with sustainability. That's a big thing with the company and is well embedded in the company. We're going to look at how we grow our culture, people, gender diversity, et cetera. So we are very excited. I think I speak on behalf of all my colleagues. We are really excited about what's coming. And with that, I hope we have been able to impart and convey all the information that we have planned, and I will close the presentation and then shift over to Victor for the Q&A. Thank you very much.

Thank you, Benjamin. So we will now start Q&A in a moment with all of our presenters on stage. We will be taking questions from the audience here in the room. [Operator Instructions].

It's interrogation time.

We are ready for the first question.

Didier Scamama, Bank of America. Thanks so much for your presentation. Very useful and high conviction that you will outperform WFE over the next few years at least on my end. Maybe starting with the ALD market opportunity. I'm just curious, you gave us your 2022 ALD TAM. Can you give us an estimate for '23, I mean, probably grew double digit, I would imagine. So that would bring us quite close to EUR 2.9 billion and put your '25 TAM in sort of within the vicinity of that, if that makes sense. So just give us a sense of '23, and I've got a follow-up.

I'll take that, then Han, maybe you can add on. I think '23 is still in progress. So we are not going to give any kind of number on that. But I think Han has explained that, look -- if you look at where we were in '22, the market size was $2.6 billion and by '25, we do expect that, that's going to be between EUR 3.1 million to EUR 3.7 million. Let's just say a midpoint of $3.4 million. So you're going to see significant growth over the next couple of years. And a big part of the growth is going to come from, of course, the transition to gate-all-around. I think if you maybe do the math, so you can find a way that we get there. But at this moment, we are not giving any guidance for 2024 year.

Yes, I think the question was for 2023, but the same answer. We're, of course, tracking in detail how the market this year and the first half next year is developing. But it's too early to give really a color. We're confident about EUR 3.4 billion for 2025. But for the shorter term, we will not give any guidance.

The other question is on sort of the current market. Obviously, China has been a big market driver for ASM and for the WFE this year, I think it's about 20% of your revenue. I was surprised to see on your slides that the mature node investments in China actually are not a major contributor to your revenue. So I'm curious if you could give us a sense of where your strength in China is coming from presumably LPE, but also leading at logic and foundry. Memory presumably has mostly disappeared, I would imagine. So just give us a sense of where that strength in China is coming from?

So I'll take that. I think when you look at China, of course, they have various pockets where different segments of the industry -- so one, if you maybe start with really leading edge. I think that part of the business today is more limited just because of export control. So there isn't really going to be a lot of investments as far as 14 or 14 and below. Now if you look at maybe what has actually been strong for us, in the past. And so I would say today is the power analog and wafer segment has been strong for us. And that's actually where we have quite some revenue coming in from China. If you look at then the silicon carbide area, that's just starting, but we do have a good presence there, maybe not in terms of absolute numbers are that big. Now what actually is a big part of the market in China is what we call the non-leading-edge logic and foundry. So the stuff that is like in 28, 32, 40, 45, 65-nanometer type. And that is an area where, traditionally, we don't play much there. And if you want to go in now and you are not what is called the baseline, whether it's in deposition or whether it's in epitaxy it's very hard because a lot of it is just copy exact. So that's an area where it is less beneficial for us. And that actually is reflected enhanced presentation why in 2022, we did not benefit as much in our silicon epitaxy market share.

That's exactly right. No nothing to add.

Sandeep Deshpande, JPMorgan. You had a very good presentation on the new opportunities you have with your products, when you spoke to the market last time at Investor Day, you talked about gate all around, and that is actually happening now. Which of these new opportunities that you've talked about will begin to contribute and in terms of wins that you already have in these new opportunities, for your '27 revenue opportunity? And I have one quick follow-up on that.

I think maybe Hichem, you can speak about that, the ALD and Epi opportunities.

I think when we look into the data round, I mean, there are many new opportunities in both ALD and Epi. I think in ALD, the opportunities are mainly in the gate stack area with many new dipole and also work function metals. When you go to gate-all-around, you need many more of these dipole and work function metals. And for each one of them, for each dipole, you have a new patterning ALD layer. So we see some growth there. And for Epi, we also -- when you go to Epi in the gate-all-around, what happens is that everybody needs to have the nanosheet structure. Before, like we have in FinFET, not many customers have a channel of films. Some customers do, but many of the customers don't have any channel films in FinFET. But when you go to gate-all-around, you have to have those channel films, the nanosheet structure. So that's how you gain market share, and that's how you know your market increases from that point of view.

And my follow-up, Ben, would be with ALD, you were a pioneer in that market. When you look at Epi and now some of you mentioned -- Paul mentioned earlier that you're now coming across some competition in some of the new areas that you're going into. So how do you see yourself positioned? Is this now that you're going to be directly competing with some of your particularly U.S. peers on these markets? And how are you going to fare in this competition? And then particularly, do you see them in your ALD market?

So I think, of course, with all the new ALD applications coming up. It's kind of open. So everybody wants to -- everybody has a fair chance. And of course, the competitors are trying to get a piece of it for themselves. But I think we coming to the end of almost to the end of a 2-nanometer gate-all-around development. I think we see that we have maintained our position there. So we are confident that we are getting our fair share based on our leading market share. That's one. And going forward, of course, we continue to work with the customers for the next node, et cetera. One of the things that we looked at actually is that if you look at ALD, that's the situation. But if you look at, for example, epitaxy, it's actually on the contrary. When they go into a leading edge, gate-all-around, it will be much more beneficial to us because we have been so far just a small player. As far as FinFET, we [ book ] in a 7-nanometer and have continued, but that was about it. And what you call a non-leading-edge logic and foundry, as I've just explained, we don't really have a position there. We have a position in power, wafer, analog. Now moving to gate-all-around, that's where I think it's going to help us because we will have many more Epi layers, we would have many more -- much more penetration. And that is what we are looking at to get us to, for example, that at least 30% market share by the time we exit 2025. Maybe just one addition to your question Sandeep is you're asking when do we see all of this becoming revenue for us. Actually, it already starts next year with the pilot lines. Sorry, can we maybe move to the middle. Janardan, I think.

Janardan Menon from Jefferies. Two questions, which are perhaps sort of related into one. So hopefully [indiscernible] be okay with that. When I look at your guidance and I break it into 2 segments, '23 to '25 and '25 to '27. And I'm using sort of consensus, which is made for '23 based on your own guidance of more than 10% drop in the second half and your Q3 revenue guidance, et cetera. I calculate that your growth will be around, give or take, 13% CAGR between 23% and 25%, and then you are forecasting a sort of acceleration to about 17%, '25 to '27 based on the [ EUR 3.3 billion ] and the [ EUR 4.5 billion ]. I'm just wondering what you think is going to drive that acceleration? Because as you've said, you are confident that the 2-nanometer gate-all-around is going into high-volume production in 2025. And that has been the big driver for you in ALD and epitaxy, so what is going to drive the further acceleration among various things from '25 to '27. And sort of maybe related to that is compared to your previous Capital Markets Day, you've talked about some new areas in atomic layer deposition, which is like the molybdenum interconnect metal layers, the advanced packaging, selective ALD, et cetera. So these seem to be new and seem to be coming in around the '25 time frame, but you didn't raise your ALD market expectation. So why is it that you've got new -- many new areas you just said in the previous question as well, but the market sizing is not changing on ALD.

Sure, Janardan. Maybe I will answer the second part first. And I think one of the reasons why we don't share so openly all the different applications is because of the competitive nature. And we are a very, let's say, focused, dedicated deposition company. So it's very easy to kind of figure out what we are doing from our competitors. And actually, some of the things that Hichem has mentioned, whether it's metals, whether it's selective ALD and so on. It is now finally happening. So before it happens, there wasn't really I would say, a need or, let's say, a necessity to try to oversell stuff. But this will happen. I mean, Hichem, has already mentioned. This is happening in the first 2-nanometer gate-all-around. Pilot lines will come into place in 2024. And if everything goes on track, high volume in 2025, we are going to see this happen. So this is now and the reason why you're getting this information now. When you look at the, let's say, the growth rates, as you have currently mentioned, I think we should also consider that we are in the year 2023, where we are seeing headwinds. If we did not see that the curve will probably be much more smoother, the growth rate, which probably will be better. But having said that, I think we stick to what we have guided. I think by the time we get to 2025, we hope or we believe there will be a recovery, and there will be significant investments in leading-edge logic, foundry, memory as well and the steep drive towards 2027. Maybe I want to bring you back to one of the slides on my colleague Han's presentation where it's basically showing that from 2024 onwards, you're going to see a $50 billion, let's say, increase due to gate-all-around. That is a big part of it. Our biggest driver is still in the leading-edge logic, foundry and memory.

Stephane Houri from ODDO BHF. Quick question maybe on silicon carbide because the upgrade of your guidance for 2025 is mainly based on the silicon carbide upgrade LPE. And when you make the calculation, EUR 200 million of revenue mix, 24% CAGR over the next 2 years. And I've heard you many times saying that 25% CAGR was a bit conservative. So is there a delay in the deployment of your product? Or is it just a conservative view of the next 2 years?

Well, we did not really look at whether it's '24 or '30. But I think if you look -- see from Han's presentation, the [indiscernible] data for devices is basically showing -- or the latest information is growing at greater than 30% and I think if you look at the industry today, it's growing very rapidly, and it's also, I would say, evolving. And one of the reasons why we have not provided, for example, the market sizing and market share is we do believe that whatever we give it to you today, it will change or become outdated than maybe 3 to 4 months down the road because the market is moving so fast. Now on the whole, I think we are doing very well. Having taken over or let's say, close the transaction in October last year. I think we have shared that with the continuing presence that we have in China, which we are still doing well, we have also secured new wins for major customers in the U.S. and also in Europe. And maybe just to add that these are not [indiscernible] tools. These are multiple tools that goes into high-volume manufacturing. And we are in a lot of discussions, demonstrations with, let's say, the other major players, and we are confident that this -- some of them will lead to also a positive result for us.

I have a quick one on pricing. I mean, we talk a lot about your layers and your opportunities to increase your footprint there, but what do you assume in terms of pricing as, I guess, as well, you have an improvement road map in terms of tools, throughput, quality and so forth. So what are you making? And the second question is on selective ALD here. It seems to be a very significant opportunity. You saw the platform. What kind of ASP are we looking at for this kind of product and how is the competitive landscape specifically for selective ALD given the change?

I think maybe on pricing, Paul can give you some idea. And then on ALD, Hichem can give you some insight, but we are probably not going to tell you how much the platform is for competitive reasons, but maybe just more idea on selective ALD.

On pricing, the key word is the cost of ownership. So when we talk to customers, it's all about cost of ownership, the cost of ownership, the target, the throughput time of the rates that we see. They have certain targets, we need to deliver on these targets. So from a margin point of view, again, it is very similar with certain applications higher than others, very similar to what we see today. There's no big changes. There's also, as we say, always competition. For every layer, we need to compete. It's just head on competition many times. And sometimes, again, we're leading by a mile and sometimes it's more closed. So that will be a factor. But cost of ownership is there the key point. On average pricing of the tools, it will again depend very much on the mix of the tools. I mean the tool that Hichem showed, we have [indiscernible] 6 chamber. That's, of course, a more expensive tool than some of the other ones. But it will depend over time how much of these are we going to deliver. And of course, we made certain assumptions. So average price might go up a little bit, but it does not really have a direct impact on margin because, again, they are the magic word is cost of ownership.

I think to talk about our differentiation in selective ALD. I think that what we have done is actually when you do selective ALD, you need to use inhibition. And the inhibitor is a unique process and precursor that we have developed ourselves. This inhibitor is ALD-based, which is different from what's used in the rest of the industry. It's a very stable when you expose it to air. It's easily removable and it's applicable to all of the selective ALD market. So in selective ALD, today I showed you DoD, MOD, but also there is MOM, there is DOM, there's all of those things. And the technology that we have is actually applicable to all the different selective ALD in deposition. So we think that we stand a very good chance in the selective market from the technology point of view.

Two quick questions. One on gate-all-around. And I just wondered if you could clarify one thing from the presentation. It seems like your strength in -- I can't pronounce it, molybdenum ALD for the basically the vertical channel is essential as historically, it's been based on copper. Can you confirm that that's broadly the sort of industry recipe across the 3 major leading-edge logic foundry customers? And if so, does that mean you've got them in the bag already locked in effectively and I've got a follow-up on China.

So we are talking molybdenum. I mean molybdenum ALD is used not in the gate-all-around device, but actually in the middle of line and back end of line. We have worked with a few customers on metal ALD, on molybdenum ALD in gate-all-around application and we have some good collaboration and we have developed and we are qualified in some of our customers' process flows.

Right. And on China, of course, the current environment is somewhat uncertain, with concerns around, for instance, a full emerging ban in China. That's why I asked the question earlier, and it feels like from your answer, your market position in the core emerging node, so call it 28 to 65 is actually reasonably weak. Does that mean that in the sort of worst case scenario fully emerging ban in China, the impact on your business would be reasonably modest?

I think that would be speculative because it really depends on what is being restricted. Today, I think there are some as far as we know, there are some restrictions on, for example, immersion, but I do not believe that everything is restricted. So I think we still need to see what exactly is the restriction. And also, at the same time, for example, for whether it's 28, whether it's 40 or whether it's 65, what are they using it for? I think that's still left to be seen. As of today, maybe just to share with everybody, we do see a strong business coming in from China this year. So we at the end of 2022, China was about 16% of our equipment revenue. This year will definitely be higher. And a part of it is for the customers that have not been able to, let's say, invest in what is called leading edge, which is 14 and below, they have changed to investing in maybe SOI or 28-nanometer. So those we still have some business there, and that's what is actually helping us to drive our business. In addition, I think the -- especially on the power side, in China, it is still -- the investments are still continuing, and it's still quite healthy, yes.

Can you provide a bit more detail on market shares? If I recall correctly from the previous Capital Market Day, you have a very good visibility a few years of because of the application wins that you expect to make? Then you also said that you expect the logic/foundry market share to remain at ALD to remain very high, similar level and then win share quite clearly in the memory segment. Maybe give a bit more detail on that? And also on the Epitaxy side, you make the jump from 15% to 30%. And at the time, I think you said it's mainly driven by shrinkage. I assume that you gave even more shrinkage and more to what gate-all-around towards 27%. So why then you do not make more market share in '27 than what you're going to make in '25?

Han, do you want to do that?

Yes. So the market share, we gave some color on the ALD market share then higher than 55%. It is still true what you quoted generally, in logic/foundry, it's higher. And in memory, it was lower and were improving, and that is exactly what we see in the last year, 2 years. And we continue to invest in memory. So nothing is changing there. So basically, we maintain our goal of larger than 55%. That's what we publicly share. We think it is a healthy target. It has become a competitive market. So for many applications, we have to compete. So that is the color I would like to give on ALD. On epitaxy, also there to go from where we were 2 years ago, 14%, 15% to 30% is a big step. It's competitive, but we confirm it today. And as I said, the transition to gate-all-around, we think, will help it. And so for the moment, it is too early to change anything on the 30% target for 27%. That's just too far out, and we want to just feel more confident and be a few years later down the road, to actually have made that progress by 2025.

I just had a couple of questions, please. One, I think in the previous guidance, you said in 2025, there'd be a $1.2 billion opportunity from no progression in gate-all-around. Could you give us an update for that number in 2027? And then when I think of the '27 guidance is understandably quite a large sort of range on the revenues for that. Can you just help us understand what gets us to the lower end of that range and what gets us to the higher end of that range? Is it just simply the adoption of gate-all-around in '27 or are there other factors?

Han, maybe you want to take the $1.2 billion.

So the 1.2 billion we shared 2 years ago was meant to give an indication on what we would -- what the increase would be for ALD and Epi in going from logic and the effect of FinFET to gate-all-around. We have not updated it for '27, but instead, we have given you today the impact of FinFET to gate-all-around through the $400 million increased SAM for ALD and Epi. That is very clear. This is the same for us today. At FinFET, this is the same gate-all-around. That is the $400 million SAM increase that we see and that, we think, is a clear update than trying to update the original $1.2 billion target.

Maybe the second part, I will try to take a step at it and then Paul can also join in. So the way that we have structured it, as Paul has mentioned, is we do a really bottoms-up kind of trying to find out, okay, one of the applications that we will be selling our tools for. We also look at, for example, where the customers will be investing, how much they will be investing and that's why we come out with the range. And we also tried to look at, okay, is there any correlation between this and WFE? And as Han mentioned, the midpoint that we have taken is $120 billion let's say, WFE in 2027. Paul, anything you want to add.

It is, of course, market development. For sure, it's customer mix per customer, you see, of course, different penetration levels, it's '27. So not all layers for '27 are known already. Which one we will win and not win. So we made certain assumptions there. So we can, of course, be better or slightly worse than what we currently estimate. So there is still quite a level of uncertainty. And in addition, which also doesn't help is today's uncertainty. It doesn't help if you have to guide for the coming years, if you have let's say, an environment that we have today with a level of uncertainty, we have inflation, with higher interest rates, the geopolitics, et cetera. So we just tried to illustrate that, yes, through a, let's say, somewhat larger range. I don't think it would be realistic to give you a range of whatever, EUR 100 million difference. That's not -- unfortunately, we cannot do that. I wish we could, but not possible.

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So firstly, regarding heterogeneous integration. So it's definitely a very popular topic. Even one of the back-end player do have cluster tool with the front-end competitor of you. So based on my knowledge, you still do have this kind of ownership with ASM Pacific, but you not necessarily working together. In the future, let's say, for example, for hybrid bonding, on plasma technology knowledge is more important. Would you be considering working closer with ASM Pacific to create a sort of front-end, back-end collaboration again? And also my second question is actually on your Epi market share. If I'm not mistaken, your current market share in Epi is about 16% in 2022. So is the 30% going to come straight in 2025? Or are we going to see a progression in 2023 and 2024? Are you gradually gaining market share?

Maybe I'll try to answer a little bit on the ASMPT part. And I think it will be good for maybe Hichem to explain to you what exactly we are doing on advanced packaging. So of course, we still are shareholders in ASMPT. We still own 25% of that. But what we do today in advanced packaging or heterogeneous integration, has no relation to them. There's no collaboration. There's no joint marketing or activities. And what we are really focusing on is really what you call the front end part of, let's say, advanced packaging. And Hichem can maybe share with you some -- as he has mentioned, some of the things that we are doing, which also requires, for example, ALD.

So for hyteorogeneous integration, I mean, some of the things that I mentioned is in the area, for example, of TSV, okay? In that area there, you need some ALD liner from that point of view. And so we're actually partnering with customers to develop that technology. And we see also lots of investment happening in the backside power distribution network with the power [indiscernible] whereby you need to have many ALD liner films but also metal gap fill. And the metal gap fill can be with tungsten, we're working with our customer to do actually metal gap fill with molybdenum. Okay, which is actually will be better because it has lower resistance of the tungsten. So we're involved in that. And also on the interposer level, interposer is really moving into the incorporation of MIMCAPs in the interposer and the deep-trench capacitor. And for that, the MIMCAPs, it's many ALD layers, high-k ALD layer capacitor, you want to increase your capacitors, you go to ALD. So we see lots of partnership with our customer in that area, too. And in silicon photonics, which is really part of the heterogeneous integration, I mean, we actually the tool of record for all customers in Epi with -- for the germanium detector and silicon detectors. So we feel very confident of our position. And we're working very tightly with some customers to understand this market and to get something out in this market. But we are very selective on what we do. But if we see an area that we have some strength, then we go and jump in.

Maybe Tammy, on your question on the Epi market share. I think the growth in our market share is going to be quite dependent on gate-all-around. And that's why we need gate-all-around to come in. And of course, starting next year with pilot, hopefully really ramping up high volume in '25. We have shared in the past, we are already in the leading foundry. We have won a second customer. We're not going to say anything about the third customer, but we have a very good traction, let's put it this way. So that's all going to help us when it moves in the gate-all-around.

You've had the LPE business for nearly a year now, I understand that silicon carbide is a fast-growing market. But I was just wondering if you could expand a little bit on the strategy for the business? Because I'm guessing now as a consolidation phase, understanding where the opportunities are. But given your expertise and their expertise, is there scope to expand the addressable market to other compound semiconductors in the future as well? Just how to think about LPE from here and then into that 2027 guidance would be great.

So I think on the silicon cover epitaxy side, we are doing well with some of the activities and wins that I have described. I think the market is at this moment looking at buying or investing in what you call equipment that can do both 6 and 8 inch. And the reason for that is 18 substrates is not really available. And they just want to make sure that they want to buy equipment that can do both so that they don't have to change this investment, I think, will continue, heavily driven by electric vehicles. Now one thing that I think we should also make it clear and that came from Hichem presentation. We actually have already been selling 8-inch vertical furnace for silicon carbide and for gallium nitride applications for a long time. In fact, I would say, when you look at 8-inch vertical furnace, we are probably the market leader for that product. So we have been doing that. So if you look at that, we are now trying to look at -- can we also cross-sell for example, same silicon carbide customer. Some may not have a vertical furnace. Some may not have our silicon carbide epitaxy, and we are trying to do that together.

Two questions. The first, in FY '24, you talked about the gate-all-around pilot lines. On average, how many wafers a month is a case around pilot line.

Sorry, I [indiscernible]

[indiscernible] Wafer starts per month for [indiscernible] gate-all-around.

For fiscal year?

I don't think we have liberty to disclose that. But generally, pilot production is small, small, few K, maybe maximum 10k.

That's very helpful. And then you mentioned expanding your European capacity and you talked about CapEx. Are you thinking about building a sort of European campus center of excellence? Or is this just purely assembly manufacturing capacity?

I think maybe Hichem would be in the better position to share the idea that we have.

I mean for Europe, what we see in Europe as the strength is really in R&D. So -- but in Europe, we also located in many different areas. If you look in the U.S., we have a central R&D system. In Asia, we have a central R&D system, but we don't have it in Europe. And Europe is our hometown pretty much, okay? And we like also to put more and more emphasis on R&D in Europe, especially in the area of power electronics, which Europe is a leader here. that's really the thinking that we have. It's really strengthening our R&D in Europe, which we already have some investment in Finland with the University of Helsinki and also with [ IMAC ]

Your margin, your EBIT margin guidance is pretty stable through 2027, so do you expect it to improve gradually from 26%, which is probably this year up to the end of the range? Or should be always in the middle of the range because you are ramping up the R&D expenses. And then second question on silicon carbide. You have a single wafer technology. You have in the pipeline to expand to multi-wafer or you will stick with this because of better, let's say, productivity in terms of defects?

I will just quickly answer the second part, and then Paul can give you insights on the margin. So the answer is no. We will continue with single wafer because it's proven that in terms of our performance, that is superior. So we will stay with that. Paul can explain to you the margin side.

So for the margin, it will not be a linear line up, as we always say, the most important factor determining the margin will be the mix and the mix can be different from quarter-to-quarter, from year-to-year, it can be better, worse, et cetera. So it's definitely not one line up. One factor that will contribute and that should see a line up once revenue starts to grow again is the operating leverage on the SG&A line. So everything else equal, the margin will go up. But of course, if the gross margin would come down because of mix, then of course, also, the EBIT margin will come down, but still better than it would have been today. Given the operating margin, the operating leverage that we will expect on the SG&A line, once again, revenue starts to grow again.

I just wanted to take a step back and look at the deposition market, it's about $27 billion. You only addressed maybe 10% to 15% of that deposition market. The largest part of the other is PVD, CVD from tools like Endura from Applied Materials. So what is your ambition to penetrate the Endura market today? You mentioned this molybdenum and opportunity. Is the goal to basically eat into the larger CVD and PVD markets? Or is it just more of a niche strategy?

So of course, the main part of our play in deposition is ALD and epitaxy, silicon epitaxy. And we will continue to focus on that. Now what you have just mentioned about whether we would like to go after the market that is now covered by our peer will depend. The case of metal or ALD metal is one that is very clear because it is transitioning from CVD and PVD into ALD and that plays to our strength. When it comes to this kind of situation, of course, we are going to go after it. But we are not going to -- try to go into, for example, CBD in a tungsten or PVD in a copper because that's not our main core area. So that's what we will do.

Two quick ones. Thanks so much for the spotlight on your advanced packaging capabilities. So First question is how big is that market for you because [indiscernible] revenue, you can choose whether you want to disclose '22 or first half of '23. Second, on the TSV opportunity, should we conclude that you've got exposure to CoWoS within that?

So maybe I'll just take the first part, and then Hichem can answer the second part, whether we have exposure to CoWoS. I don't think we are going to disclose any revenue specific segment. And for us, advanced packaging is still a growing market. Today, it is not really that big. But maybe if you fast forward 5 to 7 years down the road, it could have a lot of potential and that's why we are trying to do it. As far as whether TSV has exposure to CoWoS. I will let Hichem answer that.

Yes. I think we're working with our customer on CoWoS opportunity right now. in TSV packaging, but it's really on the development phase right now, more than anything else.

Firstly, a bit puzzled on your CapEx. Initially, you mentioned EUR 60 million to EUR 100 million for the next 4 years. First year was really ahead of that number. For this year, EUR 350 million to EUR 200 million and then for the coming years between EUR 100 million and EUR 180 million. More or less initially, we would end up at EUR 320 million. Now we are at EUR 550 million. Your sales guidance hasn't changed if we take into account the LPE acquisition. So what new signs insights that you have that you have changed your CapEx plan, so drastically going forward? Compared to what you have stated 2 years ago.

You have more insight in the number of square meters that we require. And I think that was not on our radar that with the growth and the number of opportunities that we work on and the number of tools that we need in our labs to work actually on these opportunities that we would literally almost at the same time instead of sequential outgrow the facilities that we have, the clean rooms that we have and that was just not sufficiently clear on our radar. Now that we have better on our radar now. We are working now on these applications. We know better, I think, what is coming. And with that, we've updated our guidance. But of course, if we would have known this in '21, we would have immediately shared that, but it was just not foreseen that the R&D facilities, which need that space that we actually need today.

Just one short question on ALD basically where you talked about the addressable market being 10% to 14% growth rate. Basically, you're looking for a 55% market share, both in 25% and 27%. So just thinking about the split between volume and pricing there. What would that be? And then the second question is really on the geopolitical risks and export restrictions. Obviously, you've had them already in advanced equipment, specific types of technology. You've seen some in materials as well in chemical compounds. I think you've talked about the fact that ALD obviously could drive on new materials. So basically, the question is, is there some [indiscernible] that basically that could obstruct some of your ALD growth basically if some of these materials will be further restricted.

I can take the second part of the question. But can you maybe just repeat the first part of your question, you were asking about volume versus pricing split?

Yes, exactly. So then the 40% growth rate, right, that's sort of the idea. So what is the units basically growth rate you're looking at and the sort of pricing within that.

Unfortunately, we don't disclose that. We don't give a volume. We also don't disclose pricing. Now on the so-called -- I think you mentioned geopolitics or let's say, export control. So number one, we comply maybe even more than 100%. We are very cautious. So we comply fully to all the export control regulations. And based on what we know today, including those that have been announced by the Dutch and the Japanese government, we don't see any additional impact to what we have already shared in the past. Now of course, there are some rumors, some guests that look -- the U.S. government is going to announce new regulations or update their regulations. Anything that we say will be speculative. We have to wait and see what's going to come up. Today, I think the restriction is really on what we call equipment, critical equipment, equipment that can be used for 14-nanometer and below logic, in 128-layer FLASH, 17-nanometer or 18-nanometer DRAM. That is the restriction today that we know, how this changes, again, over the next couple of quarters or years, again, that will be speculative and we just have to wait and see what happens.

If I can add to your question, we really don't see geopolitical issues as far as getting the precursors from -- that we use. Many of the precursors or the gases or the chemical that we use right now for us, we don't foresee any issue on where we procure them from. Most importantly, the precursor that we develop actually synthesizes. So many of the things that are happening are actually we develop those precursors ourselves in our R&D laboratory. So there is absolutely geopolitical effect from that point of view.

I think we have to probably come to an end. I want to thank everybody once again. Thank you for your time today. I hope again, this has been very useful for you. And of course, it's always a pleasure to be able to see everybody in person. I think we have a short -- I don't know what you call it, but it's outside. And hopefully, we can still continue just to chat a little bit. Thank you very much.