BE Semiconductor Industries N.V. (BESI) Earnings Call Transcript & Summary

This is the agenda for the presentations this afternoon: a small strategic overview by myself; market trends, Chris; wafer level assembly, Peter; and Christoph, die attach; Jeroen, packaging; and Bart, plating, followed by Q&A. Next slide, please. Let's hurry up a bit. Hybrid bonding, that's what you all came for. Well, I hope you also came to see the other Besi products. But anyway, we're in the midst of a unique transition in this industry, where we see the hybrid bonding being adopted as the next mainstream technology for interconnect of single devices, but also organized in a chiplet architecture for dimensions, connected to below 5-nanometer chip design. And that is in the past 12 months since you were here. Already said, not anymore a question of whether this will come to the mainstream, but the question is only how fast and for which applications. So some of that, we will explain a bit more in Peter's presentation. But that's, of course, key. Then you've also seen the first high-volume TCB chip-to-wafer. And to make that more clear, again, we have entered into the TCB world about 12 years ago, focused on stacking memories at that time, building memory pack, and now continue with a new challenge is on connecting CPU's Scrum. We see, also in industry, again, at an inflection point and the importance of semiconductors for our society is not only because of the technology enabling many more applications and faster and supporting the competitive environment for our economies around the world, but this has also become ever more critical. And that has put more focus onto what is happening in this industry, where it is happening. And as you all know, more and more, the dependency on Asia is becoming too risky so the world is developing plans to establish more onshore, new technology developments, both in Europe and in the U.S. And that's -- combination is helping us tremendously in understanding where this industry will lead, and especially the back end, which so far has been, you could say, separately organized. But through this hybrid bonding becoming ever more integrated into the front-end of semiconductor development. Next slide. We also see that demonstrated, I would say, nearly every week. We have articles in major newspapers, also many conferences, the world is looking for a way to do 2 things. First of all, to move this industry in the next technology generation, where advanced packaging and especially hybrid bonding and chiplet architecture is seen as to be the major enabler of that. But #2 is how the world will reorganize in order to develop over time, less dependency on the Asia Pacific region, and certainly to have control over technology onshore. And Besi is in the midst of that. It is both our customers, also in the partnership with Applied Materials, ever-better positioned and being part of that community having the opportunities for the years to come. Next slide. So if we look at more down to earth, what's happening, we are still in the midst of a downturn, a downturn which started at the beginning of last year. Some people argue we should be somewhere in the trough and things should become better from now on. But who knows, this industry is highly unpredictable. So it could still go on for some time. But if you look at basically how we've managed so far through this downturn, you all know the numbers we released end of April. And things have not gone, let's say, too bad for Besi. Revenue has declined, however, margins have gone up. But we've spent enough time, I think, on that in explaining our numbers after the release end of April. In the second half of this year, what will happen, of course, the big question, will the tide turn? There are some indications in China, which we also mentioned already end of April, which indicates some increased demand. But still on a relatively isolated basis, you can't say there's an overall recovery, certainly not outside China. There are some industry segments which still grow positively, like automotive. So basically, '23 is a down year, and if we look at the statistics, typically, the downside will last 6 to 8 quarters. So somewhere towards the end of this year, beginning of next year, we should see the next cycle take off, which is predicted by all the independent analysts in this industry, TechInsights, Yole, whoever you want to follow. But anyway, important, even more important is how are we positioned for this next cycle. And it's fair to say, and we'll spend some time in the presentations, we have developed not only for the latest technology, but also for all of our existing products, next-generation improvements, applications. And that should give us an opportunity to benefit, again, better from the next upcycle, like we've done in many cycles in the past. So those are key points to realize. In addition to that is our cost structure. As you know, our margins are definitely at the higher end of the spectrum, but that means -- or that's only possible when you have a constant focus on growth. And in every downturn, we reassess our manufacturing organization, our supply chain organization. Through the COVID period, we've had to add many additional suppliers, which were qualified because others were not able to deliver. And so we have a higher selection capability, which is also under full swing. So from a cost point of view, we also anticipate to be in a better position despite that we have, of course, this inflation [ angle ]. But this inflation works on both ends, on the top line, but also on the cost structure. So far, we are able to manage that in a positive way, but that is also something to look at it carefully. Next slide. And here, we see a bit of history, 2006. The first year this company was in the Besi family, 2005. And there you see when we announced to the world in 2005, we've bought the best in the world, flip chip, et cetera. And there, you see we go -- but this was the banking crisis, okay, it's a bit of an excuse. But anyway, in all the years, you see the swings, 40% down, 50% down, 50% up. But you also see, gradually, improvement of margins, gross margins now well above 60%. And that is, again, a combination of focus on the winners in the 3 segments: communication, data and automotive. And at the same time, improving, on an ongoing basis, our cost structure and our operating model. So anyway, if you take the midpoint of the guidance and you take the last 12 months, we've already fallen off a cliff of EUR 750 million to about EUR 600 million. But then if you look at past then, that also is a trend which you can recognize. So we're not worried about that. But just as you know, it's a wonderful cyclical industry. Next. And we see here a bit of -- yes, let's say, comparisons in efficiency, profit efficiency over cycles, both in revenue, orders, gross margin and then baseline operating expenses. Always keep your expenses down is the message. But anyway, a consistent line which doesn't need much more detail. Next. We also see that here, in market shares, a gradual improvement of Besi's market share overall. But for some of you who do not know yet, we're not that much interested in market share; we're interested in margin. But still, if you have the right margin, you will also see an increase in market share. So in the addressable market, a strong increase. Again, '22 over '21, die attach, very consistent and very strong. Packaging also. So in total -- and we see here the revenue split, 79% is die attach; 21%, packaging and plating. So it's around 80%-20%. But, all in all, a very positive development in the last upcycle. Next. If we take out of the total back-end markets, the addressable markets and especially the advanced die placement, for years, we've been focused on this advanced packaging. That's also the history of Besi from the start. If you focus on that consistently, it simply offers you the best growth opportunities and also the margin potential. So anyway, this is details which we share each time, and the data was released in the last 2, 3 weeks from TechInsights. So anyway, next slide, please. What's important here is that those areas where we are focused, so the advanced packaging, in particular, is where the growth is, and that's not a surprise. So if you do that consistently, you also increase your share overall. And we can see in the years to come, the big opportunities are the growth in the advanced die attach arena. Next slide. Important is, of course, shareholder returns. And all of you know that over the years, we have always maintained a very healthy balance sheet, simply because margin-driven. And anything above 20% of revenue, we distribute to shareholders in the form of dividends or share buybacks. So simply to keep our balance sheet safe, we see here the threshold of 20%, so that we can weather any storm, but also are prepared for any strategic step to finance that on our own balance sheet. So over time, a tremendous return to shareholders over all the years. And also you see here the development of net cash and gross cash over the past 5 -- 4 years and a quarter. Next. And we see that the capital allocation then to shareholders. It's amazing, EUR 1.6 billion since 2011 in dividends and share repurchases and still maintaining that 20% at a minimum in net cash, 20% of revenue. Next. So our model remains very much intact in this downturn, what we shared last year, EUR 1 billion plus plus plus, more details to follow. Although our revenue has declined in this down cycle from EUR 750 million to EUR 600 million, we still maintain to our EUR 1 billion plus plus plus revenue model. That means in the addressable market, where you saw in the last numbers, just below 40%, that it should be slightly above 40%. Our margins maintained well above 60%: for gross margins, 60% to 64%; operating, 30% to 45%. Headcount split, Asia and Europe, 80%-20%, not much change. Then the Scope 1 and 2 emissions, 62% reduction, and global energy needs, 75% from renewable sources. So that's our business model. Next slide, please. That leads us to the next chapter. Chris, please share with us your insights on where this industry is heading.

Thanks a lot, Richard. Hello, everybody. Good afternoon, and hello as well to those of you listening in remotely. My name is Chris Scanlan. I'm SVP of Technology at Besi. Just a brief introduction for those of you who I have not met. I've been in the industry for about 27 years now, working all the time on advanced technology development and about 70 patents, all related to advanced packaging. I've been with Besi now for about 2.5 years. I came to Besi to not only help change the world but help find ways advancing interconnect technology. So excited to talk to you about that today. So with that, let's move on to the first slide. So we're fortunate to be in an industry that's growing rapidly. We have some projections from semi and other firms that we're actually expected to see a higher growth rate in the future, over the next decade or so. We're moving from an era where we had Moore's Law helping us out on cost reduction year-on-year as we increased the number of transistors in a chip and, at the same time, reduce cost per transistor. We're now kind of seeing the end of that trend. The other thing that's happening is we're having a trend towards big data and AI generating data and information for us automatically. It's no longer us humans relying on ourselves to create the information and data, it's machines that we're building doing that. So it's simply more data and more information has to be processed or transmitted. And this is a positive trend for our industry. Next. That said, yes, we're in a cyclical downturn. We had at least 2 really great years, and now we're paying the price with a downturn. You can interpret the chart as well as I. Maybe we're at the bottom, not sure. But Richard said we're experienced in managing these downturns, and what we're doing now is laying the foundation for the next upturn with the technology and the services that we're developing. Next. So this is seen in this data from TechInsights. The semi CapEx overall market, this is memory and foundry CapEx but also [indiscernible], is expected to decrease about 17% in 2023. The key point of this is that the biggest percentage decreases in memory and logic and foundry is not decreasing as much. And if you look over time over the last 5 years, advanced logic and foundry has actually grown faster than the memory and analog and others. And more exposed, I would say, to the foundry and logic portion of the market. Next. As well, if you look at just what's been announced in terms of big investments in fab capacity worldwide with these leading players, we see many realized over the announcement period, of Which one of them, about 80 billion, 85 billion, and annual investments each year on new fab capacity as well, again, supported by government initiatives, Chips Act, [indiscernible] as well as indirect investments from people like Apple. And it spawned further increase in that number. So we see a positive outlook for the long-term future. Next. Yes. Of course, we do anticipate a downturn in the assembly equipment market this year of about 23%, maybe 22% depending on the analyst. But a rebound is projected in 2024-2025. This year, you can see that the downturn will still be at a higher level certainly compared to 2019. Next. So looking specifically at the advanced packaging markets, Besi is really focused, in terms of our product strategy, certainly on R&D spending on advanced packaging. This is data from Yole Développement that recently was published, showing a 40% CAGR in advanced packaging revenues, not the equipment revenue but the solid revenue associated with advanced packaging. And they define high-end performance packaging as those things like fan-out, CoWoS, hybrid bonding and those kinds of things. So these are all the areas that we're playing in, and this is very good for our future. Next. So the end markets that we're serving principally are mobile Internet, computing, automotive and industrial. In all these areas, there are applications that are driving continuous growth. We'll talk about some of them today, cameras. We'll talk about generative AI and what we're doing on the networking side. I'll talk a little bit about our BFO electrification and automation. But all these markets are continuing to be important investment. Computing is now the largest market, which is a change from last year. Next. I want to talk a little bit about chiplets, because there's one trend in the last couple of years that is really where our focus. So our R&D efforts at Besi, it's chiplets. And what are chiplets? Chiplets are the idea of taking an SoC, which, year-by-year, we used to cram more and more stuff into the SoC, more functionality, with smaller transistors and reduced costs. And that capability is simply slowing because it's getting harder to reduce the size of transistors. That's being actually very difficult to implement a new node and keep the same cost per transistor. In fact, transistor cost is going up on a per transistor basis. And because of that, there is a trend now towards splitting this SoC functionality, I guess the one chip into multiple chips in such a way that we can use these most advanced nodes only for those functions that really can benefit from those nodes. Because some of them can, like SRAM, as an example, does not shrink anymore as you implement new nodes, either these analog functionalities you can see from this chart. Therefore, by using chiplets, they can reduce the cost of the overall system, by combining the most advanced nodes or the trailing nodes, maybe even devices with different fans, all in the same package. But when we do that, we need to have a very high-density interconnect to put them back together inside the package. This is one example from Intel called Ponte Vecchio. This is a device GPU for data center and supercomputing that has 47 active chiplets, which is still kind of the best example actually implemented in the market today. So I'll talk a little bit now about what kind of interconnects. Next. The overall market for chiplets is, up until now, been relatively small, but this data from TechSearch estimates that the CAGR for chiplet packages will be about 100% over the next 5 years. It's really, again, driven by things like this Amazon device. It used to be a single chip, are now split up, taking out functions that aren't really benefiting from this -- most [indiscernible] package. And the way that we did that assembly can be earnest, but we anticipate this to be prevalent and really very commonplace in servers and CPUs initially. And this big jump in their data, according to TechSearch, they anticipate their transition as well in mobile. Next. So how do you put these chiplet packages together? It's -- these things can be very complex. That package I showed you from Intel, again, had 47 chips. Inside that package is many different interconnect technologies at play, not just one, and they all complement each other. So in this example, this is kind of a generic example. We might start with hybrid bonding. This is a salmon-colored stack, 2 chips or multiple chips directly connected to this hybrid bonding copper-to-copper interconnect, providing the highest density interconnects. Even if we have that, we then have to take that stack of chips assembled to something else. Oftentimes, it might be done using chip-to-wafer TCB, taking these chiplets and then further attaching these chipsets. Okay. The interposer might have other things on it. It might have HBM, it might have other chiplets, all assembled using flip chip or TCB. And then we have to encapsulate, right? We have to make that encapsulation around the chiplets, planarize the whole thing to make it thermally efficient. Now that interposer has to be assembled onto a substrate. That also takes a die attach machine that is capable to handle a very large other component like our evo. And so basically, at Besi, our strategy is to provide a full solution to allow customers to assemble these complex packages with Besi equipment. Next. But the most important technology that we are working on today really is hybrid bonding. Hybrid bonding is the third major kind of interconnect in our industry's history. So we started with wire bonding, and then the energy split chip. And when I started in 1994, I was working on flip chip at Motorola. It was really transformational. Because before that, we had wire-bound pads on the edge of a chip. And designers thought that way, right, that the people that were designing the chip, the circuit, they knew they had to put their [ iron pads ] on the edge because that's where they could be connected. And when we said, "Hey, you can put the contacts any way you want them to." That was really difficult for them to grasp at first. And some of the early flip-chip even had bumps on the peripheral pads because the designers couldn't think differently. Hybrid bonding is even more transformational. Because what it allows to do is design in 3 dimensions with much higher contact density than what's been possible in the past. So what is hybrid bonding? It's basically a direct copper-to-copper interconnect between chips without any solder or other kind of wiring. We can do it at extremely fine pitches, today, 6- to 9-micron pitch, in the future, down to 1-micron pitch and below. What this provides is the highest bandwidth, a lot less power, highest efficiency in an interconnect that's possible. This, in turn, is going to allow new architectures, new ways of thinking about design that are not possible or have not been possible until today. Next. Some of the applications that we see. First, high-performance computing. We see this really big cache that we'll talk about, but in the future, any other implementations or ways of architecting high-performance computing systems. And then as a next step, stacking high-bandwidth memory. Peter will talk about that in some detail. There's the application processors for phones, and also opportunities in displays and photonics. Next. So last year, we talked about AMD's road map. AMD, of course, came out with 3D V-Cache last year. And just to remind you, the picture on the left is a picture of the 3D V-Cache architecture that AMD introduced with hybrid bonding. And fundamentally, it takes a CPU chip, which is the bottom chip. On the back of that CPU chip, they mount a SRAM device, which basically triples the SRAM capacity of the chip. But I just wanted to remind everybody down again that when you're counting bonding steps, I know a lot of you are counting bonding steps, it's not just one hybrid bonding step, it's 4. Why is it 4? So we mount the SRAM to the logic device using hybrid bonding, that's obvious, but there's 2 other spacer chips that also have to be mounted. They're just blank silicon, but to our monitor, they look the same, same UPH and everything. There's a phantom bonding step that we don't talk about much that is used as kind of a temporary bonding step. So 4 bonding steps for each one of these small chiplets. Then AMD can take that small chiplet, they can combine it in many different ways. In the middle part, this is a new implementation of their gaming processor. So you can see there's 2 CCD chiplets. In this case, only one is hybrid-bonded, the other, not. And I just want to stop there and point out something that's really brilliant about what they've done. This is a completely new technology, hybrid bonding die wafer, had never been done. So you might think AMD is taking a huge risk. But the way that they did this is they implemented the design in such a way that they can actually use the same chip with and without the extra customer. This allowed them to qualify their technology and manufacturing process and improve maturity. Now that they've done that, they're now introducing products like MI300. MI300 is a GPU-CPU combination. It's used for supercomputing applications. And this is really architected around hybrid bonding. There's no other way to build it. So it proves that hybrid bonding is mature. AMD is not the only one thinking about this. AMD has proven the feasibility in production. There are many companies looking at designing systems like this. Next. We talked about capital intensity last year. Once again, AMD has now implemented another generation with even more process steps called the Genoa-X. So we're now up to 50 placement steps in a single package. Next. Another key development that we see is a lot of interest in chiplets around standardization of the chiplet interfaces. There are multiple organizations working on this. The most mature is called UCIe. You can see the companies that are engaged in UCIe, but all these companies are working on ways to standardize the chip-to-chip interface, both the physical interface and the interface in terms of software and IP. Next. We've had a few questions about the 2.5D interposer as well. So this is actually a pretty small market today. You can see the market size in 2022. But 2.5D interposer has potential, it's known as CoWoS, involves placing flip-chip die or other kinds of die onto an interposer and then further assembling that interposer onto a pack of substrate. So the chip-on-wafer, that's the part where we place the flip-chip die onto the wafer. And then the AMS substrate is taking that interposer and further attaching it to an AMS substrate. We expect this market to grow rapidly. This is new data from Yole, just from May, showing the rapid growth rate in this step. It actually does support multiple process steps in this flow [indiscernible] relatively small market. Next. Yes, in the mobile space, there are several different parts of the mobile phone and wearable devices that we're interested in tracking. So first off, I mentioned a little bit about advanced camera technologies. There are new form factors, new types of cameras that we're working on. There's [ scope ] cameras, display cameras. In the mobile arena and basically the application processor side, there's a lot more AI capabilities being built into the application processor, and that will continue in the future. We're looking towards a chiplet architecture for the AP. This is one possible arrangement using hybrid bonding. So this will be a major inflection for us in the future, instead of having one die in the base package, having 3, 4, 5, 6 die in the base package instead. And then we've also seen some news, I think, yesterday about AR chipsets -- or headsets. This is also an area where Besi is engaged. We can't talk too much about the details, but this could be an interesting market going forward. Next we got automotive. We have the 2 major trends of electrification: the powertrain and automation. So autonomous driving and ADAS. And we simply see a very high growth rate in both of those areas. In the case of electrification, we anticipate an increased growth rate, as we have government regulations picking it in many different areas. By 2040, I think 60% of the global fleet will be, for new cars, will be electric. And this is all driving higher number of chips and, hence, content per car. Next. One of the key areas in the powertrain side is trains and powers, [ electric motors ], moving from IGBTs to silicon carbide or gallium nitride. So on the EV powertrain side, the silicon carbide is becoming prevalent, silicon carbon LCs from GaN power charging for other kinds of power conversion. Gallium nitride has been a huge share already in things like commercial portable chargers, but also now being used on onboard chargers, maybe even on the driver and the flip-chip. So both of these are growing rapidly. They're part of different kinds of assembly, especially in die attach, where we have moved from soft solder, which is still growing, but introducing now diffusion bonding, and sinter bonding has higher reliability of technologies for these power devices. And even on packaging and plating, areas where we have customized solutions, high reliability solutions for the automotive market. Next. Yes. So this brings me to the summary of the market outlook section. As I mentioned, really, the move to chiplet architectures is driving a lot of our R&D and innovation at Besi, particularly in the area of hybrid bonding. And we see applications and related developments in all the end markets, including HPC, mobile and in automotive, as well as the automotive power aspects. With that, I think I'd like to wrap up my section. Thank you.

Thanks, Chris. Any questions in between? We have a question-and-answer at the end. Now it's your turn, Peter.

Thank you very much. Welcome, everybody here in the room and also online. My name is Peter Wiedner. I have been working for Besi for over 19 years with 1 interruption in between. And actually a little bit more than 1 year ago, I took over the responsibility for our wafer level product portfolio. So let's get started. Our wafer level product portfolio is actually what you see on this screen here. You have seen that the scheme of this new chiplet architecture in Chris' presentation just before, and we can offer a lot of production steps within there. But the wafer level steps that are, on one hand, for sure, the hybrid bonding step, #1, which is the enabler for this chiplet technology. Then secondly, the thermo compression, which is also coming along not only old memory package types, but also in these new chiplet package types. And third of all, we also do provide a machinery for the bridge attach. Now having that said, it is, in a way, the 2 enabling technologies. First and foremost, for the hybrid and also the TC, these are the enablers, while actually the bridge attach is more a supporting step. And for that reason, I do want to concentrate for this year's presentation solely on the hybrid and the thermo compression. So let's get -- before we get into the hybrid and the thermo compression, let's look at this chart, because we are very often getting questions about, "Well isn't hybrid taking over the TC technology or other way around? And how is this related to each other?" And I think that's a very nice chart where you can see it. We have not only, by the way, the hybrid, but also the whole development, from the flip-chip arena that Chris also mentioned in the beginning, over the development of the [ CC4 ] flip-chip, which is the deep purple one here, then the TCB technologies in a chip-to-substrate configuration. Over to then, the more modern side of the TCB with chip-to-wafer, which is then coming close to the new chiplet architecture as well. And finally, going into hybrid. And that's, on one hand, already a historic development of the flip-chip technology overall. At the same time, you can also see on this chart when to use which technology, so to speak, because it really heavily depends on the number of interconnects that you need -- where to place. And for that [indiscernible] between the interconnects. And you see that when you get actually in the arena where you have interconnect pitches below 10 microns, so that's the green area, you only can use hybrid anymore. You don't have a chance to use TCB, because simply with melting the metal of these TCB studs in between, it's too narrow to the neighboring and it will interconnect. So we will more or less connect all the bumps that you have underneath. And so only a copper-to-copper interconnect is out. Any other additional metal enables you to go down to these low bumpers. And that's the reason why that's not one or the other. They are coexisting. You need both for the really high-density interconnects to meet the hybrid. And then as Chris already mentioned, I want to emphasize it once more, also in this new chiplet architecture, if you then have hybrid stack and you want to connect to, let's say, to a carrier or to a carrier substrate where you typically don't have that high intensity of interconnects anymore, then you can switch over and use a bit the TCB. And still, because these are high-end packages, it's still a lot of interconnects. And you see one word in there, in the light blue area, fluxless. So in the left portion of that, between 10 and 20 microns. And that's definitely an arena where TCB can play. However, it's a more advanced TCB compared to the history because the pictures are getting so small that you, on one hand, need a high accuracy. That's clear, obviously, to meet the counterpart. But also that we cannot use flux, which is a supporting material during the bonding anymore, because we cannot clean out afterwards because the interconnects are too close to each other. And for that reason, we then need actually to have a fluxless TCB. And that's exactly this arena between 10- and 20-micron pitch. That's precisely what we are targeting with our next generation [ TC ], as you can see. But let's stop here and really -- what's this? I guess it's a different [ section ] here. It doesn't matter. Let's go straight into the hybrid, actually, into the introduction slide. So last year, in the same forum here, we were talking about our -- like the new generation -- newest hybrid machine with 200-nanometer with dual gantry. So providing also a good speed for this very complex process between the 1,500 and 2,000 UPH. And that's still there. But since then, there is one very important thing came in addition to that. Since then, we are doing high-volume production, and also the yield of this production, we could bring up to the expected level of 99.9% and above. So that's really an add-on since last year. I'll get to more details in some slide, in a few slides from now. And for this year, our main focus points are really developing and providing the first machines to the market on the 100-nanometer. So that's a big topic of our today's and this year's activities. And also because last year, we have started actually with logic devices, we are heavily engaged in this year, specifically with the memory devices for high-bandwidth memory. Also more to that later on. So -- but we don't do that alone actually. We are doing that together with AMAT in a joint development that we have started back in 2019 already, which is very crucial because in the hybrid bonding, it's not only about the bonding machine, it's also a lot about the surface preparation of the material that is getting into the machine. And only if everything comes together, you get a good bond and with very good yield. And for that reason, it is really true, and we have established that relationship and it's a very good relationship. We are expanding on that every year. And out of that, we already get a lot of benefits. On one hand, we now can offer, together with AMAT, not only a single standalone bundle which we still do, for sure, but in addition, we can also provide to the market a fully integrated system, which is also including all the preparation steps that are needed so to really make it easier for the customer to control all the individual growth steps that are needed to get good point. So that's #1. That's the integrated system that we see in the left part of the slide. And the other part is we have set up together in Singapore, actually, our Center of Excellence, where we also have this type of equipment over there. And all -- both of our teams are working there and where we can do actually, on one hand, development work on the process together. So for example, the memory, high-bandwidth, the high-bandwidth memories is one thing, as I already mentioned, for this year. And on the other hand, actually, we are also -- because we have the same capability there, we are doing also the customer demos in our Center of Excellence in Singapore. So actually, all relevant customers who want to use hybrid in the near future are definitely -- they have all visited us. So we are in contact with all of the leading customers of this world via our center here. So that's the reason why this partnership is really crucial and important to us. Now let's look at the development of hybrid since last year, since we have met last year for the same reason here. And last year, in fact, at that time, we were just about to install bonders in Taiwan for high-volume production. And on the upper side of the slide, you can see the first products that have been introduced by them. And actually, today, we can say, well, we have finished that. So the first high-volume production factory in Taiwan is set up, all with our machines. Actually, the end customer or our customer has launched this product, and you see a few examples. That's not all, but a few examples on top, and Chris has already shown his slide. I'll need to repeat twice. So they started with the Ryzen, but they're also expanding step by step. And besides this setup, which is a stand-alone bundle setup, we have also managed to finish the development together with AMAT of this integrated system that I have mentioned before. And also the first shipments of this joint integrated system have been happening actually last year, towards the end of last year to the first integrated lines, also to meet customers all over the world. So that's our joint activities. But as already mentioned earlier today, we are not stopping there, because especially while the lead customer AMD, or the first adopter AMD, we already getting the signals that the next generations because the design thinking is changing. That was the example that Chris was making back to the flip-chip. So also the designers now start to change and they want to see the opportunities, the new things that they can do. And out of that, we immediately got the question, "Well, I think for next year, we will need even more accurate machine for 100 nanometers." And this was on our road map. Also shown last year, we have executed on that. And actually, we will ship the first-of-its-kind machine or the first outflow machine of that to our customer at the end of this month so that he can already start with that machine to install it and also do the sampling for this end customer for this next generation type of chiplet products. So I would say a lot of things have been going on since we met last time, but there is also, for sure, look what's ahead of us. So what is that? Yes. Well, on the market introduction, if you look at that, especially now, about this time, they start with the MI300 that Chris has explained a little bit in more detail what it means. So are they really high-end products? And with also the input of the next 100 nanometer that is needed, we also did get the confirmation actually about the next ramping scenarios of the leading logic -- of the 2 leading logic customers of this world, which are planned actually for '24, all over the year, starting at the beginning of the year. And so we got the confirmation for both of them, and that is really a good outlook for us. Now for us, actually, we have not only the cluster tool where we will also ship additional tools this year and the 100-nanometer machine, what is also very important for us this year is that while last year, there was this lead customer we were very focused on, this year here, together with AMAT, we have broadened our scope and we were really shipping a lot of machines to this first type of machines in the R&D facilities of all these R&D customers, logic and memory. And so that helps us to see that it's not only Taiwan and the U.S. starting with hybrid. But that really also Korea is following and for the logic and on the memory as well. And we are getting more insight into their programs, and we can now see much more that their programs are firm, and they are going for it and not only asking for information. So that's really proof to us. We actually have widened our customer portfolio this year very much, which is helping us then for the future years to also expand into their production. And in order to do that, also one important topic, which is on the right bottom is our fully fledged, also redesigned 100-nanometer machine release because this year, we are shipping out machines in order to support leading customers. And from next year, end of Q onwards, we have the serial solution for that ready for all the customers in the [ program ]. So that's for the next year, and that was very much focused on large outlets, have a look at hybrid and memory. As I said, we already contacted all these memory customers as well. And it is getting more and more visible that actually for the high-bandwidth memory generation #4, the HBM4, that will be a generation where these customers and these companies will need to use hybrid into their -- as a bonding stack into their product portfolio. So there are actually 2 reasons, and one, you can see actually quite nicely on the right upper side, all these AI calculations and all the high-power computing. That's not only high computing power, the higher the computing power, the more memory you need in order to connect to these processors. And it's not only that, the amount of memory, it's also the speed that you can access the memory. And what they can do with the HBM4 is that at the same space, which is limited and standardized, they can not only make an 8-stack memory or a 12-stack memory because the collections are nearly -- need no place. They can make up to a 16-stack memory. So that means you have more memory in the same space. Plus, as the connections are really pure copper connections and they are electrically superior, they can get a higher bandwidth out of it. And that's the driving forces why they are going into that direction. So they have a very clear reason why they need it. And for that reason, there are programs. They all say that between '25, '26, depending on the customer, that's where they want to start launching them. And we have the R&D now, and we have devoted actually from the [ Yole ] statement here, which is from an actual report that according to their forecast, 36% in '28 will be -- each HBM memory will be hybrid bond. So that's a little bit about the memory release, and what are we doing for that now? So what is our -- next slide, please. So what are we doing for that? Well, number one, we have started to intensify our process development activities in our Center of Excellence, which is on the top row of this slide, some of our test vehicles. And we have started with our own test vehicles to develop the processes that are needed for these memory stacking. So that's one activity. But we are not only doing that on our own. We also actually have engagement with -- yes, with the leading memory customers, and we have started to work together with them in our Center of Excellence. That's on the process side. On the machine side, actually, we started already last year to one memory customer who was kind of an early bird, and he already wanted to have the demo machine last year, which he has still today and in his R&D lab for his own research. But actually, in the middle of this year, we -- in Q3 of this year, sorry, not the mid-, we will definitely ship cluster tools to 2 of the leading customers for their first adoption, and that we are still testing of this memory. And that's we see here on this chart. So overall, if I sum it up for the hybrid, it has started launching last year. We were more in the R&D stage. In the meantime, we are in the HBM stage, and we have the outlook for next year as a next big ramp year for the logic. And now this year, we are starting together with the memory makers in the memory R&D stage, which will lead us to an outlook of volume ramping as a forecast from our customers, roughly about '25, '26. Now with that -- having that said, let's go to the last hybrid slide, which is the graph that we also showed last year for showing updated numbers, where we can see as that logic has -- is much more firm now, we could raise the low case numbers to higher levels because low cases for us, so to speak, in [ hybrid ] where we say, well, only logic will adapt to hybrid and none of the others. And now with a much firm outlook, we could raise that number a bit. What we also did not have from the screen, while we had it in our mind, but not on this slide last year, is also the third bullet, which is the application processors for mobile devices, which is a little bit farther out than memory. So it's the classic high-power computing first than the memory, but also the logic devices, part of the logic -- the application process for handheld devices will get down that road because also there, the computing power is increasing and increasing because not all the AI calculations can be done in the cloud. So something needs to be done with edge computing as well. And for that reason, also their performance needs to increase. And especially also in the combination that they are running on battery, so low power consumption is also a good argument there. So that will drive also these gentlemen down the hybrid road, but they have a little bit more time for that in order to do that. So currently, we got some signs that it could be around [ 2027 ]. And out of all these 3 categories, we can see that our outlook is still great for the hybrids. Actually, it's more on the rising chart. For sure, it's always coming in waves. It's the first R&D, then it's the first HBM wave. So it's not straight. It's always a little bit cyclical. But it's definitely coming. And we are currently seeing that our outlook, what we think we can follow is the mid case in this chart. For sure, there is always some room for improvement. And you have heard -- I think you might hear from Christoph also in the CMOS arena, there is hybrid bonding, which might get from a wafer-to-wafer to a die-to-wafer bonding, which is then our machine compared to other machines in the world. So that will give them with this additional uptick to a high case if that is happening. So anyway, we are in a good way for the mid case. With that, let's start to move over to thermo compression. Once again, thermo compression -- in our case, for our new machine, Richard said, we are doing that since 12 years. That's correct. But with our new machine, we are clearly targeting actually the chiplet architecture. And that means I have explained that on the other slide, on one of the beginning slides a bit, the high accuracy, we need fluxless capability. And what I did not mention, you need much the capability to handle much bigger die size system. In the old times, right, it was typically memory dies with a fairly small or medium die size. Because if you have already a package of hybrid-bonded devices, that's bigger than in the past the memory devices. We are now currently in the stage of releasing our first machine, and we have a new road map to even higher accuracy and fluxless. And that will be the focus. And that looks like this, so that exactly right now, we are starting actually -- you have seen actually a full production tour of the equipment for the deep work here on the floor. So that's finished now. Last year, we were in the R&D. It's now finished, and we are starting actually with our lead customer in -- now in the second half of the year to adopt. And we'll start at the end of this year also with memory customers. As I said, the road map for fluxless and accuracy included and not long out, but already within the next 3 quarters. So that is actually in order to complement in the chiplet architecture our hybrid offering. And with that, I can come to the conclusion. So with our wafer level portfolio, we are really targeting all the steps that are needed in this new chiplet era, for sure, #1 with hybrids where we have made our inroad, and we are clearly the market leader today; secondly, with the TC, which is starting as we speak here. And third, which I did mention, but did not go into details, also with supporting technologies like the bridge attach. And with that, thank you very much. I will hand over to Christoph.

Thanks, Peter. So I have to catch up a little bit. Good afternoon, everybody. I want to welcome you here in Radfeld. Briefly introduce myself, I am Christoph Scheiring. I'm actually Austrian and coming from here. I have grown up here in that facility and have meanwhile moved to Switzerland and running the facility there. I have 20-plus years of experience in semiconductor and in Besi. I have a technical background. And yes, I am responsible for the mainstream die attach. And this is what I'm talking about now. So die attach, what does that mean? It's about 70% to 80% of the basic revenue, with a market share around 40%, as Richard has presented, steadily going up over the last years. Even more important is our market share in the so-called advanced die attach segment. There, we have 75%, and this is the segment where we really do the advanced packaging with high accuracy machines. The die attach portion is an interesting market because it's growing above average, with a 12.2% CAGR, as predicted by TechInsights. And the drivers behind are really the mobile, I talked about it a little bit already. It's the mobile cameras, that is the main driver for us; automotive; as well as computer. This is a snapshot of the die attach product portfolio of the product lines I'm responsible for. The bread-and-butter machine for die attach is clearly the one on the top-left side, the multi-module attach, or 2200 evo as we call it. This is -- and I explained it a little bit already, a very versatile machine that is, yes, in very high volumes at this moment and always used when it comes to handling of nonstandard processes, nonstandard formats. On the right-hand side, we see the other high-running platform, the die bonding platform. This is the high-end die -- mainstream die bonder in the market. Then the next one in line is the flip-chip, where we have an offering in the mass refill flip-chip market for both -- for the strip-based formats as well as for the wafer formats. You have seen that downstairs, and I'll also talk about it [ later ]. And last but certainly not least, the soft solder platform, which is a dedicated machine for the power electronic markets where we do modules as well as discretes. Here, I'm trying to explain a little bit our positioning in the end user market is clearly the mobile that is the strongest hold for us, followed by computing and automotive, which is developing -- especially the automotive is developing well over the last years. I think that's a phenomenon we have seen throughout the downturn that this is about the one segment that remained relatively stable and even was growing. So looking to mobile there, the platform that is having the highest representation is the MMA platform with this camera and sensor solutions as well as the die bonding platform, this is mainly for 5G applications, but also IoT variables are drivers behind. If we look then to the computing here, this is the key positioning of our flip chip platform for CPUs, for GPUs, also for high-performance computing and also with the EVO platform, with the MMA, we are having a good, yes, traction in that market, on the one-hand side, with this hard disk drive applications and also in the high performance computing CoWoS segment. And on the right-hand side, the automotive, it's again the MMA that's having -- is having a very strong footprint there for sinter applications. Chris was talking about the new driver sintering, and here also, the EVO is positioned pretty well. And naturally, the soft solder, is a platform that is specifically designed for that segment, here, we are also having a very strong position. Now showing a little bit of detail about our MMA platform. More than 7,000 machines are meanwhile in the field, and that's a huge number compared to what's normally out there in the back in the industry. So that is increasing rapidly with high shipment rates we are having. One of the most relevant installations at this moment is in the camera space, like you see here, LG Innotek, for instance is one the big customers. Foxconn is another one. And yes, there are other installations, as you can see here in the middle chart in other application fields, very prominent customers, as you can see. Some of the highlights I'd like to mention in the recent time around MMA are that we have been able to qualify this platform for a next-generation periscope camera as a process of reference, POR, that will not only help us to drive business of this year but also for the years to come. So that was a big step. Other than that, we have increased the cleanliness of this machine a lot, and not only in pure cleanliness numbers, but we have also demonstrated the impact of that improved cleanliness on the yield, the output of one of our key camera suppliers. And the numbers were impressive. The numbers were much better. And this will help us lock in that platform further into the camera supply chain. And the last one I'd like to mention is last time around, I was talking about a new development of a high force platform for the automotive sinter market. We have launched that machine, and we were, I can say that now ready in time with that platform. Since we started delivering that machine, we have seen good traction, and we have meanwhile a significant installed base of these highly evolved machines in the automotive market. Next in line here is the epoxy platform. Also that one has a significant installed base, more than 4000 units are out there, basically all the major OSATs as well as the IDMs that are in epoxy and field-based die bonding are using this machine because of the accuracy of the machine. We are offering the highest accuracy implants because of the speed of this machine and also because of the feature set of this machine. Our plan is really offering the highest end die bonding in the market. New developments or some of the highlights are on the one-hand side, in the automotive MEMS segment. Here, we have done a lot of work around this control of the dispensing volume and further on also on the bond line of these bonded chips. And this feature is something that is specifically required in the automotive segment. And because of the superiority of the solution, we have been able to qualify this one for one of our key customers and lock that in for the years to come. Another development area is around inspection. We introduced newly a 6-side inspection system and not only introduced it, we meanwhile have been also in a HBM environment running in Taiwan with great success. The last one also coupled with our developments around the 2100 platform and all these height measurement systems we have introduced, this can be enabled now in the automotive CIS segment, and there, we have also been able to qualify a new customer. Going to the flip chip. As said, flip chip basically is divided into the substrate-based flip chip and the wafer-level flip chip. On the right-hand side, you see our Quantum and 2100 flip chip platform. That is the one for the substrates. There, it's basically all about speed and cost of ownership. That's really mainstream and cost of ownership-driven market. On the right-hand -- left-hand side, sorry, you see our Quantum platform. That is the one you have seen in our clean room. And that's the one that is tailored to the advanced packaging needs. We have put a lot of effort into that machine in the recent months to drive the accuracy further up. We can now commit an accuracy of 1 micron, which is helping us in the high-density fan-out market and also bridge attach market as we discussed earlier today. And also, and that always comes together with highest accuracies. We have worked on the cleanliness and the automation you have seen, and even the wafer loading system coupled to that Quantum, which is always a must to have those units together. Also on the high-speed side, we did improvements, and that helped us to qualify new customers. We have -- we are continuing this customer penetration with the HS machine, and we keep on working on process reliability and process enhancements around our multi-eject system. And yes, the last product line, soft solder, I think you're well aware that our current soft solder platform, the 2009 platform, is the tool of reference in the high-end soft solder market. We have started to phase in now the successor platform, the 2100 SSI machine, and we progressed pretty well in the last year. Meanwhile, these 2100 SSI is -- has been qualified for 2 major auto IDMs we are having. We have the next one planned in the second half of the year. So with end of this year, I do believe that we have the three customers qualified from that platform. We'll keep on working on process improvements. One important step is diffusion soldering, which is required, which is driven mainly by Infineon, but also others are looking into that process, and we are, at this moment, the only one providing a solution on our 2009 platform. Next step is to build that over to the 2100, and that will also give us a good lock in there going forward. Coming to my last slide already, talking a little bit about where are we going from here? What's next? What are the driving forces. So we basically see 4 elements. The first one is obvious, we are now in sync with the downturn, and we do expect the market to grow, hopefully, from '24 onwards. That will help us in the broad portfolio and the broad field of applications we are in. However, there are 3 additional elements where we do expect a growth above average. And that is shown here on that slide, the most important one in the mobile space. As we are working, we have qualified the periscope camera line, we are working to further improve that. And there is quite a strong growth expected in that market. So that's one of the drivers, improving camera features further. Another one is on the biometric identification. Those systems are pretty much isolated at this moment. Further integration is expected. That integration requires ascending processes with high accuracy, what our machines, what our EVO especially can do best. Then also this whole new product category, AR/VR devices, where we have seen and heard since yesterday, we do expect that one to come up. And I think you have seen how many cameras are in there. You have seen how complex that ascending processes will be behind. We do see that as an enormously good growth potential for us. The automotive space, we all understand the EV adoption is going on. That fundamentally requires powerful power modules based on silicon carbide, based on gallium nitride. We have at least 2 solutions, 2 die attach specifically for that market. One is the MMA as we discussed, the second one is the soft solder platform, especially around diffusion soldering. And last but not least, in the computing space with the new architectures on the one-hand side and also with photonics being part of the process unit. We have platforms that can support that, which is our fan-out solution, our bridge attach solution, the FC dual CHAMEO platform. And we have solutions also for the transceiver assembly with our EVO that is already being used there, and we do see further potential to grow our business there because of the strong growth that is expected in this market. Well, yes, with this outlook and with this driving forces, that will hopefully help us to grow our business. I'm at the end of my presentation and ready to hand over to you.

Good afternoon. My name is Jeroen. I'm responsible for packaging. Packaging is putting a plastic layer around the chip and then shaping it to the individual microchip core. I'm with the company for almost 25 years and 6 days just according to Richard. So according to us, trying out through my ovation. Yes, as mentioned, we just had the high touch, right? That's just packing or placing dies on gallium and making an interconnection. But without molding, singulation, which is on form, you cannot use it in a computer or in a mobile phone. So these product groups are essential for the back ends. So these chips are as Christoph and also as Peter mentioned, they are in the 5G and wearables. They are in IoT and computing. And these are typical array-type packages. They are on substrate, they are on flip chip devices. For that, we have a substrate molding machine where we can do 2-side substrate molding. So we mold first one side, we flip it around, we place the GaN dies and then mold again. This is specifically the use for our system in packaging. Now we do the singulation, so we cut the substrate in individual packages and then you can place a mold. For the automotive and also for the storage and the networking, those are typically single-sided or double-sided individual packages. They are placed on a leadframe or a copper placement. For that one, you'd also have to place an individual molding package around it. And then at the trim and form we punch the products out of the leadframe and we shape the leads. Then it can them be ready to place on an SMT bond. So that is about the packaging unit. Although we already do 20% of Besi, there's a huge potential for this market and also for the growth. Let me go into this. First, the molding machine for substrate packages. We have introduced this machine, I think, in 2012. And since then, we have already sold more than 350 systems in the market. This machine is typically focusing on double-sided packages, but also all chip packages. You can see on the top side, there is some 5 bumps, and these 5 bumps are the antennae packages. This is a 5G mm wave device or a system in a package as well. That's one side, with an offset on top. And as well, you see on the bottom side also a molding package. So we can do it 2 times, so we have double opportunity here. Next to that, you also have the 5G mm wave is where you have an exposed area. So for molding, it's important to keep that area clear of molding compound, only pack the dies and then later on, these devices, there will be a connector attached or there will be another sensor attached. For this kind of market, we are currently having close to 90% of margin. And these are the typical customers that are using the machines for the mobile market, for IoT market as well for wearables. This machine is specifically for the SiP packages. And they all become smaller and smaller, the asset. They're going closely done. So for that, we need to make sure there is no air inside. Now we are making a program to a further reduction on the volumes so that we can place components closer to each other. So that you have smaller phone or a small tablet. Because it's already in -- from 2012, we are moving now to now to a generation. So we are building up also a new asset platform right here so that we can expand with additional features, additional interfaces, like for instance, the AGV handler. We see that in the back end or with molding. We have not so much experience in these areas anymore. So customers are going into automatic handling. So with a robot moving into the machine, locking into the machine and then it properly handles it. Same they are doing in the front end. So in order to support that, we need to go move to a new platform. Then we have for the power devices and also industrial. As Chris just mentioned, there is a whole change ongoing in automotive for the EV, electrical vehicles. For better battery management, power management as well also for body and safety. So this whole change is going for a silicon carbide for getting manufactured devices. It used to be these kind of -- these large IGBT packages power packages by using of an epoxy or a glue when you have a plastic casing. But that is getting common, so they're moving into mold packages, as Chris also mentioned in his presentation. So this machine is focusing on those big IGBT, those big power packages. But not only for the car manufacturing, but also for industrial, via solar panels or wind turbines, even air emissions. All those electrical devices are moving into this molded IGBT packages. There's a lot of heat in there, the heat needs to get out. So they're making a copper layer around it. And that needs to be clear of molding compound because molding compound is an isolator. So for that, we are developing the top foil. Next as well, the price is quite low. The amount of money we can earn is quite low. So the cost of ownership is very important. So we have built in this machine as well more size or more capacity in there. So to reduce the cost of ownership, of course. Then for the trim and form. Although all these phone packages are analog devices, and they don't need to be so sophisticated, the reliability is very important. Because if you have a mobile phone, you drop it, you can simply buy a new one. But a new car, you drive, then you have an accident. So traceability and reliability is key in this. And that's what we have developed in the last couple of years. Therefore, we sold almost 1,500 systems already in the field. And we see more and more integration in these packages to get it on. So efficient, all kind of inspections that are required. This equipment is sold looking at what is wrong, that's one takeout, no individual marking where you have QR codes, so you can scan these QR codes and you can see a whole production line where they were produced, how they are produced, so track and traceability, is for these packages, key. For that, indeed, we have all the kind of integration with vision, with laser marking, with testing equipment as well with automotive and mobile. On the mobile, again, with singulation. So we have these subframe parts, the individual packages, they need to be placed on an SMT board. As just mentioned, it is an SiP package, and they're getting smaller and smaller. In order to get the smallest package as possible, we have developed a different sawing technique where we can get much closer to the edge of the packages. High-speed sorting. So we are now able to do 45,000 units an hour. So we are outperforming in this moment the competition on certain capabilities. The automotive step cut, that is for also reliability. Normally, it cuts with a whole package, now you only do a partial cut, then you do the plating. I call it faster to illustrate a little bit more, and then we make a sync up. So we get an increased reliability on these power packages. Then last but not least, Chris already showed that picture where we want to go to the whole line of chiplets. And one picture was there where you also do chiplets with new molding, so wafers. For that we have designed the machine as well. And with that one, we can do different than competition is exposed. They can do their die completely exposed. Currently with the fan-out transcode, we can do compression overmold completely, and then you do a back grinding coming down to the die. In our case, we can go immediately already in the exposed area. And the second step that we are now also learning in the market is that sort of, I think, in the presentation from Chris as well, that there is an underfill. With this machine, we have the capability of underfilling the die and also overmolding or maybe that's they'll stack the same line. So for packaging, the growth drivers and the key development projects, same set that was what Christoph had just mentioned for packaging the 3 major markets at this moment our mobile, car and industrial. And you see the standard revenue, you see the organic growth, and this will be an additional growth driver. For the mobile, the 5G mm wave as well the 3D imaging sensor. For that, the key technology are SiP packages, but as well also in battery management unit. There's and new thing that's coming up in the market is where mobile phone and then the battery must be much smaller. So there will be a SiP package to control the lifeline of the battery. Also how -- what kind of application the battery is going to use. So also here, in SiP and in combination the battery life. And of course, the wearables you'll see them more and more. People are having technology in their body. When we go automotive, there, for packaging is the power switching, the battery charging, battery management and the safety management as well. But especially the top 3, that is the drive from silicon carbide and gallium nitrides. Right now, your car charging will take about 20 minutes. They want to lower that to 15 minutes or even shorter, same for the petrol. So that they need to go into this molded package with silicon carbide or gallium nitride. Battery charge and battery management as well. So switching from when you drive, you hit the brake, do charge your battery, those kind of battery switching requires new power device. And then industrial, as mentioned, the energy transition from fossil fuels. By 2040, no more fossil fuels, everything will be natural power, solar panels, wind power and so on. All those transitions require new power packages. Factory automation 4.0 and also on-shoring of production. So all these parts will help the molding and the trim and form acceleration or packaging and back end service for further growth. That's my story. Bart?

Thank you. A couple of slides more. I think this is Slide 66, 67, 68. I have 2 slides and that's the last. So that's the Q&A. Plating is about 10 equipment platforms. I'm not doing you 10 slides, right? So I'll limit myself to some high-level messages. But first of all, let me introduce myself, I'm Bart Berenbak. I joined last year, early last year. Also I have a history in SEMICON. Studied physics and had PhD in chemistry, but then I joined ASM International, a 300 millimeter wafer processing, all cleaning issues. I've been there. I've spent my days and occasional nights in the cleaning rooms of the Intels and Infineons. So cleanliness, particles, yields, I've been there. And also when I went into the managerial roles, robustness, squeezing more out of the equipment and reducing particles, availability, training the people, working with the supply chain, all of that, I did it from them. So that's how I joined. So now we can do that with Besi and Besi plating, switching. First of all, so this slide is about the bread and butter. So it's cold plating, mostly renowned for its tin solder plating. So we will have already thought leadframes. So leadframes in the end need a layer of thin for the solderings or many flavors of that. But make things around for a little while. So 1978, has started more with connector plating or the long boards or little connectors always need to be plated as well. We like to focus now on semicon plating, right? The semicon industry we like but there's a lot of synergy with the other product groups, but also there is some adjacent markets. But then again, like it says here, plating is now only 5% of the revenue. The adjacent market is 20% of 5%, and 1% of these you saw. I will not explain too much about it. So there's some legacy, but there is also some upside still in the adjacent markets. We're looking at, Richard always says, it's part of the margin. If we can't do high volume, if we can't have a leadership position, we can't have the right margin, then let's focus on semicon, right? Semicon is tooled at this moment. Semicon is also good for plating. So we are from basic plating, we are a leading supplier to the leading audience, leading OSATs, many of these logos. I mean I think there's a couple here but we can fill the entire slide with logos of companies that have Besi, and there's many plating equipment. So according to TechInsights, we do really well. They report 80%. Down that number a little but slightly over 70%. And also during COVID, I mean everybody struggled with supply chain disruption, we had customer complaints, it seems we did better than the rest, right? That's also because basic plating is part of a large organization. We have a fantastic operations. Good buying power. Also a lot of people that have fully these parts when it's needed. Sales and service organization, a lot of synergy there. Plating equipment, next slide, I'll show you some more about the growth drivers. They're large, EUR 1 million, EUR 2 million, right? And then, well, let's move to the next slide. The growth drivers. Plating. There's performing of equipment, there's even more equipment platforms. The key message is automotive quality. The requirements are getting more and more stringent, like Edmond said, we drive a car, your auto fails or some critical driver assistance unit fails will get you in trouble. So automotive and power can be automotive power for your drivetrain, but also automotive has many more chips than just EV drivetrain. So the car does have infotainment, I mean my car is full of electronics. 3,000 chips in advanced high-end car is not unusual anymore, 3,000. Yes, needs to work in the winter time, needs to work in the heat of the summer, it needs to work, well, preferably for 20 years, right? So power modules were mentioned, right? So large ones, some larger components they are molded. And of course, the modern equipment view is fantastic but still when a mold opens, there are some [ components ] that will be removed. These things need to be attached. There's multiple opportunities for wet chemical applications. So there's more than just these overlay, yes. So power modules is a growth area. Also, the leading-edge investment is simply more and more chips, and vendors is quality constrained, right? And quality means more [ bonding ] applications. So this mold material, it needs to stick. It needs to stick with the die. It needs to stick with the substrate. So what we also do is more adhesion promotion. We have dozens of systems already at the leading manufacturers. We expect a lot more people to dive into the topic of advanced mold adhesion, chemical applications I spoke about. Flexibly, this wetable cleaning time is into also the set that Jeroen mentioned. I'll spare you the details, but it's a topic that is getting more and more attention. So it's quality assurance, enabling optical inspection, soldering of this square little cube into the substrate. All quality remain topics. So these topics in the top half, they're about more revenue. There's also some opportunities to create more value out of also the tin plating that we already do. So automated quality controls, nitrides, that Jeroen mentioned. So in the future, people want to be able to know each chip, the full history, that means that every process step, all the equipment needs to be connected so it will be much more obtaining the data. There's an opportunity for a lot of basic plating systems that are out there. The robotics yes, this is high throughput equipment. Plating system can process about 2,000 leadframes per hour. So -- and well, that's still done by operators. So manually operating people bringing these assets. Besides supply chain interruption, you also have labor disruptions, right? It's difficult to get a lot of customers and say, "We can't find people." You have people out of stores. They don't want to be a night shift operator anymore. I can't blame them. Why would you want it? So besides the labor cost part, it's the cost of ownership, it's just getting people. And if you have the people, how are you going to hit it, right? So these are all good drivers for robotics, then I have to say, yes, a strong bench, perhaps go with overhead systems, that are not there yet. Will likely come in the future as necessary. But it's an important opportunity to prepare for. And lastly, the environmental footprint. Let the shipment go while considering the bush in the Netherlands, it's large. A lot of electricity, a lot of chemicals involved. All of us, our customers, but also base, we have a responsibility to reduce the ecological footprint. Even a technical possibility to reduce the footprint and increase quality. So that's a good combination to make of a more sophisticated system. It will serve its purpose. And of course, there's also an ability to increase the gross margin of those systems. So all in all, there's more than just tin plating, there's portfolio of wet chemical applications, but also tin soldering or [indiscernible] increase the market share, stay ahead of the competition and sell more systems. Yes, any questions? Questions to Richard, now is your chance.

So thank you, that leads us to the Q&A. I see one hand raised. Yes, please.

I'm Madeleine Jenkins from UBS. And I was just wondering, so you mentioned the high bond with memory. The 36% of high band memory is going to be hybrid bonding by 2028. I was just wondering what you think for the rest of the market? Will that remain TCB? Or do you think there's upside to that?

That's a good question, Peter?

Well, yes, if the question is we definitely -- that's a forecast given for a certain year, and typically, how these things are developing, it's going. It's not the end. There is an upside beside it. But on the other hand, there is also one thing clear, not the whole HBM will convert to a hybrid. So there will be always a mix between hybrid and some of compression technology, the AFM technology.

Simon from Barclays. You gave the new hybrid bonding estimates, and you said you're assuming higher ASPs. Could you just give us some more color on that, give us maybe revenue or maybe just color on how you think generation 1, generation 2 and so on will be in the mix going forward?

Well, as a rule, I would say, technology and accuracy, there's an exponential relationship. There was an article in the Financial Times this weekend on ASML, I don't know if you read it, there, it has 2 graphs where it clearly tells you there's a exponential relationship between increased accuracy and cost. So you can expect the same for hybrid bonding machines. We indicated that this first generation is between $1.5 million and $2.5 million. We receive depending upon the features. This generation 1 plus will move up a notch between $2 million and $3 million, this is a rough estimate. But it all depends on effective diagnosis metrology integrated into the machine so that feature, which also drives the growth. And we also mentioned, I think it was last year really that once we move below 100 nanometers, it's a whole different story once again. And the cost of that machine could move significantly up because we need different cameras, we need different sensors. We need a different mainframe, which is much more stable. And I think Peter already alluded to that. So gradually moving up with step functions, the more accurate, the higher the cost, and the higher the margin opportunity. Does that answer your question? Next. I see many fingers. Nigel.

I have one on the higher bonding road map. CPU, '24; higher bonding, '25, '26, if I remember it correctly. And then the application processor for smartphone more towards '27. I think in the last earnings call, you were a little bit urgent about the opportunity in the mobile space, partly because of the, well, smartphones, also tablets. So maybe that was the piece missing in that presentation. Do you still think that tablets or other mobile devices could be adopting hybrid bond a little bit earlier.

Well, a little bit earlier. The road map, Peter explained is similar to what we have seen in the past year. So first, focus on CPU, high-end computing, and making inroads into portable devices as of '25, maybe '26. We also mentioned there's ongoing development. The big ones are all testing if it is feasible to adopt a chiplet version because the big driver is to eliminate the number of components in a way that you integrate those devices with a chiplet architecture. And as said, that's still in test, and it's hard to tell when that's going to hit the market. But there are huge advantages because you save the cost of interposers. You also need less current to drive the circuitry. The circuitry is faster. So there are many drivers which should support adoption as soon as it is mainstream feasible. But those road maps will still change. Mostly at technology, it is always the base. People are very excited about new technologies. So far, you can say that in the past 12 months, and we've said lot about that already, it's been a bit unusual how fast the adoption has happened in the past 12 months. And that may have caused some people a little bit more excited. But still always imagine there's an awful lot of technology involved in the different production steps, which may delay at some point. History tells you, it does. So to predict precisely what happens in '27 or '28 is not easy. But we're on the right track. It has enormous interest broadly growing. So that's a positive. Next question, so two more hands.

Can you talk about the top line synergies between the products. You mentioned a few times in the presentation how hybrid bonding was to drive the demand for TCB and also for some of the other products. If expanded, how do you expect that to do? Is it just those increase your addressable market? And also you're going to cross-sell the products to the same client in the same light?

That's a very good question for Chris. Chris?

We had a little bit of trouble hearing the question, but...

Can you repeat it?

So the synergies between the products. You mentioned a few times in the presentation that hybrid bonding will also drive more demand for TCB and solder products. So how do you see that working out? Do you expect the clients to buy the box together? Or does it simply increase your addressable market? How do you see that being?

Yes, we certainly see that opportunity. So the kind of the drawing that I showed in my presentation, also Peter showed, demonstrates that hybrid bonding is part of a larger assembly. So it's kind of the most advanced interconnect that's kind of used to make chiplet brilliant as part of the front-end fabrication process. So in a sense, we're moving from the -- hybrid binding from the back-end assembly into the front end, what's delivered out of that is perhaps a sub-assembly, a chiplet, might be comprised of whatever the number is. And maybe that has bumps on it, and then it gets delivered to another part of the manufacturing line that uses the TCB machine to run it onto interposer along with other things. So there's an attach rate there, right? And that whole thing further has to be assembled onto a substrate. So there's another attach rate with like an EVO. And those configurations are complex, and every customer will have a different one. But certainly, the reason why we have the strategy of supporting every layer in the interconnect is because we want Besi to be simply the chosen for every layer in the interconnect. But generally, I would say hybrid bonding, because its job is to match these identity chiplets on integrating base I/O, will have a higher number of hybrid bonded chiplets, and will go down to a smaller number of those things that are assembled on to the interposer. And then finally, the interposer will be a smaller number, yes, that gets assembled on to the circuit. And then with memories kind of a wildcard in there.

You have this great new TCB machinery we saw today, and then there is this road map as well with new machines coming. Is there a sense of what market size you're targeting there? You added a few dozens of machines a year or much less than level in a sense there. Would you remind us that, looking at those machines.

Clearly, we haven't laid out the details, perhaps, as much as we have for the hybrid at this point in time. But as a rough guess, we clearly see as -- once again, coming back to what Chris just said, it's not one or the other, that could easily be the same market size as the hybrid in itself. So we'll see the potentials for it.

In terms of units or revenues or how do you...

Well, right -- they have similar price tag, so it's the same actually even you measure in units or revenues.

Maybe I can add some flavor to this. This whole trend towards chiplets, you have to think about classical big chip, cutting it in pieces. And that's at the end of the day, it will be a cost question. Is the smaller chips with the higher yield, including the extra costs you have for making the interconnects in between and the input-output that you need extra because you'll separate these chips out, will it be more effective than one chip? That trend is very positive. So we had some discussions with them, for example, because it impacts their models also. But overall, we see that in a very good rate. It's extremely difficult to estimate exactly how many hybrid bonders it will be. You have to take a chiplet, you have to say which part should go there. But so far, our calculations, were fairly accurate, I would say, and Peter improved it somewhat. He said the lower side has gone a little bit better. We're trending between the mid case and the high cash. The application process, and I think you mentioned, we said a little bit later than originally expected, but not much later, I would say. I must also say, and Chris also, on the ECTC conference last weekend. And one of the inputs we also got was that the cost effect of a TCB versus hybrid, that it turns out that the hybrid is actually much more expensive than the TCB solution, which actually put a few of our customers saying, we would like with this knowledge now to bring hybrid earlier on than we originally had expected because only now people start to get a full picture on the cost savings. And that was a very, I think, a very positive remark we got from 2 major customers. That I would like to add a little bit of flavor to this.

There was the next question on this side?

[indiscernible]. A question on your HBM4 opportunity that you mentioned. So you have basically 2 machines targeting the HBM. You have your TCB fluxless resin and your hybrid bonding machine. Are they both targeted for the HBM4? Or is there a difference between them, the TCB maybe for the HBM3 competing offering?

Easy to answer. So it will be -- the current TCB we're developing is mainly for the logic that we are also developing in possibility for in memory sets, of course, with that, but the main focus at this moment is logic. For the -- yes, for the hybrid part, Peter already shared, for the biggest exit, if we keep it also closed, but also, and that's the part that Chris highlighted, the developers of these devices are really starting to rethink what they can do with this hybrid bonding because they were classically, it's kind of hierarchy, you have hybrid bonding in, say, 5 micro and below, you have 20 as TCB as you go down. But with the 5 micron and 1 micron technology combined, you start to see new possibilities also for the memory itself because from this moment in hybrid memory that just fits the 50-micrometer range. You don't need its own hybrid for it. You start thinking that you can make different contact structure if you divide it. We can build a complete new memory, and that's something that's happening at this moment. So the developers are really catch along with it. Does that help you? It really is this.

Yes. You also have the machine that's also targeted for the memory adhesion.

Yes, we'll do that. And there will be still -- there's still life in the classical, in the actual [indiscernible]. They've rolled it. But first step will be logic, then computing, the HBM IC. Our part there will be probably more in the hybrid section, yes. More questions?

It's Rob from Deutsche Bank. I just had one question, Richard, for you, which is on the Q1 call, you said that the [indiscernible] order hasn't landed by -- and you're expecting it by June. So given that we're in June now, I was just wondering if that has resolved itself? And I have a follow-up.

Well, number one, this session today is about technology. It's not a market update. We will come with our numbers in July as everyone knows. So I can't give any specifics on orders received this quarter, otherwise it will full release. And your next question was?

It was just about the -- I mean that was for the benefit of the people on the line. Yes. On the wafer to wafer hybrid bonding, obviously, that's been quite big in the NAND flash market. I was just wondering if with the HBM4 opportunity, if that was under consideration? Or is it just not an option to do wafer to wafer versus [ large ] wafer?

Technically speaking, it would be an option; economically speaking, no. Because I have pointed out, especially on the HBM4 that one aim is to stack more dies. So 16 is definitely the target number for this HBM4. And every wafer has its yield. And the more you stack on a wafer to wafer, the lower your yield gets because on every wafer, and how to spot this is not good. And for that reason, that kicks you out on the economic side, the higher the stacks get.

Is NAND going to stay out of your circle of opportunity?

No, because that's within the circle of opportunity, that needs to develop.

Just following up on the TCB discussion earlier. In terms of the -- when this -- when you see kind of the growth of that in the business, do you see it sort of running parallel or would it have a sort of a die factor in it when you see the units of that being shipped out versus hybrid bonding?

Well, as -- I will not see a lag factor from the market perspective, but sure, if we compare our numbers head to head, so to speak, it might look a bit like the lag factor because, of course, one machine was early in the market to launch and the other one later. So that's the lag in between, so to speak. But I would not see that from a market perspective there is a lag between technologies.

Simon from Barclays. Just on the margin you obviously gave us, the gross margin has gone up, which is great. You changed -- in a sense the net margin target and the population margin target. And it looks at the low end. Implies slightly lower than core. Is that just giving yourselves more flexibility around R&D.? Just a bit more color on that would be great.

No, the answer is very simple. The world, for whatever reason, always looks at operating margin. There are no companies, there are not -- but you can correct me if I'm wrong. We only switched to this operating because many of the analysts simply ask for it. Is it at the lower range? No. I don't think so. I think gross margin is consistently in the 60% last 3 years. And then operating, 25%. We reached net 37% and a bit in '21, then 33% in '22. And this year, we have no forecast for the year, but we are still up in around 37%. Operating between 30% to 45% is just the range which we determined, which I determined -- anyway, next question.

Just talk about TCB. Are you going to have new machines every 2 years that are more accurate? Or it's just really this one machine? Then I have a second one.

Well, I'll answer that one first. Actually, we have done the groundwork for this machine generation, which is the brand new one now solidly so that it will not be a complete new machine. We will just add on to this platform and make it more accurate. So there's a lot of potential in there to make it more accurate. And on one of my slides, the next step was already for the end of the year, this road map slide. And for sure, we always develop better and better. You just look at the Eagle platform is another example where we started with the predecessor at 20-micron and then reduced to 10, and now we are at 3. So that always goes on.

And I'm just trying to understand, when is it more economical to use TCB and when is it more economical to use hybrid bonding?

There's a lot of cost analysis also together with AMAT in this game because they have the full portfolio, all the processes and all the costs associated. So we came to the conclusion that these costs levels are actually, if you compare all in all, quite comparable. Initially, a lot of industries said, "It's much more expensive." But now we start to see that after these calculations where quite the cost for hybrid, you have to add this planarization so that you have a very flat surface. You have to add a little bit of cost, a little bit of training, which are not so expensive. But the hybrid approach, by nature, is much faster because you don't have the temperature silo. Usually you'd like to have all stage live, you have to do source planing, you have to have all these things. Your approach, by nature, is slow because you do have the temperature, or say, you go down, so the throughput is mostly get smaller. But there's also another technical aspect is as long as you work with solder material, and I'm not sure if any one of you has ever soldered water pipes. You have to put some flips on there and then you solder it. But you always solder it above. On this context, you have the same effect that at a certain mold if this contact becomes too close, you solder those stacks contacting the next contact. So there is also a physical moment where you have to go to hybrid bonding or TCB to fill out optimum bonds. I hope that it gives you a little of a -- we gave a lot of these processes because it is a complex question. Any more questions?

It's Nigel from Kempen. I just have a question on the manufacturing of the acceleration hybrid bonding business. So my question is at what level do you expect to start seeing your tools. And then when do you expect that 99% manual savings?

I had in my presentation on slide where I said we will be ready to see manufacturing tools of the 100-nanometer. So that's the next generation than in volume in -- at the end of Q1 next year. So that's the data, I think, you are looking for. And with respect to the yield, we are showing actually a yield of more than 99.9% already today in the production. So we do not have an expectation that this will be different for the next generation as it is based on the existing one. It's not an all new development. Then I will agree, then you would need to start doing a lot of things once again, but it's just an evolvement of the existing machine and for that reason, that should be there.

It's a very good sign that we're on the right track because customers are never telling us it goes well. A customer will never tell you if things goes well. Because they always tell me, "Please surprise me." Because they only will tell you if things go wrong. That's our line, which is correct. But on the 2 things, we never had discussions at this moment on hybrid bonding's yield and also correlated with their priorities. We don't -- we seem to be very well there, there's no issue there. As always it's technology. But those points are never raised so they did what we would do. There was another question there, I think.

I have a couple of questions on bonding steps. I think it was on Chris' slides, I guess. So you mentioned 4 bonding steps for that Ryzen CCD chip and then 13 -- more than 13 chiplets on the MI300. Is that 13x more than 13x4? Or is it slightly different?

Yes, we trust that. The short answer is we don't know yet because we haven't seen the real part in a while. But all we know is that there's -- actually, there's more than 13 active chiplets, active die, in the example I showed on the Ryzen CCD. In addition to the active die, there are integrated spacer chips. They call it structural silicon. We simply don't know how many of those are needed yet. I really can't say it. And then -- but also the sometimes temporary bonding steps. So as well above -- probably well above 20, but really I'm not that sure on the number. We'll probably know more probably in a couple of months. We came up with our parts, and everybody came out with their parts and talk about it.

And then just on mobile, when that comes to the market. What would you expect for the number of bond steps? It's an integral part there. If there's any communication to you that's you're able to share. And then more conceptually, once the market starts adopting, is this a kind of one and done. So you get your format, it's got hybrid bonding in it and it has X number of steps and then you build up adoption? Or is there an evolution, you think, over the next 10 years where you keep on adding more and more steps for a given part?

I think in the mobile phone, the number of bonding steps will be less, simply because the available area, the die area, the point of doing it for 8 years is to maintain the same die area, not grow it. Because the phone is very limited in the front and back. I don't know what the number will be. It could be, like I said earlier, it could be 3, 4, 6 maybe, but we don't know until we really understand how the designers choose their architects using hybrid bonding. Because, like I said, it's very new to them. But that's right, that I would expect something like that. Of course, there could be companies use 6, there could be some first steps along. As far as the future. If you start with where we are today with the high performance computing, I mean we're already in a very high number with this genomics device at AMD. And that will, I think, continue to grow because were not -- yes, we're not shrinking the transistor size, it's unbreakable. It's like that now. So you're asking about a 10-year time frame, I think the area of silicon, I mean, is at its full growth. We're not going to want to increase the chiplet size too much. We think the whole point of the solution is to maintain a reasonable yield and path, therefore, we're trying to give more chiplets.

I just had a quick follow-up on the hybrid bonding yield. So you said -- you've got very massive numbers. My management loves that. I assume that's, at the time, new customers. Just wondering how easy is that to replicate at your other customers when it comes to that?

Peter?

Well, the numbers that we are talking about are the numbers of our machine in the whole process chain that customer then pleased to do. So as at other customer, our machine is the same, the replication should not be an issue. Typically, when you see the yield is different, our customers saw it, then you need to look -- for sure, if the bonders is okay, that's clear, but also then specifically if the preprocessing is okay. Of course, that has a big influence. So yes, there might be always once in a while, a challenge with a lot of customers coming right up because they have a different machine configuration before, but it's not at our machine and typically, because once again, the importance of the process development as we are doing that with AMAT together, we also can then analyze and say, well, things needs change, and then we get to that really good.

We definitely learned that this hybrid bonding approach has to be far more accurate than with a 5 or a 10 micron approach. So every single step when we're preparing a die is more important. And customers have to learn that also this really came with -- even top customer still need a material that was simple to bond. Simply because the preparation work but we'll set that together expect them [indiscernible]. So we can now already judge much earlier this material we put out into, that gets also the soldering it, instrumented it. Okay. I think we're done.

Either our presentation has not been clear or -- are there still more questions? Anyone? Yes, please.

Just given by the number of bonding steps, it sounds like hybrid bonded memory will have more hybrid bonding steps taken in mobile looking through to kind of in between 20s. In terms of numbers, should we expect higher volumes from the high-power memory side from the mobile side you think?

I guess the number you said, Chris.

The unit volume is more, it's certainly high. So that could be somewhere actually.

And any other questions? Then we've come to the end of the this session. May we thank you all very much for coming here to [indiscernible] and sincerely hope that you have learned a lot. And in case you have any further questions, don't hesitate to reach out. Safe travels. Again, thanks.