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

Welcome, everyone, to our Investor Day Presentation on June 18, 2026. Following a tradition in the meantime, every year in June, we try to update you on what's happening, what are the opportunities, what is accelerating, what is maybe not that accelerating, but it's not many today. So an update on the market, and what is it not to be very clear on that. We don't talk about Q2 numbers. You have to be a bit patient. In 4 weeks, we will have our Q2 numbers, and that's of course, focused on the quarter and the outlook for the next quarter. But the purpose of today is to give you a bit more longer-term perspective and how Besi is doing vis-a-vis the market, vis-a-vis the competition, some market share and more importantly, on the fastest-growing segments in our business. We will spend time to try to convince you that those fast-growing parts of the market we serve are leading to a new model, which we announced this morning, up from EUR 1.5 billion to EUR 1.9 billion to EUR 1.7 billion to EUR 2.2 billion. It's interesting that several of you, I won't call names, are a bit disappointed, as I read in the first comments. Well, that's probably in line with the world, which thinks that things will grow forever into whatever skys or Mars. Our models are based on a very careful assessment. We, as you know, some of you test every 3 years, our strategy in a very detailed fashion together with our key customers, also with the support of a major consultancy firm, to have everyone on board and to simply try to be as accurate as possible to what we can expect. Well, as a nice anecdote, last year, we reached a revenue level of EUR 590 million something. If we would have been awarded a bonus for reaching that 2025 target, we would have received nothing because if you look at our budget, which we always make towards the end of the year, as every company, about 40% of that EUR 600 million was completely other business than what we expected at the beginning of the year. And it won't surprise you, the AI really started to take off by the mid of last year, Q3. And the other part of the market, the conventional market did not take off. So that was an interesting development. But just to tell you, we know a lot, but we certainly don't know everything which is moving this market. So a bit of conservatism is what we try to share with you. So this is a long page with all kinds of disclaimers, which you may know very well. Nothing has changed to that page. But then for today, the agenda I will give you a brief overview. And then Chris Scanlan will explain the technology part like Chris did last year. And then Peter, on the Sub Micron, market, developments. So both for Logic, also for HBM Stacking. I'm sure you're all very keen to understand how that is progressing, then also the other applications using our hybrid bonding process, then we have a short break. And Christoph after the break on the mainstream Die Attach. And as you may all know, that is really booming all the 2.5D engagement, photonics. Those are the parts which are driving the buzz today, also new modules in high-end smartphones, we are Engine 1, as we also call that part of the business. Christoph will share the progress, the development road maps, what you can expect going forward. So that is part, if you take the whole model, the now EUR 1.7 billion to EUR 2.2 billion. About EUR 1.1 billion is the Engine 1 part of that. The other part is, of course, the Sub Micron part. But Christoph will share with you a lot of drivers, market size, very important, photonics, we often get the question, how big is that going to be? I forgot to mention, Peter, of course, on the copackage optics, that's more on the Sub Micron side of the equation. But anyway, and then we have a summary and an open discussion, and you're most welcome to challenge us in every way because that's what life is all about. So let's go to the strategic overview. Well, it won't be a surprise. The first sentence, overall market conditions have improved significantly, 50% plus compared to a year ago, which is simply effect driving the whole AI infrastructure, and that's where Besi has a large part. The second message is equally important, how are we doing in that market, are we gaining share, are we losing share? We'll share with you that we are definitely on the right track. We have the right products, we have the right customers, and that has improved significantly in the last 12 months. Then if you look at our profile, look at the order growth, that also explains more or less what we've said in the first 2 sentences, but then also our margins. Many of you are used to Besi margins, gross margins, somewhere in the mid-60s. In the down period, it was a bit trending towards 62%, 63%. Net margins, 21% at the bottom. And probably, if you look at the guidance for Q2, it should move well again above the 30%, if you take the gross margin and the OpEx guidance. So anyway, our margin structure continues to improve. Hybrid bonding adoption last but not least, use cases increase in logic, memory co-packaged optics and also in consumer. Remember, Apple announcing the M5 in hybrid version. There are 3 revenue streams emerging, each with attractive growth profiles. To what I mentioned before, the 2.5D, assembly equipment growth expanding due to strong data center rollout and photonics demand, the Asian subcontractors or for the current AI application. 3D assembly gaming traction, next-generation use cases and more and more architectures. Traditional mainstream is improving. We see that with all of our end customers. And that also has impact a positive impact on our growth year-over-year. Multiple drivers converging to accelerate the hybrid bonding growth. As we all know, in Logic, it started. And the reason, again, very small, bond package limitations causing a switch from a reflow process to a hybrid bonding process. That has been the driver in the past 10 years, diverse to early adopters AMD. And then gradually expanding their product range, but then Broadcom and Apple, Intel, not to forget, they are all moving into hybrid-bonded device architectures. Chris will explain much more. [indiscernible], those of you who have seen that road map issued about 1.5 months ago clearly show that hybrid bonding is the way to go. Then in HBM, stacking, like we shared with you end of April, it's critical in the next few months to understand, will that lead to a major mainstream volume or will that still be in sort of a niche part of that application? But as every 1 of those 3 explains the world, sooner or later, that switch to hybrid process will become effect. And then we have co-packaged optics. The COUP at TSMC is one of the major parts of extension of our business. We also shared that at the end of April, orders in Q1 received, and that is where we also have a lead in terms of new technologies. Then adjusting our operating model, a switch to cost. So to be prepared for further growth in this industry, we have always used the simple method, doubling each time. This time, we should probably double -- prepare a bit more than double. That's all in place. And also what we have shared last year, if you share a model, that model should be in place. Otherwise, you're sharing a model which still has to be developed. So that's key to understand. So where we have organized that operational part, is in Malaysia, is in China, come up Vietnam, supported out of Singapore and ever more support center close to the big end customers, of course, Taiwan, U.S., not to forget, for Intel, but also Micron and others and coming up TSMC. And then you have in [indiscernible], the support for the Korean customers. The targets, again, increased by about 15% versus the last Investor Day, all identified business, identified customers where we also have demonstrated a process of reference positions, and that should help to bring our company into the next phase. Some nice sites about CAGR, what is to be expected in the IDM and foundry capacity to double by 2030. If you look at the different green colors, you see the bottom end is advanced logic and foundry. That's where we are ever more established. The lighter green part is what is supposed to become far more clear in the second half of this year with enormous growth potential. And then we see also on top of that, the discrete analog and other. So a major market development model, and it's all about this build-out has caused a multiple-year investment in infrastructure, take TSMC's comments, Broadcom, Applied Materials, and also NVIDIA. So that is basically supported. If you look at our model, it is tied very closely to this model, of course, that the industry tide has turned very rapidly. It's very nicely shown in this graph here, where you see from Q1 '23, '24, '25, last year. And then all of a sudden, and that's simply because of memory, an enormous supply then and offset with not sufficient production capacity. And the same we see here with unit growth, enormous trend up. But if we look statistically, then there's always sort of a peak which should follow at some point in time. I won't make any forecast today, when, if history repeats itself, that is what you should be working out for. [indiscernible] equipment follows the same pattern in many ways, a bit less aggressive compared to front end. But you also see here from a [ 5.4 ] market size in '25, towards in '28, [ 8.3 ]. So enormous increases, and that's where we certainly will benefit from. And we see an enormous list of new advanced packaging fabs being constructed in the U.S., in Taiwan, Korea, India, well, simply Singapore, China, Europe, Vietnam, Malaysia. So enough of opportunities. They won't come all at the same time on stream. But at all of these customers, we are in a very good position to benefit from the investments in those capacities. This famous slide takes you back to 2006. Some of you have witnessed this trajectory all through the 20 years, and I'm very happy that you take the time to visit our Investor Day once again. And what you've seen here is a wonderful cyclical development for years, sometimes a bit longer, but that's a typical pattern. And then if you look at the gross margins, where at that time, we were proud to reach 40% in a quarter, but usually below 40%, then in the next, 42%, 56%, 62%. And as we guided for the second quarter, we should be again above that level. So our next growth period [indiscernible], is in the regards with -- as things look now, potentially higher margins. Where does that come from? Number one, we've learned over all those years to focus ever better on advanced packaging opportunities. So where can you make a difference compared to our competitors and peers in Asia, simply focus each time on the next-generation devices. And in the 3 markets, so the computing part, communication, automotive, and having done that systematically every 3 years, redefining our strategy that has improved our focus tremendously, engaging the customers in the early stages, also customers supporting that development and then, at the same time, working on a better cost model. The cost model, multiple sourcing, production in Asia, headquarters in Malaysia, production, China, Vietnam coming up and a global supply chain, which is simply based on a concept in multiple sourcing, as I said, but evaluating that constantly. And that delivers you an average both higher than the industry and also margins substantially above any of our competitors. Some more data here, if we compare Q2, Q3, Q4 and Q1, '26, do you see the order intake, 2 quarters, now, 250 plus. Also, the revenue is certainly climbing. If you look at our cost structure, it's intact, and that's what we have guided also for the second quarter. But basically, these financial metrics tell you how we run our company. Market shares, you all want to grow market shares, as we have said many, many times, the market share is an end result. We look first the margin potential because the margin is where it's a lot about. Return on capital and then ultimately, if you do that right, you see that your market share continues to grow, which is, in a way, very lustrative for Besi. So if you take the addressable market, the die attach, the advanced die placement market gradually improving the overall share, simply through selecting the best applications. Long-term outlook enhanced by increased hybrid bonding use. That gives you a snapshot, but Peter and Chris will give you much more detail of those customers, which have adopted now in logic to a large extent, but also on the brink of adopting that in memory stacking, some chiplet architecture. And remember, we now have over 20 customers who have bought hybrid bonders from us for all kinds of applications. Mainstream volume is, of course, in Taiwan most established than Intel with 30 bonders in 6 automated loans and gradually picking up for other applications. The adoption, as I said, is expanding. We're now at 20, and we have listed these customers also for the different applications, logic, memory, photonics, R&D purposes. But again, more about that in the presentation of Chris and Peter. Increased R&D spending, of course, with all these wonderful applications and ever more complex you see a gradual increase in R&D spend. And you see on revenue levels of 25%, so close to EUR 600 million, 14.8%. In 2020, below 10%. But if you look at the trend of order intake and you simply define that by the spend in R&D, you can easily calculate that in line with the revenue development will change. But the key is are we investing in the right end applications. And you can easily conclude that if you look at the end margins. So the focus is right. It is gradually increasing, ever more complicated, look at hybrid bonding, the 15-nanometer, also [indiscernible] the flip chip multi-module tech. So many applications, which are in the mainstream that will provide significantly more opportunities to add to the total model we shared the updated first in this morning. That ends my presentation. Chris, it's your turn.

Thank you very much, Richard. I'm Chris Scanlan. I'm SVP of Technology at Besi. And first of all, thank you for joining us here today. Thank you also to everyone on the phone or online listening. I'd like to share with you our view of the market, some of the applications, specifically, that are driving growth for us and creating opportunities for us. And most importantly, what's changed in the last year since we last spoke together. First of all, what's changed since last year is the AI market has taken off really faster than we expected for sure. I think last year, when we blended the semiconductor market forecast, we were expecting about EUR 1 trillion in revenue by 2030, which was also impressive. But it looks like we're going to hit that and exceed that already in 2026. Tech Insights anticipating EUR 1.4 trillion already this year. So that's a material change. A lot of that is pricing, of course, memory pricing is much higher. But underneath, there's also unit growth. So about 25% increase in units, something, over month in April this year compared to the last year. So overall, this is really driving opportunities for us. And Tech Insights anticipating EUR 2 trillion by 2035. A lot of forecasters, including TSMC, are looking at EUR 1.5 trillion to 2030. Pick a number, but what's really driving it AI infrastructure, so there's a massive build-out on going around, I'll explain why, but it's supporting training and inference, using these models for productive purposes as well as all the devices, AI-enabled devices that interface with these models. So things like mobile phones, computers, physical devices, like cars and robotics as well. So how do we measure this adoption rate of AI? And I think the best way to measure is the output of the AI factories. So AI factories produce tokens, tokens are a little bits of information. Token is approximately a little bit less on English word, worth of information. And this chart from Goldman Sachs shows a forecast for token usage coming out of AI models through 2030. The top line number is 120 quadrillion tokens by 2030 per month. And it's hard to even imagine what that means. But to put it in perspective, the Library of Congress in the U.S., which is a pretty big library, all the printer works in that library would consume about 3 quadrilling tokens. And already, right now, we're producing more than that per month using AI models. So it's already a really big capacity, and that's going to continue to grow. Why? Because these things are very useful. When we first had ChatGPT in December 2022, we could do some really simple things with it. It's kind of fun. But we couldn't really do much with it. But really, I would say, in the last year that's really radically changed, and we're all using AI now for really productive purposes, like coding, like actually creating products. And this is driving demand. The other thing that's driving demand is in November of last year, there was an induction of something called OpenClaw. Now we're really the first kind of tool that allowed people to make agents in a very simple way. And what is an agent? And the agent is something that can automate the use of and do it in a logical step was function. So it kind of amplifies our ability to consume tokens. And that's really what's going to drive the consumption in the future. It's no longer dependent on us humans to take some action in front of the computer. In order to create that capacity for tokens, we need hyperscalers to invest in CapEx for data centers because data centers are the factories that make tokens. And I'm showing some data from Tech Insights. And there's other forecasters as well, anticipating about EUR trillion in CapEx spend per year by '29. Some of you earlier today and discussions told me, "No, it's going to be EUR 3 trillion in 2 years," I don't know, but it's a big number. And all this is having an impact on Besi and our end markets, where do we see our business coming from. If you would have looked 2 years ago, it was 30% mobile. That was the biggest market for us and probably extending 10 years prior to that. We were really driven by the mobile market. But currently, because of the AI build-out, we're more than 50% computing this year, and mobile is only 16.7%. And if you look at what kind of devices and what kind of products we're supporting, it's all the components that go into these AI factories. So it's an AI factory, is something that takes electricity as an input and uses computers to output tokens. That's output. And these factors are [indiscernible]. This is a picture from NVIDIA's, came out at GTC. Some of these factories have over 100,000 servers, 100,000 GPUs. And there are typically a multiple of these buildings on a campus. The biggest ones are talking about using 5 gigawatts of power. So it's a massive power consumption. Therefore, we have to do everything we can to create our devices to perform energy efficiently as possible to produce the most tokens per input power. And what kind of devices are we talking about? It's things like we all know GPUs and accelerators. These are the things that can do really mass parallel mathematics, so made by companies like NVIDIA and AMD, and all the hyperscalers as well. And then CPUs also very critical. These are the devices optimized more for stepwise computing functions, following a list of commands. This is becoming more and more important for agentic AI because in agentic AI, we're not just calling a model to do something, but we're actually logically creating a stepwise -- launching of multiple agents, multiple model steps in sequence. And for that, you need to use. And then you have memory, HBM memory, of course, that's what's storing all the parameters for these models as it goes through the sequence of processing and creating the model and then the inferencing for the model. And then, of course, we need to connect all these computers together because they all have to function as one device in this massive building. And for that, you need network, so you need network switches. It is a really high-performance ASICs that direct the traffic, basically the data traffic within data center, within the RAC. And then finally, another aspect of networking is the photonic transceiver. That's basically the thing that you plug your fiber optic cable into. It takes the light out of the cable, decodes it, makes it an electrical signal and delivers that to the switch. And Besi is involved in all of these, and I'm going to describe a little bit about what's happening with these devices. One thing that's happening is in parallel with this big demand for AI, there's another phenomenon that's driving our growth. And that's kind of the death of Moore's Law. And if I had to put a time of death, I would say, 2023, based on this chart. So this chart is looking at the maximum size of flagship products coming from NVIDIA and other customers, other high-performance computing IC suppliers. And you see up until about 2023. culminating with the NVIDIA hopper that was the H-100 generation. All these devices were basically fabricated in a single chip. But in this time frame, they were very close to the maximum possible size that's defined by ASML's reticle size basically. But starting in 2024, all that was no longer possible. It was no longer to scale, transistor performance adequately, in order to increase the number of transistors needed for the next generations. And therefore, you see every device now exceeding that reticle limit. That means that the devices have to be split into multiple chips. Once you do that, you split the devices into multiple chips, and you start looking for ways to optimize what function do you put on this chip versus that one. We call that concept chiplets. That's splitting devices into multiple chips using different process nodes to optimize costs and performance, and then using advanced packaging to put it all together. And that's what we help with. This is a view of what the hyperscalers are doing. So the hyperscalers are not just buying. Of course, they buy a lot of devices from NVIDIA and Intel and so on. But a lot of them are also developing their own chips, optimized for their own AI workloads. See companies like Google, Amazon, Microsoft, Meta, all developing their own chips. And the reason is simply to increase the efficiency and reduce the cost of producing tokens in the data center. But what they all have in common is they're all very large devices, mostly multichip and all using advanced packaging, 2.5D and 3D packaging. What does that packaging look like? Well, I've shown you a picture like this before. But all these packages, all these devices are using a variance of these kind of 2.5D and 3D assembly technologies. And the important thing is that they combine multiple different bonding steps, die attach steps in the same product in order to combine all these devices together. And so there's different types of bond required depending on which layer of the interconnect you're talking about. So starting with hybrid bonding, there's multiple use cases inside these systems. I'll draw your attention to the center top, you have the SOICs, so this would be fabricating the logic device itself, for example, a CPU, GPU, in a 3D configuration where you have a base die with a certain function, could be SRAM or I/O. And then maybe the processor cores, a smaller chip that's placed on top, and the most effective way to make that connection is using hybrid bonding, and I'll explain why in the next slide. So this fabrication of 3D ICs using hybrid bonding. The next application of ever bonding is an HBM. This is a future application. We expect with HBM 4E, but hybrid bonding there will allow us to integrate more chips with better thermal and electrical performance and ultimately higher performance for the whole system. And then finally, in the CPO or co-packaged optics application, hybrid bonding is also used. And let me just explain what CPO is a little bit because I know there's a lot of interest in this technology. Basically, what we're doing with CPO is taking the light from the fiber optic cable and routing it directly to the package. So we have a fiber optic connector on the top. The little blue line represents the fiber. The fiber is attached or an array of fibers are attached to the top of this chip. There's a little mirrors and etched into the silicon that direct that light down into the bottom chip, called the photonic IC. The function of that chip is to capture that light, turned it into electrons. And then it has to go up into a high-performance processor. We call that an electrical IC. That processor has a job of packaging that information, communicating to the ASIC very quickly. That whole thing is done using hyper bonding. So the EIC is connected to the photonics chip using hybrid bonding. And I'll show you an example of that from NVIDIA in a minute. So once we've done all that, we still have assembly today, right? So we have the SOIC. We have the HBM. We have to assemble it onto an interposer and test that thing. And that assembly process involves placing all these components onto a wafer. That's why we call it chip-on-wafer. So this blue interposer represents a wafer that our machines placed both the HBM and the die onto. And that's a very important process as well. We have different ways of doing it, either flip chip, which is done with his [ Cameoflex ] machine, that Christoph will tell you about, or thermocompression bonding using our TC Next. In many cases, in a growing number of cases, you also have components assembled into the interposer. [indiscernible], for example, you might have heard of, L stands for local silicon interconnect, and that requires machines to place those local silicon interconnects very precisely inside the wafer. It's also done with this [ Camioflex ] machine, which we're introducing. And then finally, we have to assemble all that onto a package substrate, also using either flip chip or TCB. So none of this is a surprise to us. We've been working for the last number of years to develop all the equipment necessary to enable all of this. And for our business, what this really means is that the capital intensity, the number of machines customers need to make these products is really increasing rapidly. So if you simply look back 10 years ago, you're NVIDIA GPU, you're Intel CPU was typically 1 chip. We call that a system on chip. And every year, we put more transistors in there through Moore's Law. But that started to break down. And the first step was to integrate these devices in multiple chips, called that MCM. And currently, we're now working on 3D stacking, so stacking chips on top of other chips and then further assembling of those into the package. And the next step now is adding optical interconnects into package, which adds even more intensity to the whole assembly. So more steps. All those steps requiring more accurate equipment, which tend to be more expensive as well, all adding to the capital intensity. Now we have different choices, how we assemble these devices. In the case of 3D IC, 3D IC, meaning integrating 2 logic devices or logic and memory together in a vertical way. really, the process of choice is hybrid bonding. So in hybrid bonding, we created direct copper-to-copper interconnect. Between the back end of line copper structures on both devices, there's no other interfacial material. And it's really functioning as if it was fabricated on the same device. Because of that, we can achieve much higher interconnect density so we can drive the pitch down because there's no other materials in there, all the way down today to 6-micron pits, even down to 1 micron in the future. So the internet density is much higher, the speed is higher. Ultimately, the energy-efficient performance of stacking using this method is 100x higher than it is for TCB. So for those high-performance computing applications, this is really the method that is being pursued. And even for memory applications, I'll show you how hybrid bonding helps to improve the thermal resistance, which improves the overall performance of GPU devices. So for these reasons, rebinding is really being adopted as the primary method for 3D IC. I just want to share with you now a few examples of the kinds of devices that are using hybrid bonding and how and why. Starting with CPUs and GPUs, which are separating the core compute fiction and the SRAM and I/O function and putting them back together with hybrid bonding. So the reason they're doing that is because SRAM is really critical in these systems. We talk a lot about HBM, of course. But really, SRAM has a critical part to play in these computing systems also, always has. It provides a very high-speed, high-bandwidth connection to the logic that is needed for certain compute functions, not as high capacity as DRAM, but very critical and getting more critical as we scale. The problem is that SRAM doesn't scale very well as we go to advanced nodes, particularly as we make the transition from [ FinFET ] to gate-all-around kind of transistors. This data from Fujitsu is clearly showing that you really don't benefit by scaling SRAM to an event one. Actually, you can have performance degradation. And so the solution to that is to keep the SRAM on a trailing node, like 5-nanometer or 7-nanometer, and then use the advanced node only to logic cores and then hook them together using hyper bonding. So that does a few things. Number one, it improves the overall performance of the device, but it also reduces cost because you only use the advanced node for a smaller portion of the design, in this case, 30%, in the Fujitsu design, and the rest of it, you can use a trailing node at lower cost. Intel is using this method. You can see also for their new Xeon 6 plus, formerly known as Clearwater Forest. In their case, they have the most advanced node being used for just the compute tiles. They're buying 12 of those things using hybrid bonding to a base tile. And that base tile is during the function of -- yes, I/O and SRAM. The next type of product, we have GPUs. Hybrid bonding is already used by AMD in their GPU products, the MI family, MI 350, 355 and so on. And we see them continuing to expand the use of hyper bonding and extend the design roll capability. So they're already now down to 6-microgram pitch, for example, with their [indiscernible] using the best equipment. What we see in the future is other kinds of GPUs that have traditionally been single chip. NVIDIA now has die-stacking on their road map for the [indiscernible] GPU family, which is due out in 2028. In addition to custom HBM, Custom HBM means -- I'll explain it a little bit in a minute, but we anticipate that Custom HBM will require hybrid bonding as well. Broadcom also has announced for their custom ASIC customers. So they do a lot of work with for hyperscalers and developing accelerators that they have adopted this 3D IC technology along with TSMC, and they have multiple customers in development. And the concept there is very similar, stacking just the accelerator functionality onto an SRAM die or an I/O die. And by that, reducing the total cost system. We expect multiple announcements from them in the coming year or so. And then there's co-packaged optics or photonics. So this is taking off faster than we expected, last year. I think last year, we showed you this picture on the upper left. This is NVIDIA's Spectrum X network switch device. And this is a network switch for a scale-out networking. That means connecting different server racks to each other or different clusters to each other inside the data center. And what that entails is, first of all, they have a big network switch ASIC in the center of this package, but all the small squares on the outside of the package in M2 are co-packaged optics chiplets, just like I described in our previous slide, so they're fabricated using hybrid bonding. So in this 1 example, there's 36 of those. That means 36 hybrid bonded chiplets associated with 1 network switch. What's new is that it's no longer just NVIDIA. So NVIDIA is in production, but so is [indiscernible] using the same kind of technology. And there's many other technology or switch companies or CPO technology providers working on similar technologies using hybrid bonding. So we think this is a really big market, but even more exciting is the use of CPO and scale up networking that means connecting GPUs together within the RAC. That's a much bigger, a much higher number of connections. And this has been announced for -- also for the famine generation of GPUs from NVIDIA. They have a dedicated NVLink network switch -- or not network switch, but a switch for the scale-up networking. What this will require is not only the switch device but also CPO components directly associated with each of the GPUs. So you can easily imagine that this is a much higher volume opportunity. And we expect this, like I said, in 2028. Next is memory. So we've been discussing memory for the last couple of years, and we still are convinced that the Intercept for hybrid bonding for HBM memory will be HBM4E, the first adoption, and then a broader adoption in HBM5. There's been a lot more data being generated in the last year since we last talked, demonstrating the performance benefits of hybrid bonding in HBM. One of the main ones is the thermal performance benefit that we get with hybrid bonding. When you stack many of these devices, you have a sandwich of 12, 16, 20 layers. You have to somehow get the heat from the bottom, ASIC out through the memory to the top, and hybrid bonding is much more efficient because it doesn't have any insulating materials in between the die. When we use TCB, and we have the solder bumps, not good is copper. And then we have some epoxy material that's also filling that gap, ex like a resistor. And the more layers you have, the worse it gets. This data from Samsung shows with 12 layers, they're able to demonstrate a 30% improvement using hybrid bonding compared to micro pump for HBM. So it's thermal performance, also higher interconnect density, which will become important for custom HBM and electro performance benefits. So for these reasons, we are convinced that this technology will be adopted, and like I said, HBM4E and then later HBM5. And then we're now starting to see hybrid bonding percolate into higher-volume applications. So this is a consumer application, for example. We have an example now from Apple. This is their M5 Pro, M5 Max, family of chips for laptops. So really consumer devices, you can go down to the store and buy this, maybe some of you already have it. And in this case, what we're doing is placing a separate GPU and CPU chip on to a base silicon layer using hybrid bonding. And then connecting those 2 with a very high-density wiring layer in the base of silicon die. And you can see the picture on the right, the actual hybrid bond interface, connecting the 2 devices together. And you'll notice it's basically just copper, copper. If you don't know there was a bonding layer there, it would look like just the back end of line metal chip because that's kind of what it is. It functions just like a single chip. But what it allows them to do is 2 things. One is, they can make a match. So they can take and combine it with different GPU configurations. That's how you get a Pro and a Max. So only 1 CPU tape-out, 2 GPU tape-outs. Secondly, it reduces the size of the individual chips increasing the yield in the factory and helping to reduce the cost of the silicon. So this is really kind of a cool application, and we expect more of this in the future. AMD is also continuing to use hybrid bonding, but they're increasing the use. So they're basically adding more hybrid bonded chiplets into their desktop gaming CPUs, and they're able to do that because they've improved their performance. They don't have any losses like they used to associated with thermal issues and so on. So it's really functioning well for them. And then -- so that's about hybrid bonding, but it's not all about hybrid bonding at Besi. So AI is offering many other opportunities for us. Colas is one of them. So as I mentioned earlier, after we do the hybrid bonding, we still have to assemble into a package. And for high-performance computing, the main method of patching these different components together is Colas, chip on wafer on substrate. And this is really exploding now in terms of demand, there's a 50% CAGR expected between '25 and '30 in terms of the wafer demand. And one example of these kind of products is shown on the right, this is the next-generation Venice CPU from AMD. And what you'll see there is CCD is basically a CPU core. They combine 8 of those, together with 2 I/O die. So they use different nodes, cheaper node for the I/O die, which has bigger area in the most advanced node for the compute die, and then they have some additional chips along the side. So altogether, there's 18 ships that we have to place on to that 1 unit. So for 1 CPU, 18 bonding steps, plus we still have the bond that wafer assembly on to the substrate. So 19 bonding steps. So it's easy to see how this drives a lot of demand. And we've developed a very high productive machine for the specific purpose that Christoph will share with you. And then we have the mobile segment. So mobile is projected to decline in terms of the overall market this year. Nevertheless, there's always opportunities where we see technology transitions happening in this market. So one example would be with the application processor. Typically, this has been a vertical structure where the memory is attached on top of the logic device. But because of the increased need for memory in AI-enabled phones and also the increased power dissipation of the application processor with more narrow processing units and things like that inside the chip. There's a transition to the side-by-side structure. That offers opportunities for molding, for die attach and a lot of the different process steps we have Besi, other configurations or wafer level assembly, which take advantage of the same capabilities I just mentioned earlier. And then the mobile memory side, we typically haven't played there at Besi, but what's changing now is that the demands on die placements are increasing meaning that more accurate chip to wafer assembly processes are needed in order to create these new kinds of mobile memory structures. And there again, our equipment comes into play. And then finally, the smart eyewear is a kind of a new device type that we see opportunities in. Why? Because it requires very high miniaturization, hierarcracy placement. And then in the case of the glasses with display integrate, you need to have a light engine that can also take advantage of hybrid bonding. So still a lot of opportunities there. And then finally, in our core business, the there's growth still happening in automotive, starting to come back. And we see, for example, in the powertrain and electric vehicles, silicon carbide, gallium nitride type modules being used and ever more complex structures. And we're very much engaged in both the die attach and packaging of these kind of structures, same way data center. So I talked about all the advanced devices in there, but there's a lot of power management and data center. You don't want to have waste in your power management, right, because it's very power hungry. And so there's a lot of unique packages that require things, like diffusion bonding where Besi has a leading product offering as well as hyperprecision molding. Okay. So that's -- I think I'm a little bit over time. So I would just like to leave you with a few things. One is that -- all these opportunities are really exciting for us. We've been preparing for this for a long time. And I think it's a great opportunity as the market is taking off and growing for us to capitalize on it. I think I'll leave it at that. And I'll turn it over to Peter.

All right. Welcome, ladies and gentlemen, to our this year's CMD presentation. So my name is Peter Wiedner, and I'm responsible for the Sub Micron business. But the ones of you who are following Besi since a while and also participating here, you might more perceive me as Mr. Hybrid. And I can tell you, I had a great last year since our last meeting because wherever I went, people said, "You're the right guy, I need hybrid." And if I would recount all the meetings that I had from the last year here, we would be still sitting here tomorrow. So actually, I want to start with a quote out of a summary from the ECTC 2026, just roughly a month ago in the United States, one of the most important semiconductor conferences for that arena, which is saying in the summary, actually, memory bandwidth, chiplet to chiplet latency, synchronization, overhead and energy per bit now shape overall efficiency in multi-die AI architectures. And bottom line, hybrid bonding directly attacks all those bottlenecks. And it's also kind of a summary to the explanation, the technical explanation that Chris has given in his section, but that's really the summary of what's going on in the market right now. And at Besi, we have been a very early believer and for that matter early adopter of hybrid bonding. And for that reason, already years back, we have brought the very first hybrid machine on the market, the one in the left upper box with stated #1. And this was a 200-nanometer machine. And that was the first machine where hybrid bonding in volume manufacturing did start for devices, for logic devices with roughly 9-micrometer bump age. Our second generation, which is the actual generation today, the second one, we've increased the accuracy 100-nanometer. And relevant for logic devices for 6-micrometer bump ages is the industry standard today. And I'm very proud that also this machine will be the starting point for high-volume manufacturing in memory business, in HBM business. For sure, in HBM, as you are aware, the bump age, and with that, the accuracy is a little bit more relaxed, but in difference to the accuracy that productivity matters much more. So that's the reason why, in the gray bar, we are counting on the productivity or the units per hour that the machine can produce. And while we are doing that and helping our customers to ramp up their production, we have been developing already the next generation in the meantime, which we call the [indiscernible] 50-nanometer, which will make it -- will be ready for logic devices with even smaller bump age in the area of free micrometer. And that's very important. At the same time, this machine generation where we will start actually the beta test at the customer site this year will, at the same time, not only be more accurate, but also way faster, which is, once again, very important for the HBM segment of that market. We are not done with that. In parallel, while we start launching this machine, we are already working on the next generation thereafter for even higher accuracy and more speed. And this is -- why I'm showing you this, because this is a unique road map and the unique product line up, actually, in a very short period of time that no other competitor of us is matching. While we are still having all these experiences and improving generation by generation, they are still fighting to make their first inroad. And that's really our big advantage and our strong competitive position. But that is not all because that's what I'm showing you. That's the bonder. That's one step in this whole hybrid chain of manufacturing. But as you are aware, there is a lot of machines involved and also the pretreatment of the die and the wafer before it gets to the bonder is a very critical part for a successful hybrid bond in the end. And for that reason, we have teamed up a long time ago with Applied Materials. You are aware of that. And together, we can offer not only individual machines, but really a complete system, which is doing the pretreatment plus the bonding and by the way, plus the measurement after the bonding, so the quality assurance. And that's the integrated system that you see on the bottom here, which is our shared [ AMAT ] and Besi system, which is called [ SKhynix ], and why is that important that this is an additional offering as well because the more chips you have to put together, and you heard some examples, of Chris, where this is happening, where the packages are getting more complex, the yield is even more difficult to achieve, and an integrated system simply can help you to maintain a high yield even in a complex package. And that's the reason why that one is very important as well. Nevertheless, there is one more aspect to our partnership that we are having with Applied Materials, and that's going a totally different direction. And I would even consider that perhaps even more important than the product offering. We have been -- since ever, we have been engaged with Applied Materials, we have started together a joint development activity and we call it the Center of Excellence in Singapore. And for sure, that lab is equipped with everything our own integrated equipment, 2 pieces and 5 bonders, all downstream and upstream equipment that you need because the aim there is really to research on the bonding -- not on the bonding but on the hybrid process itself because it has a lot of ingredients. It starts with the material, with the layers that you take there. Once again, the preparation, and you all need to understand that to make a slight hybrid bond in the end for volume manufacturing. And this lab is utilized by us to learn that, to understand, also the research to come up with even better hybrid processes. But at the same time, we are engaging in this lab with our end customers who want to do hybrid bond and help them to develop their packages with hybrid bond interfaces inside. And so far, we have been engaging, together Applied and Besi, over 25 customers in our Singapore [indiscernible], you see a nice correlation by the way, Richard's chart where we already have now 20 active customers who have bought machines from us. And that is also driving actually the hybrid adoption into the market much faster with our help and our activities. Now talking about customers, let's go to the market. And let's see what happened in the last year on the market. And let's start for that matter with the logic side. And a lot of things Chris has explained, and I can summarize them here a little bit. So what we definitely do see on the logic hybrid side is that a lot of use cases have been materializing throughout the last year, and I'll get to that on the next slide. But if I would sum that up, you could say 2 things. One thing is that hybrid interconnect technology for AI logic devices has become and is confirmed to become the predominant interconnect technology. You can name it, AMD, Intel, NVIDIA, then also the Mata Google, all the ones who are doing their own chips, and you saw also one example of that in Chris' presentation. So that's very clear, very obvious straightforward. And perhaps also looking a little bit back in history, nobody would have doubted that this is the primary area where hybrid bonding does make a lot of sense. But I also do remember in some of our previous presentations like that, I got the question, "Well, what do you think? Will hybrid also enter, let's say, a consumer market, for example, into our laptops?" And that was not so easy to answer back in days because even so the very first hybrid device from AMD was a consumer device, it was a graphics processor. There was not really a lot of activities visible for follow-on. But now this year, with the launch of Apple's M5, high-end processor group, which you, by the way, can already buy now at the market, laptop, it's very visible that what we thought all along that on the high-end segment, hybrid will penetrate the consumer market, that this also has been happening throughout, yes, in that case, it was -- the announcement was this year. And once again, coming back to some of the use cases, I want to use and to show you the latest ones, I want to go back to a chart that we have been showing you 2 years back in this meeting here. And back then, this chart was an increased section technically trying to tell you how it typically the development of a process to evolve from an SOC system on chips or 1 chip to 2 or 4 chip, which we call it, back the split tie, in order to get more compute power, but without hybrid interconnect. All the way then to the chiplet architecture, you then use hybrid bonding. And back then, 2 years ago, there was only the [ EPIC ] from AMD, which you see right upper side, which was confirmed in the production. But we said, well, that's a pattern, and that will happen to all of them, 1 earlier, 1 later. And only Intel back then had announced their internal Clearwater Forest architecture, so that's not an end product, that's an architecture that they are working on that. But it didn't have a sellable product. And really what happened in the last year was that all of this, what we predicted 2 years ago, came together. So Intel finally launched a real product based on their architecture of Clearwater Forest, say, on 6 Plus. Then as I mentioned before, in the consumer market, Apple launched the M5 Pro and the M5 Max. And finally, and that was also very often my question, "Well, what will NVIDIA be doing?" Very interesting because it's obviously one of the biggest suppliers. They don't have a product here today, but they announced with the same architecture and product line that they will use that as well. So it's very clear on the logic arena, to sum it up once again, adoption, the use cases are there. They have been announced. You can already buy things today, and that's just moving along and the adoption rate will increase. Now let's move from logic to another segment, which was way more discussed over the last years than the logic arena, and that was the memory, the HBM. You remember the times when I said, "Yes, hybrid will come." And then there was the high topic and yes, you can make higher stacks, and everybody said, "With the higher stacks, you still can use DCP." And that's not good for hybrid and all these discussions in the past. But if you look at what really happened now and once again, finally, this year is that for the pure technical benefits that Chris pointed out, and I just wanted to sum it up in one sentence here for -- because the hybrid enables a lower power and a better heat dissipation, and that's up to 30%. That's such a big advantage that the manufacturers of HBM can then turn either into faster memories or into more memory 1 stack that everybody wants to use that. And also in addition, and Chris explained it already, these custom HBM, with custom logic underneath, which is driving the bump ages down to a smaller level, and we predict roughly around 12 micron, which is then much closer to an hybrid interconnect and to a TC interconnect, also that is speaking a language, the same language. But once again, that's just a technical summary. So what did happen last year or in the course of the last 12 months? So finally, all 3 leading suppliers are seriously doing research and seriously evaluating hybrid bonding for HBM memory. And by the way, they all do it with our machines. For sure, some started earlier -- did start earlier, some a little bit later. So the early adopter or the front runner is already very far in his research, and you can read his announcement also. He is not -- he's also very proudly announcing that. And it's very clear that the first one will adopt the hybrid interconnect in HBM4E in '27. And it's very visible, well, to the outside world, but also internally because he's already starting preparing his factory for high-volume manufacturing. So for mass production for sure in advance so that in '27, he can start to deliver. And that's a very clear signal and a clear message that the question, if hybrid will come, formulary, yes or no? That question is answered, it will come. So now the matter of fact is, well, how fast will it come? And for sure, you can have different models to that. But on a higher level, one thing is very clear. Once again, why do you want to use that, because you get a better performance. Now every new HBM generation is defined by better performance data. That's the reason why there is an HBM5 and then 5E because it always gets faster and more memory. So that means with every successive HBM generation, you will use more hybrid in connect because it simply helps you to achieve, yes, the target data and the target performance of the HBM die. And once again, starting with HBM4E is -- the start is just around the corner. So also there, very exciting and great news. But I have to tell you the most exciting one is the CPO topic that was already mentioned. Because if you remember our last year's presentation, I had in my section a slide where I was showing actually also that picture and a little bit more on the technology side and saying, "Yes, these co-package optics, there is some advantage, and packages are being developed, and TSMC is doing this COUP, they call it COUP." And so -- but in the end, if you look at our last year's presentation, it was really more telling you an R&D is ongoing in that arena. And now within 1 year, we have from an R&D stage to volume manufacturing. So because, as Chris pointed out, you can already buy it from NVIDIA, the Spectrum-X or the Quantum-X that's -- and that's -- he showed the picture as well. You can already buy that today. So it's already there. So in 1 year, in no time from zero to hero, that's even for our fast-based semiconductor industry extremely fast. And let's have a look at it perhaps why it went that fast? And what's behind that? Not technically perhaps, but in general. And I think there are 2 major factors. One factor is there are these undisputed advantages for the end customer, not for our customer, but for the end customer who is using the interconnect. Because as you can see from that conference slide from TSMC, if you take a CPO and you put it in the right place, you can really gain up to 10x greater power efficiency and 20x lower latency. So it's -- you take less power and you get a higher speed at the same time Thinking of the huge effort that the data center today has and the power consumption, there is a huge drive really from the one who is using this device, is that he wants to have that. So that's always good if the end customer want something. So that's giving a big drive, number one. But the second drive, that is also very driver, which is also very important is the people who have designed these packages, once again, COUP, as an example, as the most important example, they did a very smart job because they designed a package, which is using a lot of technical ingredients, which are already there today. And that brings that package to a great scalability and a very fast scalability. And if you just take that 1 interconnect -- that we are doing with hybrid here. And as you've seen, there is more to that. But if you just look at that one, you do that with the same process with the same machine like you do logic hybrid. So that means you don't need to develop something in addition, like you need to do for memory, for example, because the stacking of memory has some special challenges, which need to be addressed in R&D, you just take the same machine, you put that device on it and you bond it, done. So that means the ease of scalability is also the important ingredient, which allowed this fast adoption. Now when I say it's in mass production, and if you look at the right chart here, which is a prediction forecast, it's saying 0.2 million devices this year. Well, it's the start year for that device, so no surprise there. But comparably to what is predicted 4 years ahead, in 2030, that's a very low number. because the prediction of these market forecast is that this will be a market of around 60 million units a year. And that's a huge growth rate of a CAGR of over 30%, and this is -- and for that matter, that the speed of HVM and also the size that can be achieved with that specific market segment. That's the reason why I was saying that's for sure the most exciting development for hybrid in the last year. And with that, for sure, we have also increased our market model, that you know. Every year, we are presenting that. And last year, I had a little bit of CPO in, by the way. So it's not -- it was not zero, but it was very modest. And I also had it in the high case because it was not sure when it is coming, how much it will come. So for that reason, you don't put it in the low case. But now a year later, I can easily put it in the low case, and for sure, with much higher numbers behind. And for that reason, the low case, so the logic with all its adoption, plus the CPO, we can increase that for 18% versus our last year model. Then like always, we are adding the memory part to that in order to come to the mid case. And if you will compare, you will see, I did not change -- we did not change that much on the overall, let's say, number of machine assumptions there. I think that -- because we always have been positive that this is coming, so we had that modeled in already. However, what is the difference is the confirmation that it will come is this year clear, why, you could have had a question mark last year. So that means also the mid case is confirmed. And then -- and I did not talk to any of these subjects in our topics in detail. We are adding up the edge devices like smartphones, processes for smartphones, but also smart glasses in order to come to the high case, which then increases overall by 12%. Now just a comment to these edge devices. Once again, I did this year, not prepared a presentation for that and spend the time. But I did show you, for example, a lot of activities on the smart glasses last year. Just let me assure you the R&D activities with the end customers of that is ongoing. We are still engaged with that. But that's a little bit more of a development work to be done by the end customer so that is taking a little bit more time, that's the reason also why the high case curve is not kicking in this year, but only a little bit later because these devices still need some development time until they are getting to high-volume manufacturing. So all in all, a great increase up to a cumulative 2,200 machines and also the low case up, as I said, up to 150 machines. So all in all, as I said, I had a great year. But I'm not only responsible for hybrid, also TC. And we are also doing a lot there. And I want to give you at least a small overview over TC as well. You know we do have an offering, not on the basic TC processes, but on the so-called fluxless, which is, let's say, the most modern style of thermocompression process. And we did expand our adoption last year -- over the last year to 5 customers, which includes customers for memory and EPO manufacturers. And the interest in these fluxless TC interconnect is really increasing, especially in the last 3 months. We get a lot of, yes, customer request. And with the new technology, you get a request for all kind of market segments in the end. But I want to point out 4 relevant market segments for this future technology. And that's, on one hand, memory, and for sure, today, TC is normal in memory, but that's the NCF, the standard thermocompression process. But we are engaged with one memory supplier to develop a TC fluxless interconnect package style. And if you now think, "But Peter, you just told me 4 slides ago, that goes to hybrid," think of it, I said, not everything will be hybrid, and don't think only of HBM memory. There is more different memories out in the market than only HBM. So you have to think on the whole memory market where this may play a role. Then for sure, the covers, also mentioned and explained in detail by Chris, which is today flip chip processes. But when the covers styles are getting very big, you need to switch from flip chip to thermocompression because of the size. Once again, we need to consider actually the optical market with the CPO, but also the transceivers, because also here, these are very complex packages and the transceiver has up to more than 10 product interconnect steps that you need to do. And also here, some of them are poised to become TC. So that's an interesting market. And ultimately, even so I agree that that's furthest out, but we are doing R&D with certain companies who are engaged with that already. And that's for, let's say, I don't know if I can call it a semiconductor then. But also these quantum computing, let's call it, tiles, need to be packaged in a way and need to have electrical contacts to the outside. And unfortunately, you cannot use, let's say, usual materials like copper, you need to take very special materials like Indium, which are hard to make them connect, but that's also some arena where fluxless and [indiscernible] gas TC machines play a role, and we have already made samples for that and then on an R&D stage. So these are the 4, let's say, most relevant segments that we are looking at when it comes to fluxless TC. And my counter is at 0 here, and I'm at the summary slide. So that fits perfectly together. And so we can have a break in the coffee now. But before that, let me just finalize it. So we have a perfect product lineup for hybrid. On the market side, the use cases, logic has been confirmed. On the memory side, the implementation, the first runners are around the corner, and as a third one, the CPO has developed in 1 year into volume manufacturing, and all these positive signals are driving up our market potential. And for that matter, we have also increased our market forecast. Yes, I think with that, I can -- well, not close the session, but with that, we can go to the break. And after that, Christoph will continue with the mainstream business. Thank you. [Break]

All right. So welcome back, everyone. Yes. I hope you're still with us after the break. I'm Christoph Scheiring, Senior Vice President for Die Attach, and I'll walk you through the main updates for the mainstream die attach, this is my responsibility. As my colleagues, I'll focus on the changes. You're following this Capital Market Days for years already, so you don't need the full story, only highlight what has changed over that last year. So the message for today regarding the mainstream die attach is clear, Mainstream Die Attach is no longer only driven by the traditional semiconductor cycles. It is increasingly supported by structural AI growth. That's the clear goal to make that transparent for you. What I will do is I will show you the drivers. I'll talk a little bit about technology changes and certainly about the product portfolio and the positioning and why we believe we are able to capture those growth opportunities. And I'd like to start here with a chart showing the end markets for the mainstream die attach and talk about the scale of the AI impact -- so basically, what we see is strong growth expected across various segments. And this means it's not just about compute anymore. It's about the complete infrastructure that is driving growth from photonics to power applications and others. On top, we see also a second order growth vector into smartphones and AI devices as those units or AI models are increasingly being performed on those devices at the edge. Altogether, means an increase in advanced packaging and more accurate, more complex, more sophisticated die bonding tools. And this is, at the end, where Besi plays a main role. China, important. China remains a demand pillar. This has to do, especially with the effect that advanced packaging is even more relevant in markets where you are not constrained, right? So what does that mean for the Besi -- for the machine, the equipment market? So what we see is that we are, over that last year, the die attach intensity, as I call it, is rapidly increasing. So if you look at those AI systems, what you realize is that we have more packages per system and even more -- if you look into the package, there are more dies that need to be placed package. All that creates an additional structural AI demand on top of the traditional semiconductor cycles. So because of that, we have updated our model the addressable market model to a EUR 1.6 billion level by 2030, which is an increase of about 8% as compared to the numbers I have presented last time. And what's also clearly visible is that the growth is concentrated on the advanced segment, which again plays well into the strength of Besi. Talking about the portfolio. We are having a known slide. In the upper part, you see the volume drivers, the multi-module attach machine as well as the flip chip lineup. In the lower part, epoxy and soft solder. So what we see is that the growth is not evenly distributed. Obviously, stronger growth is seen in the upper part for MMA and flip chip, while the lower part, the epoxy and the soft solder remains important, no doubt about that, but it is a more moderate growth. Competitive positioning remains strong for all the segments, whereby the Besi strongholds are always via accuracy and process capability. So if you look at the big picture, the most relevant applications for us going forward are here in the flip chip part, the 2.5D CoWoS market. For the MMA, it's clearly the photonics part. And a bit scattered across the platforms, it is, yes, smartphones or in general AI devices that are driving the business. And those are the 3 applications I'd like to dive into more detail in the subsequent slides. And I'll start here with the 2.5D market, which over that last year really has emerged as one of the major growth drivers for us. What we see is -- sorry, what we see is a strong growth going forward of about 50%, same as Chris already has shown, driven by clearly AI data centers. On top of that, we see modules growing very, very large. And because of that, a technology transition to so-called [ Covos L ] formats or architectures which is seen as the dominant architecture going forward. This [ Covos L ] cohort is based on RDL interposer wafers, which require additional die bonding steps to place so-called bridge dies in order to create local interconnect, which means additional die bonding steps. This, together with the increased complexity, has a very strong and positive impact on the number of , yes, die bonding steps per system, a driver for equipment demand. In more detail, is a slide that explains this equipment demand or that driver. If we look at the next-generation accelerator package, like shown here, we basically start with an interpose wafer with only a handful of components of units on it because of the sheer size of those modules. And then going into the module itself, you see there is a number of chiplets that need to be bonded onto 1 or 2 or even more bottom dies. Those dies later on go onto the interposer wafer. But that, together with a larger number of surrounding dies, HBM dies as well as chipless, then some dummy dies. And as mentioned already, we see also quite a large number of these silicon bridges that need to be placed and those are the dies that create the interconnect later on. And at the end, everything needs to be bundled into the package substrate. So what we see, while we had in the past, a single-chip process flow. Now we look at very complex architectures with several layers of die bonding steps needed, in this case, it's about -- you can count it, it's about 40 different steps, whereas 1 step in the past. And this obviously creates a lot of demand for us. So Besi is engaged and aligned with the needs on all those layers. We start at the upper end with our hybrid bonder to do the most advanced bonds. We have introduced new machines for the middle layer, our 8800 Chameo FleX for the mass reflow. As well as for the highly accurate biotech steps that are needed in the stack, we have introduced our 8800 TC Next, for the TC related flip chip, Peter explained in his presentation. And we have at the bottom here, an important platform, which is a tool of reference for the interposer attached into the package substrates. So quite strong presence in the market already. So clearly, from a mainstream perspective, this platform, Chameo FleX is the most relevant development over that last year. That's why I'd like to show you a bit more in detail what it is and what it can do going forward. So it's basically building on the success of our leading Chameo Advanced, which is tool of reference in today's [ Coves ] like markets. But it addresses additional markets such as Bridge die, which I explained, but also pan level applications. It's yes, designed to provide best-in-class productivity on the one hand side, together with 1 micron accuracy. And these are basically the key ingredients needed for next-generation 2.5D structures. Over the last year, we made enormous progress. We have launched the platform. We have started engagements with several foundries and OSATs and are qualifying the system. OSATs are specifically relevant going forward, as you may have heard TSMC decided to outsource their internal chip to way for operations to their OSAT partners. So also that portion will go to OSATs. And as you probably know, Besi Mainstream has a well-established relationship with those OSATs, and many of them are using Besi tools. So that's a good news for us. Importantly, we have already been able to complete one of these qualifications, and I'm expecting the first purchase order any moment. So you clearly see that platform is developing rapidly from product introduction into a commercial validation. And we believe that with the help of this machine we will increase our share of wallet in this 2.5D market and capture additional markets such as the bridge die attach. I'll -- with this slide, I'd like to turn it then to the next market, to photonics, and specifically to transceivers, those units here, which basically sit at the end of every fiber that goes through the data center, from RAC to RAC and so on. Those transceivers are because of the data center build-out are seeing an enormous growth, indicated in the chart here, 25 million, at a number of 100 million units already -- and going forward, showing or expected to grow significantly overall with a CAGR of about 30%. And what we also see, besides the market growth, we also see a transition to 1.6 tera transceivers, which are faster, higher transmission speeds. And this is, and I will show that in a minute, increasing the die-attach intensity, which again is a positive factor for us. And lastly, we also see new units coming up so-called LPOs, linear pluggable optics, which is a response to the ever-increasing constraints in AI -- or power constraints, I should say, in AI factories. Those LPOs are, from a packaging perspective, very similar to transceivers. However, their assembly requires higher accuracy, which is again positive use for us as this is our stronghold. So transceivers represent an enormous growth opportunities for us already on an already high level, which we are seeing at this moment. Besi is one of the leading suppliers of assembly equipment for that market and our 2,200 Evo-advanced is the real workhorse there, used by all of the leading suppliers in this market that are listed here. So going forward, where we see, first, clearly, the market expansion. Secondly, the transition to this 1.6 tera transceivers, which is increasing the die-attach intensity and the graphical representation of that can be seen here, while a typical 800 gig transceiver currently used in many of the data centers coming, from [ Innolight ], is comprising 4 lanes of 200 gig each. We see in the next generation, the 1.6 tera, the number of lanes is doubling. And again, that also means that the number of attachments, per transceiver is almost doubling Besi today, and I tried to indicate that here in red, is already covering quite a number of different process steps. I don't read it out here, but it's a few of them. On top of what I just explained, we are targeting with a new development, Evo-1 enabling higher accuracy as well as eutectic bonding. With that, we are addressing in the future even more steps, extending the scope as well. So basically having an increased scope, more die-attach intensity and this, in a market that is exploding, as Chris said, is a clear, yes, demand driver for Besi, and that's why we are excited about that photonics market. And lastly, let me turn it from AI infrastructure to AI devices. AI is, yes, increasingly being executed on at the edge on those devices. The market itself is expected to grow significantly also the main variant, the dominant device for the time being, is smartphone and will be smartphone. However, others like robotics, automotive or AR/VR are emerging as well. And the one thing they have in common is that those AI devices are rich in semiconductor content. That basically means more advanced processors, more memory, better memory, and also sensors are typically also being better and more complex. From a packaging perspective, that means that, yes, we are looking at integrated functions on more complex functions, on tighter accuracy requirements which plays well into the strength of the base portfolio, namely our Evo, which is used in smartphones, but also increasingly in AR and VR devices, into our epoxy platform, which is heavily used in the sensors, in power management, power amplifiers for smartphones and lastly, in the flip chip portfolio, which is used in the processor packaging, in the memory packaging and recently being introduced even in a camera package. Talking about camera, we are also seeing camera innovation at an inflection point. We are seeing the introduction of new functions, and since we have been able to qualify our tools again as tool of reference for those applications, this will add to the overall growth story. So in summary, and you can read out, we see a structural driver coming from AI that is also impacting the mainstream business in -- across a broad range of mainstream markets, I think that's very important and also impacting various basic products. We see that this increased die attach intensity is a multiplier on equipment demand, as I have pointed out for transceivers, but also for 2.5D structures. Because of all that, we see our addressable market growing by a factor of 2 to 2030, which is an up compared to what we had in our models last year, of about 10%. We are very well positioned in those highly growing markets, like 2.5D, photonics and AI devices, and our product developments, which we have launched, are getting track now and are helping us to accelerate the market growth and help us hopefully also to increase market share. That brings me to the end of my presentation, and I hand it over to Richard for the summary.

Thanks. So a lot of information. I hope it didn't surprise you. It's all following crystal clear road maps, but the adoption rate always varies, but let me go to the summary. So as we shared this morning, an upgrade of our target model, new targets, EUR 1.1 billion, engine 1. So Christoph's part mainly but also adding die attach and several plating solutions to that. And then we have Peter's engine 2, Sub Micron, up from EUR 0.5 billion to EUR 0.9 billion to EUR 0.6 billion to EUR 1.1 billion. Simply as explained, because of continued adoption in logic, the range because of expected adoption in HBM that moves the needle either faster to the upper end or in a somewhat 1, 2 years slower trend, but it will move to that upper end, we're convinced, but also other developments, the chiplet architecture. And one of the key factors, which many of you asked us is can Besi maintain its leadership position in Sub Micron icron world because what we haven't said -- I think somebody counted there are over 10 hybrid bonders announced in the market so far. How many questions did we add up in total? Yes, yes. Well, there are some Chinese as well. So there are 2 the questions which arise "Why is everyone developing a hybrid bonder?" Well, there's only 1 clear answer. In the near term, but certainly the long-term future, the direct copper-to-copper way to connect the devices will become the mainstream. So that opportunity leads to all investments in these whatever 20 hybrid bonus. But then the question, "How can Besi maintain its leadership position?" Well, we have explained to you several things. We were there very early. I don't say the first because [indiscernible] was also there. But we have been very successful so far to understand clearly what it takes and translate that into production tools. At the same time, on the road maps of the key customers early adopters of hybrid bonding. But then the process know-how, which we built with Applied Materials help over the past nearly a decade, 7 years in our formal relationship. And as Peter explained what we do in Singapore, what we do jointly in Singapore, but also in [ Radfeld ]. Coming up in the U.S. is second to none. And that gives us a sustained engagements with customers in developing of all kinds of new processes. Whether we have the best bonder, is that still the challenge. It looks pretty good today, but you have to be always sensitive, careful, is somebody else building a better bonder? But anyway, that's our entrepreneurial life blood, which definitely will take us further. So that's key to the upgrade in the model. And why did we increase the operating margin, very simple. If you look at the success of advanced packaging and then not only sub Micron but also the part in engine 1 is moving to ever more complex devices. And if you do your homework right, you have higher margins. And that you will see translated in the end into higher operating margins. And that's the reason why we inched that up a bit in line with our strong market development in the past couple of years. but certainly at this very moment. So that's the new model. And then if we take all these messages, many have been touched upon already. You see a significant increase, however, words you choose due to AI infrastructure buildout, and that will continue over the next couple of years. You may argue, if you look at this industry and a historic perspective, it's never a straight line. There may be, let's say, periods where the adoption takes some time building new fab sticks time, building advanced packaging facilities takes time. not only to build, but also to train people, but more importantly, end markets always take time. So that's also why our nature has always been a bit on the conservative side. But if you look at the drivers, they are enormous. We are at the very beginning of a significant up cycle driven by this whole AI change in the world. So we're in an excellent position to benefit from that. Second comment is in line. Currently, you can say there is a deficit in capacity. Besi is well positioned. The new up cycle as we explained to you, began in the second half of last year, I want to repeat the anecdote of our close to EUR 600 million revenue last year. That has surprised, by the way, everyone in this market. It's very interesting to see that phenomena time and again in this industry, it's conservative in a way, but on the other hand, it's most leading-edge technology you can imagine. But the timing of these cycles remains very, very difficult. And we are move to, let's say, the decision arena at customers, also helped by Applied Materials. And although the big picture is very clear, the immediate demand changes are often, let's say, not according to a clear schedule. But anyway, it's turned second half, and you've seen that in Beijing, as we announced our first quarter numbers, the guidance for Q2, fourth quarter already. That definitely proves that we're in the middle of that. Significant progress achieved multiple drivers converging. I hope that was a bit more clear this time on what's happening in this hybrid bonding arena, and it's a lot where we are in the core process development and in many cases, process of reference increasing our targets and adjusting our operating model. Although everyone takes for granted that we have gross margins above 60%, many ask, "Why is it only 60%? Are your targets high enough?" Well, that's also why we increased the targets. I can share with you if you would know all what goes wrong in our company, there's still a lot to improve. So those targets increasing is a very natural way to manage our business. So with that, we'd like to conclude what we have prepared to share with you, and we would now like to open the audience for some questions. And Peter and Chris, why don't you come forward? Take your chair along, and we'll be happy to answer your questions.

Who wants to sit where? Did we make -- please take a seat. Peter, in the middle, you are the most important person.

You're the..

Anyway, who has the first question? May I choose on the front row, please.

One question I have is about your capacity. You talked, I think, on one of the slides that you're going to increase your capacity to 35 tools per month. That is what you're saying? Is that going to be sufficient to supply this demand that you're talking about by 2030? Or is there going to be a continuing increase in your capacity to be in terms of being able to supply the market? And my second question is, clearly, I mean, now there seems to be -- you seem to be closer to volume adoption of hybrid bonding in HBM, in terms of what needs to be still overcome to go from here to high-volume manufacturing? Is it something that you need to do? Or is something customers need to do? So what are the steps between now and, say, next year or whenever that high-volume adoption takes, please?

Well, 2 excellent questions. Number one, if you do a quick math, we are now at a level of building 300 bonders per year. So theoretically, if you multiply that by EUR 2.5 million is an average price and you look at our model, it's close, but we also have shared already that the next phase is already prepared. So this capacity expansion we do in steps. This should satisfy the first part of the 5-year model. But then once it takes off much more, we are able to expand with locations already in place. So one of the simple comments is Vietnam. We have started with high-precision tooling. And we've also shared by the end of this year, we will build the first bonders in Vietnam. They move out of Malaysia. So we simply have more space, is easy as that. So don't worry, if that accelerates, we are certainly able to address that. And customers on an ongoing basis, come and test our capabilities because that same question is on their table and is Besi ready to deliver one that is required? Your second question, what does it take? High volume? We mentioned in one of the slides, we are expanding our support footprint in Taiwan. We are also expanding that in Korea. In the U.S., we have expanded it significantly in bringing Intel up to speed. And that requires a service support along a front-end business engagement model. And that has taken us some time. We had enormous help from the 2 big customers who have a certain mainstream volume. That is now in place. The people different people, training levels. Also, what we mentioned is the spare part infrastructure that's completely different, supporting a front-end fab compared to high-end assembly facility. So in a joint effort also with Applied Materials, we have the most brilliant benchmark available that we bring this ever closer to front-end requirements in the market. But so good so far. Next question behind you. Sorry.

[indiscernible], UBS. So I have 2 quick ones questions. sorry. The first one is on the road map for hybrid bonding. So you mentioned the 15-nanometer another 25-nanometer. So when are we going to see the 25-nanometer tool? And I don't want to look too greedy, but what is the road map beyond that? I mean how far can you go in the accuracy for you, do you think, maybe in the 5 to 10 years view? If you have any roadmap would be great. And secondly, you mentioned as well you the accuracy and the throughput improvement that you are delivering despite improvements. How should we think about the pricing of that? Because if you have a massive unit increased throughput plus accuracy has to give you good pricing power here. So you mentioned EUR 2.5 million average ISP. I mean, how should we think going forward given the big advantage you provide to the industry?

Peter? .

Well, I'll start with the last question with the pricing because that's easy to answer. The effort of developing ever more accurate machines and that might be a bundle or take ASML for for EUV and so on is exponentially increasing on the R&D effort side, and the bundles are getting more complex, and the machines are getting more complex. So the price level is definitely going up with each increased step of accuracy. So that's without any doubt. And that needs to be considered if you are looking forward. The -- on the accuracy, for sure, the accuracy increase will move on, and we will see, and we will adapt to what our customers are needing. Currently, the customers are telling us that they are targeting and depending on which customer you're asking, bump ages of 1 micron and some are, say, 0.8 microns. So -- but it's in the ballpark, a little bit below 1 micron. And that can be addressed with our developments that are currently ongoing, which will be there in time when the market needs it before the end of this decade. And then we need to -- not then, in parallel, we are always watching out what is the next step of the customer. And if they say they go down to 0.5, then we will simply follow with our road map to that. So not everything in our industry is moving ahead. But in any case, as accuracy has always been an, independent if it's hybrid bonding or any other bonding step has always been a very vital and important part of our DNA. We are anyway, having our pathfinding R&D departments that are working very generically on how to improve accuracy even further in die placement machines. So that's what we are anyway do independently. So we will be prepared whatever comes along.

And to add to that, in very close cooperation with the key customers, as Peter said, the engagement in their road map is what it's all about. So they regularly test what progress we are making. And you must realize that the timing, and we have seen that in the past, is also not very clear to the customers even the largest customer on this planet. So we, as a supplier, have to switch gears unexpectedly faster and sometimes also somewhat later. But anyway to underline, we are always connected to the most critical road map for accuracy in the market. And that's in logic. It's not in HBM. Memory is always a bit less critical, but still very critical. And that determines our long-term future. So your question is very important. Thank you. Next

I just had on the CPU front. So you talked about -- very encouraging to see into Clearwater Forest announcements recently, and AMD has obviously adopted hybrid bonding as well. So I'm curious about your penetration in the ARM CPUs. So the NVIDIA Vera, Axion, Google and AWS Tanium and the propensity for them to adopt hybrid bonding as well. And then I guess the second question was just kind of following up from an earlier question about the level of service and support that you've given. Do you see that your service business could accelerate faster than the group revenues over the next few years given the intensity is rising? Or do you kind of see it rising with group revenues?

Chris, the first question. .

Yes, I can address the first question. I think for all the ARM CPU suppliers, none of them yet are using hybrid bonding. That's true. So our involvement there is supporting the current processes that they do use, which tends to be Covas, for example. Sometimes in the case of I think the Amazon chip, it's just chip on substrate, multichip module. But in any event, our equipment can support those process that -- the question is when do they convert to hybrid bonding. I think the good news is that ARM has a design tool kit now to enable that for their customers for both CPUs and GPUs. And that was only done, I think, maybe 2 years ago and still being designed into. So I expect to see that, but I don't know. I can't tell you exactly when.

And the second question, Peter?

That was about the service revenues. Service revenues are definitely accelerating as we speak simply because of the reason that, and that is coming back to what Richard already said, that hybrid is placed in the front-end area of our customers and not like we are used in the back end. And there is simply -- in the front end, there is simply a different style of working with. And yes, it reflects on spare parts, but it also reflects on the service because in that, you normally only are going to the customer if you were asked for a specific service. While in the front end, typically, there is a ongoing presence of the supplier, and that's for sure then covered with service contracts. So yes, definitely, the service part is accelerating as we speak. And it is growing along with our engagement in the front end arena.

Simon from Barclays. Maybe it's a relatively simple question, but we get a lot of questions from investors on how to think about engine 1. You -- we've seen the small increase -- or a nice increase for the guidance for that. How do you think about the mix of engine 1 in your target operating model? 50%, say, of the group today is computing, so is it even bigger in the future? How do we think about spend and services within that? I think that would be very helpful for investors just to picture how that grows from here, again, it's implied doubling, I'd say. And then second question would just be on photonics. Last year, you gave us, I think it was a 60% hybrid bonding unit TAM for the next. You sound very bullish about it. It's clearly a big opportunity for you guys. How do we think about -- how you think about that TAM but also the dynamic between some customers will use flip chip for a while and eventually shift over and others are already using hybrid bonding today? That would be very helpful as well.

Christoph?

Yes. So your question about the engine 1 split in the driving market. What we see is basically, as described, a strong push coming from the AI, which is going to compute 2.5D covers as a main driver right now. But the photonics portion is seeing an increase, which will reflect in higher shares of photonic business for overall none. At this moment, already very relevant, but expected to increase over time in the next years. That is a bit on the expense of mobile, which has been very large in the last up cycles and is still relevant. And with -- as I explained, with AI-enabled phones kicking in, again, seen kind of revival, but not at the level we have seen it, and we expect the transceiver business to be. So both transceivers and 2.5D compute will be the major contributors going forward. And if you translate that to product lines, it is flip chip for the compute and Evo mainly for the transceiver business.

Martin Jungfleisch, BNP-Pariba. The first question is really on China. I think you have talked about -- much about it. How much of an opportunity do you see there? And is that included in your TAM, so the hyper bonding term that include the bonders that are potentially going to China. It's the first question. And the second 1 really is, if you could split up the TAM for hybrid bonding for the high end? I think last year, you gave us the individual market groups by HBM and AI, logic, et cetera. So just -- is it fair to assume that the majority of the increase would come from AI logic part of it today?

Well, let me answer that question. So your first question about China, yes, we are considering China as we are selling to China today. So it's also considered in our TAM. And the second one the main portion, actually, from today's model that I have been presenting, the increase is coming really from the CPO section, actually. It's for sure, the AI logic section, as I said, and also the computing logic section is confirmed. But once again, that section was the first one to be manufactured in the world. So that was the segment, which was the also, years back, the easiest one to predict. So that was always -- has always been there and has always been refined year-on-year. So that's not the segment which kind of is giving a bit a big surprise. So the -- because, yes, we know that segment best. But really, the CPO, as I said, which was really skyrocketing within 1 year. from R&D to real manufacturing and now has a tremendous outlook, which is definitely supported if you dig deeper and look into what is happening in the data centers and how copper interconnects are being replaced by fiber interconnect. For the pure reason of speed and especially less power needs for fiber interconnect, so you can also translate that to the end customer needs. So it's clearly the CPO, which is the driving factor.

Martin Marandon from ODDO BHF. My first question is on hybrid bonding competition. I'm trying to understand how much of an edge you have versus competition, notably with a new 15-nanometer accuracy tool. So maybe what could be helpful is that maybe giving an example of [ current ] products, which would be based on 15-nanometer accuracy hybrid bonding tools where maybe you are alone in the qualification process if is that relevant? And the second question is on memory. I think I saw a slide where you talked about HBM 5 and the fact that -- it will be in the majority hybrid bonding. I'm just trying to understand there, if you talk about the majority of chips, we have highway binding in them. or you also are talking about the hybrid bonding assembly market being larger than TCB for ABM 5?

Let me answer the first part. Peter, you the second part. On the competition, key is, of course, to find the mainstream adopters, and in that mainstream, any production of any good in the world looks for a process window reliability of that window and then the outcome is the yield. So that is ultimately where you can achieve a volume sale, which then if you do it right, brings your margins and you can pay your R&D cost and your support. So the focus on mainstream application is where it's all about. If you look at the competitive landscape, certainly, - the highest volume is expected in memory. And that's also not difficult in a rule of thumb, there's a relationship 1 to 4 or 1 to 6 between logic and memory in a very simplistic way. So most competitors are looking at that part of the market. You also heard earlier that the accuracy requirement for memory is a bit less than the accuracy required for logic because you have more IOs, which are denser designed. So if you look at that whole landscape, and we look at it every single day, you also try to understand which solution is best suitable along those criteria in the next generation because it's always about the next generation. Today, we have this 100 as more or less an industry standard. Also, as said, and is now enough for logic and also for memory, stacking, and that's fantastic because you can make that platform ever better. You can improve the accuracy, you can improve the speed, you can improve the reliability and for that reason, the yield. So that's in full swing every single day. And you can bet your life customers are beating us up that it should be better and measured. And we have these calls where I'm also involved following the progress. And as long as that's happening, it's difficult for competition to get in. Competition will get in with the next round. So the next round, 50 on the logic -- we have several prototypes now running, one focused on the accuracy, the other one focused on the speed. So that platform, as Peter explained, you can use with slightly less accuracy, but then the expectation and already data shows that you can increase the speed because the machine is far more stable and that improves the cost of ownership. And also along those and why am I explaining this, customers are always looking if somebody else having a better product. That's the open competitive world. So in these different applications with different requirements, you're carefully understanding through customers, but also through other context what's happening in this world. If you ask me, what is your competitive lead timing that's always difficult to answer. You can assume today that is a very decent lead. Will that last through to 5 years. Well, on the high end, it's pretty, let's say, safe to expect that there is not immediately 15-nanometer to available that can be a revolution. On the more lower, let's say, accuracies and that's where competitors are aiming you may have in 5 years, a segment of the market, which is less accurate, but also immediately, the margins will be far less attractive. So then the discussion, as always, where should you put your best assets. So your people should focus always on a next generation, and that's our strategy, DNA and not to defend a market, which is in a lower application offering lower margins. So in a bit of a longer answer, that's the way we are looking strategically and every week in our teams at what is happening in this market. Chris, from a technology road map angle, Peter and all the support people from very much how are we doing today. And also with the help of applied who have a much deeper, let's say, position in this overall market. So you try to gain as much intelligence every single day. But anyway, just to share with you how we look at that. Peter, next part.

Yes. If I understood your second question correct, it was about HPM 5 and what we are thinking about, yes, hybrid demand versus TCP demand, yes. So well as I said in my -- during my presentation, so with every sequential generation, we are expecting higher hybrid needs simply in order to achieve the specifications of these new generations. And if you also look at the forecast chart that I have been showing is when you look at the years where HBM 5 is showing up, then you can see that in the total market, the growth only is then coming from the -- and that's normal from the newest generation anymore. Now if you then say, well, more than 50%, definitely far more than 50% will be hybrid. That means from a market -- from a machine market perspective, going forward, that will be mainly a hybrid market versus a TCB market. And that's different than today because today, all the growth rate, the nice growth rates that HBM has experienced in the last 2 years and for 3 years, Well, as TCB or still is the standard yes, that was for sure all on TCB bonders. But that will drastically change then with the generations to come. That's what we are thinking about, how that will develop.

Marc, ING. Two questions. First, wafer-to-wafer hybrid bonding. I think we discussed it in the past, and I think there were clear technological and reasons why wafer-to-wafer would be less attractive for the longer I think Peter and we discussed already a bit. But I think was quite vocal at the last AMC event that they are going into that direction. Is there something that really changed there in the discussion with the clients, do you think there's some reasons why wafer-to-wafer could be a bit more of a viable alternative to die-to-die or [ die ] to wafer?

Yes, I can take that one. there's definitely applications where wafer-to-wafer bonding makes a lot more sense and is more useful. So one good example of that is CBA DRAM, which is an emerging memory technology that requires the funding of different portions of the DRAM device using wafer-to-wafer bonding and that's expected to be a very high-volume application. It's not an application where, at least today, where we see [ die-to-wafer ] bonding making sense because of the fact that you simply can't test and evaluate the goodness of either side of that sandwich before bonding and they're anyway, both the same size. So it's a perfect application for wafer-to-wafer bonding. There's also other applications like image sensors that have been using it for a long time for similar reasons, same die size difficult to evaluate the quality before bonding. Those are the cases where wafer-to-wafer it makes the most sense, in my opinion. And -- but there are high-volume applications for those use cases. what it cannot address is use cases where you have, let's say, multiple smaller die being bonded onto a larger one, which is most of the logic and memory combination kind of applications that we shared with you. And so that's where we don't see a threat coming from wafer-to-wafer bonding.

And second question is I think in the introduction, you said you only talk about confirmed clients. I mean I think there's quite a bit of talk about [indiscernible]. And is that -- and some of your competitors said, okay, we take it seriously. Is there anything that you can say about this? Is there any discussion you already had? Or is it indeed potentially a large opportunity for you? Or how do you look at it?

It definitely is also for us a large opportunity, the tariff app, and we have started discussing with the with the team, which is setting up the tariff up in the United States. They have confirmed that this will not only be a front-end facility, but also packaging will be included. And so yes, out of that. That's a business opportunity. And as it's a [indiscernible] a, obviously, a very big one.

And every chip needs to be assembled one way or the other. So that is directly to confirm what Peter said. And the good thing is, again, with our applied relationship, we are engaged from the very beginning, same with [ Rapids ] in Japan. Same with new fabs being built in the U.S. So just to confirm that we are very much engaged in that is an understatement.

[indiscernible] from Kepler Chevreux. I just want to have another question on HBM. I think you've now mentioned being [ NVIDIA firemen ] and CPO being included in your low case. HBM is still in the mid case. So that means you're -- I mean, you've bought a very convincing case, let's say, why it could be adopted, but you haven't done it in a low case. I guess there's maybe some hurdles yet that you're not entirely confident about. I think just in general, apart from the fact that the process costs have to come down. You're not -- you don't have all of these parameters under your own control, probably also your partners, your customers are having some of that ever having an impact there. So what could really unlock adoption, I guess?

Well, that's an interesting question, actually. And you're totally right with that question, but if you would see us preparing the presentation, then it would make clear because we were discussing on -- not on that specific question, but in general, to shape the graph this time, totally different to give kind of a different kind of transparency because it's really in these days, as you are pointing out, rightfully not necessarily more -- only more a low and a high case and something in between. And in the end, and we already had it all different. And in the end, we said, well, you're the audience here is so used to this and also used to, okay, you have more -- in a nutshell, you have the logic in the low case and then the memory and then the rest in the high case that we said, well, in the end, let's simply keep it. But not because we are not convinced it's not coming, but simply in order to not confuse the history because then we are consistent with the charts. And so that's the reason why we just kept it like that. But it's interesting that you're asking that perhaps we should have still gone to changing the whole graph and throwing it differently.

Yes. And I guess it could probably apply a bit the same reasoning for the fact that you now included in [indiscernible], right in the low case. I mean you talked about CPO being a significant contributor to your uplift. But I guess, last year, you talked about sort of 500 units that you expect to sell in [ Logic], you didn't repeat those targets anymore, but is that also a bit what we should think about you're very conservative still there?

No, actually, the -- what you should consider is that in -- also in the older forecast the last year or the year before, as I think I said already in one of the other, we already we did not only consider in this forecast, let's say, the companies that already had hybrid manufacturing. Otherwise, it would have in the beginning only an AMD forecast, and that's it -- so we have, from the beginning, consider that also this customer will change, also this customer will change one earlier, one later. So also from that angle, we had factored in a certain portion of NDF, for example, because you're asking Faiman specifically, already in our previous forecast. For sure, we have now refined the numbers and time lines and so on according to the information, but it's not that this is a total -- that this is coming on top totally. So with having that said, as a generic explanation, I can say that, yes, also the logic part was in our forecast was increased a little bit with this positive development. But there, I have to say also when I did the update, our -- let's say, our view from last year was already pretty solid. So that's the reason why there was not so much change in that section, simply because we had yes, the best visibility anyway there. And so the big portion of the change is really coming from the CPO section.

[ Sam Jada ] with [ Gallo ] Investors. I had a question on [ Edge AI]. So we saw NVIDIA introduced large models being put on device. Apple similarly with the smartphone is going to have some on-device models. Given the capability increase on models and the need for lower inference costs, latency improvements, all that stuff, do you see an update in terms of your long-term penetration of smartphones and just edge AI devices in general of hybrid bonding?

Well, I would say along these lines, I would see 2 things. So number one, there is definitely -- well, today, we know it's all done, yes, not on the edge device. It's just passed through and then in the data center. So still, we are seeing activities in the smartphone section to make the processors more powerful. And for that reason, we know some, let's say, projects where yes, where they are trying to incorporate or planning to incorporate hybrid funding for these application processors. Actually, I see the biggest drive for that coming out of China, by the way, as is on a side note. The other thing which is going along the line and which is very interesting lately is that the it. What we have not seen last year, for example, and the year before is compute power and on an edge device -- and that's on car processes for automotive for cars. And there, we are seeing currently a trend starting, I would say, that really they want to make the processors in the car, way more powerful in order to utilize AI. But there, as we all know, you can -- because of latency, you cannot rely on yes, whatever on the data center and to get the data back because, yes, a self-driving car has to react immediately. And so lately, we are seeing something in that arena which is then not handheld device, but which is still AI, but in that case, automotive [indiscernible]. Not sure if there is something to add from you --

I would just add. I think outside of the Engine 2 hyper bonding side of the business, I think in the [ NGN1 ] side of the business, it is having -- or presenting opportunities, like I mentioned in my presentation. So what it means is higher processing power on the [ AP], means higher heat dissipation and the need for a lot more memory capacity, [ LPDDR ] next to the processor. And that's actually driving different kinds of packaging, which I mentioned. So there's opportunities in chip to wafer die attach using mastery full flip chip. There's opportunities in high precision placement for memory stacking, which is something new in the memory market where Besi can participate or before we couldn't and even in things like molding. So we do definitely see some relevant changes there that present opportunities.

Yes. Let me add one more. You mentioned -- as processors. You mentioned memory, but you have not yet mentioned these sensors, many of those new emerging AI devices come with more sensing functions since the -- your you context-based feedback, going on, on the sensor side, which is again very much supporting parts of the mainstream business as we have a strong position with many of the sensor suppliers.

[indiscernible]. First one is about data centers. If somebody designs a data center fully loaded with photonics and co-packaged optics. How many more bonding steps are there needed compared to one with copper connections? Is that factor 2 or 3?

Well, we've heard numbers from NVIDIA speakers at conferences talking about like 1 million CPO connections in a data center. But we haven't really -- at least I haven't done the math on the ratio of total bonds. -- and all the other packages and other components in the data center versus that, but it's a pretty big number.

And it's much more intensive, so positive.

Yes. Yes, definitely. I mean, I showed you the network switch. The [ Spectrum x switch -- ]the switch itself, the processor has 7 individual chiplets I had talked about, but that's already a triple package. So there's 7 bonding steps there plus one to attach that to the substrates. And there's 36 hyper bonded chiplets around that. But -- so it adds the [ hybrobodying ] steps inside the chiplet plus a flip chip or TCB step on to the substrate. So that's a big multiplier on that particular component. Now when you talk about GPUs, it's going to be a very similar story, not as many per GPU, but now you have a GPU and an associated switch for every GP. So it's -- yes. Maybe we'll do that math and present it next year.

Okay. And is there -- are data centers also being retrofitted with photonics and cold package optics? Or is that only going to happen in 7 years when the first AI centers will be burned out?

I think it's very difficult to retrofit, yes.

Yes. Difficult. Second question is a follow-up question on services. The annual report always provides segmentation between equipment sales and services sales. And I noticed that services have been flattish over the past 5 years, even though you sold more than EUR 2 billion of equipment to your customers, which must have boosted their installed base. Typically, when you sold base goes up, your services sales also go up, but it didn't happen. So I was wondering what has been happening.

Well, number one, to answer that, it's -- you need to see the timing because if you sell a machine, you are first having a warranty period and only after warranty period, then you sell the service. And sometimes, customers are even in advance buying, let's say, instead of the usual 12 months, 24 months with an increased machine price already. And so -- and as I said on the other answer before, the service increase is mainly coming -- yes, from my business unit because that's more than front-end related. And so the huge numbers of sales and if you go now back 1 year, 2 years, my numbers were relatively speaking, to Christoph's numbers, still the way smaller ones. So you -- so we are only starting now with the service contracts because of the service of the warranty period. And -- but now as the numbers are increasing and increasing and always with the delay of the warranty period, you will see that climbing up. So it's what you see or what you are observing here is more or less the introduction phase, which has a certain delay relative to warranty.

Okay. But again, it's about a 5-year period, and that seems to be that the delay will eventually kick in.

But -- but 5 years back, we didn't sell hundreds of hybrid bonders. We did sell hybrid bonders, but they were very, very limited and in number back then because it was only starting. So you cannot expect a big number out of that.

No, but I mean the flip chip units have also been so -- I'm talking about --

Total normal flip chip bonders you don't sell service contracts with that. That's a classic back and equipment and you install it and that's it.

A question on China. I think most of the slides very detailed by the way, thank you for that. I've been on end markets, but -- can you discuss how you are addressing what I believe to be strong growth and push in terms of advanced packaging in China? It seems you have a really good market positioning. And I think, Christoph, you've mentioned as the demand driver or pillar you set, but how do you see this in the next couple of years, both from a competitive perspective, but also in terms of growth rate across, I guess, 25D, photonics consumer, et cetera.

Yes, as you rightfully said, China is important for us, remains important for us, especially for the mainstream product portfolio. we see basically very similar developments as in all the other countries. We see photonics being very strong there. We see not directly [indiscernible], but covers like packages, which are from a bonding perspective, very similar to the TSMC application. We bond to that demand by having our own facility there, right, with lesion manufacturing, China for China there. not only manufacturing, but also having a dedicated supply chain for the Chinese market. What we see is that the competitive intensity there is very high, and that has not so much to do with our typical competitors but more with local Chinese competitors also driven largely by government funds and government policies to introduce local sources whenever possible. So that's kind of a limiting factor for us. However, so far with our advanced technologies, we have been able escape those competing fields and find our sweet spots where we can offer technology that's simply not available in China and gives basically really lead in supplying equipment into those fields. As I said, transceivers is one of those fields. And honestly, there have -- we have seen a trend that some of the lower-end processes were moving over to Chinese competitors. But yes, this is anyway then a business we are not interested in as it is very, very price sensitive and margins we can achieve there are not as expected. So yes, we focus on the high end part of the business is always Yes, that's how we look at China. You have to be careful. You have we don't develop anything there, right? All the core developments are driven out of the European headquarters. We have engineering in Singapore, and we have in China, basically, the application team that is bringing the machines to the customer, but not exposing ourselves to the IP risk and helping our competitors to get up to speed.

Thank you. Actually, I had a question on exactly that. But more on Peter's side, you have been shipping hybrid bonders to China I was wondering -- well, 2 things. First off, aren't you afraid that those are copied by local competitors? And also, if not, you said that it's part of your TAM. Is there a point maybe in a few years where these tools, I can imagine are shipped for R&D purposes today inflect in terms of volume applications?

If you don't want, I will answer it. Happily, well, to add to [indiscernible] part first, you have to also understand which customers do we support and there are basically 3 types of customers in China. We went to China to support non-Chinese customers setting up their operations in China. In the very early days, it was Motorola and then [ TI ] and Intel and yes, in the whole supply chain for high-end smartphones. So that's one part. At the same time, using Chinese subcontractors and many customers of ours, European customers have built capacities at and therefore, typical ones who have capacities established for non-Chinese customers. And then you have the third part, Chinese customers. For many years, that was more, let's say, the middle and the lower end. But recently, as explained, the tune of the modules coolie using our flip tip, also driven by their end customer. So the end customer who builds those modules with Chinese suppliers, dictate which equipment to use. So our strategy for China, and that brings me also to the hybrid camp is driven by end customers and is driven, of course, by margin, not by market share. In order to protect ourselves in current situation already, but in the future, that may well be more stringent, that we have less U.S. components in our machines, we have them very carefully analyzed not to make any mistakes. And that may well, in the end, bring that part of the business in line with what's happening in geopolitics to whatever lower levels. But that the world demand is the world demand that will then be manufactured outside of China. So you see an enormous increase in the countries around China in Vietnam, for instance, more done in Philippines. Thailand is up and coming for the more mid- and lower-end India. So simply follow the customers. And those customers are simply evaluating day by day, what is the best tool of reference? Is that a basic tool or somebody else? And that's, in a nutshell, how we organize our business. Does that answer your question, Atul.

Yes.

Any next question? Have we answered all the questions can be -- Yes, [indiscernible].

Actually, following on to that question, I mean, you've seen in the press about the new Chinese scaling, which is not more law based, but based on some folding structures, and that would probably include hybrid bonding. Has there been any discussion with governments on this? Because the risk remains that there will be further -- you don't have restrictions on hybrid bonding into China at this point. But whether there will be restrictions given how the industry there is trying to overcome their lack of access to EUV, et cetera. And then secondly, there has been speculation in the press in the last few months about BESI being acquired. I mean, any thoughts -- I mean Besi's a big company in its own right now as such really. So does it really need a partner like that?

Well, let me first answer this wonderful development to. Maybe Chris -- that's for you better answer on this [ stacking], you're the technology man.

Yes. I mean, from what we know about this to scaling, first of all, the -- what you're referring to is -- because the access to advanced lithography is not there. One solution to that is to simply use more silicon area and fold so-called folding the circuit on top of each other, effectively the same argument that we use for all the other hyperbonding use cases, right? Our understanding is that at least the first implementation that they're trying to accomplish there is using wafer-to-wafer bonding so that they don't test anything beforehand. They just send which it together and then test it later. But we'll see how it develops. They very well could adopt died away for have bonding for that use case as well. But we don't really -- at least I don't see that as being fundamentally different than other kinds of logic-to-logic hyperbonding use cases. Yes.

Yes. And the second question we simply refer to 2 press releases in the last 2 years. When those rumors arise, and I hope we convince you a little bit today, we have great confidence in our own strategy. And we have a wonderful opportunity to execute on that strategy and rumors we don't respond to. Also the partnerships, and we highlighted that today and in several comments with the [ prime ] materials is very important for us. Partnerships in this industry are becoming ever more also for the simple reason that due to geopolitics, the M&A situation is what it is nonexistent nearly, so partnerships is the way to go. So that's what it is. So I see six 0s in front of me. We've run out of that I hope we answered all your imminent questions. If you have more questions, don't hesitate. Thank you all for coming, and those participating online. Also thank you very much. And that's it for today. Thank you.