INFICON Holding AG (IFCN) Earnings Call Transcript & Summary

So welcome, everybody, to INFICON's analyst visit in Q2. We do this 2 times a year. Just because there has been so much interest recently, so we thought we do an in-between event. Obviously, in Q1, there is already a number of conferences and also earnings release and AGM. So we thought this is something we do. We have an amazing amount of nearly 20 people joining. So this shows again big interest. That is fantastic to see. Thank you so much for the interest. I want to quickly check online. Everybody can hear us okay, right, last seat?

Yes, all good. Good morning, everyone.

Yes, so good morning. So we do this as usual. This is for you. So I will have a little bit of an introduction, but then most of you will be interested in Q&A, I assume. Otherwise, please tell me how much of what you would like. I'm very happy to go and follow a little bit what your needs are. This is not a Capital Markets Day or a Tech Day with a fixed agenda. It's very much visit, so you can use it to your best, fulfill your needs best, all right? And also online, just speak up if you would like to ask a question or give feedback. Maybe, Dimitri, you can monitor a little bit if somebody raises their hand, so I don't miss it. So does this work for everybody, if I give a quick introduction, and then we jump relatively quickly in Q&A? Good. And also for the folks online, I know some of you guys online know us a little bit less, but I hope this is still okay. Otherwise, please let us know your opinion. I think this sounds more or less like thumbs up. All right. Very good. So just to make this formally correct, a quick safe harbor from my side. So this is not a formal analyst meeting nor a Capital Market Day. INFICON will not disclose any new information in this gathering. All information shared today is already in the public domain as it was discussed either at INFICON's full year 2024 results conference in March or at the first quarter webcast in April. As we have received numerous meeting requests, INFICON has decided to pull these meetings for efficiency reasons as best as possible and also to give a bit more insight for everybody. So we invite in third-party several times a year to meet at INFICON with the management in person or online, you can join. And for those that are here, they not only get a coffee and a beautiful view, but they also will get a tour afterwards to see our manufacturing here in Balzers. The oral statements made by INFICON during this session may contain forward-looking statements that do not relate solely to historical or current facts. These forward-looking statements are based on the current plans and expectations of our management and are subject to a number of uncertainties and risks that could significantly affect our current plans and expectations as well as future results of operations and financial conditions. We undertake no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. All right, so much the boring part. Any questions at this point about the visit? I have to also quickly apologize, not everybody was aware, right? You, for instance, told me it's good always to get feedback that you weren't aware of these visits. We started them last year, but this is a new idea, just to cater a bit better to the information. We will do better in communicating them online and whenever we speak also at the earnings release, so you always see the 2 dates. The current idea is that we have one in Q2 and one in Q4 to fill a little bit the information gaps. But we are very open to feedback. All right. Thank you very much for coming. So now my quick overview. INFICON is a global leader and innovator, $650 million-plus revenue, 1,600-plus employees, largely self-financed. In most of our markets, we lead the market with technology and market share. And if not, then we have an aspiration to become #1 too. We had a compound growth of 11% in the last 5 years. So we are in a diversified markets, but with a strong focus on semiconductor. We choose our markets though very deliberately. They need to have a synergy with our technology, and they need to have a growth profile that is 5% plus in the average. Most of them are cyclical. So that is always going to be a CAGR of 5% and the profitability that is around 2% plus. Currently, we do not have a focus of inorganic growth, while we constantly look at inorganic growth and have about 150 to 200 targets in the pipeline. This is not so material. This is mostly about technology bolt-on. I can get back to that later. What we see is significant organic growth opportunities, and that's how we built our long-term strategy of 5 to 10 years to double the business. Of course, if you have so many cyclical markets, it's a bit hard to say what exactly the timeline of it is. But we know it from designing wins when we win market share and how this scales up when it goes into HVM with the customer, be it chip maker or also to make. At the bottom here, you see all our different products. And for those of you that are in the room, they are on the table as well. So feel free to touch them. It's not a problem. They give me the broken ones anyway. They will not go to our customer. So you can drop them. Don't do that, but you can totally touch them and look at them. So we have some gauges. This is a mass spectrometer. So that's two flagship products over there. There's a leak detector in microscopic form and exactly that is the spray gun, an innovation -- a recent innovation, which produces just a couple of bubbles of helium when you want to go test a vacuum tool. And this is the other end of it that pumps out the vacuum tool and then feels as soon as one of these helium molecules goes into the tool when you go along the tool and find a crack or a leak, right? And then there's the handheld, what you just touched there, that's the handheld leak detector for refrigeration and air condition with the nose there that you can bend, is also for combustion. And the yellow thing there that has an apex rating, that's why it needs to be yellow. With this one and the stick that you see in the corner, you can sniff gas leaks of gas pipes for 2 meters of earth. So you walk around and check gas sticks which is regulated quality assurance. Yes, so there's all kind of different stuff here on the table or for those of you who are online, you see the pictures below. Sometimes I get the question, wow, you've got so many markets and so many products, how do you do that with this size of the company, manage this complexity? And that's a good question, but it is well managed actually. The idea is that we have about 15 to 20 core technologies such as pressure measurement in vacuum or gas analysis where you identify single gases or single molecules in the vacuum chamber. This technology translates into many applications. So the R&D is synergetic. The manufacturing is synergetic. A lot of the customers are synergetic. Definitely the approach, the go-to-market approach is always a key account approach for us. So let's say, the sales methodology is synergetic. What is really the difference is, and I give you the example of the mass spec here is how you package it for the customer group. So this mass spectrometer for maybe those online a little bit more difficult for those here, simple principle. You see here a tiny filament, maybe later you can look at it. This ionizes the gas, makes it magnetic. Then it goes through this pipe. It has four rods where with magnetism, it's filtered. So only one mass goes through. And then it hits here a faraday cup, where it produces a tiny signal and then you know how many are coming of a certain type of gas weight. And with the weight, you can then define what kind of gas it is. And this is the electronics to evaluate. There is already quite some horsepower here to understand that. None of our sensors are trivial. All of them have quite some computational power. Data analytics has always been part of it. But I want to say, so this is a tool to analyze gas. And when you look at the different pictures online, this is definitely what goes on a tool for a TSMC or Intel or Samsung to understand what is happening inside the vacuum chamber when they make a chip. It also goes to the tool makers for integration in the tools. It is part of leak detection. So there's different tools that we use to check leaks in car batteries where we are also #1. There we have sometimes an in-line system. So you can do parallel checks in a system that produces 100 to 200 battery cells a minute. So a good format is the 4680. If you think about the batteries you have at home, a little bit bigger than that, the AAA, the AA or there's also a new invention what I just mentioned was Tesla, so there's the one from BMW, 46120 or 90. So when you check this, it's in line, but it's still the same technology here with mass spec. The HAPSITE, which is our online lab, I'm showing it with the cursor online here as well. This -- I don't have a model here. With this, you can go identify chemical warfare agents, pollution, narcotics, explosives, is the #1 tool in the market, also uses a mass spectrometer to analyze. It has a few more extras on top to quantify. And then you have them also in stuff like the new markets such as space and one of those is actually the one that we sent to the moon about 6 months back, and it's now stuck on the moon, sniffing, it's for prospecting on the moon. So you see this is quite versatile such a technology to use in many different applications. So the application is really where the translation happens and where you could say we manage the complexity is a quick explanation. Then just quickly about our history. We have been founded 1969. So we celebrated 50 years in 2019. Of course, different pieces of the company came together. Most notably in year 2000, three parts came together: Balzers part, Liechtenstein; a Cologne part in Germany; Syracuse part in New York, U.S. that formed the current structure of INFICON, and we went to -- we did our IPO in that year. So we are listed for 25 years now. All right. So then a quick overview. You see here pictures of the different buildings. Mostly, you will meet us in Balzers. However, we are thinking maybe also in New York to do such events potentially in the future. But in the end, it's these three big locations, right, Syracuse with the complicated intelligent sensor solutions and Balzers focused on measuring pressure in any shape or form and then follow on measuring leak detection in all different applications. And when you look at the global footprint, you see this is the three main centers that I just mentioned, and there's 8 other specialized competent centers. So there's Finland, Sweden, there's Massachusetts, there's Texas, Colorado, Kansas, in the U.S. and then we have Shanghai and also Malaysia, whereas the last two, there were mainly manufacturing sites and the others are more focused on R&D as well next to manufacturing or very specialized competencies. And then we have more than 20 offices across the globe, the Northern Hemisphere between Japan and California to serve our customers. Many of them are pretty sophisticated application centers. Again, this is this translation for the customer. Some of them are also doing some part of innovation because an application can go into product variants and building systems out of sensors for customers. So there's different flavors of those. Maybe to our sales team, I should say, that's over 400 people, but the largest part is actually application engineers, and an application engineer to imagine that. The most sophisticated ones, the ones that live on Taiwan, in Thailand next to the most advanced chip fabs, they go in there every day. They have a batch. They innovate together with the customer in R&D or in the manufacturing plant. They have often a PhD. They have 10 years' experience in semiconductor or more. So this is quite advanced detection development. All right. So one other aspect is important. We have a lot of smart sensor. That's the bulk of our business on the left side, but then we have developed for about 25 years also in AI, as we would call it today, data analytics. So we have tools that the semiconductor fabs use from us to analyze their processes inside of tools, wafer health. And then, of course, on the right side, aggregating everything together, you can make a digital twin not only of a tool, but of an entire fab, and we currently run over 60 semiconductor fabs with our scheduling and management processes. This is focused always on sensing and then analyzing it and putting together a model to predict and support the productivity, optimizing the yield. So now quickly to the markets. Again, today, unless you would like that, I will not talk too much about quarters, but absolutely, we can answer any questions. I want to a little bit more talk about 4 end markets that we are reporting. So you see on the left, the semiconductor market, this is about half of our revenue. You see there was constant growth. In the meantime, the last 2 years or so, we had a bit of a down cycle. So this is only possible when you are winning market share. So you have a diversified semiconductor portfolio with different key accounts, different types of key accounts that you're serving. So we were able to grow 15-plus percent in the last 5 years in semiconductor. Then when you look at the next markets, there is the green one and the orange one, they're about the same size, about 130 million to 150 million annually. So the first one, the green one, the automotive, refrigeration, air conditioning market. This is a lot around leak detection. We're also here the #1 in leak detection, for instance, refrigeration, refrigerant detection. So there, the most recent development, as you know, was that the auto market itself was not very dynamic. There was less units sold. And the EV transition also was a bit slower. There was a big jump in 2023. There is a bit of an effect there of the big backlog that we had and then China opening up. A lot of this business is in China. So that's why 2023 probably has some revenue that wouldn't belong to 2023 and got a bit delayed 2022. So also there, you see a rough growth of 9-plus percent CAGR in spite of these difficult years that the market had. So also there, I would think we were able to win market share. I think most notably is that we adopted our China strategy. We have been in China for over 30 years. But during COVID, when there was a full lockdown, it was very difficult to go to customers. And then we are struggling against the local competition that also pushed especially in these 2 years there. And so in the meantime, we have really doubled down on innovation. So you've seen from our communication that we opened up an innovation center in Guangzhou that has made real good progress in the last 2 years. We are expanding it. I was just there 2 months ago with the executive team to further develop our China strategy and talk to partners and review the innovation center. So we further push that, and I believe that is one of the drivers that we have been able to perform well in China. The largest part of our competition is now Chinese, not best than any China. So for us, we are 100% committed to the market. Again, we've been there for a long time. We have strong partners, good partnerships. We see some difficulty, but we have full commitment to it. So this is a little bit about this automotive refrigeration, air conditioning market. Maybe one more notice there. Air conditioning is tightly connected with also because a lot of the air conditioning work is also for automotive. Heat pumps at one point of time was a big push also in 2023, but slowed down as well, actually. What steadily is growing is the refrigerants, the new refrigerant detection. This is new regulations that drives also. For instance, the handhelds that you have over there, the new generation of that is -- has some tailwind because of that. All right. So then we move over to the orange market, the General Vacuum. This is about 20-plus smaller markets. This has been more up and down. It has the same effect in there because China is a big market with this 2023 backlog deduction after the opening. But the general industrial development was not as dynamic as maybe we would have expected or as other markets, as you know, the last 2 years. You see that here. So we jumped up to this 196 in '23 and then went back down on a normalized level of 160 something, similar like 2022. And so the comparison of the most recent quarter is still on a quarter that is a higher level, which is the first of 2024. But I believe now we are kind of steadily building back up after have been going through rock bottom. One chunk is going to miss also for this year in solar, which was a big driver in 2023. This is still in consolidation and struggling. I think in China, where most of this market is or most of our customers are, is still overcapacity. And there's less dynamism on the customer side currently. So I think in some sustainability initiatives, the focus has a bit shifted these days. I think it will come back same as with EV transition. In there is also a lot of industrial vacuum applications. So there's life science in there. There's also big science in there such as heater and so on. There's space in there. So there's a pretty broad of bag markets. So hence, this is a bit more then on the GDP -- it can grow GDP plus. I think that's also what you see when you look at the CAGR. But most recently, all regions were a little bit slowed down. All right. So then the last market, the smallest market, this is Security & Energy. This is largely driven through government programs. There, you've seen especially the new HAPSITE rollout with a couple of first phases from the DoD. There's more coming. You see this nice growth. It goes in cycles. So we already said this year will not be as high as last year. While the pipeline is good, security budgets are up, especially in Europe, tremendously up. So there is optimism for that, but it's also very long sales cycles. I think we started selling for the most recent rollout there in '23, '24, we started selling 5 to 7 years before that. So this is also constantly ongoing, but it has a time lag. And then there's this rollout of new energy as well, biomethane, hydrogen, it's a bit similar, but it's also a bit slowed down in the sustainability initiatives, especially in the U.S. So long term, we think this is a good market, but it has a bit of a different dynamic, and it's this year not going to be as big as last year. All right. So this is the big -- here, the stars you see where we had a record year last year. Anyway, so then 2 or 3 more pictures, and then we should probably jump into Q&A to do everybody justice, the ones that are a little bit newer and the ones that know us well. So here is the global distribution. You see that we have roughly a quarter with some swings between North America, Europe, Asia and China. So Asia is about half-half. You see also how China -- and not China, but Asia, I want to say, was growing over the last 5 years. You only have 3 years here. But in the end, at one point of time, we had 1/3, 1/3, 1/3. And the footprint in Asia is extremely important for us. The markets are over time growing much more. This is a similar picture that no doubt you see in other places too. But we are very committed to Asia and also to China, but also the rest of Asia. And specifically Korea, Japan, Taiwan are also important markets. So obviously, we have a little bit expanded in Southeast Asia as well. This new location that is also an application sales location now in Kuala Lumpur. So you see that Asia was growing also in Q1, while Europe and Americas is a bit slowing down. Americas, we see a bit of a slowdown of investment. So we are CapEx driven to some larger degree. And U.S. has been a bit moving out projects. I think it's a general trend. We hope that with normalization of this liberation tariffs that this will get a little bit more dynamic again into the market. Also here, you see just for illustration, the many markets we are in. On the left, semiconductor industry, we diversified there, as you can see, ICAPS, memory tools, display logic. And even down to sustainability topics in the sub-fab. We're also in air conditioning on top. And on the right side, a number of other issues I touched on most of them already, so not much details there. So maybe I make a stop here at this point. I can talk a little bit more, but I also want to make sure that serve your needs most. Are there questions at this point?

Yes. I mean I just want to ask about last but smart manufacturing and sub-fab. I mean you said more recently, some things about sub-fab I guess...

All right. First of all, the definition of what we think what sub-fab is.

Yes, again say what sub-fab was...

Yes, absolutely. Yes. So in the end, you have a ballroom floor or a main floor of the fab, where you have all the tools, where you, in the end, have the processes running in the semiconductor tools. But then to cater to them, you need to bring gas to there and you need to bring vacuum to there and you need to take away is the exhaust or the waste. And that's happening in a floor below. It sometimes is next to it, frankly, right? Everybody has their own designs in Korea, they build big towers, even several fabs on top of each other. You see them from Samsung and in U.S. where you have a bit more space, you can also spread out and sometimes the sub-fab is next to it. But technically, it's the basement, if you want, where you do all that. So there's pumps down there where you create vacuum and you prepare gases that go up there and then you abate gases, meaning clean it up so you can go out. There's also sometimes the infrastructure there for air conditioning, water preparation and these kind of things in there. So obviously, when you are smart with how you use resources down there, you can -- you have the biggest lever of optimizing a fab sustainably, meaning the simple version of our software is in the end, just switching on and off the right tools in the right problem -- in the right moment, depending on the process that runs on top. So obviously, when you have processor or sensor on top to put it simply, that then feeds into a software and it understands when does it need what the tool, when does it need that, when does it need this gas or the other gas or when does it need to clean up a clean process. Then you can switch on and off these components in the sub-fab. And through that, save quite a bit. We published a white paper that we could save 2/3 of CO2, for instance, also other gases. And in the end, the same for energy. And so in the end, this turned out to be -- this came out of the collaboration as well. It turned out to be mainly a software solution to become sustainable. The sensors sometimes are needed, but it's more about bringing the data together and be smart about it. And I think we have a few more future stages there of how we can push it further. We do basically a rather simple optimization at this point still because you could go when you include scheduler, you can even plan ahead a day or two and then you can shut down things that you will not need for half a day and take half a day to switch on. Now it's more about a couple of minutes switching on and off ramp up and down. So this has more potential. Yes, I hope this answers...

Yes, yes. And then just -- yes, I was kind of reading a little bit about manufacturing tools. And this has been introduced or described, is it fair to say that your smart manufacturing tools are more or so sold to like the kind of 200-millimeter wafer fabs...

Yes. I mean there was definitely a push in 2022 if we go mentally back to that point. Automotive industry slowed down a little fast and then was speeding up again and the capacity wasn't there. And specifically, the bottleneck was the chips manufacturer, this is companies that are focused on automotive NXP SPM, MCU, also power chips, it's all a bit related. They needed to have additional capacity. So that gave a real boost to this smart manufacturing in the second tier. Our aspiration is also first tier and sustainability, we do a lot actually with first tier, but there is a mix. We also need to say in first tier to dislodge a homegrown solution they have for 20 years sometimes and maybe invented by a young smart engineer in the '90s. And now this maybe young smart engineer is slowly going towards retirement. That's a little bit when they're looking for off-the-shelf solutions, and that's often when we can flip it a bit. But it's a slow selling process, I have to say. The Tier 1 is a bit less agile in a sense on that IT landscape. But we're making headway.

And like in terms of you would say within that sort of smart manufacturing or like the share of your addressable market that you think you can get? I mean, presuming like TSMC has their own thing that they run, that's probably not going to change, I would say.

Yes, no, I guess. I mean we have everywhere software. The question is how many of the modules they buy. I mean there are no comparison to SAP. But maybe just as an illustration is there's so much in these solutions that SAP offers. You can -- once I was in a company we launched SAP and in the end, it was just launched for HR management. So do we have SAP or not, right? You can say yes or no. So sometimes we have -- or let's say, always we have the software that goes with the sophisticated sensors for the data analytics. So looking at the tool, looking at the process and being process aware. But how far it goes beyond that is often the discussion, right? So we are in there. We have the relationship and we work with them, but it still needs probably some time to break into further places. And it's also a market that is still defining itself a bit, the autonomous fab is a long aspiration, I guess. This working group in the semi is around time, but only now they're really -- last couple of years, they're really starting to push forward.

So it's kind of a long...

I think so on.

And that makes up like 10% to 20% of the semi...

It's still -- the software only is 5% to 10% of the overall, but we do sell a lot of software modules with this or that but that's not what you're asking, right? So you're asking about the software only. Yes, exactly. And that's that part. Otherwise, software is much more entrenched. I mean most of this have software included and you have software upgrades to it or additional modules you can buy boosters, more analytical packages, more integration, even the sensors here into different interfaces and things like that. So it's kind of always been part of our DNA. But what you're asking, right, is software only, which really is a bit more on the level of where MES operates. Well, we are always on data analytics and that not competing with MES, but is a bit of a different level in terms of. MES is just a manufacturing execution system, meaning the system that steers all the switches and valves and so on. It's not what we're trying to do.

But in that context, there is no exclusivity in the new bipolar world order or you deliver to Chinese, you deliver to Americans, maybe produce them in Asia as well. Does the data belong to and do you have to make sure that it's kind of ring-fenced for the Chinese or...

It's not an easy -- it's never been really easy, but it's gotten a bit more complicated. However, what we need to do is always focus on one customer and the data belongs to that customer. Yes, we run it in their cloud or on their premises. Yes, we have access to it. For that, we have security protocol, obviously, for support, but also for upgrading and expansion. But in the end, the data belongs to them. So we need to ask for data and then we get sanitized data, but we can learn from the data anyway, right? So we should be able to beat homegrown solutions always because if you are in for almost every fab, then you can go and learn from all of them. But we need to be careful of how much we take out. And yes, this trade war makes it harder a bit, but it's -- yes, it's possible. I think it's just more complicated. We had to ramp up our clients processes, regulations, sometimes product delivery, that's now I'm speaking more general, is a bit more complicated how it needs to flow to the customer. That's not helping anybody, right? This is all eating in everybody's margin trade wars, but we can manage it.

And as a tendency, customers become more reliant on you than they were like 10, 20 years ago...

Yes, for sure.

So like hardware solutions. Now it's the bundle and now there is a certain dependency increase.

It's stickier, I would agree, yes.

Will that continue for the next 10 years?

It should, yes. I mean also that we have been able to raise our profile to be more of a solution provider where we really can build senior strategic partnerships, whereas in the past, really in the past 15 years ago or so, which I know from my predecessor, we went more through the back door to the procurement category manager and then sold a certain piece. And now we have much more these conversations where we talk about what is your problem in the next generation or the one after, where can we help you? What's the problems you want us to solve for you?

How far could that go? Could we go as far as that profit and monetize and yield improvement for instance?

We sometimes do that, yes. It's not so easy because there are so many factors, right? And when you go in there, what we often do is also change the processes because their processes -- maybe if you know software implementation from anywhere, literally, maybe you could go back to SAP, in the end two problems you always have. The data is not up to standard and the processes are not harmonized to standardized. So we have the same problem. So we go in there and we work with them, and that's why the selling period takes long because you make a proof of concepts and pilots and then convinced and then you take the next one on, next one on. And yes, we have models where we show how much you can improve, but it's a lot of factors, obviously. So they often turn the whole company around. That's also why we need to talk to the higher level of the management. Otherwise, it would not work. Yes. Good questions around software. I want to stress, as excited I am as a computer scientist originally about software, we have different product lines that are as exciting as this, also new sensors or things like that. So I just want to make sure there's not one-trick pony for us. And we also don't think that hardware is, in general, a disadvantage versus software. Most recently, that's why the ratio stayed the same is the sensors have been growing nicely, too.

So that kind of growth that you've seen in [ General Vacuum sales and percent ] year-on-year, that's kind of commercially sensors rather than like an implementation of software that's driven in more.

Yes. I think software was a bit slower in -- if I recall this correctly, it has its own dynamic. That's what I want to also show this slide here. I think in 2022, if I recall it correctly, during this automotive supply chain crisis, it really got a boost and it chunked up. But then specifically, this -- they just grew nicely. That's also -- if you remember, our investment program, you for sure do, we talked about this big investment program we did at the time. That was a lot with this, you will see today in the tour also where we invested in automation. So it flipped to this. And then most recently last year, sophisticated sensors took a jump, specifically this one, the mass spec. And I think this year, this one has, again, a good speed, while software went a bit down and is now gradually increasing. So just to give you a little bit of flavor of how we look at it. We have about 20 such product lines. And they're really quite -- behaving quite differently, which is...

They're kind of in the same market...

Yes. You have diversification of big customers. We can talk about the big customers, almost each one has a bit of a different story. I just think about TSMC, Samsung, Intel, how different they are. And then you have diversification over time because you sell an OEM tool, which pressure sensors typically are at a different point of time when you, at the end, want to have a fab built, then you sell the sensors. These sensors you sell either early on as part of the design and R&D for a process or when they have problems in manufacturing, quality problems that don't work so they add it on later. And then you have the maintenance, I want to say, like the leak detection. This is somewhere at the back end. You have a few at the beginning when you start ramping up and then you -- really when you up into HVM, that's when you stack up more leak detection. So if you think it's even over the time line diversified. So this is what helps us.

And how much do these tools cost, I guess, a very wide range of costs?

Pretty much, yes. So they also have different sales channels. That's why we sometimes we talk about gross margin and tell you it's a bit hard because of the fluctuations that they have different gross margins. So this would be $1,000, $500 to $1,000. So this very simple sensor for pressure would be much cheaper than here is the sophisticated one. This is a heated one. This is the unheated one, the direct pressure gauge, CBG. So they are more like $1,000. This one can go from 7,000, 8,000 to 60,000 or we have -- the big product of this is this big, it's like half of a phone booth. Then you want to do analytics or you build a real big machine for lithography, then you buy these kind of things. And then over there, leak detection, 20,000, something like that, 30,000. It depends on the extras that you want. Then you have another sensor here, for instance, it's also from Syracuse in the U.S. This works with plasma. This is an illustration. This is a plasma cell where you train the plasma like Northern Lights or what you had in the lights earlier. And then when -- depending on what gas goes in here from the chamber, the color changes. And through this window here, the optical tenders looks at the color mix. So you can imagine this Northern Lights effect. And for that, you need some sophisticated AI to understand then what mix is that. So this one would be about 20,000. This is pretty popular in Oregon and in Taiwan for instances of chip makers.

How durable are tools like [indiscernible] by harsh gases with that inside out, but they have...

This is always applied. So what you want at least is from one that came to the next, meaning from one maintenance cycle to the next is 6 months typically. So you need to make it at least 6 months. But that's not going to impress anybody yet. So I think the 2, 3 of these PMs, you should survive for. It depends, right? Some of them run forever, if you have a simple chemistry, nothing aggressive in there, no crazy pressure changes. And it's also about how you run it and how well you do the maintenance. But the most extreme ones, for instance, when I was the U.S. President 5 years ago, we had a massive problem with this one in the very new processes. Then we developed -- sorry for the jumping. We developed this thing here, which was the next generation. So this is actually this, but with a whole system. It has a pump. It has a reference. It has -- it can plug into different sites of our own tool with different pressures and switch around. So it's a system. But this one is able to survive aggressive gases of a certain chemistry. So almost for all the different types of chemistry, a little bit [indiscernible]. So that's why I say this is one of the fights and that's where we are leading. That's why we have 85% of the market is because we need to constantly adapt. This chemistry is changing. On the right side, you see a little bit of a chart. On the Y-axis, different gas amounts. And on the X-axis, you see the timeline of about 20 minutes, just as an illustration. But then you have these different variants that you see on the left side, and they constantly evolve. So I still have here the prior version is the NPH and this is the APX or APX, so the different generation. But I mean, the system is in its core, very similar. Yes. So rapid prototyping is very important for us with the customer. That's also why we need this collaboration. So we want to go in there. We want to stick. A first variant in there, I believe, can survive and then we try it out and then we adapt and we adapt and that's how you can do it best. We do have our own investment also to simplify this. Sorry, for the jumping. Maybe it's not here. We have, for instance, a [indiscernible] in the U.S., where we have all the different tools. You see there ALD, PCVD, there's also an etch tool in there and so on. And that was still during COVID, that's why they're wearing masks, where we got a tool and normally the team calls on the name. So that one is called dark vapor, PCVD. They're all bit in there. I mean it's a good thing that shows they're creative, right? So anyway, in there, we can test also sensors with new chemistries, right? So we don't -- we try to limit the amount of test tool time that we use in a factory with testing as much as we can in-house while we do go through these fast iterations. Nonetheless, in the end, the proof is on the -- proof in the pudding is when it does run on a tool in that specific process, how they do it. But it goes through this rapid cycles. On the left side, you see our innovation process there that goes through these fast spinning cycles. This is the prototype cycle here, the blue one, and this is the making a product cycle where you have different variants and versions then after. So there's a lot of labs there that you see where we tinker around at times.

The circles are the same size, but I can imagine that there is a shortening in life cycle...

Yes, it's fair, actually. You could say that the green cycle is probably bigger because that's where you make the full product that has all these quality standards and obviously, full manufacturability and serviceability requirements and all of that, whereas the blue is more really go quick what I described earlier between our internal mini fab and the customer try out a new sensor and sometimes you see aluminum foil and duct tape and a little bit crazy like there's a picture in the middle there. Here, this one. This is a picture of this prototype that we made for ASML, the next generation, this EXE:5000. That's about 5 years ago now. Yes, the early days when we got their requirements and then tried out the first version of it. It looks pretty terrible, obviously, right? It's all kind of ad hoc piping. But that's how you quickly learn and quickly eliminate issues and then...

Is it fair to assume that the cycles over time have become shorter as well, thanks to the deployment of AI and other things?

Yes.

And product management as such?

Yes. I mean I'm really an innovation nerd. So I come from a background from software engineering from an agile approach. So I did that already before at Mettler Toledo two times to take an organization that also does hardware into an agile mode. That's always not so easy. Software is quite easy. Just if you imagine you want to have a continuous integration, meaning whenever you change something, you want to immediately compile a full product that is tested through and that could be sold and used. It's a bit harder with hardware because you cannot just make hardware every time. So it takes some sophistication to find out what exactly an organization needs to do to stay agile and have the right iterations even with hardware. So yes, this we pushed a lot the last 5 to 7 years. And I would say, definitely, we have increased the innovation cycles. We have to. If you want to go and do this fast prototyping with customers, you need to be quick. So that we talk weeks, right? And then you launch a new variant in months. That idea, not 5 years development and then you come with the new thing and you unveil it. Nobody is interested in that. We hardly do it. I mean it's something that I sometimes regret because then for you guys, it's a bit hard to see what is going on, is this continuous brush. But this is really what we work. You see all our labs are full of this stuff, where they just try, try, try. And then when it's a new variant, it's launched right away, and it's sold. So it's much fast, 6 months, 12 months. When we needed to speed up the Chinese story that I told earlier in China to compete in leak detection with automotive, and we installed this innovation lab there, we had 4 launches that year of that product, every time a step further and the variant and so on. Just because you need to speed up, you can. Chinese customers specifically, you cannot say I have something in 3 years. Hangs up the phone, it's gone. It is not interesting. Go with something that is 60%, really 60%, not 80%. So we have to try to also learn this. I mean you see how much more important Asian market is for us. So we adapted this. It's the best of two worlds, right? The European first time right, meaning take a long time, all eventually, you make a fantastic product, small, it's slick. It takes a long time. It might be off the market. So if you combine this with super fast hacking it together, which sometimes is really terrible in product quality and reliability, you find it the right way, then you win. That's what we tried also. Now that's a couple of factors that I mentioned why we were speeding up. But AI you asked as well. So we do for 25 years, AI. I like to call it data analytics, honestly. But, which always had machine learning or statistic methods and so on in it. We apply them also to our own product development. I think in the Tech Day and also last year when there was this Kepler Cheuvreux AI Summit in Zurich, I talked about how we use it for our products, but also how we use it for our internal development. So yes, it does speed up. I think it's been kind of building up gradually. So I would not say it's like a big bang. But we have really built up our AI team now, meaning people that really have this extreme background and have this focus, have a PhD, have really go -- they go after the most difficult problems that we see. This we really scaled up. And it's a fun amount of stuff that comes out of it. We'll talk more about it. It's happening. But you could just see that they are -- basically over a weekend, they did a couple of these LLM bots. Ask Gen, ask [indiscernible], there's another a third one. They just do that on the site. That's not even hard for them, it's bot stuff. So the hard stuff for them is, for instance, the scheduling, optimization, which still is an NP hard problem, meaning a problem that cannot actually be solved without assumptions and heuristics or this data time series where you have a trace of a measurement from a sensor and you try to understand, is this now good or bad? Is the health -- is the wafer healthy or not? It's not a one-to-one relationship. It's more -- a wafer dies by 1,000 cuts, meaning 1,000 tiny things go wrong and then you have the yield go down, right? So you need to kind of think over several tools and over several processes. You see a picture. Sorry for the flipping around, guys. It's back here again. So on the left side, you see that's something we launched about 4 years ago, the Smart FTC. It shows in this blue the envelope of where we think the wafer is healthy. And the green one is the trace from the sensor in a very simplified version. Obviously, there's many different traces, many different measurements and many different envelopes. But that's what we developed here is to show when it's in a healthy range and when it isn't. And then over time, through a scoring system, you can say this wafer is going to die soon or this tool is -- needs maintenance and things like that. And this, we can also apply to our own sensor development, obviously, things like that, how you optimize the parameter for measurements and so on. And that does help. So we're really boosting this. So we should ask you whether you have stability in those teams, these probably international teams. I mean that's crucial to keep them, to lose them. And it's not so easy because a lot of them were originally sitting in Austin. And Austin, as you might know, is a Silicon Hills, meaning they're not in the Silicon Valley anymore. People also leave. They go to Texas. And there was a lot of competition with Facebook, Google, they were all there, Amazon. But that's already now 3 years ago. Things changed, right? They staffed extremely in -- during COVID times. And then they overstaffed and then they really cut jobs quite a bit. That was 2, 3 years ago. We have no problems to find people. It's also sometimes -- I know this sounds a little bit [ religious ], but I mean, do you want to go in semiconductor and solve truly difficult physics problem and chemistry problem? Or do you want to optimize how many clicks you have on an ad? You also need to ask yourself what is making you happy. So you always get a bigger salary in the end when you go optimize ads, Facebook and such. But that's not maybe for everybody. So we find people that are really focused on this. There is people that have -- typically, we find them through papers and conferences. This operational excellence, industrial engineering paired with data analytics people. There is a little bit of a breed now developing and there are some institutes and some universities that work on that with a focus, and that's where you poach them. We also don't need 500, right? So we have maybe 100, 200 software engineers and maybe 10% of them are really hardcore that kind of, I don't know, PhD, data analytics and then operational research type people. Some of them post on LinkedIn from our guys. For instance, [indiscernible] is one of them. Not everybody does. Some people are a little bit more. We have a lot of introverted people, right? They would rather like to -- they have very much enjoyed COVID because they could stay at home in the basement. So still have -- they're still the same people actually.

And go-to-market, as you described, happens like almost week by week -- once there is no fair cycle or conference cycle.

We don't do a big laser show, smoke and unveiling of a big machine. We don't even have big machines. And so software, you follow us on LinkedIn on the website, and you see when we launched Ask Gen. So the story made for those who don't know, we acquired FabTime last year. One of the main experts in this group was Jennifer. She's 20 years in the market, helping fabs optimizing the cycle time, meaning how long does the process run through one tool and then several tools. So she wrote many newsletters. It's a very famous newsletter that people read and she wrote white papers. So these guys, nobody went there and said, top down, hey, you must do this, the idea is always create an environment and people just go, just try and break things and make mistakes. So they just over the weekend, I know I talked to these two guys 6 months ago, 8 months now. And I met them, yes, we just -- we wanted to be the first one with some LLM type thing. And we just did that in the weekend, two guys, Eager and Holland are the two guys. And then they just launched Ask Gen, which is basically just a small language model, meaning limited only on her white papers and other materials you create. And now you can add the tool, you can buy this additional module and then you can ask, what do you think with this data that we see in our tool, what should I do? What can -- what levers do I optimize and there's different phenomena that they describe and so they can suggest, look, this is probably this type of pattern you have and hence, that's the little source there. So they just did that. And then they launch it. I'm not going to go and sign off on stuff like that. They just -- they need to go. But then where you see this is basically for everybody else outside of the direct customer relationship, you see it basically just on the website quickly. But they would go -- our interaction with the customer is -- marketing is not so important, the market communication in that sense. What is important is that we go to the conference, talk about it. And we have our own conference as well around, smart manufacturing software where a lot of the customers join, almost 80% of the customers in the market, the regional join, and they have these discussions and then they specifically talk about this stuff. So it's very blunt. Yes, it's small. And then you go there -- Yes, when I go there myself, I mean, my old computer scientist's heart is beating that they don't understand so much, but it's just they're the same nerd. And interesting enough, they can talk across companies about these topics. So they'd also talk about road maps, what should we develop next, what is important, what doesn't work. So this is relatively quick. That stuff there that developed in 2 months. It's a small thing, right, to be honest. We do more complicated things like that. So that's an example of maybe a simple AI tool was made.

Beginning, you showed the chart -- is this show where you send the tools or where you really invoice?

Yes. It's a complicated picture. I mean, yes, we try to be as accurate as we can, but we really not always can. So especially Genevac, half the Genevac business, so meaning 80 million or so is basically going through distribution partners. I mentioned to you in the beginning, we are key account management focused. That is either a large customer or it's a large channel. Obviously, we have these products, and you see it when you walk through our manufacturer, we have them in different colors to private label and so on. And then it's hard to know where it goes. But with the key accounts, we know it a bit better. With the end user, it's very clear because we ship it to that factory. But with the toolmaker, again, it's not entirely. Because if you also look at the North American OEMs, they may be 10% or 20% of their products are actually going to the U.S. So we manufacture maybe in Europe or in Asia, and they ship to Asia. So we -- this product never goes to the U.S. So maybe it is listed as a U.S. product. In some cases, but it is not actually ending up in the U.S. So it's a bit more blurry than that. So these numbers, I would not 100% guarantee that they are accurate. They're good enough. I think maybe that's a question for our CFO or maybe Dimitri can also help of how accurate they can be.

So this is based on headquarters and not on shipments.

No, it's both. It is more intelligent matter. But I can tell you, it's not such -- it's not so transparent, honestly. When we also were to talk about trade tensions, it is very relevant that number though that I mentioned that only 10% to 20% of the products that go to U.S. OEMs actually end up in the U.S. So very little is actually affected from tariffs potentially, meaning from Europe. But right now, we are in this state where it's only 10%. So that's not impacting trade at least in our space, much, but if it were going higher again, then that would be a relevant number.

We have been talking about different scenarios and so on in the earnings release. Nothing more to add there.

Nothing more to add. All right. Let's just hear from the finance folks.

In terms of pricing as such, I mean, there is this one part where you see that index 2021, 100, but they're still like -- they went up at 235 and then down to 22 and that stay there. So there has been like price pushes due to salary increases, inflation as such on raw materials and so on. I mean, how much of your growth that looks nice -- was pricing related?

Yes, there was some of that. Was the big exercise. The exercise was in 2023. I think it was yes, mostly and then in '24. But then that was mainly to digest this wave of inflation in the different regions. So...

Most of a one-off.

Yes, it was mostly one-off. And it was a long silly negotiation with each customer and each supplier where everybody roughly ended up at the same margin with a lot of waste of time. That's why I call it silly. And we might end up with the same thing again next year, right? Probably not, but it might be inflation might come back for a long. In the end, this is not how we can expand margin with long-term partnerships. It's also relatively transparent. We were certainly not losing though. We made sure of that. I was really pushing also to professionalize our pricing capabilities, and we will also be better in the future. But -- when we talk about pricing power, maybe that's a question. We typically gain this through innovations that we can price well. So innovate something, sell it at a good price point and have a better margin and then some the back-end productivity gains and things like that. So there's some of this in there, but it was a one-off correction, right? So in the U.S., it was... Don't take it for granted that I know that remember the numbers correctly, maybe it was 4%, 5%-ish there. And in Europe was something a little less, but similar.

So overall, it's between 2% and 3% overall.

Yes, exactly. So it was obviously, Switzerland was different. And Asia had its own dynamics. So yes, there is some of it in there. But if you look at the CAGR, it's a chunk, but it's not material. So it indicate the whole story.

Sort of maybe small margin impact long term just from the kind of mix of divisions over time growing at different rates.

Did they grow different?

Yes. So some of them have higher low margin and maybe the higher margin one goes faster kind of natural.

Yes. I mean it's been pretty balanced out in the sense that over time, what before I explained this waves. So I couldn't say that there's a real big trend. One thing that we talked about quite a bit is [indiscernible] quite a bit. That was a leap. And I think this was '23. And that's what I mentioned earlier with this CapEx program. This has a lower gross margin. It has a similar EBIT like the others, but it has a lower gross margin. So it's 40%, 50% versus we go up to 80-plus and the sensors are more like 50, 60. They need more application engineering. That's just what makes the bottom line similar, but the gross margin different. So there, you could see that our gross margin went down, and that's also where I think we have most questions about what's the development on your gross margin. This whole question, do you go to 50% or not? So this is a bit hard for us to say because it comes with this mix.

Make sure that folks online, is there any raised hands?

Guys, feel free to raise hands online. I know it's not as easy as for the folks here to ask a question, but feel free to -- you can also write it into the chat...

Or raise a hand. Changing the software in terms of subscription.

It's quite similar.

Yes.

Subscription is certainly established now.

So it's a good mix, 1/3, 2/3 or 50-50, somewhere in between there.

Will fluctuate -- yes, it's an advantage financially, but we are pretty balanced already. So I think we always would go with what the customer preference is. It's also part of a larger deal, right? So what do you pack in there? And if you pack all in there, would you like rather this as a onetime license and this is a subscription. So you can play with it. So we don't have fixed guidelines, let's say.

And then when you said like the next gross margin of 80% software, right?

Yes. This sometimes sort of buys 100% is -- I mean, there are some services included that we do installations on. But there is also hardware included at times. So we supply actually the hardware for let's say, a server that goes into the shop floor, we would supply that because it has its own specific requirements. But typically, when it goes into a data center, then they will give us a virtual space.

In terms of I mean it sounds as though that's able to capitalize on problems within some of your competitors' supply chains and sell the vacuum coating in kind of 2021, 2022. I was just wondering what is it difference in the way you organize your supply chain that, that may have been the case?

Yes. All right. Good question. Maybe then I'll quickly show you the world map. Sorry for the flipping around, guys. Don't look too much, so you don't get dizzy. Yes. So this is the chart that I showed at the earnings release Q1 2025. It's the normal chart of our locations plus the red circles are the ones where we currently have reconfiguration ongoing. So maybe an explanation about this. So what we tried to build over time and no doubt this was also historically how we came about, we were a distributed company always. Many of you imagine we were these three companies coming together or three divisions of other companies that came together actually is more accurately maybe. We always had three centers of gravity, Bolses, Cologne and Syracuse. But then we did acquisitions, and we did some certain expansions. For instance, the Shanghai factory we did over 20 years ago. So this state distributed organization, the only thing that they always had as a principle in the past is make one thing only in one place. So have a competence center in one location because also how we started out was actually we had the products in different locations at the same time because there's different companies came together. Actually, a long point of time, this one here, the mass spec was made in Cologne, in Syracuse and in Bolses. Three different variants because it was three different companies. Obviously, we standardized, that's a long time ago. But that was a little bit the former history. And now about 5, 7 years ago when globalization kind of slowed down or even went backwards, right? That's basically the trend that we have that we have more regionalization. Then we pivoted with our strategy, and we also strengthened this team to think more strategic. So now it's not the simple rule. One thing is in one place, but now you need to make it where it makes most sense. That then entailed a few things. You needed to make products that you can shift around. So the much less tribal knowledge, much less -- there's a bunch of experts that can make that. Now you need to standardize this, that you can move this from Cologne to Shanghai or from Shanghai to Kuala Lumpur or you can send it somewhere else. And so that's what we worked on the last 5, 7 years. The COVID time actually further emphasized this because when we all looked at our supply chains more in the aftermath of it of the supply chain crisis, we were thinking through this dual sourcing, and there was a lot of nearshoring that people wanted in the U.S. and in China was a very strong push for that. So all of this together got us to the point where we now have the ability in these different competence centers to move product lines from one place to the other. But everything needs to be able to go everywhere clearly, right? And the smaller locations are not made for receiving more typically. What it is, is the three big ones plus the two factories are where we can go manufacture. So the 3 big ones, again, that will be Germany, Liechtenstein and U.S. And then we have China and Malaysia. And then you can actually maneuver all the four regions really well. I'm talking 4 regions because it's a little bit how we look at the world. There's Americas or North America, there's Europe, there's China and there's the rest of Asia. And you need to be able to kind of have a footprint in each one of them to play best. Also things like China Plus strategies, you can then implement. So based on this strategy, then I know it's a very long answer, I guess, but maybe it helps answering a little bit how our DNA works or how our operating model works. When then the most recent announcement came at Liberation Day, this was not a news for us necessarily because we have these projects, the red ones, they are already going because we could already see things. That's not because we're particularly brilliant. We're just listening and adapt much like with innovation relatively quick. So we -- we knew that U.S. and China is decoupling. Everybody talked about it for 4 years. I mean since the last Trump administration, this was a push. So we just started to rearrange it all over time. All we needed to now do is speed it up because 20% tariff is different than 140%, obviously. So -- and that's how we navigate it also in the future.

Broker cost, which was a big issue before. Will they go up again? Is the trade tariffs...

I think we did. But never say never did in this world, I guess. Yes, I almost forgot about that pain. Thanks for reminding me. Yes, that was at one point of time, if you remember, we communicated, I think, around 15 million impact in broker costs. That was maybe 22 still. I'm not sure that piece maybe you guys can confirm it, -- but it will be in the public domain when we talked about this transparently. But just to name the issue, so the problem was there that we couldn't get our hands on our chips. So this one uses, for instance, an automotive-type chips because it needs industrial, it needs long life, it needs to be robust. And automotive, that was all the rush. And we are not the first ones because we buy smaller pieces, even though all of those guys are our customers. So with some, we tried to go and phone up the same people we make project with, can you give us a batch? But hey, I don't know what exactly happens because we saw 0 numbers that look weird. So it felt almost at some point of time, they were purposely selling it through brokers and then there was an immense fee on top and then only we received it. I don't know what happened. We never really found out the full truth. But in any case, we thought we paid a lot extra, sometimes 3x, 4x of the chip in the end of the PCB. And then you went away as it came, nowhere. There's just a bunch of people. There's in between middlemen folks that probably really made a lot of money that time. So yes, now we have to -- we have tried to go and get closer to our customers, better planning, more second source all that stuff, some obsolescence as well because maybe a product is not obsolete, but at the back end of its life cycle, so it's a little bit scarcer. So you want to be rather in the bulk of where it's high in the life and running. So we did all kind of things like that. We also diversified our sourcing for PCBs to have U.S. and Asia more. So yes, we're in a much better place, but I don't know what happens next year. We -- I can assure you that through this network and this thoughtfulness of how we set ourselves up, we are way more agile than others. We have not -- we don't have to phone somewhere to look for a plot of land and build a factory and make local connections and hire HR and finance management and all that stuff. We have locations where we can easily scale up and down. So that we do have. And the same with supply chain. There's obviously each one of these five big locations, a good supply chain team that works with the same methodology as everywhere. There's also something that changed. In the past, there was a lot of local sourcing and a lot of local logic and methodology. Now we standardize it. So they speak the same language, so they can also throw each other balls like that. So...

Yes, did a lot of work on it. Hope it works.

So at this point, we don't see this as a problem yet because it came a bit with this automotive crunch. And then, yes, there was another problem though, the supply chain crisis. You all remember still this picture of the 500 ships outside of Shanghai. I mean we have a little bit something like that though. So -- and that worked itself through the system in 12 months. That's only when we saw it. So I will say never say never, but it should be different this time. It has a bit of a different nature as it presents itself to us.

Maybe with the distributed expertise all over the globe now, how do you make sure the expertise doesn't leak that it stays within the group? Do you have some particular policies?

Yes. No, that is a part of this strategy. So there are some things -- like I'm chokingly called, as an example, the watch makers of our sensors. So these are the guys for those who are physically here, you will see them later. Those that make the in the most of the sensor head running fragile little wirings there. This is, for instance, something where we believe we have a little bit of a moat. Only a few people can do it, and you need a very long time of training, 1, 2 years for basic and then 5, 6 years more. So such capabilities as an example, we try to be protective and place them only in places where they make sense. You can do that because this is not much value, right, whatever tariffs and so on, so it should work. So others or software code that they obviously try to lock down. So we, at this point, don't have software openly in China for most of our products. There's an exception. Some of the products we actually will start increasingly to innovate in China because I tell you, it's there at the center of the world of innovation. It's not here. So our strategy is now not anymore protect stuff in China, but go run as fast as you can with the local competition and then export into the world. I think you need to think dual these times where maybe 10 years ago, everybody was going there and said, okay, IP, we're going to be careful. We have this decision by product line. And when we went there this year for the strategy workshop, we specifically looked at these places of where we want to innovate in Asia or in China and where we don't. It's not easier. It's more complicated. And it's a good question, because it's moving quickly and these processes, they move quickly. So how can you go and make sure that you stay safe? You can't always. So I think we always a little bit lean towards speed versus protection. I think in our industry, in our world, that is more important. It doesn't mean neither. It doesn't mean not the other thing, but it means a little bit more rather speed if you had to choose. It goes almost for everything. Is there any other questions from online, just making sure that...

Maybe a question to you, Oliver, you've been CEO for some time now. And I remember the first time we met -- that you're potentially going to change, the things that you see in the organization that might need adjustment after so many years of the same management, which is not a bad thing. But of course, you're a new person. You've been in the company for quite some years. So probably you've had some ideas already before. So maybe now looking back since when you started, can you elaborate a little bit the things that you have changed or adjusted and the things you still see probably that need adjustment, also the R&D has increased since you have arrived. I'm not sure if that's connected to you or if that is just the time that we have right now. But maybe I can elaborate a little bit on -- since you started today, what have you actually changed and what you think still needs to be addressed.

Good question. That was asked a lot when I started 2.5 years around there. And yes, it's good to check in, I guess. We do obviously annual cycle of checking in, which is always Q2 and Q3 and see a little bit how we're progressing. And then we produce normally a 3 years plan where we detail out what has worked and what hasn't worked, where we need to double down, where we may stop. Also important. So yes, maybe to outline quickly what my strategy at the time was when I came here in 2022, I was together with Lucas for some time and then we had did the split. He was still running stuff. I was still running a little bit my prior location, the New York location. But at the same time, I was also allowed to go and formulate a little bit the strategy, the future strategy with the management team. So we had a couple of workshops around that. And what came out of this was basically a 2-pillar strategy for the next 5 to 10 years. This is also the strategy where we said we can double the business organically because we saw the building blocks specifically of how we can grow each piece. And it has aged pretty well, even though, oh my god, what happened in the last 3 years really was not what we have foreseen. But it's okay. I mean, if you are agile and you like a challenge, it's not bad either. So the two pillars are -- one is around a couple of market initiatives. And obviously, there's semi in there. There's new energy in there. I will talk about more what that is. And then there's a number of growth markets that we see and maybe the markets that we don't want to do anymore. So that was one half. And the other half was about 10 initiatives to professionalize the company and make it scalable to support that. And one example in there is this global operational strategy, the operational excellence strategy, which I think you heard a bit more how it materializes. So maybe quickly back to this 3 market strategy. So one is the semiconductor, which the idea there was to make sure that with all of these top accounts, we end up with a strategic partnership. So we go and innovate on their next generation or the one after and build that up further. And yes, we made good progress there, not done yet. This is long-term relationships. But I think we did a lot of great big and small moves that move us in a very good direction. So there was also about finding new markets within semi and strengthen that base to further diversify, but always with being selective about which markets we go to. So it needs to have the right growth and profitability profile, the right synergies. And there, we also did some progress. I mean, subfab, we talked a little bit about today. There's more that in the works, and I think we didn't progress as much back end, but we did do some stuff there, some prototyping of new products, back end of the line of semi manufacturing. So there, semi has developed quite nice, specifically look at these top accounts and our partnerships. I was also personally very engaged there with our executive team. For me, this is a senior executive job to go and make the handshake on the top. And also when specifically when ship hits the fan, you want to be there and you want to get a phone call. If they're unhappy, I want them to yell at me. That's a good thing. Because if they don't, they go somewhere else and they're unhappy and -- so there was a good amount of this. Then we formed this new section, new energy. Maybe at one point of time, we might change our end markets. But I don't want to confuse everybody, honestly. So -- but new energy is everything that we've seen that drives, maybe I can show a picture, sorry for the flipping around again. Everywhere where we can move sustainability forward because as we -- as it happens, INFICON in its DNA is actually very strong in helping other customers to sustainability. So the core of our internal sustainability strategy is actually so-called Scope 4, as we call it, not official, is how can our product move the customers' sustainability. And one example, upper left corner is the subfab optimization. A little bit went into detail earlier. And obviously, battery is one, solar is one. Biomethane is one. Hydrogen is one. There's also other stuff. I even published something when we work with carbon capture companies, for instance, Primeworks. But there's a few more ideas in this space, which are further down the line, maybe might never come or might be big opportunities. But this has been part of our new energy initiatives, big markets also for us and growing markets. And then this was about building out our foothold in those, but also explore new ones. It's ongoing. And in battery, I believe we have really a strong place. Solar also, I think and [indiscernible] and brings the solar business back, we are ready for that. We have the products. We have the collaborations. And then biomethane and hydrogen, similar that we can go into this detail. It's a bit more explanation, maybe what the dynamics is. But I'm optimistic there. Then we have the growth markets, which is especially what you have in vacuum, in general vacuum, it's a long list of different markets. And there, we really try to understand each market of them 20, 25 markets and categorize them where we want to push, where we want to retreat, where we want to be optimistic. And I think we have a pretty good feeling now what we want to do there and have adjusted our strategy. So that's the whole side on the market, one pillar. The other side on productivity. I think a couple of big topics that were in there was building the team for the future and further build our culture. We can talk about culture at one point of time. It's pretty ingrained has always been for us. Also, that's maybe a quirkiness that you sometimes notice. We try to really focus on what is key and not do what is not key and no formality anyway. So there's culture stuff that we do. We build the team for the future. Digitalization is a big one. So there's all kind of optimization around that, that gives productivity gain, the operating footprint and excellence I talked about. Branding was in there, and I think we're almost done. We feel that we are now, after we had to catch up for a couple of years, we're in a good place. And then, of course, sustainability is also part of that, this enabler initiatives. So that's the quick rundown maybe on my scorecard here. We're continuing. So pretty happy how it's going actually, even though there was stumbles and troubles and difficulties, still needs a lot of attention.

[indiscernible] on the discontinue.

Yes. I mean we have some products that are obsolete for 10 years, and we really try to go convince the customer, don't buy it. They are still buying it. So some of the sensors and then we are a bit more proactive in how we do that. It needs smart solutions. Sometimes we sell them a license to the design and then they make it themselves, and we help them make it themselves because there's, I don't know, maybe a company that needs 100 of those, and it's just financially not viable for us to do that. Some we have invested smaller stuff, some we have just terminated. I just don't want too much distraction as we maybe had in the past. Because what I described early on with this complexity of our products and the many different markets, yes, it has a risk to dilute our efforts, right? So we need to constantly -- I don't know, it's like brushing your teeth or beat the garden. You need to always look, okay, does this still make sense? And saying no to a thing is harder than saying yes, especially in our company where everybody always wants to try something new, then you very quickly a lot of stuff. So you need to kind of this process of cleaning out the old product lines and old markets, then we try to find good solutions there. It's not just sending a letter and say no. It's typically not. It's a small world. So people need actual solutions.

One question online from [indiscernible].

Given that you talk about markets and you also showed the Contura product earlier on, we haven't talked about food packaging for a long time. If you could just give a short update on where you stand there, whether the opportunity is still attractive for you, whether it's still a growth market, maybe some perspectives on that.

Sure. Yes. Yes, Michael, I mean, that's maybe one of these examples where people went in there with a lot of enthusiasm, built a fantastic product and then pivoted five times. And then some of it we boost and some of it, we classified as more opportunistic with small efforts. So what is that? So this -- I don't have a picture right now of, I believe I have to scroll up and down. I don't want to do that to you. But it is -- for those who don't know, this is a relatively big product like this. It has a big opening chamber and it has different flavors to it. You can put some packaging in there and find out does it have a leak. It has this boil that goes around and then is able to go and find out is there a leak. And in combination with a mass spec, you can also qualify what comes out of there. So this product was originally then thought for food packaging because food packaging is still this water bubble test. You take -- for those who don't know, I was in food once with Mettler Toledo, you take a bag of something.

And then you put this underwater and you look if there's bubbles. So that's leak detection in food.

So okay, it's about shelf life mostly, not maybe unhealthy, but sometimes it is. So we can, of course, do that better because we can go and actually count single molecules that come out of that leak. So we felt, hey, guys, why are you not switching? But most of them, they just don't see even this investment of this 10,000 product, not even on the quality side, right? In line not -- and also not at line. So they still do this stupid all above. So that's okay. I mean, yes, that's okay. It's a classic engineering problem, right? So we have the best product, but people just don't want to adapt and don't see the business case or it's just, hey, this is not my focus and I have 50 other problems, why am I doing this? So we do it for a selected few premium products, coffee, moon cake, stuff like that. It's pretty much established there, but it hasn't grow humongously, right? This is like single-digit millions or something. But then where it actually -- what then happened, and that's often happening with our technology. It pivoted and it was actually a fantastic solution for batterated leak detection. And there, you do care about the very tiny leaks. And you have weird packages at time and you have pouch batteries, right? All the -- basically, all the high-tech products that you have now from car to mobile phones to everything else, mobile needs a battery. And you need to -- this is an early technology, still a battery because you try out different mixtures, you try out different formats, you make it bigger, smaller, different, whatever. And in that whole world, this is actually a very good tool. And it continuously is part of one of our products to test or solve this problem. And it's also -- there's in-line versions to it, too.

Can you sell the membrane as a consumer over there as well?

Yes. I think it's a little bit less because it is -- yes, it's a bit more optimized. I think it's more organized manufacturing maybe than in food. But I don't fully know how much consumable we have in that space, I need to also say. It's not some significant number that I would know. So anyway, so in that world, the Contura lives on is a very strong product. But as part of the leak detection in-line testing or also in R&D, but I mean the bigger part is more at line. That's what happened with that. I mean... Other things like this that happen all the time. I think I don't see this as a failure or only in a failure that I would like to encourage the team to make in a sense because what I don't like is if we are not bold enough to go try it out because we worry this is not going to work out, then we have a problem. I want them to go there, try it out, make a product and then we have this meter funding. We cut it off when we think we need to cut it off. But you cannot cut it off at the beginning because you don't know where everything goes. And now, again, in this specific example beautifully shows it ended up somewhere else solving some great problem. And that's all the time. This is not an exception. This is how innovation works. It's never linear. It's always like this, some kind of weird confused path. So this energy ball, I want to maintain that produces this kind of stuff.

Just timing-wise, it's now quarter to 11 or do you want to do till 11 and then...

Yes, maybe we do 2, 3 more questions, and then we slowly wrap it up for the online folks.

[indiscernible].

You mean private label?

Yes.

Yes, it's about half of Genevac. So it's by 80 million or 70 million or something. Yes, this is important, I believe, because there's -- especially look at the vacuum technology companies, we are a pure play, and we want to be that. So keep that focus. And these companies sometimes do a lot of different things, right? They pump, they have valves, they have whatever, and they sell it all. And then -- so they can go and have a car -- people in cars driving around places and selling things is a viable channel for them. For us, it isn't. But in the end, you sell 2 universities, 3 of these gages, you can't justify a person driving out there and go 3 times, right? But if you sell more stuff, then that works. And that's why we work with these private label partners for the broader market. As soon as we think it's strategic or it's a larger account, we try to go and work directly. Sometimes still for that channel, but then there's R&D involved. And sometimes some -- big science projects then morph into a direct relationship. I don't know how it exactly happened, but you could use Ether as an example. So at the beginning, they would just buy from one of the distributors, some gauges and over time, they needed a different type of gauge with certain capabilities. And the industry knows where they come from, even though they have a different color. So they would call us directly and we develop this specific for them, and it also came in blue. So that's sometimes a bit a transition. But it needs to be a strategic decision then because big science, we now feel it's an important market for us, at least for the big accounts. It's actually a growing market. We studied this last year as part of this exercise on growth markets that the accelerators particularly growing, but there's also fusion projects. that are increasing quantum computing a little bit behaves like this too when it's about vacuum. So there's a number of these big signs, some markets that actually have interesting growth rates that they're a little bit hidden away, tucked away from the rest of the world in a sense. We also needed to go there. We have a few people that come out of this space and have worked, specifically, one market manager or product manager -- plugged in with this space and understands what projects are there. So the nature of it, we can actually -- it works for us, and we have the products for it. It's just -- it needed a bit of cleaning up and organizing. That's, for instance, one of the things we did when we -- that growth markets. I think we also put it even on this slide here. Yes, big signs. This is, for instance, an accelerator. One of these tenants is also most recently, the many have a space program. Many of these -- many countries, also of the emerging countries have large projects like this. China has a number of them. India starts. Japan has them for a long time. So this is interesting that this has an interesting dynamic. It's not big, but this is not going to be 10% of our revenue. I think but it's a good market, also good to push R&D right? Any few last questions, maybe also online.

Say something about M&A strategy...

Roughly, you have summarized it. I mean, we also -- what we do maybe as opposed to before, maybe back to your question is what I tried to do in '23 onwards is to staff this differently and set up a more industrialized systematic approach to scanning all the markets equally, especially the ones where we find strategic important before it was a bit more opportunistic. And then fill up the funnel, and that's why there's about 100, 200 targets in this funnel. But a lot of them are long term, right? This is a long nurturing phase always, sometimes 10 years until we buy somebody. So anyway, so when we look at what works for us, it is typically what you described because -- we have -- it's a bit of an advantage and disadvantage is not as bad as maybe with VAT, right? Our profitability though is relatively high. And our growth aspirations are also relatively high. So when you look at any target out there, sometimes it will dilute your financial performance. So we will still do it if they have a technology that we cannot develop. The thing is, though, most technologies we can kind of develop, but we cannot develop all the stuff that we want to do. So we try to balance with acquisitions also a little bit. Maybe if we buy this year, then we move the resources for R&D over here. So we play with it a little bit. But yes, out of this 150 or whatever targets, the bulk is this small companies like FabTime. And we would have bought a few more. We were close a couple of times. We have any given time about 3 that are hot, but -- yes, I don't know. Statistically, it didn't happen. We were very close a month ago with one. Then we found another one that is even better. So we're looking at that.

So it kind of goes back and forth, sometimes.

Yes. So that's roughly the strategy. I believe there is some growth in there, but you don't need to put it in your model necessarily, right? If this is just a couple of millions or maybe 10 million, 20 million potentially. So we look at big ones, but that often risk-wise and so on, it's kind of not our DNA to do something crazy. We would have to talk about it if it's really strategic fundamental to do it, but we haven't found one yet that is...

Right. Added like 50% of capacity in recent years. How much of that is in use now?

There was this program from I think back maybe '21 to...

I mean a bit stuff is down here. But not only, but one was because gauges exploded in this period of time. We have since still expanded actually some more, maybe another 10%, 20%. It's also part is in China and the part is in Finland, specifically on gauges. I think the original additional capacity is in use. But now since then, we have further expanded because we try to be ready for this ramp. The ramp that we talked about for a long time, right? So it's always coming in 6 months. It's like a little bit like the cold fusion there, it's always in 20 years, then we have it. So I don't know. I think joke aside, the ramp will come. I think it might be a little bit subdued this year because of the trade confusions. But we feel that it is coming. We have good signals now. So for that, we have 20%, 30% extra capacity to be able to digest that. And that's also reasonable if you want to not miss the boat or have very stressed customers in the middle of it. So -- but the problem is a little bit, I mentioned that before that our cost base is a bit higher than it could be because we're kind of ready for a ramp for quite a long time now. It's probably 12 months, and that's a bit unreasonable. Of course, we'll be smart about it, not everything is staffed, not everything is activated, but this is still in there.

[indiscernible].

So a couple of the product lines. I mean, again, if you look at this picture on the left side, we just look at the semiconductor industry, it's almost every key account. There's -- I mean, there's 20 to 30 big companies globally that all our customers and each one has its own little story, but we had now more tangible longer-term upwards trends. It's not fully broad yet. So I'm talking about signals, not about ramp having started, I think it's a good recovery from the bottom, especially the ones that really crashed down like memory but is it really ramping? This has always been the question. So in full year for Q4, I think I remember that at the time we said we see some very narrow ramp around AI, so HVM and high-performance computing and high-bandwidth memory. And then since then, it has a little bit broadened, a bit more in other places. So that's what gives us this moderately optimistic view. But since then, what came as a counter reaction was Liberation Day and the trade tension and the extreme decoupling of China and U.S. And that's why we feel -- and we read the same reports as yours or we even read your report, so just to calibrate here. But we believe that's why maybe it's a bit slower than we maybe expected. I think we were really in a good place just before Liberation Day. There would be only optimism, I think. So now I just don't know. I mean, again, our realistic scenario, as I mentioned in the Q1 earnings call is about 3 different scenarios. But the realistic scenario is a bit of a decoupling of U.S. and China in any case. Maybe it could be small. But in most of the places, there's going to be some kind of a digestible deal. So that's the current assumption. But it will slow down the market, right, because everybody slows down investments. That is -- there's no magic science to this. I mean I'm very interested also in your feedback, honestly. So we are also reading reports and look into the crystal ball and try to find out what...

There are no further questions online.

No further questions. It's good. I mean what about -- you guys can still ask questions. I'll go with you on the tour. We take a small break for everybody to air by a break and if you want to drink or eat something, and then we go on to the tour. And for the folks online, I will go and stop at this point. I want to thank you very much for your interest, everybody, for joining. Fantastic crowd, almost 20 people online and on-premise. That's really cool. Thanks for being such interested investors and analysts. So talk to you soon again in any other location, and have a wonderful day.

Thanks for the opportunity.

Thank you.

Bye, everyone.

Thank you. Bye.