VAT Group AG (VACN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the VAT Q1 2025 Trading Update Conference Call. I'm Sandra, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Urs Gantner, CEO. Please go ahead, sir.

Ladies and gentlemen, good morning, and welcome to VAT's Q1 2025 Trading Update Conference Call. With me this morning in Haag in our freshly opened innovation center are CFO, Fabian Chiozza; and our Investor Relations team with Michel Gerber and Christopher Wickli. After my introductory remarks, we will start the Q&A session. The call moderator will take your questions in the order you enter them. So let's start. We are pleased to connect with you again after the full year results event, March 4. Following the full year results, we had great discussions during our Zurich and London roadshows with a focus on the technology and the anticipated shifts relevant to our business this year. Since then, I spent a lot of time with customers, mainly in Asia, which is especially important during these times of uncertainty we are seeing. Our customers rely on us to be ready with our products and services in the location they need us and with ever shorter lead times for engineering and new product introductions. Nothing has changed there. My takeaway from these discussions is that our customers are not changing their views or expectations about the ongoing technology transition and capacity expansions. However, a new arrival has become relevant, tariffs. Tariffs are likely to impact the demand for and the pricing of consumer products. The exact magnitude is difficult to estimate right now. Nonetheless, the advancement of the next generation of chips and thus VAT's core growth driver is still in place. The overall demand for semiconductor chips and therefore, for semiconductor production equipment remains consistent, but we have seen a slowdown in order intake of about 10% since the fourth quarter. This is due to the high level of uncertainties caused by the geopolitical situation and, for example, announcements of potential factory reshoring. The semiconductor supply chain is on a standby to serve where and what kind of demand will arise. Our customers are reflecting this situation as well and lead times remain short. They expect us to remain on standby for deliveries. As we mentioned previously, we have seen a recovery for VAT from the bottom in 2023. The market seems to have plateaued in the past 2 years around the record wafer fab equipment of around $100 billion. It will be the mix of applications that will drive VAT's growth going forward. The investment announcements by major hyperscalers or the reconfirmation of the previously made commitments is, in our view, a strong signal that AI will serve as a key driver of the technology transition and of investments in additional capacity. These long-term plans reaffirm that despite of all these short-term obstacles, the semiconductor market continues to grow towards the $1 trillion mark by 2030. In the Advanced Industrial business, we have seen a slowdown in orders compared to Q4. Again, the volatility from uncertainty in global trade has been eating into the business. Furthermore, U.S.-based research institutions have been experiencing cuts to their funding. All this is expected to be temporary, and we have still expectations of a recovery and growth in our ADV business during this year. Global Services completes the picture. Demand for consumables and repairs remains at the same level as in the fourth quarter as fab utilization has gradually improved over the course of the year. The segment shortfall is due to the lower demand for refurbishments and upgrades, which similar to the valves is related to uncertainty around investments in upgraded wafer fab equipment. Let me repeat what I said at the full year results in March around our expectations for 2025. First, the semiconductor market is doing well as demonstrated by our 2024 results. We still expect 2025 and 2026 to be growth years for VAT. It's up to us in the industry to provide the latest chips to bring in the next generation of electronics while mitigating the developments in global trade. Second, we are progressing with our capacity and capabilities expansions. In Haag, we just moved into the innovation center, a very impressive building where we will get our R&D capabilities running faster. Innovation is what our clients expect from us and what distinguishes us in the market. And third, the thesis of the $1 trillion semiconductor sales in 2030 is still intact. It's not even accelerated by additional AI investments in the years to come. The 2-nanometer adoption is in progress in logic. HBM capacities are fully booked in 2025, and our customers are preparing to introduce NAND chips with more than 200 layers. All of these trends require a shift in wafer fab equipment towards more leading edge with higher vacuum content. Let's turn to Q1 results that we published this morning. Q1 order intake of CHF 242 million represents a modest improvement on last year's Q1 numbers. Group net sales came in just above the bottom of our guidance range for Q1 at CHF 275 million. Compared to Q1 last year, our semi sales were up 52%, which ties back to what I said previously. Our semi valve business is doing well, but we are still anticipating growth to pick up from here. The significant U.S. dollar swings, especially against the Swiss franc, have only taken place in the past 2 weeks, which means we will talk about this at the half year call, and thus, the FX impact during Q1 was only around a negative 1% to 2%. We maintain a healthy order book of CHF 339 million, which is 5% higher compared to last year and represents a book-to-bill of around 0.9x. This is below our expected book-to-bill over 1x in 2025. Looking forward, we maintain our 2025 outlook that we expect market conditions to continue improving over the course of the year. We continue to expect better sales, EBITDA, EBITDA margin, net income and free cash flow in 2025. I can only repeat my statement from our fiscal year results. The technology transition in 2025 is one of the key drivers of our business for this year. And based on our technology leadership in leading edge, we expect to benefit overproportionately from this transition. We have also spoken about the increasing vacuum intensity. This still holds true as the increase in process steps will drive the overall required installed process chambers, which will increase the installed VAT content in the newer fabs and drive demand for our adjacencies. In ADV, there is no change to our expectations and a rebound in scientific instruments and in industrial application will drive demand for VAT valves. We also anticipate further investment in fusion research and uranium enrichment. In Global Services, we expect upgrades and retrofits of existing fabs to pick up as fab utilization overall is high and additional demand will drive upgrades. On tariffs, we are working with our customers to find solutions to the conundrum. Valves represent a small portion of the highly complex supply chains and remain mission-critical. Therefore, we believe the immediate impact is going to be limited at this stage. What is more difficult to anticipate is the impact on the overall consumer electronics market. We are set up to outpace the market growth anticipated for 2025 and beyond. The mix is going to be very supportive, leading edge deposition and edge tools and our ability to service our customers globally. We are optimistic about the coming quarters and for the second quarter of this year, despite the FX hit, we continue to expect sales of between CHF 260 million and CHF 290 million, which at the midpoint is in line with the full year consensus run rate. We will provide more details on our strategic focus and business drivers for the coming years at our Capital Markets Day on May 20 at our new innovation center in Haag. Formal invitations to the event will go out soon. We plan to offer a plant and innovation center tour before diving into our strategy in the afternoon. This concludes my prepared introductory remarks, and we are now turning the call back to the operator for the Q&A session. Operator, please?

[Operator Instructions] Our first question comes from Meihan Yang from Goldman Sachs.

So I have 2 questions. First of all, have you seen any potential prebuy effects given there are potential sector tariffs on semiconductors upcoming according to your customer interactions? And I'll ask the second one.

I think, so far we have not seen that, but I think you are anticipating correctly, this could happen. But at the moment, it's still too volatile and changing too fast that our customers would do such action. They are also analyzing. Everybody is kind of analyzing the situation and find the right measures to answer the new challenges.

Understood. And second question is on the advanced industrial rebound that you mentioned. How sensitive is the rebound assumptions that you're having now to the macro development?

Yes, that's also a very good question. I think here we need also a little bit of crystal ball how the overall economy will evolve now and how the whole pricing overall will change. I think our Advanced Industrial business is heavily on energy. I think this -- we still see positive that this will continue. Then also on the scientific instruments that goes more also in the health care and all these. So I don't expect that there will be a big pushback. And our footprint also in certain areas that are heavily impacted on the tariffs is not that high. So overall, in VAT, it's less than 20% what we send to U.S. So I think this is also for us and again, leveling out the impact.

The next question comes from Didier Scemama from Bank of America.

I've got a couple. First, if you could give us an update on your business with the Chinese semi cap vendors. Have you seen any changes in behavior, any pull in, any pushouts of any sorts? And if you could give us a quantification of the revenues coming from Chinese semi caps? And I've got a follow-up.

Yes. China is a hot topic and the question, and I spent quite some time now in -- after the March event we had in China, met all the major customer and also a lot of new ones. So China is really a very interesting business for us with the big companies you already know, but there is a lot of smaller companies also popping up here. I have -- I sense the situation in China, it's kind of completely decoupled what we are discussing here in the West. They have their clear mission. They want to achieve this self-sufficiency in China, not only in the chip manufacturing, but also in the equipment. I think today or last year, the share of the self-sufficiency was around 20%, and this shows that there is huge potential for our customers in China to serve the domestic market going forward. And this is also what we see. They have to develop a lot of new products, tools, new applications. And there is -- I always say it's kind of a gold rush, engineering rush that they have to come up with new solutions. So it's very positive. And I really think it's kind of decoupled from all the geopolitics. They just have their own agenda and Western suppliers as VAT, we can support that and also benefit from this situation.

Very clear.

You're asking for the share. I think it was -- last year, it was roughly 30% of our total. And in Q1, it was a little bit higher in the 33%, 32%.

So to come back to tariff on the second question. So there are tariffs on Malaysia and in Switzerland, which are quite punchy. I think you've been giving us earlier your exposure to shipments to the U.S. of about 20%. Is that from Switzerland? Or is it from Malaysia? Or is that like an average that we should use as a sort of bogey for the business?

This is Fabian speaking. So the 20% are the total shipments from both locations.

The next question comes from Jorn Iffert from UBS.

The first one would be, please, on the order trends with high bandwidth memory capacity additions being in full swing. My question is, is this not something which is already supporting your order intake quite materially already today and there's just some weakness in some other legacy CapEx materializing right now. This would be the first question, please.

Yes, Jorn, I think in the -- we always have to distinguish is a build-out of capacity or also is it tech transition, right, that they are just doing upgrades. And of course, the fabs first, they are doing tech transition. So we are upgrading their tools, reusing the tools they have before they go into further capacity expansion. And this is certainly something that is holding back. And as I also mentioned before, lead times are extremely short now and everybody is kind of trying to reduce lead time and just deliver when they need and to not go into commitment for too long time, and since the situation is changing quite dramatically from day to day. I think this is -- this volatility we see and everybody is holding back. Requests from our customers on lead times is extremely short, and this certainly reflects the situation.

And then maybe a second question is a kind of follow-up. I mean, when I step back 3, 4 months ago, I mean, everybody was expecting some semi wafer equipment CapEx recovery or acceleration to call it this way already, it was not happening. Now the world is likely looking for more challenging macro picture versus 2, 3 months ago. So when you listen into your customers also at [indiscernible], I mean, what do you hear? What is the trigger point actually, which really gives you confidence that we have end market growth happening over the next 1 or 2 years on semi wafer equipment CapEx and not just maintaining in practice that these [ $95 billion or $100 billion ] in run rate?

That's certainly an interesting observation. In the past, we were always talking about the semi cycles, right? That was always the up and down in the 3 to 5 years. And I think if you analyze data today, I would say we just are going in a 3 to 4 years cycle to the next plateau. So coming from the [ $30 billion to the $50 billion to $60 billion ] and now we are reached 2 years ago, the $100 billion. And maybe we stay there this year and maybe slightly higher next year before the next big jump will happen. And potentially, this will go to the [ $125 billion, $135 billion ] to achieve the next plateau. So it's less about the swings in the wafer fab equipment. It's more about what kind of -- what kind of tools and the shifts within the wafer fab equipment that becomes more and more interesting. And we also try to elaborate that on our full year event that there was quite a shift in the last year towards more lithography and especially the, let's say, the legacy lithography tools driven by China as well. And what we anticipate now in 2025, this will level out again to the more depth and edge tools. And as you in the right way, ask before the HPM and also then the gate-all-around technology, they will ask for -- they will require more and more the leading-edge tool where our content will be high. I think this is the growth story. So even if the $100 billion wafer fab equipment will remain on that level, VAT is in a position that we will outgrow the market. So we will have this significant growth in 2025 through this technology shift in the wafer fab equipment.

The next question comes from Sandeep Deshpande from JPMorgan.

Two questions, if I may. I mean, in terms of the order intake in the first quarter, I mean, you've seen this weakening of the orders. I mean, is this because, I mean, what is happening macroeconomically? Or is it something else that you saw during the quarter, which is making it happen? Also your revenue in the first quarter was at the bottom end of the guidance. Normally, I mean, you guys are pretty good in achieving what you have guided at the midpoint. So can you just give any indications of what -- how it played out in the first quarter? And I have a quick follow-up.

Yes. I think you gave the answer already in your question somehow. It is really this macroeconomic, these uncertainties that coming in. And it's not only one, it's several factors that play in here in the industry itself. So kind of the reshoring activities, not every company is in, let's say, in best shape or had some changes internally. And then, of course, also the geopolitics playing in here as well. Tariffs is one, but also the reshoring and every region, every country want to have the chip manufacturing on its soil. So that gives a lot of opportunities for sure. It's some great directions for the industry as well, but also a lot of uncertainties. And as long as this is in this flow and changing that fast, everybody is kind of cautious and waiting until there is more security again.

And my follow-up question would be on one which was asked earlier, which was on the China percentage of your revenues in semiconductors. I mean this 30%-odd revenue that you're getting from China, I mean, the semi-cap companies in China do not have that sort of market share in the global semiconductor equipment market. So maybe how do you understand that share you have in revenue coming from the Chinese semiconductor equipment suppliers given this dynamic?

See, we have very, very long-term relationship as well here in China. Of course, just in the last year, China was growing that fast. But this is always building on a long-term good relationship with customers. And I think if you have done your homework 20 years ago, and here I'm grateful for the former management as well, that they were wise enough to also start working with them and that's kind of stay close to the customer, support them. That's very important, especially also if the business at the first is not that attractive. It doesn't look that attractive that you are very close to them and support them. And I think that's now where we benefit as well, this trusted long-term relationship and of course, the technology they need. They are on a technology path now in China. They want to achieve in the next 5 years, the Western world maybe have done in the last 10 to 15 years. So coming from the 28-nanometer node down to the 7 or 5-nanometer. And in China, this will go much faster. They will also have their challenges for sure. Not everything will go smooth, but they will find a way to succeed on that road map. I think our -- not only VAT, but also other suppliers, component suppliers will benefit from that since they deliver quality, proven quality products into China and can support them partially on that journey.

The next question comes from Aziz Nabeel from Redburn Atlantic.

I had 2 questions, if I may. Firstly, just on gate-all-around. So how is the supply chain looking in the gate-all-around ramp? And for a ramp in the third quarter, fourth quarter, when do you expect to see orders pick up?

Yes, gate-all-around is certainly very -- from technology side, very, very interesting. So this goes down to the 2-nanometer in the next phase and also to the 1-nanometer where even more equipment will be required. So what gate-all-around means is that there will be more process steps required to produce or to process the wafers. And a lot of more, for example, ALD or ALD process step, so leading-edge process steps where VAT has also a higher share compared to the legacy tools. I think this is what we will benefit. The build-out will be certainly driven by one major fab, the leading one. And if you see the -- what kind of chips they are producing, they are really focusing always on the leading edge and the build-out will happen. And also there, they have a very nice announcement about the spend they will have in the market this year. So that's certainly what's driving that, and our customers will benefit from that with the leading-edge tools and VAT will benefit since we are qualified on these tools.

Okay. Great. And then I guess on my follow-up was just another one on China. So ASML yesterday commented that China demand held up better than expected. I was wondering how you see overall China WFE spending this year, whether you feel like it's trending better than expected and whether you expect it to be relatively stable this year for small down this year?

Yes. Of course, our business cannot be compared to the OEM business directly. But yes, that China, we also anticipate that the wafer fab equipment overall will be reduced in China this year, let's say, 20%, but will be still on a very high level. But even on this reduced wafer fab equipment, the domestic OEM will win. And this is where we will grow in China through the domestic OEMs.

The next question comes from Michael Inauen from ZKB.

Just 2 questions on the -- first on the order intake Q1. How has it evolved actually month-over-month? Has it actually just basically stopped like a shock that we could have anticipated with the President of the U.S. just bringing up this tariff discussion to a new extreme level. So has it been okay at the start of the year and then basically dropped, I would say, a couple of weeks ago? That would be my first question. And the second question would be, I mean, the discussion is obviously still ongoing on tariffs. There is a 90-day pause, but between the U.S. and China, it's still escalating, I would say. So what are your assumptions for VAT for a good outcome of these? And what would be actually a bad outcome for you going forward? So how should we -- how should we look at these basically options that we have on the table here? This would be my 2 questions.

Thank you, Michael, for the question. So on the, let's say, order pattern throughout Q1, I wouldn't see any specific driver here other than the genuine underlying demand. So what you usually observe in Q1 is that you have a slow start, then you go into Chinese New Year, which usually has an effect on your Feb numbers and then March picks up. And I think that has been not much different than what we have observed in the past. On the tariffs, I think that the way I look at this is on our own plate and that we, let's say, symbiotically work with our customers on solutions and at the same time, do everything possible to ensure that the tariff impact on our financials will be limited. So I think I'm not in a position at all to kind of now look in the crystal ball and anticipate what might happen. I think we, on our side, we just need to be prepared and then react as we have done in the past and also going forward while staying very close with our customers and elaborating the solutions jointly.

The next question comes from Craig Abbott from Kepler Cheuvreux.

Yes, I just wanted to -- on the full year conference call, you indicated that you felt quite comfortable with consensus top line growth for this year of around 20%. And if I look at the midpoint of the Q2 sales outlook and I add that to the Q1 sales, it suggests nearly half of this has already been achieved in H1. And you said from the beginning and also on the conference call that you expect Q2 to be stronger with the ramp starting to pick up pace. And I just wondered, given all the uncertainties that we've been talking about in the call, how comfortable you still feel that you suggested earlier in your comment that it was still sort of trending in line with consensus. If you could just elaborate a bit on that. But -- and also just as a final question on that, I guess, though it would nevertheless be fair to say visibility on this has maybe declined a bit. And then just one really quick follow-up.

Yes. Thanks for that question. I think I also tried to indicate that in my introductory remarks that we still are very positive that we can achieve not our guidance, but the consensus that is out in the market and that we have -- we are on the run rate now to achieve that. Yes, the uncertainties, of course, they play in, but not only the tariffs or the reshoring. I think the industry itself, the demand will be there. So semiconductors are on the path to grow to this $1 trillion as well. So investments will be needed. The exact timing of the investment is always the big challenge. But certainly, there will be major capacity expansion, especially new technology going forward already this year as announced by the big fabs earlier this year. A big impact, of course, we also have the FX. I think that's certainly something that's critical to us always being in the -- still major of our business in U.S. dollars and heavily impacted still on the Swiss franc. That certainly is something we have to watch carefully, but it's not completely in our hand. But I think with our global footprint, we also started already in the past to balance that out that we are less dependent on that as well. But short term, still, there might be a hit on that, as I indicated as well. So that's why the guidance, if you read that correctly, it's actually a growth, right? So it's a growth in the Q2, if you would normalize that in the FX.

Well, that was going to be my follow-up was to what extent maybe the recent FX volatility has led to this wide guidance range on the sales for Q2. I appreciate you said you would give us more of an update with the half year numbers, but that is the case, right? You sort of...

Basically, what also in my speech, I had confirming actually this consensus for 2025 so far.

And Craig, maybe let me just add to that also for the benefit for the other participants. So as we have informed earlier on, we have actually less than 2% of our sales are recognized in Swiss francs. And therefore, in this utterly volatile environment with the intraday swings that we have observed over the recent days, we have chosen then also to expand this guidance range a little bit, which I believe is mindful at this point of time, but still implies some growth for Q2.

The next question comes from Martin Jungfleisch from BNP Paribas.

I have 2 questions, please. The first one is on inventories. You mentioned that slightly higher-than-expected customer inventories in semi also contributed to slightly lower orders and sales in the first quarter. Could you point out any specific customer group that has seen elevated inventories? And would you expect this headwind to sustain in the second quarter on orders and sales as well? That's the first question.

On inventory, I think it's not -- well, it's not high that inventory. So it's just also kind of sometimes balancing out and when the customer takes the goods or so that can have an impact on the finished goods. And of course, in general, it's also that we also prepared, of course, to deliver, as we mentioned before as well, lead times are very short. You also have to be prepared to deliver fast and then you have to also have the long lead item in your inventory. And in the end, it's all about the rebalancing.

Okay. And the second question is on adjacencies. Just if you could disclose the rough revenues and orders generated with adjacencies in the first quarter? And if you could call out any specific applications or customer groups that are currently driving sales and orders for that?

I understand this is a very interesting question. So I think we have the answer on that in our half year's result and not in the quarterly.

The next question comes from Michael Foeth from Vontobel.

Just one question left for me, and I would like to come back on the tariffs. You say that you expect no material impact, but still you have these 20% sales into the U.S. So I was just wondering how we should read that comment? Do you expect basically no tariffs? Or do you expect exemptions? Or do you expect to pass the tariffs on? Or how should we understand the comment that there is no impact from tariffs on VAT?

I think the array of solutions is what you just introduced. So ultimately, as I said before, we're working closely with our customers on solutions to limit the impact. And I think there's a range of mitigation elements in here, which we will apply.

Okay. I think that goes in the same direction as what ASML, I think, also alluded to.

The next question comes from Lavric Nejc from Octavian.

The first one would be on the book-to-bill. If we look at it, it's probably the lowest since 1.5 years. What do you expect for the coming quarters? I mean you have this historically heightened backlog, almost 40% of your sales. Could this go back to maybe 20% that we've seen pre-COVID? So maybe a bit more reserved order intake, but still strong sales as maybe your guidance implies at least on the upper end? That would be my first question.

Yes, we are expecting that we go back to a book-to-bill of around 1 in Q2.

Okay. And maybe in light of this, I mean, you have a CapEx guidance for CHF 90 million to CHF 100 million. You have capacity of CHF 1.5 billion. Maybe in the light of all these tariffs, I mean, are you maybe reconsidering some of these investments or maybe just your cost base? Maybe some thoughts on that.

Of course, we are constantly reassessing our investment plans to cater for any potential uptick in demand. But I would say we have set course strategically how we would like to expand our footprint, how we would also like to decouple the supply chains. I will give you an update on that in about a month from now. So overall, the game plan is unchanged and also in light now of the currency developments, which we have anticipated actually a long time ago, our natural hedging activities here will certainly also play in our favor with the footprint expansions, which we are currently driving. And therefore, for me, it is not so much about only about the capacity, but also about how we tactically strategically operate our production footprint amidst all this geopolitical and macroeconomic uncertainties.

If I may, I mean, can we understand that maybe a part of it will be going to China? I mean if I speak maybe to some other companies, I heard that maybe China wants to have more manufacturing locally. I mean you're now in Malaysia. I mean, is there any direction -- any movement in that direction or part of that CapEx going there?

Again, I think it's not the moment now to question the footprint that we have currently established. I mean, we are consciously monitoring that and the observation that other companies are building kind of a local-for-local production in China is also nothing new. So this is something that we keep in our draw that we're analyzing. And at a given point of time, we would then also consider that. But for the time being, what I would like to reiterate is that the 2 flagship sites that we are focusing on is going to be Switzerland and Malaysia as per prior communication.

The next question comes from Juergen Wagner from Stifel.

If we look at a potentially weaker macro, let's say, later in '25, how resilient would your service business be? And then you mentioned lead times are very short. Can you give us a number?

Well, first to the lead time, of course, it's always depending on the product line. But I think we are on a very low level in the 6 to 10 weeks. Meanwhile, it also depends it's a high-volume product, a new product. I think lead time is especially required to be faster in new products as well. This is typical now in this race of technology as well. Everybody has to be ready when the end users are requiring the new tools for the new processes. I think that's the biggest challenge in lead time also in connection to the engineering part. The second one was...

On the resilience of your service...

Service connect to consumer. I think our service business is heavily connected, of course, to the fab utilization. I think that's the most important. And for example, for the high bandwidth memory there is capacity booked for the whole year. That's certainly a positive sign. Also from other large fabs in the logic and in the foundry business, they are fully booked for the leading edge. So this means they will do certainly keep maintaining their tools but also do expansion. I think these are still the positive signs we see that especially also in Japan and Korea. Korea for a typical semiconductor country. Japan, not any more than #1, many years back. They also are up in the service business quite a bit. And also here, it's very important to stay very close to these customers, to the fabs to serve them also globally. And I think that's also a strength of VAT that these global customers can benefit from our global footprint.

The next question comes from Nigel van Putten from Morgan Stanley.

Just starting with a clarification. Last quarter, you said you're comfortable with consensus and explicitly said, which is looking for 20%. So when you're saying you're still comfortable with consensus today, to what number are you alluding to? I think you said before you're annualizing the second quarter, the first half will get you to consensus that implies 16% to 17% growth. Is that correct? Or I'm missing something here?

The same number, yes.

So which number? Sorry, but can you just make that really clear.

Well, Nigel, around [ 11.40 ], I mean, maybe there will be some adjustments to the consensus by you guys after today. But of course, there's also a bit of FX consideration in there. So, we'll see.

No, of course. Now I'll tell you, I mean, the consensus for the fourth quarter, I mean, consensus since moved. And you've also provided an average compiled consent as a median. We have Bloomberg visible of the consensus. So it would just be helpful to just get the number because confusing.

Yes. It's Bloomberg and it was the [ 11.40 ] back then.

11.40 back then, you're still comfortable. Okay. So when I -- that would imply sort of growth in the second half, but -- and you've mentioned FX, right? I mean, perhaps can you remind us sort of what the percentage is of sort of U.S. dollar in your sales mix typically?

Yes. The U.S. dollar accounts for about 65% in our...

65%, right, yes. And against the Swiss franc, we're talking to almost a double-digit headwind as of sort of current levels. So that's quite steep. So is there anything that's sort of offsetting that in terms of you're still being comfortable with sort of the 20% growth into the full year?

Yes. But remember that in the sales recognition, you take the year-to-date average. So we started quite high, still above [ 90% ]. And so that takes quite a while up until this comes down. So at this point of time, I would estimate if we look at it on a like-for-like basis, that the FX impact full year is still below 5%.

Yes, but strengthening into the second half. So I'm just asking specifically to the second half seems to imply then that growth from the first half, even though the macro situation, et cetera, is tricky. So -- and given you tend to have quite short lead times, I'm just asking, is there anything that gives you confidence that the second half would indeed sort of grow both organically and even offset the FX sort of headwind that's going to strengthen in the second half.

We always have in our mind that we -- that the industry has this $100 billion wafer fab equipment. That's our assumption around that. And as I mentioned pointed out before, there will be a share on the leading edge as well, and this is fueling our growth. And also mentioning before that China, we will grow also in China, even though the wafer fab is smaller there, but our growth will be there as well. So I think this comes together. It's not one element, but the different element that makes us really positive that we will have this growth in 2025.

Yes. So sorry to press the point, but I think this is indeed very consistent with what you said last quarter. But since then, we've seen the macro environment worsening. We've seen FX worsening. So I'm saying you seem to have to fill a gap here. And I'm just curious if there's anything specific you can point out that gives you the confidence.

Our confidence comes, of course, mainly on our customer talks, right, how we are very close to them and we can do in our customers, they have their customers, and they are the big investors as well.

And I think overall, it's just too early to judge all these developments. We alluded now several times to the uncertainty that we have. Let me also reiterate that we feel comfortable with the consensus, which points at about 20-ish percent growth. And where this whole FX situation is going to take us, I think we just have also here to drive at site. And at the next update, we'll tell you more. So I think that's as much as we can say now, still reiterating the fact that we do see underlying growth also in the second half year as you have rightly triangulated.

Got it. And then so you said even on -- so you're using the year-to-date for your internal budgeting, I get that now. But then looking at sort of margins considering sort of the mismatch between 65% in dollars and not producing elsewhere, should we take that into account for gross margin EBITDA forecast? Is there anything you can provide some rough color on in terms of the materiality of maybe not tariffs, but the FX on EBITDA margins?

So also here, I think we have our financial model quite comprehensively in place now, as you have seen also in recent years. We have not been vulnerable to an extreme extent to these FX swings. And I think the same also applies going forward where our hedging policy, both financial, but also natural will provide certain mitigation to these elements. And bottom line, I would also here not expect a material impact on the margin. So we stay course.

Okay. And then maybe lastly, on sort of '26 view. I think you've mentioned sort of a change in the structure of the industry towards sort of moving from plateau to plateau. Is that what you're sort of implying for '26, we should grow off the current plateau. So I guess, no more cycles, but growing from at least a stable level and potentially see growth from? Is that the best way to interpret that commentary?

I think it's still early to say, but I think for 2026, the consensus here is that it will be around a 10% growth of the wafer fab equipment will be at [ 110 ] in a positive scenario, maybe [ 115 ]. That will be certainly something we are expecting. And this also shows now if you have now this block of 110 and have gradually growing with the shift, as I mentioned, towards more leading edge, this is the growth story that's underlying to our numbers.

The last question for today's call comes from Martin Marandon-Carlhian from ODDO BHF.

The first one is on ALD. Could you give us maybe a bit more color on how ALD valve sales were ramping up in Q1? And in the sequential decrease of orders in Q1 versus Q4, did ALD valves orders have decreased as well? And I have a quick follow-up.

So you're talking about the advanced industrials. Is that correct?

No, I'm talking about the valves specifically for ALD applications.

Well, of course, this is a new product introduction, new products we are coming -- bringing in. So this is how it goes in the semiconductor industry. You start with lead customers to qualify that, develop the technology, the portfolio. That's a journey to go. We had fantastic spec wins in the past and certainly on the leading-edge tools, but it will take time, of course, until this will be in higher volume. That's why we always say this is kind of our Horizon 2 initiatives. We are very proud on that. It's engineering work, fantastic products going to the market. But so far, we do not disclose numbers on individual product families.

Okay. And maybe for my follow-up on China. On a broader view, what do you expect from China in 2025 and 2026 compared to maybe 3 months ago? Because obviously, inventories to COGS ratio seems quite high at Chinese equipment manufacturers and you have more tariff uncertainty. But I was wondering if actually this geopolitical uncertainty could accelerate the decoupling of U.S. and China economies and actually makes you more confident on the China business going forward?

That's exactly the point and also how we estimate the situation. Already the sanctions, the technology sanction accelerated and now the tariffs are the next accelerator for the self-sufficiency in China. I think that's the program they are running, and they will not stop that. Whatever the West is doing, it's not stopping them to achieve their goals towards self-sufficiency in chip manufacturing and also in the equipment. Okay. So thank you very much. That was the last question, and we conclude our call here. We hope to see, of course, all of you at our Capital Markets Day on May 20 here in Haag. I think we have a very interesting program with factory tour, innovation center tour and then, of course, the formal presentations in the afternoon. Invitations also with logistical details will go out soon after the Easter break, you should look for this in your inbox. And we -- like I said, we hope to see all of you here in Haag. And with that, thank you very much. For those of you who have a long Easter weekend ahead of them. I wish you all the best there and have fun and despite the markets and talk to you on May 20. Thank you.

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