VAT Group AG (VACN) Earnings Call Transcript & Summary

Ladies and gentlemen, welcome to the VAT Half Year 2026 Results Conference Call and Live Webcast. I am Mathilde, the Chorus Call operator. [Operator Instructions] The conference is being recorded. [Operator Instructions] The presentation will be followed by a Q&A session. You can register for questions Webcast viewers may submit their questions in writing via the Relate field. For operator assistance, please press star and. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Urs Gantner, CEO.

Thank you. Ladies and gentlemen, and good morning, and thank you for joining today's webcast on our second quarter and first half 2026 results. Apart from this, I'm delighted to share an important milestone in VAT's long-term growth journey, our planned acquisition of Aton. Joining me today is our CFO, Fabian Chiozza, and members of our Investor Relations team. After Fabian's and my remarks, we will have a moderated Q&A session to answer your questions. . The first thing we want to cover today are the H1 results. Semiconductor markets are in a unique situation. There is a clear supply and demand imbalance. We will discuss the Q2 a record CHF 500 million order flow and the successful start to our ramp-up to support this demand. The second thing we want to share with you is an acquisition. Our press release this morning might have come as a bit of a surprise. We have been talking in the past years that we are always looking for technologies that excites us. With the signing of the SBA, I'm delighted to share that we are bringing Atonarp breakthrough molecular sensing technology into the VAT family. Together, we will create a powerful integrated offering that enables our customers to generate new value and opens exciting growth opportunities for the future. But let's start with the highlights in the first half of 2026. Next slide, please. It is impossible to talk about our business without mentioning AI and the massive investments in data centers. To be precise, however, our products are not used inside the data centers themselves, rather we benefit from the industry's need to expand semiconductor manufacturing capacity to produce the advanced chip that power them. The key driver is the growing imbalance between demand for leading-edge semiconductor and the industry's ability to supply them. Advanced AI chips require the latest generation of semiconductor manufacturing equipment operating in the most demanding back environments, yet existing fab capacity is insufficient to meet this demand. As a result, more than 140 semiconductor fabs are currently being built or expanded and will be equipped over the coming years with advanced edge deposition and EUV tools. These chip manufacturing tools incorporate VAT valves and adjacent technologies creating not only significant near-term demand in VAT products, but also a growing installed base that will generate service opportunities for many years to come. As a result, we continue to see very strong demand for our products in the second quarter, leading to a record order intake of more than CHF 500 million, First half orders increased 75% year-over-year, reflecting the industry's confidence that this growth cycle is more than a short-term AI-driven search. In the first quarter call, we discussed how we were ramping capacity to meet customer demand and highlighted our target of increasing output by 20% to 30% per quarter. In Q2, we exceeded that commitment achieving a 32% increase in output and keeping us firmly on track to reach a quarterly factory output run rate of more than CHF 415 million by year-end. To support this ramp, we focused on 2 key areas: people and supply chain. Over the past 6 months, we have added more than 700 employees across Malaysia, Switzerland and Romania. At the same time, we invested in strengthening the resilience and security of our supply chain to ensure we can reliably support our customers' growth plans. By executing this rapid ramp-up, we have also remained focused on the future. Moore's Law continues to be a fundamental driver of growth in our industry, and we are actively preparing for the next generation of semiconductor manufacturing equipment. Our innovation efforts are delivering results with 60 specification wins secured in the first 6 months of the year. These specification wins demonstrate how we are extending our technology leadership within our core markets. At the same time, we are investing beyond our traditional boundaries to create new avenues for growth and deepen the value we deliver to customers. So the acquisition of Aptina marks an exciting step in this direction. It allows us to look beyond the current growth cycle and broaden our value proposition to customers. By adding advanced molecular sensing and analytics capabilities to our vacuum expertise, we are laying the foundation of our integrated system solutions that enhance process control, improve productivity and create new sources of value for our customers. Next slide, please. Turning to Slide 6, we can see an overview of the performance of our business and market segments. Valves, our largest segment, accounts for about 79% of our sales which are down from 84% a year ago. Global Service has shown relative growth to 21% amid the overall high utilization rate in the fabs. With all the activity in the market, 81% of VAT sales were from semiconductor customers. Geographically, in line with the location of fab build-outs we now have 73% of our products and services being delivered to Asia. And our direct China business accounted for about 28%, down from around 35% a year earlier. As anticipated, China sales as a percentage of total sales declined as rest of world sales accelerated. Next slide. If you have met me over the past few months, you may have heard me compare our ramp-up to idle diesel engine starting up, a lot of noise, a lot of smoke, but not yet operating at full speed. With our Q2 performance, I'm pleased to say that the engine is now running smoothly. In the first half of the year, we welcomed more than 700 new volumes to VAT, consistent with our flexible operating model, the majority of these additions were temporary employees supporting our production ramp. Around 85% of the new hires joined machining, assembly, vulcanization and other manufacturing united functions. Approximately half of these employees wearing higher in Malaysia where we continue to expand capacity close to our customers. The second major focus area was our supply chain. Our teams worked closely with suppliers to secure the materials and components needed to support the ramp. This included targeted inventory buildup, both internally and at key suppliers as well as selective multi-sourcing initiatives to reduce risk and enhance flexibility. Next slide. Despite our intense focus on executing the current ramp, we remain equally committed to investing in the next phase of ET's growth. We will discuss Athena, which we believe will become an important new growth pillar for the company in more detail following the financial review. At the same time, innovation within our core business remains central to our strategy. It is the foundation of our long-term growth strengthens our partnership with customers and enables the next generation of semiconductor manufacturing technologies. In the first half of the year, we invested approximately 7% of sales in R&D. Across the organization, more than 130 development projects and are currently underway, creating a robust pipeline of products and technologies that will support future growth. Specification wins remain one of the most reliable leading indicators of our future business. We delivered another strong performance in the first 6 months, securing 60 specification wins. This success demonstrates that our customers continue to rely on VAT as a key innovation partner. The industry's technology road map remains highly compelling. While the 2-nanometer production is now being rolled out, development efforts are already advancing towards 1 nanometer class technologies, including CFET based architectures. This highlights an important point. The demand environment we are experiencing today is not a onetime event, but a part of a long-term technology cycle. The past forward is currently defined. And VAT is well positioned to support our customers through each technology node and capture the opportunities that comes its way. This concludes my initial remarks for the H1 2026 review. And I would now like to hand over to Fabian for a more detailed look at our financials.

Thanks, Urs, and a warm welcome to everyone on the line. Let me take you through the truly remarkable order momentum we are seeing in H1 2026. On this slide, you see the order development of the second quarter and half year 2026. Very clearly, the order patterns reflect the above-mentioned demand from our customers and from the fabs for new manufacturing equipment. This is, as far as we can tell, based on configurations arising from the demand for advanced DRAM and logic chips with capacity for chip manufacturing fully booked into 2027, the buildup of new fabs, including latest chip making tools from our customers are the main source of our growth in the quarters to come. Reported Q2 orders were up 40% sequentially, and we hit the record CHF 500 million of orders year-on-year. The order intake even more than doubled and grew by 102%. When we look at the order book, it increased by 50% since last reporting and was over 120% versus last year. And while we are increasing factory output constantly, 2/3 of the order book currently will convert into sales in the next 3 to 4 months. On Slide 10, we want to put the current demand momentum in historical context. Looking back, we would have seen the last peak in orders in Q4 2021 and the trough in Q1 '23. In Q4 '21, at the last peak, the order intake was CHF 434 million. We have surpassed that number by a good margin, and the record CHF 500 million order intake is now nearly 3x higher than the tough quarterly intake of CHF 134 million in '23. Book-to-bill ratio rose again in Q2 versus Q1 to 1.7x on the back of sequential order growth outpacing sequential sales growth. With regards to the business units driving this momentum, it is no surprise that both semiconductor OEM wall sales for greenfield investments as well as the global service business and driving the robust growth. With semiconductor new wall sales increasing by 134% year-over-year. Also, Advanced Industrials is showing orders up 36% year-over-year, which includes demand from scientific applications, industrial applications and power-related growth. Moving on to Slide 11. But it's not only the OEM business that is contributing to growth, as we can see, also adjacencies and global service are contributing meaningfully to the H1 results. Adjacencies are starting to slightly accelerate with growth at 5%. As mentioned previously, this is in line with expectations in both in net walls and motion components, we are seeing solid double-digit growth in products. In our advanced modules, order growth is still a bit sluggish as the advanced tools that we have been specked in or starting to be deployed in volume with the fabs. So we can expect more growth to come through there. In Global Service growth was seen across all product groups as semi spending picked up. Consumables saw solid growth as high utilization growth demand for spare gates, fabs for minimizing downtime, resulting in slower growth in repairs and for retrofitting or operating activity. Finally, as a reminder, the potential of global service is not fully visible yet as the growth we are seeing in OEM was really only start converting into service sales 12 to 24 months from now. Let's move to Slide #12, and let's look at our profitability, starting with gross profit and the gross profit margin. For those of you who I met in the past weeks, you will remember that I have mentioned there are a number of effects that will impact our margin, making it difficult to predict H1 numbers. Overall, our gross profit for the first 6 months declined 7% year-on-year, which is slightly less than the reported 8% year-on-year decline in H1 sales. gross profit margin, however, went to 66.6% compared to 65.5% last year. You will remember our mention of net working capital reductions last year, impacting our margin, which reversed again this year. Further tailwinds to the gross margin came from our continuous improvement programs. As headwinds, we experienced mix effects in combination with unfavorable FX, especially from U.S. dollar, Japanese yen and Korean won impacting our net sales. Let's move to Slide 13. As mentioned to you in our meetings in the past weeks, we expected EBITDA margins to reflect the stage of the ramp we are currently in. We achieved 29% in H1 26 compared to 29.6% last year. The main reason that we are below our target bank currently is the front loading of the ramp costs, which is personnel expenses and other ramp-related expenses in the first half of this year. Combining this with the lower sales, we see lower cost absorption in H1 despite all our efficiency and cost-saving initiatives. However, as we have proven in the prior years, H2 can show a different profile. And given we are expecting further sales growth, operating leverage will materialize in H2 this year. Let's move on to Slide #14, please. Taking a step back and reviewing H1, we were quite busy at VAT this year. We transitioned our organization from ramp ready into ramp mode, adding more than 700 colleagues, especially in the production sites, Switzerland, Malaysia and Romania. We work with our suppliers to have to bring their capacity online to support our manufacturing. We also have been continuously optimizing our setup and equipment across our sites. While adding 22% new colleagues and increasing our sales by more than 30% quarter-over-quarter, we have maintained a margin in line with prior years. We have the same proven recipe that applies here, our ability to drive efficiency gains from our Darwin program. This capacity expansion is not without costs. In addition, we are mitigating the impact of any cost inflation where we can. And for us, these are not expenses, but investments in our ability to deliver profitability and free cash flow as the operating leverage materializes. Finally, in H1, we have been preparing the acquisition of Opto Nor, an important future driver of growth for VAT in the future. You're excited about bringing in this additional growth pillar to the VAT Group and that we have been able to secure an attractive financing package for this asset. For the second half, I foresee the following: as mentioned, just prior to the expenses in H1 are investments for our ability to deliver profitability in H2, and I'm confident that we will achieve the target I mentioned in the full year conference call of being in the upper half of the lower half of our guidance band, but this requires continued discipline and monitoring and are working closely with our operations to understand their needs around capacity, the output they can achieve and cash. This is a truly unique ramp environment we are in and 1 that is likely to persist. And as they say, it's not a sprint, it's a marathon. We have to pace ourselves. Finally, the wildcard is the geopolitical macroeconomic environment, which remains unpredictable and volatile. Not only does this impact our supply chain, but also on our sales and foreign currencies. We are always thinking about creating additional resilience against the FX impact. For example, we added the most off in Malaysia in H1, growing our team there by nearly 40%. The unforeseen effect of geopolitical developments as in commodity prices, which have been impacted by the global uncertainty in which we are also monitoring closely from our side. That's it for me, and looking forward to a further exchange with you in the Q&A. But in the meantime, Urs will take you through the strategic rationale of this exciting acquisition of Optonor.

Yes. Thanks, Fabian. So let's talk about this new acquisition and tenor. I am truly excited about this company. and even more about the people and the technology. Let me first remind you on the strong results we have delivered over the past years, increasing our market share, expanding our share of wallet and driving sustained revenue growth. Our ambition through 2029 is clear. So we want to grow our core valve business by further increasing our share on wafer fab equipment tools while benefiting from the rising number of process steps and increasing vacuum intensity. And we want to expand our share of wallet through our adjacent components and subsystems. Until now, we have been cautious in discussing our growth opportunities beyond 2030. Today, we can be more specific. As semiconductor manufacturing becomes increasingly complex, success will depend not only on enabling advanced back environments, but also on providing the technologies that allow customers to precisely monitor and control their processes in real time. Feed forward pressure control and gas flow control are areas where we already have a strong presence. But as the industry moves to 2-nanometer, 1 nanometer and beyond our customers require even deeper processing side and control at the molecular level. That is the strategic rationale behind Atonarp. The acquisition expands VAT's technology scope from vacuum solution into advanced process sensing and analytics. It creates a new avenue for growth beyond our current portfolio and it will enable customers to solve some of the most critical challenges in next-generation semiconductor manufacturing. The next slide, Atonarp was founded in 2009 to develop a new generation of miniaturized spectrum in red. The key advantage of the system is its ability to measure gas composition in real time directly within the process environment, which means integrated in the chamber. This gives customers visibility into what is happening during critical process steps and enables them to make proactive adjustments to process receipts improving both yield and process stability. As the industry moves to sub 2-nanometer architectures, this capability becomes increasingly important. Many of the new manufacturing steps required for these advanced nor cannot be effectively monitored with existing technologies. With the Aston product family, customers will be able to transition from conventional time-based process control to adaptive chemistry-based control. They can make decisions based on actual molecular conditions and process outcomes, enabling higher precision, greater consistency and improved manufacturing performance. Through this acquisition, VAT's capability beyond the vacuum solutions into advanced process sensing and control. Next slide, please. Our customers will benefit from the combination of the stent sensor family with VAT's existing technology portfolio, as illustrated on this slide. In green, you see our established OEM valve solutions, which continue to evolve and support the most advanced semiconductor manufacturing processes. In blue, you see our adjacencies where demand is now accelerating with the deployment of the latest generation of semiconductor tools. And in purple, Estel adds a critical new capability real-time process sensing, effectively providing the eyes into processes that today remain largely been visible. Next slide, please. Based on this, we believe this transaction represents a major step forward for both VAT and Atonarp, with each company bringing highly complementary strengths with the partnership. We gained access to a unique technology platform but would be -- would have been difficult and time consuming to develop internally, and we can prepare the next chapter of the VAT growth story. This is about positioning beyond the next 3 years. We have identified a critical future need in semiconductor manufacturing and are investing in technology that will help our customers continue pushing militarization towards its physical limits. For Atonarp, VAT is the ideal partner to accelerate commercialization. The first Estel systems are already deployed and VAT's deep customer relationship, strong market position and proven specification win track record provide a powerful platform to scale adoption across the semiconductor industry. VAT also brings world-class industrialization and manufacturing capabilities while Atonarp developed their breakthrough technology, VAT's global manufacturing expertise across Switzerland, Romania and Malaysia provide the scale, quality and operational excellence needed to support broader market adoption. So in short, Atonarp brings unique technology and VAT brings customer access, manufacturing expertise and industrial scale to unlock its full potential. Together, we are creating a stronger platform on long-term loads. Next slide, please. Let me close this section with a brief note an overview on the transaction terms. We are excited to move forward and we'll provide updates as we progress towards closing in the coming months. Given the nature of the transaction, we do not anticipate any significant regulatory hurdles and expect a straightforward approval process. Finally, I would like you to take away 3 key messages from this transaction. First, Athena is a continuation of the strategy we presented at our 2025 Capital Markets Day. We will continue to drive organic growth through our core valve and adjacency portfolio. Second, we recognize that not every critical technology can or should be developed internally. Atonarp spectrometry capabilities are exactly the type of differentiated innovation that will become increasingly important as semiconductor manufacturing advances beyond the 2-nanometer node. This acquisition brings us technology and expertise that would be difficult and time-consuming to build ourselves. And third, the success of this transaction should not be measured by near-term accretion, dilution or cost synergies. This is fundamentally a technology and capabilities acquisition. It strengthens our position in the semiconductor value chain and expands the opportunity available to VAT beyond 2030. Ultimately, the true measure of success will be our ability to translate these new capabilities into future specification wins. That is what investors should watch in the years ahead. Next slide, please, the outlook section. The best proxy to start the outlook section is always the estimates for wafer fab equipment spending, which in both 2026 and 2027 have continued to move higher. This is confirmed by our customers, which are providing increasingly positive signals regarding demand visibility over the coming quarters. Current market consensus points to a wafer fab equipment market of approximately USD 145 billion in 2026. This growth is being driven by the massive investments, hyperscalers are making in data centers, creating extraordinary demand for high-performance chips. The challenge remains that semiconductor manufacturing capacity has not kept pace with demand. To address this gap, more than 140 fabs are currently being built or equipped through the end -- are now entering production. The next node transition, including 1.6 nanometer and 1.4 nanometer technologies, are already on the horizon. These trends reinforce our conviction that the growth story we have been discussing for several years is now unfolding. Demand is strong. Capacities being added at high pace and the pace of semiconductor innovation remains as compelling as ever. Next slide please. The latest surveys indicate that approximately 140 semiconductor fabs are currently under construction or being equipped worldwide. Current wafer fab equipment forecast already highlight a federal path towards USD 200 billion annual wafer fab equipment market that many industry observers anticipate for 2028 and beyond. Assuming an advanced logic, a memory fab requires approximately USD 10 million to USD 20 billion of equipment investment, the fabs currently planned represent a cumulative fab equipment opportunity that exceeds USD 1 trillion over the next few years. In addition, we expect new semiconductor manufacturers and initiatives to enter the market. These new entrants will require substantial manufacturing infrastructure, creating an additional source of demand beyond the expansion plans of today's leading chip makers. These factors give us confidence that the current investment cycle is supported by strong structural drivers and that the long-term growth outlook remains highly attractive. Coming to the last on outlook. Based on the positive market backdrop and our strong operational execution, we remain firmly on track to achieve our 2026 target and to reach our planned quarterly factory output run rate of more than CHF 450 million by year-end. Growth will continue to be driven primarily by our semiconductor OEM valve business, supported by strong contributions from our Global Service segment benefiting from high utilization rates as well as from semiconductor-related markets within ATV, including our semiconductors and inspection. As a result, we expect 2026 to be another record year for orders, sales and free cash flow with higher EBITDA, EBITDA margin and net income compared to 2025. For the third quarter of 2026, we expect sales in the range of CHF 355 million to CHF 385 million. Looking further ahead, the continued increase in wafer fab equipment forecast has strengthened our confidence in the market outlook. As a result, we are currently reviewing our 2027 targets. While all indications point to 2027 being another good year of growth for VAT, we do not yet have sufficient visibility into customer ordering patterns to quantify the magnitude of debt growth this the precision we require. We will provide an update as soon as visibility improves, and we can do so with confidence. With that, moderator, please open the line for the questions.

[Operator Instructions] Two questions. So first of all, AC's growth is expected to grow at 24% according to your consensus, but your orders have been clearly outgrowing that number. So just wondering, are you seeing any double ordering pattern from your customers? And the second question is if we're looking into 2027, when are we likely to get an update given that your lead time is still probably around 3 months. So how would you feel comfortable about guiding your 2027? And if you could help us break the bridge of second half margin. If I listen -- if I get it correct, it's the upper half of the lower half of the full year guidance in terms of operating leverage and FX? And are you planning to do any further ramp up?

Well, thank you for the questions. I can take the first one. the outgrowing about the wafer fab equipment market. If you are in a ramp phase, the order patterns is also changing over time. So the customers are more open to open their order windows as well. So when it was traditional, let's say, there's 3 to 4 months, it goes now more to the 3 to 6 months. And of course, this has a huge impact in the one of the quarter. So it's more that they get more visibility, and they prepare everybody is preparing the supply chain for the ramp-up and the delivery is the same. We are doing with our suppliers as well that also we are opening up the order we know that they can bring in the material time. And the second question was about the 2027. As mentioned, well, I think all the vectors are very, very positive. So we have a very good feedbacks from our customers but it's still quite challenging to say how this will turn then into the sales in 2027. For sure, everything points into a growth year. Similar magnitude we have this year. And if you see now where we want to go with the run rate of CHF 450 million quarterly run rate then you can calculate roughly where this could end up in 2027.

And then let me just maybe complement on your third question on the margin expectation for the second semester. So with our current consensus seating at around CHF 1.3 billion. We're looking at a sales increase of more than 50% with the more than 700 people that we already added into the system. I do not expect any significant additions, somewhere between 10% to 15%, maybe in the production environment. And based on that, the fixed cost absorption will significantly increase. And then also the operational leverage overall will kick in. I do expect that the negative effects such as inflation, for instance, will stay around the level where we have seen it in H1, and then also our continuous improvement program usually has a steeper contribution in the second half. So bottom line, whereas we will end up in the upper half of the lower half of the full year EBITDA, I would expect that EBITDA for the second semester will be in the upper half of the upper half of our margin band.

My first question is going back to the orders. Just curious, some companies in the supply chain, we're talking about potential price increases. So is this something that may potentially be seeing in terms of order activity as customers potentially prebuying a bit ahead of potential price increases?

Thanks for the questions. No, at the moment, the demand is here, it's not driven by the threat of price increases at all. So we really see the demand of wafer fab here. And everybody wants to secure the supply, and that's why often the orders.

Got it. And my second question is on the $450 million run run rate. I guess we can presume that, that will kind of be the capacity run rate for the entirety of Q4. And then going into -- and then extrapolating that into next year, let's say, $1.8 billion the year, that's kind of your capacity. Where do you -- I know it's early, but like what would you expect kind of demand to be in relation to that for next year?

Need going into the 2027. And then, of course, we will see later this year how this will evolve into 2027.

Yes. So what do you expect so I guess we have a good sense of capacity. Where would you kind of expect demand to kind of be in relation to that capacity number for next year?

The run rate, I think it will be roughly at that level, and this is the factory output. Normally, we always can add some nonfactory output sales as well on top of that. So that's -- if the wafer fab equipment numbers will certainly evolve that as forecasted at the moment, I think I'm sure we need this CHF 45 million run rateSP-5.

We now have a question from the line of Sebastian from RBC Capital Markets.

I want to again ask on the -- and it's still not quite clear whether you plan to increase your capacity also in 2027. You say you end the year at CHF 450 million run rate. You say you expect more growth next year. So what from base perspective, would you say you will add more people in production in 2027. So we ended at, I don't know, CHF 500 million, CHF 550 million by the end of next year in terms of

Certainly, at the moment, if you look more in the midterm, into 2028, plus then the industry is at the moment, pointing to growth. But I think you all know that's quite far out. But we have certainly want to make sure that we have enough capacity to manage if this is materializing. So yes, you can expect the positive momentum remains and what we hear from our customers that they also want to double their companies by 2028 and beyond that. So we have to add capacity. I think there's CHF 450 million by end of the year. This is what is needed now for the start of 2 -- and I don't -- today, I would say that's not the end. But of course, we are watching out carefully how the market will evolve.

And maybe just to complement that, you need to remember that when we talk about CHF 450 million, that's our factory output. So we have between 10% to 15% of sales that's nonfactory out with that comes on top of that.

Understood. Then the other question is again on pricing. You say for this year, pricing is not the issue. At the same time, you are -- well, as we know your qualinopolist in the market, you want to deliver to your core customers, very big OEMs. They are your priority. If now a Chinese smaller player comes along and said, I need 150 wells by the end of next month or maybe 6 months out now. What are you saying to them? Are you saying, well, we can definitely deliver and let's not talk about price? Or do you say my priority is the big OEMs. This is the long-term relationship I have. If you want to squeeze into my production schedule, you have to talk price. I mean do you see price opportunities now in the next 6 months or 12 months, is a key question.

Now we're talking about the bottler. Now certainly, we have with all these large customers in semiconductor. We have long-term relationships with the Western and also with the Chinese. Everybody is ramping. We also have commitments to them. And on pricing, we remain committed always on value-based pricing as well. long-term relationships. So a ramp is always a hectic situations. You always have to balance, and what we always say is most important is that we do not create the supply chain should not create any line down. So they don't have to have a lot of products on stock. Of course, you want to have that, but it's not necessary. So that's why you're always balancing close collaboration alignment with customers, that's very intense for the -- in the last weeks, and also will will be very intense going forward for the rest of the year. And that's how you manage the business. It's less about putting money on the table, then you get that preference.

The next question comes from the line of Jon Iffert from UBS. .

I would have 2 and then a follow-up, if I'm allowed. The first 1 is coming back on your capacity planning. What would be with the current infrastructure setup you have in the 3 sites? What is the total revenue output you can handle when you would, for example, also institute niches and weekend work? I mean what is really the absolute max you can squeeze it out and the crush is directing to if semi-warm CapEx is really approaching the CHF 300 billion by '29 or 2030, how fast could you also ramp in your production side? And are you preparing for this already? This will be the first question, please. And then the second question, I know you don't have a crystal ball, but what you saw on exit rates of order intake in Q2. Would you say this was maybe the peak in terms of order intake for the next 2 quarters that all us are more flattening now? Or do you see a decline or further increases just what is your best guess would be helpful? And afterwards, I would have a quick follow-up, please.

Not sure if you get that, but okay. So the capacity today is for us a CHF 2.5 billion to CHF 2.6 billion. we can do. But of course, the operations team, all this all this finds ways to optimize. So probably it's not the complete at the end. And as you know, we still have also -- we can still expand in Malaysia. We have the A and the B, and we have not used the land on the C. So we would have kind of room to expand there as well. On the second one, the more the short term, yes, the order intake and the growth continues. But I think the level where we are will be around this number also for the Q3.

And then yes, thanks that you're allowing me a quick follow-up. And this comes back to your '27 outlook, totally I understand you don't want to quantify it. But just when I make a little bit the math, to also see the rising usage and the production steps. I mean let's assume FX adjusted your midpoint for the 2027 guidance was around CHF 1.4 billion billion in terms of sales based on the simulator equipment CapEx of CHF 125 billion. I mean, shall we say we take this CHF 1.4 billion, and that's, for example, CMF equipment CapEx would grow 60%. And from the CHF 25 billion towards CHF 200 million, for example, that we also should take the CHF 1.4 billion to crore 60%? Or is there anything wrong in this approach?

It's a good model yes. But I don't want to speculate now on the number, but certainly, the wafer fab equipment growth will help dramatically. And then also which kind of equipment is going out, that should also be in our favor at the moment. that we say more leading edge is going online. So yes, it's not completely wrong, but you how you take it.

Yes. And then you're always distinguish please between what is demand and what is the revenue recognition because we know that the industry will have, it's constraints and how much it can digest in any given year. So when you do the math, I think where you're heading with your thoughts on underlying demand, yes, Urs just confirm that, but it's not equally translate in any given fiscal year into revenue.

We always also capacity constraints out there as well. in output for our customers.

We now have a question from the line of Craig Abbott from Kepler Chevreux.

I just want to focus my question, please, on the acquisition of Atonorp. I mean, you didn't provide any financial metrics, excuse me, for the business other than the acquisition price. I understand it's more about preparing for your future growth beyond 2030. But I just wondered if there's any light you can shed on for our modeling purposes on like what kind of revenue can we expect that kind of margin? And secondly, do you have an M&A pipeline beyond the Atonorp acquisition?

Yes, as you pointed out correctly, it's really a technology and capability acquisition, and it's not a revenue but as we see that this technology is unique. It's not a me-too product in the market. I think that's very important. So we just don't want just to add technologies that are already existing in the market. So we want to differentiate. And we see an inflection point. I think we will plan a Capital Market Day in the next year, we can go a little bit more in details as well but it's kind of an inflection point out there in the market, as I try to point out that for a lot of the gate all around CFET process steps, there is no sensing technology available. So basically, they are like in a dark room, they are operating in the dark room. And with this technology, we can add like eyes into the room that they can see what's happening. I think that's not existing in the market. And this is the exciting part of that. And we don't know today fully what is the potential. But knowing that semiconductor processes are getting more and more complicated, node size is going down this 1 nanometer, the industry will need such kind, and we adopt such kind of technologies if it helps them to add value and the increased yield, productivity and so on for the chip manufacturing. I think that's the underlying thinking we had for this acquisition. And again then from a financial perspective, this deal is primarily technology and IP acquisition rather than an earnings accretive transaction in the near term. Once the product scales, to high volume with all our adjacencies, it is at least within the margin rate, obviously, with some accretive potential beyond that.

Okay. And my question on the pipeline beyond -- and before we move to that, please, to follow up. I mean you say you're quite confident that the industry will adopt this technology. But I mean, do you have any visibility or you guys joined -- do they have joint R&D projects ongoing with some of your major customers? And then the second question was on the M&A pipeline beyond.