VAT Group AG

Ladies and gentlemen, welcome to the VIP Q1 2025 Trading Update Conference Call. I am Sandra, the call school operator. I would like to remind you that all participants have been listened only mode and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for questions at any time by pressing star and 1 on your telephone. For operator assistance, please press star and 0. The conference must not be recorded for publication or broadcast. At this time, it's my pleasure to hand over to Urs Glandner, CEO. Please, go ahead, sir.

Ladies and gentlemen, good morning and welcome to BSC's Q1 2025 Trading Update Conference Call. With me this morning in our especially open innovation center are CFO Fabian Jotze and our investor relations team with Michel Gerber and Klickhofer BigClick. After my introductory remarks, we will start the Q&A session. The whole moderator will paste 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 against March 4th. Following the full year results, we had great discussions during our Zurich and London roadshows. We have focused on the technology and anticipated shifts relevant to our business this year. Since then, I've spent a lot of time with customers, namely 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 locations they need us. And with ever-shorter mean time for engineering and new product introductions, nothing has changed there. My takeaway from these discussions is that our customers However, a new arrival has become relevant to Haris. Haris are likely to impact the demand for and pricing of consumer products. The exact magnitude is difficult to estimate right now. Nonetheless, the advancement of the next generation of chips and thus here his core growth driver is still in place. The overall demand for semi-conducted chips and therefore but we are seeing a slowdown in order impact of around 10% in the fourth quarter. This is due to the high level of confrontancies caused by the geopolitical situation and, for example, announcement of potential factory reshoring. The semiconductor supply chain is on a stand-by 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 stand-by for deliveries. As we mentioned previously, we have seen a recovery for BSU from the bottom in 2023. The market seems to have fluctuated in the past two years around a record waiver-fed equipment of around $100 billion. It will be the mix of applications that will rise as it grows going forward. In this investment announcement 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 investment 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 before. Again, the volatility from uncertainty in global trade has been easing 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 had still expectations of a recovery and growth in our NDP business during this year. Global services completes the picture. Demand for consumables and repairs remains at the same level as in the fourth quarter, and fat 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 wealth, is related to uncertainty around investments in upgraded waste repair equipment. Let me repeat what I said as a full year result. 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 development in global trade. Second, we are progressing with our capacity and feasibility expansion. In heart, we just moved into an 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. Third, the thesis of the $1 trillion semiconductor sales in 2021 not even accelerated by additional AI investments in the years to come. The TUNAR meter adoption is in progress in logic, HCM capacities are fully booked in 2025, and our customers are preparing to introduce NAND shifts with more than 200 layers. All of these trends require a shift in wafer fabric business to a much more leading edge with higher backroom comfort. Let's turn to Q1 results that we published this morning. Q1 order intake of 242 million Swiss francs represents a modest improvement from last year's Q1 numbers. Group net sales came in just above the bottom of our guidance range for Q1 at 275 million Swiss francs. Compared to Q1 last year, our daily sales went up 52%, which ties back to what I said previously. Our semi-voucher business is doing well.

but we are still anticipating growth to pick up from there. The season against U.S.

product swings, especially against the 3 francs, have only taken place in the past two weeks, which means we will talk about this at the half-year call and thus the ethics impact during Q1, but only around the negative 1-2%.

We maintain a healthy order book of $339 million

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 years. We continue to expect paper sales, EBITDA, EBITDA margin, net income, and free cash flow in 2025. I can only repeat my statement on 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 over proportionally from this transition. We have also spoken about the increasing vacuum intensity. This can hold true at the featuring 3D-installed VAT content in the newer stacks and fast demand for power agencies. In ADV, there is no change to our expectations and a rebound in scientific instruments and the industrialization will rise demand for VAT buffs. We also anticipate further investment in fusion research and uranium enrichment. In global services, we expect up to to pick up, as head utilization overall is high, and additional demand will drive upgrades. On habits, we are working with our customers to find solutions to the conundrum. Bouts represent a small portion of the highly complex supply chain and remain major 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, the position 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 active shift, we continue to expect sales of between 260 and 290 million Swiss francs, which, as a risk point, 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 Market Day on May 20, at our new Innovation Engine Hub. Formal invitations to the event will go out soon. We plan to offer a print and innovation-centered 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.

Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the telephone. You will hear a tone to confirm that you have entered the queue. If you wish to remove yourself from the question queue, you may press star and 2. Questions on the phone are requested to disable the loudspeaker mode while asking a question. Anyone who has a question may press star and 1 at this time. Our first question comes from Mayhan Young from Goldman Sachs. Please go ahead.

Thank you for taking my question. So I have two questions. First of all, have you seen any potential pre-body sacks, given there are potential sacks of tariff on chemical doctors upcoming, according to your customer interactions? And I'll ask you the second one.

I think that so far we have not seen that, but I think you are anticipating correctly find the right measures to answer the new kinds of challenges.

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

That was a very good question. Thank you. We also need to be quick for how the overall economy is involved now and how the whole pricing overall has changed. I think our advanced industrial business is heavily on energy. I think this will be positive that this will continue. And also the scientific instruments that goes more into healthcare and all these I don't expect that there will be a big pushback. And our footprint also in certain areas that are heavily impacted on the turf 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 interest.

Very helpful. Thank you very much.

The next question comes from Yigie Shimama from Bank of America. Please go ahead.

Yes, good morning. Thank you for taking my question, gentlemen. I've got a couple. First, if you could give us an update on your business with the Chinese SaniCap vendors. Have you seen any changes in behavior, any pull-in, any push-out of any sort? And, you know, if you could give us a quantification of the revenues coming from Chinese SaniCap.

And I've got a follow-up. Thank you.

Yeah, China is at the hot topic and the question, and I've spent quite some time now, I think, after the margin rent we had in China, and met all the major customers 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 that are popping up here. I sense that the situation is in China is kind of completely decoupled from what we are discussing here in the West. They have a 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 they have to develop a lot of new products, tools, new applications, and there is a, I would say, 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 at EAT become Very clear, thank you. Asking for the share, I think that it was 30% of our total, and if you want it was a little bit higher, I think that 33, 32%. Thank you.

So to come back to tariffs on the second question, so there are tariffs in Malaysia and in Switzerland, which are quite fun shoes.

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? More than you do, it's Bobby I'm speaking. So the 20% are the total shipments in both locations.

Okay, brilliant. Thanks very much.

The next question comes from Jörn Isert from UBS. Please go ahead.

Hi, and thanks for taking my questions. The first one would be, please, on the order trends. With high-end memory capacity additions being in full swing, my question is, is this not something that's already supporting the order intake quite materially already today, and there's software weaknesses on other legacy CapEx? am I theorizing right now?

This would be the first question, please. Yeah, I think you always have to distinguish if it's a build-out of capacity or if it's a tech transition, whether they're just doing upgrades. And of course, as I said, first they are

everybody is kind of trying to reduce the time and just deliver when they need and to not go into commitment for too long for a long time and the situation is changing quite dramatically from day to day. This is the volatility we see and everybody is holding back.

Thank you. And then maybe a second question as a kind of follow-up. I mean, when I stepped back three, four months ago, I mean, everybody was expecting some simulation and CapEx recovery or acceleration because this already was not happening. Now the world is likely looking for more calendar macro picture versus two, three months ago. So when you listen into your customers also as applied and land, I mean, what do you hear? What is the trigger point? Actually, it's really good to be confident that we have MR controls happening over the next one or two years on similar equipment tactics and not just maintaining in practice at this 95 or 100 billion run rate.

That is certainly an interesting observation. In the past, we were always talking about the same cycles, right? That's a whole year up and down into the three to five years. I think if you analyze data today, I would say it's just going for three to four years cycle to the next level. So coming from the $30 billion to the $50 to $60 billion, and now we have reached two years ago to $100 billion. Maybe this data has been here and maybe slightly higher next year. interesting and we also try to elaborate that on our four year event that there was quite a shift in the last year towards more lithography and especially let's say the legacy lithography tools given by China as well and what we anticipate now in 2025 is we will level out again with more depth and edge tools and as you mentioned in the right way as before the HPM and also then they came all around technology. They will ask for, they will require more and more of the leading edge tool that our companies will have. I mean, this is the growth story. So even if the 100 billion weight of that equipment will remain on that level,

Thanks a lot.

The next question comes from Sandeep Dishpande from J.T. Morgan. Please go ahead.

Yeah, hi. Thanks for letting me on. I have 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 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, you know, was in 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 how it played out in the first quarter? I have a quick follow-up thing.

Yeah, I think you gave, yeah, already in your question, somehow, it's really macroeconomics, it's uncertainties that are 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, best shape or has some changes internally. And then, of course, also the geopolitics playing in here as well. Terex is one, but also the reshoring and every region, every country wants to have the cheap manufacturing on its soil. So it gives a lot of opportunities for sure. It's quite a great opportunity direction for the industry as well but also a lot of pages and as long as this is flowing and changing that path 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 revenue in semiconductors I mean, this 30% on 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?

Well, I think you have very, very long-term relationships as well here in China. a good relationship with customers. And I think if you have done your homework 20 years ago, and I'm grateful for the former management as well, that they were wise enough to also start working with them and that kind of stay close to the customer, support them. That's very important, especially out there if the business as I've heard is not that attractive, it doesn't look that attractive, that you are very close to them and support them I think that's now where we benefit as well, this trust in long-term relationships and, of course, the technology they need. They are on a technology path now in China. They want to achieve in the next five years the Western world has done the last 10 to 15 years. So coming from the 28 nanometer nodes 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 clean down on their shortness. 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 support them partially on their journey.

Thank you.

The next question comes from Aziz Nabil from Redburn Atlantic. Please go ahead.

Hey, guys. Thanks for taking the questions. I had two 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? Thanks.

Yeah, GATE all-around is very, very interesting.

So this goes down to the two nanometers in the next phase and also to the one nanometer. Even more equipment will be required. So what GATE all-around means is that there will be more process that's required to produce, so to process the waste, and a lot of more The build-out will be certainly driven by one major effect, the leading one, and if you see what kind of chips they are producing, they are really focusing always on the leading edge and that build-out will happen. And also there they have a very nice announcement about the spend they will have in the market.

since you're qualified on these tools. Okay, great.

And then I guess my follow-up was just another one on China. So A.S. Nal yesterday commented that China demand held up better than expected. I was wondering how you see overall China WFC spending this year, whether you feel like it's spending better than expected and whether you expect it to be relatively stable this year or fall small down this year. Thank you.

Now, of course, our business cannot be compared to the OEM business directly, but yes, 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

Great, thank you.

The next question comes from Michael in Allen from ZKD. Please go ahead.

Thank you much. Good morning, everyone. Just two questions. First, on the order intake, Q1, how has it evolved actually, quote, month over month? Has it actually just basically stopped like a shock that we had? Could I have anticipated with the President of the U.S. just bringing up this Paris 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 Paris. 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 VAP for a good outcome of these and what would be actually a bad outcome for you going forward? So how should we look at the options that we have on the table here? These would be my two questions. Thank you.

Thank you, Michael, for the question. Good morning again.

So on the order pattern throughout Q1, I wouldn't see any specific driver here other than the genuine underlying demand. So what you usually observe in a Q1 is that you have those cards, then you go into Chinese New Year, which usually has an effect on your Fed numbers, and then March exhaust, and I think that has been not much different than what we have observed in the past.

On the tariff, I think that the way I look at it is on our own plate and that we, let's say, symbolically 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.

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 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.

Makes a good sense. Thanks, Fabian.

Pleasure.

The next question comes from Craig Abbott from Kepler Fibro. Please go ahead.

Yes, good morning. Thank you. Yeah, I just wanted to, you know, in the four-year conference call, you indicated that you felt quite comfortable with consensus pipeline growth this year of around 20%. And, you know, if I look at the midpoint of the Q2 cells outlook and I add that to the Q1 cells, it suggests nearly half of this has already been achieved in H1. And, you know, you said from the beginning, and also in this book, it's called the effect Q2 to be stronger with the ramps 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, you know, it was sort of trending in line with consensus. If you could just elaborate a bit on that. 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. Thank you.

Yeah, thanks for that question. I think I will try to integrate that in my introductory remarks that we still are very positive that we can Yes, I'm sure things, of course, they train, but not only the service or the ensuring. I think the industry itself, that's the demand will be there. So semiconductors are on the path to success. A big impact, of course, will also have the effect. I think that's something that's critical as well. It's always being in the field. Make sure our business in the US dollars and have an impact still on the Swiss franc. That's certainly something we have to watch carefully, but it's not completely in our hands. But I think our global footprint was started already in the past to balance that out. that we are less dependent on that response. 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 tumor growth. If you would normalize that, then yes.

Thank you. 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, but I have to see your numbers. But that is the case, right?

Basically, what those are might be the confirming actually discontent for 2025. Okay. Thank you very much. Great, great. Maybe let me just add to that also for the benefit for a and 2% of our sales are recognized in this range. And therefore, in this absolutely volatile environment, with the intraday swings that we have observed over the recent days, we have chosen then also to respond with a guidance range. A little bit, which I believe is mindful, at this point of time, but still implies some growth for Q2.

Okay, that's very helpful. Thank you.

The next question comes from Martin Jungfleisch from BNP Paribas. Please go ahead.

Yeah, good morning. A few questions, please. First one is on inventories.

You mentioned they're slightly higher than expected customer inventories in semi of the 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.

What do you mean with arena? I think it's not either. It's not either. It's in the three. So it's also kind of sometimes planting out and when the customer takes and in the end, it's all about the rebalancing. Okay, thank you. And the second question is on adjacencies. If you could discuss the rough revenues and orders generated with adjacencies in the third quarter, and if you could call up any specific applications for customer groups that are currently driving station orders for that. This is a very interesting question. I think we have to end from there in our half year program. Thank you.

Okay, fair enough. Thank you very much.

The next question comes from Michael from Tobel. Please go ahead.

Yes, hi, good morning gentlemen. 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 US 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. Ultimately, as I said before, we're working closely with our customers on solutions to limit the impact. And I think that 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. Thank you for that.

Pleasure. The next question comes from Laveridge Nate from Octavian. Please go ahead.

Thank you for taking my question. The first one would be on the book-to-bill. If we look at it, it's probably the lowest since a year and a half. 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 from the upper end. That would be my first question.

Yeah, we have the expectation that we go back to a book-to-bill of around one in the future.

Okay, and maybe in light of this, I mean, you have CapEx guidance for 90 to 100 million, you have capacity of 1.5 billion. Maybe in the light of all this series, I mean, are you maybe reconsidering some of these investments or maybe just your call space?

Maybe some thoughts on that.

Well, of course, we are constantly reassessing our investment plans to cater for any potential object in demand. But I would say we have set course. 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 development, which we have anticipated actually a long time ago, our natural hatching 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 these geopolitical and macro-economical circumstances.

If I may, I mean, can you understand that maybe as part of it will be going to China? I mean, if this speaks maybe to some other companies, I heard that maybe, you know, 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 capital is 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-to-local production in China is also not being used. is something that we keep in our drawer, 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 two flagship sites that we are focusing on is going to be Switzerland and Malaysia, as per prior communication.

Okay, thank you very much.

The next question comes from Jürgen Wagner from Stiefel. Please go ahead.

Yeah, good morning. Thank you. If you look at a potentially weaker macro, let's say later in 2025, how resilient would your service business be? And then you mentioned lead times are very short.

Can you give us a number? Thank you. What is the lead time? Of course, it's all

on a very low level in six to ten weeks, meanwhile, it also depends if it's a high-volume product, a new product. I think the time is especially required to be fast in new products as well. This is typical now in this race of technology as well, that everybody has to be ready The second one was service. Service connects to consumer. I think our service business is heavily connected, of course, to the fact of utilization. I think that's very important. And, for example, for the high-end memory, there is a capacity book. They have positive signs. Also from other large firms, they have the logic and the policy business. They are fully booked for the leading edge. So it means they will go, they may keep maintaining their tools for now to do expansion. I think there are still the positive signs we see, especially also in Japan and Korea. You know, Korea, of course, is a typical semiconductor country. Japan, not any more than number one 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 feds, to serve them also globally. And I think that's also a trend of VAT, that these global customers can benefit from our global footprint.

Okay, understood. Thank you.

The next question comes from Nigel from Putin from Morgan Stanley. Please go ahead.

Hi, good morning. Just starting with a clarification. Last quarter you said you're comfortable with consensus and explicitly said you're just looking for 20%. So when you're saying you're still comfortable with consensus to date, to what number are you alluding to? I think you said before you're analyzing the second quarter, the first half will get you to consensus, that implies 60 to 70% growth. Is that correct? I'm missing something here. It's the same number, yeah. For which number? Sorry, but can you just make that really clear?

Well, actually, around 1140, you know, I mean, maybe there will be some of the consensus by you guys after today. But, of course, there's also a bit of SX consideration in there. So, we'll see.

You know, of course. Now, I'll tell you, the consensus... for the fourth quarter, I mean, consensus has been moved and we've also provided average compound defense as a median. We have Bloomberg visible as a consensus, so it would just be helpful to just get the numbers.

It's Bloomberg and it was the 1140 back then.

1140 back then, you're still comfortable. Okay, so that would imply sort of growth in the second half, but, you know, and you've mentioned FX, right? I mean, perhaps, can you remind us what the percentage is of sort of US dollar in your sales mix, typically?

Yes, the US dollar accounts for about 65%.

65%, right, yes, and it goes to almost a double-digit headwind as of sort of current levels. So, that's quite steep. So, So is there anything that's sort of offsetting that in terms of you're still being comfortable with sort of that 20% growth into a year?

Yeah, 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. At this point in time, I would estimate if we look at it on an eye-to-eye basis, that the F-16 pack through the year is still below 5%.

Yeah, 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, etc., is tricky. So, and given you tend to have quite short lead times, I'm just asking if there's anything that, you know, gives you confidence that the second half would indeed sort of grow both organically and even offset the effects for headwind that is going to strengthen in the second half.

Yeah, we always have in our mind that the industry has this 100 billion weight offset equipment. That's our assumption around that, and as I pointed out before, there will be a share on the leading edge as well, and this is fueling our growth, and also mentioned but the different elements that make us really positive that we will have these goals in 2025.

Yeah, I'm going to try to pass the point, but I think this is indeed very consistent with what you said last quarter, but since then, we've seen the metro 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 to be able to... Our confidence comes, of course, I mean,

Overall, it's just too early to judge all these developments. We alluded now several times to the uncertainty that we have, and we also reiterate that we feel comfortable with the consensus which points at about 20-ish percent growth, and where this whole ethic situation is going to take us, I think we just have also here to drive a sight And at the next update, we'll value 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, as you said, even on the year-to-date for the internal budget, I get that now. But then looking at sort of margins, considering sort of your mismatch between $65 million that you're producing elsewhere, should we take into account for growth margin, EBITDA forecast? Is there anything you can provide some rough cover on in terms of the materiality of maybe not tariffs, but what's the effects on EBITDA margins?

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 any extreme extent to these ethics swings. And I think the same also applies going forward, where our hedging policy, both financial and also natural, will provide certain mitigation to these elements. And bottom line, I would also here not expect a...

material impact on the market, so we stay close.

Okay, and then maybe lastly, on the 26th 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 26th? Does it grow off the current plateau? I guess no more cycles, but what's growing? at least a stable level and potentially see growth. That's the best way to interpret that comparison.

Thank you. I think for 2026, the content of here is that it will be around the 10% growth at a very stable level. It's just 1 out of 10 in the Portuguese scenario, maybe 1 out of 16. That will be certainly something we are expecting. And it also shows now, if you have now this block of 1 out of 10 and have a where we're growing with the shift that I mentioned that was more leading edge. This is the growth story that's underlying to our numbers.

Okay, thank you very much.

The last question for today's call comes from Martin Marandon Karlheinz from OdoBHS. Please go ahead.

Hi, thanks for taking my question. The software is on ALD. Could you give us maybe a bit more color on how ALD valve states were ramped up in Q1 and in the sequential decrease of orders in Q1 versus Q4, did ALD valve orders have decreased as well? I have a quick follow-up.

We're talking about the advanced industrial? That's correct.

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

Well, of course, this is a new product in production, a new product we are coming and bringing in. So, this is how it goes in the semiconductor industry. You start with lean customers, so it will qualify that, develop the technology, the portfolio, I think that's a journey to go. We had fantastic spec points in the past, certainly on the leading edge, on the leading edge tools, but it will take time, of course, until this will be in higher volume. That's why I want to say this is kind of our horizon tool initiative. We are very proud of that. It's an engineering work, fantastic product going to the market, but so far we do not disclose and numbers on individual products.

Okay, thank you. And maybe for my follow-up on China, on the broader view, what do you expect from China in 2025 and 2026 compared to maybe three months ago? Because obviously, inventories to cost ratios is quite high. You have Chinese equipment manufacturers and now you have more Paris uncertainty. But I was wondering if actually this geopolitical uncertainty could accelerate the decoupling US and China economies and actually makes you more confident on the China business going forward.

That's exactly the point. That's also how we estimate the situation. Already the sanctions, the technology sanctions accelerated and now the tariffs are the next accelerator for the self-sufficient in China. I think that's the program they are running and they will not stop.

Thank you very much.

Okay, so thank you very much. That was a long session, and we conclude our call here. We hope to see, of course, all of you at our Capital Markets Day on May 20th here in Hawke. I think we have a very interesting program with Factory Tour. Innovation Center tour, and then, of course, the formal presentation from the afternoon. Invitations, all the logistical details will go out soon. After the Easter break, you should look for this in your inbox. And we arrived at that. We hope to see all of you here in Aalto. And we thank you very much. For those of you who have a long Easter weekend ahead of them, you all the best there and have fun and subscribe to Morific and talk to you on May 20th.

Thank you.

Ladies and gentlemen, the conference is now over. Thank you for choosing ColorSchool and thank you for participating in the conference. You may now disconnect your line. Goodbye.