Aixtron Se Unsp/Adr

Good afternoon, ladies and gentlemen, and welcome to the conference call regarding the Q1 2024 results of XTRAN-SE. At this time, all participants have been placed on a listen-only mode. The floor will be open for questions following the presentation. Let me now turn the floor over to your host, Carsten Werle.

Yeah, thank you very much, Heike. Welcome to iXtron's Q1 2024 results call. I'd like to particularly welcome our CEO, Dr. Felix Grabert, and our CFO, Dr. Christian Danninger, who will guide you through today's presentation and then take your questions. This call is being recorded by iXtron and is considered copyright material. As such, it cannot be recorded or rebroadcast without permission. Your participation in this call implies your consent to this recording. Please take note of the disclaimer that you find on page two of the presentation document as it applies throughout the conference call. This call is not being immediately presented by webcast or any other medium. However, we will place a transcript on our website at some point after the call. And with these introductory remarks, I'd like to hand over to our CEO for his opening remarks. Felix, the floor is yours.

Thank you, Carsten. Let me also welcome you all to our Q124 presentation. As you may hear, I caught a bad cold and I hope my voice will make it throughout the call. I will start with an overview of the highlights of the quarter and then hand over to Christian for more details on our financial figures. Finally, I will give you an update on the development of our business and our guidance. Let me start by giving you an update on the key business developments of the first quarter on slides two and three. The most important messages for today from my point of view are In Q1, we have seen a strong increase in revenues and profits. Our market position in silicon carbide has been significantly strengthened throughout the last two quarters with new customer wins. We were able to win an additional top five player in ZIC. We have secured a substantial volume order from China. We could win several customers for our G10 ZIC tool, amongst them several from Japan. This is the result of the recent technical progress that we have made with this tool. Also, the other family members of the G10 generation continue to gain strong momentum. We have secured various orders from multiple customers in the micro-AED sector. The construction of our innovation center is progressing smoothly and is fully on track. Despite negative news flow from some segments of the industry, we can confirm our full year 2024 growth guidance. Let us have a look at our financial performance in Q124. I will start with our top line, and Christian will focus on the overall set of numbers. Our revenues have seen an upswing of 53% year over year, reaching 118 million euros, reflecting the high demand for our systems and the fact that in the last year some revenues have been delayed from Q1 to Q2 due to outstanding export licenses. Order intake in Q1-24 came in at 120 million euros, with the equipment order backlog remaining stable at 355 million euros, consistent with the full year 23 levels. We have experienced well-balanced demand across all the end markets that we addressed. Christian will provide a more detailed look into our financials on the following pages. Christian.

Thanks Felix and hello to everyone. Let me start with the financial highlights of our income statement on slide five. We had a good start into the year with revenues at 118 million euros up by 53% compared to 77 million euros last year. Gross profit in Q1 2024 was at 44 million, up 41% year on year. EBIT for the quarter was at 10 million euros, up by 183%, and net profit at 11 million euros, more than tripled year on year. Gross margin was at 37% compared to 40% in Q1 of the year before, driven by product mix. In Q1, We shipped a larger share of old generation systems like G4 and G5 compared to the last year. These systems come with lower margins than the new generation. To be clear, the Q1 gross margin came in as expected and fit into our full year expectation. OPEX in the quarter went up to 34 million euros, predominantly driven by higher R&D spending compared to the previous year. We are currently finalizing the development work for the G10 series while we have already started development of our next generation systems. That is why in 2024, we will see an increase of R&D expenses by a mid single digit million euro number compared to 2023. In 2025, we target R&D spending again around the level we have seen in 2023 or even below. SG&A on the other side will remain flat in 2024. Just wanted to mention that this is confirming what we said in the last results call. Now to our balance sheet on slide six. Inventories at the end of March increased further to 436 million euros from 394 million at the end of 2023. This increase is still the result of our strategy to load the supply chain early enough to secure on-time delivery of our products despite tight supply chains. This strategy was very effective in the years 2021 till 2023 and has secured us numerous orders. Now, supply chains have relaxed quite a bit and we have now adjusted our strategy and are on the way to reduce buffer stock. Based on this, we target a reduction of inventory levels by the end of 2024. The main reduction, though, of the inventory is expected in the second half of this year when we target the majority of this year's shipments. Trade receivables at the end of March were at 118 million euros compared to 158 million at the end of 2023, mainly being a result of the collection of the payments related to the large shipments in the last quarter of 2023. Advanced payments received from customers at the quarter end were 138 million euros, representing about 39% of order backlog, very much like in the past quarters. Our cash balance, including other current financial assets, as of March 31st, 24, decreased $249 million from $182 million as of December 2023. This was mainly due to our inventory buildup and the capex related to the construction of the innovation center. Out of our quarter-end cash balance, $54 million were invested into funds, where we continue to follow a very conservative diversification strategy. Turning to our free cash flow on the next slide before I turn back to Felix. Pre-cash flow in the first quarter was negative $33 million compared to $2 million positive last year. Operating cash flow was at $7 million negative, mainly due to the previously mentioned buildup of inventories. CapEx was at minus $26 million, primarily driven by the investment in the innovation center. With that, let me hand you back over to Felix.

Thank you, Christian. Before giving you some more details on our reiterated guidance for 24, I would like to continue in slide 2 and share with you our views on different end markets. Let me start with the silicon carbide market. The technical progress with our G106 system has been confirmed by multiple customers, as you may have seen in the press releases we issued with Wolfspeed and with Vishay in the last two weeks. Upgrades of our installed base of tools to the new level of performance are planned throughout the year 24. Our recent technical advancements have led to numerous new customer wins in silicon carbide, including a significant volume order from China. We were able to convince several additional customers of our tools, including an additional silicon carbide player out of the so-called top five, and several players from Japan. The G10 ZIC has established itself now as the most productive tool in the market, meeting the required specifications, the technical specifications, and offering the lowest cost per wafer. We maintain a clear number one position with a growing market share. Let me take some time to elaborate in more detail on our view about the silicon market, silicon-carbide dynamics of the market. At this point in time, the overall market worldwide has built more capacity than there is demand. At this time last year, the expectation for electric vehicle penetration was very high. And now, throughout the last weeks and months, they have been adjusted to a more realistic adoption timeline. Nevertheless, we and our customers remain very positive about the mid to long-term outlook. Interestingly, The situation at each of our customers varies strongly. Despite the overall market slowdown, some of our customers have a very strong order pipeline for silicon carbide. These customers continue their capacity expansion with large multi-tool orders, even at this point in time. In fact, at some of our customers, we have been working with them most recently in rush acceleration shipment timelines, and in rush installations to meet their strong end customer demand. It is these customers who are driving our silicon carbide volume in 24, and we also count on these customers for 25. At other customers, business is slower, and we see part of the installed base of tools idle. In the case that there are tools from multiple vendors, it is typically the EXTRON tool that, at this situation, keeps running due to our batch reactor offering the most attractive running cost. We anticipated cost pressure and commoditization in the silicon carbide market from the beginning, and our expectations are now being confirmed. This was the reason for us to decide for a multi-wafer batch tool all the way back in 2018. I would even go so far to say that the current market situation with increasing price pressure on silicon carbide devices put strong focus of our customers on selecting the most productive equipment with the lowest cost per unit, which is what our multi-wafer batch tool is offering. Hence, we see strongly increased customer interest into our tool due to the current market development. The other material system in power electronics, gallium nitride, is running well. Customers continue with their fab expansions. The scope of applications is broadening, and more and more power electronics players decide for gallium nitride as a product segment, choosing excellent equipment for their production. We are well positioned with our G10 gun, which continues to gain share with this application and more than totally meets our expectations. Let me now come to LED and micro-LED markets. First of all, in 2024, we see a wave of investment into traditional red LED capacities ongoing. We expect high double-digit Euro-million revenues in the fiscal year 2024 from this market. On micro-LED, despite the surprising news from Apple and AMS Osram in Q1, the industry continues to work on micro-LED technology full steam. We've recently reported on the Gold Supplier Award by BOE HC SemiTech, the largest Chinese display maker, and there's multiple such collaborations ongoing. Micro-LED revenues for fiscal year 24 are expected to be a double-digit million euros revenues driven by several customers building R&D and pilot production lines to commercialize the micro-LED technology. Multiple customers have placed new orders, resulting in 38% of our order intake in Q1-24. The manufacturing of micro-LEDs is challenging, particularly the mark transfer aspect. This makes timing predictions difficult, but multiple customers have confirmed their interest and the need for taking display technology to the next level beyond today's OLED technology. In the optoelectronics area, we see stable demand, which is driven by demand for datacom and telecom lasers, accounting for about 20% of our order intake in Q1. Datacom lasers are critical to data centers to meet the higher demands of AI workloads, both for intra-data center and data center interconnect requirements. We maintain a clear number one position in the laser market with a strong market share and we are very well prepared with the G10 ASP to secure this position also in the future. In summary, we are very happy with the market traction of our G10 series. We have invested into significant amounts of R&D, and as of today, we expect that the return of invest is coming even faster and stronger than expected. This confirms our strong focus on technology and innovations, which we will also continue in the years to come. In the May of last year, 23, we have announced that we will be expanding our facility at our headquarters with a new innovation center. We are excited to report that the construction is fully on track and fully within budget. We are planning to move our first system into the innovation center within 2024. With that, let me now give you the update on our reiterated full year guidance for 24 on slide eight. We are well on track with respect to our full year guidance for 24 with respect to all metrics. Hence, we reiterated our guidance for 24, which is as follows. We expect total revenues in a range between 630 million and 720 million euros. We expect a gross margin in a range of 43% to 45% and an EBIT margin in a range of 24% to 26%. Please recall that, starting with the fiscal year 24, we have decided to no longer issue a guidance on order intake in line with the other major semiconductor equipment players. We have received positive feedback on this move from several investors and analysts over the last two months which confirms our decision. However, we've added a revenue guidance for the subsequent quarter. For Q2 2024, we expect revenues between 120 and 140 million euros. In line with the typical seasonal pattern, sales in the first half of the financial year will be lower than in the second half. We have seen this pattern in several of the last years, and can confirm that this is fully in line with our expectation for the year 24, and that we are on track with respect to our revenue guidance, which we have reiterated. And with that, I will pass it back to Carsten before we take questions.

Yeah, thank you very much, Felix. Thank you very much, Christian. And I would pass it then to Heike to start the Q&A.

Eike?

Yes, ladies and gentlemen, if you would like to ask a question, please press 9 and star on your telephone keypad. In case you wish to cancel your question, press 9 and star a second time. And the first question comes from Olivia on George Jeffries. Please go ahead with the question.

Hi, thank you for taking the question. I've got a couple, if that's okay. The first one is on your new customer wins in silicon carbide. Would it be right to assume, given the low order number in Q1, that some of those new customers haven't yet officially placed their orders? And if that's the case, when could we expect them to be placed? Is it Q2 or later? I guess following on from that, I'm just trying to figure out what the latest is that a customer could place orders this year for it to still be realized as 2024 revenue.

Okay, thank you very much. Very good question, Olivia. Well, in fact, we have received those orders by now. Otherwise, we wouldn't be talking about them here in this place. However, you are absolutely right. Not all of these orders have been booked as order intake in Q1. Some have, some have not. But as your question is indicating, you will see a strong amount of silicon carbide share of the total order intake in the Q2. Yeah, I can confirm that. You're spot on. Now, with respect, when is the latest point that in 2024 customers can place orders? Well, the situation in 2024 is a bit different than in previous years. In expectation of continued further growth, we have secured a decent amount of inventories, because still in the last year, some parts of the supply chain were short. You see that in our current inventory levels, and based on that, depends a little bit on what type of tool you want. We expect some of our customers, which we have in our order pipeline, to place their orders as late as late Q3, and we still expect the unit to ship out in the year 2024. It is a bit different pattern from the past years and also a bit of a reason for the inventories that we have currently in the books.

Okay, that makes sense. Thank you. And then just my follow-up is also on silicon carbide. Your competitor, ASM, spoke about double-digit growth in their sick business this year, earlier this week. That's despite the slowdown in the EV market. Last time we spoke at your Q4 conference call, you said that you were expecting silicon carbide revenue to fall slightly this year. Firstly, I guess, is that still your expectation? And secondly, if so, how can we reconcile the differences between your outlook and theirs?

Well, I think you can reconcile the numbers if you see that currently Exxon and ASM is essentially the two companies which is currently collecting orders. If you recall in the 6-inch market, there were still some other players around which now, I mean, now all the orders are going for 8-inch, that's clear. Every customer selection, every order is now being placed in light of customers wanting to use the equipment ultimately on 8-inch, that's clear. Nobody is ordering equipment purely for 6-inch. And some of the incumbent on 8-inch, sorry, on 6-inch is no longer really receiving orders because their tools are not competitive in 8-inch. And I think that allows you to reconcile both the position that we have indicated as well as also gaining momentum from ASM. This would be my interpretation.

That's great. Thank you.

And the next question comes from Martin Moran Marayan, Adobe HF. Please go ahead with your question.

Hi, thanks for taking my question. First, on silicon carbide, on the new customer gain this morning, I'm not sure that you have this kind of visibility, but do you know, for instance, if it would be multi-sourcing there and if you would be the main supplier of this top five customer? And I have a quick follow-up.

Well, we've gained multiple new customers in this quarter that we've been speaking about. And the situation at each of these customers varies a little bit. But let me comment in general on the multi-sourcing. We are not afraid of the multi-sourcing, as I indicated, because we see that in many situations when customers have multiple pieces of equipment, in the end, they really like to use our equipment to run in full because our equipment allows to produce them at a very high productivity and low cost.

Okay, very clear. Thank you. And a quick follow-up on 200 mm. We heard recently some negative noises in the market on that topic. So could you confirm and clarify that the transition to 200 mm wafers is a clear positive and not a negative for Actron?

Yes, I can confirm. As you see from all these recent orders and what I just mentioned, all equipment orders which is currently being placed are being placed and all tool selections are being made having 200 millimeter in mind. And I think those customer wins and those customer orders that we can report are the best evidence for the statement that we have given in previous quarters where we had indicated already that our technology is working just fine. And now you see this really confirmed by orders.

And the last question, if I may, on the gallium nitride, I was wondering what are, in your view, the most important drivers for GAN this year between smartphone chargers, automotive, and servers, and how do you see GAN adoption play out in the next couple of years?

I think this is a very good question. I think GaN is getting beyond the point where you can assign the growth to a specific sub-application. We rather see that GaN has been getting very, very broad in the market and we see that our customers or the customers of our customers are using GaN devices as a general silicon power device replacement across all applications. So we see GaN penetrating in large In the 650-volt class, the consumer market was just the opening point because volume is now, I think, data centers but also automotive onboard chargers. But we also see huge GAN adoption in battery-driven devices, 100-volt, 200-volt. And not to forget, GAN is just starting now to find their way into chips for AI power supplies. not only like in the power supply connecting to the grid, so to say, but also really to make sure that you can have a down conversion and supply the individual chips and processors in a more efficient manner. So GAN is really on a large penetration and adoption.

Thank you very much.

The next question comes from Michael Kuhn, Deutsche Bank. Please start with your question.

Good afternoon, gentlemen. Thanks for taking the questions. Three from my side as well. First one on composition of the guidance. You had two points in the presentation stating that both LED and micro LED are expected to contribute high double-digit or million amounts this year. I think in that The statement was new. So group guidance unchanged, but is there any change in the composition of the guidance compared with February? So with a higher LED slash micro LED share and others expected a little lower?

Not significantly. I would say not fundamentally that there's like one segment declining and the other is coming. I mean, there's little fluctuations, of course, over the year. One customer comes earlier, the other comes later, but not structurally fundamental, as your question is indicating. However, we wanted to make the point to really bring it out that these two market segments are really continuing to contribute in this year. I think that's the point we wanted to make. Also to make the point that micro-LED continues to be significant. We had a bad news flow from one company in the Q1, which was quite a big surprise. But as I mentioned already earlier, the micro-LED momentum across the market, across the whole industry is continuing. I think this is what we really wanted to get across to you as a method. And again, it's numbers that underline this trend. It's not just some research labs and just cost, but it's really also revenue with orders that continues. It, again, speaks something that the customers are really continuing also to invest in this.

All right, understood. So no change in the growth expectation for your PowerZoom tools since February?

We didn't want to indirectly say Power is less there, but the other is filling up if you wanted to ask that.

Alright. Then one on visibility and that is in a way a follow-up on Olivia's question. So you mentioned some orders expected in Q3 and still expected to ship this year. Is there also a certain backlog currently where you have actually signed a contract but not obtained a license yet? So let's say a certain time shift in reporting the order intake, or is that not a topic anymore and following up on this? let's say, what level of visibility do you think you have for now for the next three quarters in terms of phasing of the intake and of the shipments?

Okay, this is multiple questions. I hope to sort it through. Otherwise, please chime in and follow up with a follow-on question. I take it as I got your question and then do a follow-up if needed. Overall, the situation for export license has normalized. We are back to a kind of normal situation after we had, if you remember, about this time of the year, last year, there was huge delays and so on, which was visible also in the numbers. We are back to a normal level on that one. Yes, of course, there are certain ones where we have, so to say, just applied for a license and we have to wait for a couple of weeks or a couple of months, depends always a little bit what it is, to get the license. But it's back to a normal kind of picture. And then please help me with the next one again, Michael.

Yeah, it was generally, let's say, on visibility, let's say, based on your negotiations with customers, let's say, how specific are you as of now and what visibility would you say you have for the remainder of the year?

I think this is a very good question. So I think the current market environment is a bit difficult for some of our customers. I think we all overall see that electromobility is getting a bit of a headwind due to the, I call it, normalization of expectation. I mean, it's almost like in the last two years, a honeymoon. And I think it's just a normalization of how fast an adoption can go through such a big resolution, which essentially it is. So I think it's nothing unexpected. We had expected that it comes at some point. So that's clear. And also in some of the other market segments, our customers themselves do not have such a high visibility. That's clear. And therefore, the only thing we can say is when the momentum comes back in the overall market, we will clearly, we are ready to ship. We are also ready to receive orders relatively late in the year, then take all those orders and ship a major part of that needs to achieve also the high end of the guidance. Yeah. On the other hand, if the momentum stays a bit, let's say, cool, or if customers, let's say, maintain more of a, let me call it, wait-and-see position, in that case, we would be coming out more towards the lower end of the guidance. So the full range of the guidance is possible under these two cases which I've outlined.

Excellent. Thanks a lot. And then one more follow-up, basically, on that topic. In your February call, you made... quite some optimistic statements on 2025 and actually that you are more optimistic on 2025 compared with 2024. Does that still hold 100% true or is that, let's say, any element of dilution to those statements compared to two months ago?

No, I think essentially the same statement which I made now for 24 and the orders coming in Q3 or in the summer or even Q3, going for 25. If the momentum continues to pick up, then 25 will be what we've indicated a clear growth here. So to say if the momentum, we have to wait a little bit for the momentum, then we have to all wait a little bit. But I think we are better positioned than before. to catch the momentum, especially in silicon carbide, as you have seen now.

Excellent. Thanks a lot.

And the next question comes from Marilyn Jenkins, UBS. Please go ahead with your question.

Jenkins, your line is open. You may ask your question. Ms. Jenkins, your line is open.

You can ask your question now.

Otherwise, we will take the next one and afterwards try Medlin again.

Of course. So the next question comes from Juergen Wagner-Steefel. Please go ahead with your question.

Yeah, good afternoon. Thank you for letting me on. The follow-up on GAN, you mentioned that the adoption now happening across all applications. What tool number should be modeled, let's say, from 25 onwards per year. And then on China, you also mentioned a major order for your silicon carbide tools. What kind of tool are you selling to China? Is it the G10 as well? Thank you.

Exactly. Yeah, thank you very much. So, gun adoption, honestly, we have to really update our model. It's based on the most recent one, so I don't have it. But we clearly see increasing momentum based on that one. But that's an action item on our side. You may have seen the most recent YOL numbers. So, it's a beautiful picture maybe for everyone. If you take the most recent Yule report for the last few years, very often with new technologies, you see curves being pushed to the right. Currently, you see curves being pushed to the upwards. In each of the reports, the number projected whatever for 28 or 29 is a higher number because the penetration is beyond the tipping point. It really increases now. You may check that out. I haven't done my homework yet. I have to admit to really model that and answer your question. We can follow up separately. Now, on China, yes, and definitely in China, China is also in the transition now to 8-inch, a little slower than other markets, but clearly coming. The delay is maybe six months, nine months, but it's definitely on the transition, as we also talk about the G10 silicon cover here.

Okay, at the same price then, I guess so. Of course. Okay, thank you.

And the next question comes from Francoise Bouvier, UBS. Please go ahead with the question.

Hi, can you hear me now? I'm not Francoise. We hear you, Madeline. Good. Sorry, we had quite a lot of tech issues today. Yeah, I just had a quick follow-up on the 130 to 220 million new orders that you need to meet your four-year guidance. Did I understand correctly that you expect these incremental orders to come from silicon carbide or was it other end markets?

From all market segments.

All market segments. Okay. And then given the current market environment, do you kind of bake in any order push-outs in your 24 revenue guidance? Or are you, I guess, taking more at face value what your customers are telling you?

Sorry, I didn't get the question. Can you say it more precisely from the acoustics?

Sure. Are you baking in any order push-outs in your 24 revenue guidance? Or are you kind of taking more at face value what your customers are currently telling you?

So push-outs, now I get it. Sorry, I didn't hear that clearly. So we have seen push-outs in one, two cases, not more cases than that one. So we don't expect that there is a large amount of push-outs coming.

Okay. Are you basically baking any in that are going to come for your 24 guidance? I realize you haven't seen a lot yet, but it's more kind of the rest of the year? I guess how conservative you are, if that makes sense.

Honestly, I don't think the question is so relevant. Let me explain to you why. Our orders are typically very well spread out across multiple market segments and also across very many customers. It's not that we have a small number of very high volume customers. And that an individual customer or two customers would mean a relevant shift or something like that. So due to the high fragmentation that we have across the customers and the splits across the different market segments, this is not like a major risk for us. This may be different than in the silicon world where there's a much higher concentration. So our guidance, as I mentioned before, is based on our overall expectation about how the different market segments evolve, taking into account some cautious assumptions, as you are alluding to, some cautious assumptions to secure the low-end, which we believe we will achieve, but also to take into account the full-order pipeline. If it comes, can we be shipped within this year?

Okay, thank you.

Thanks for taking the question.

On silicon carbide, it sounds like you think 8-inch transition is coming fairly soon, so I was just wondering if you can give us some more color on how we should expect that dynamic to impact the business, specifically thinking sort of around Tool demand, and then also if that means sort of extra upgrade revenues or things along those lines when that happens. I didn't get it. Do we expect to come soon? I didn't get that. The transition to 8-inch and silicon carbide. You're saying customers choosing Axtron over others because of your tool being able to do 6-inch and 8-inch, just trying to understand better the dynamics when that happens.

Okay, now I get it. Thanks for the clarification. I didn't get it from the acoustics. So I think what's the game here? So the industry and all players of the industry will be enjoying a productivity gain or reduction of cost steps, let's say, in the transition to 8-inch, simply because whatever all the other processing steps, be it some other deposition steps or be it lithography or edge steps, whatever you do, when you do it on 6-inch or 8-inch, in the end, you have about the same cost, but 8-inch, you have bigger wafer area. So this is the driver for the industry to go to 8-inch in the end to really make it and to be cost competitive. That's the driver. The transition is about to happen. We see some customers have already now switched to 8-inch early adopters and run their lines today already in 8-inch. Others are planning to switch their lines throughout 24, 25, but for sure everyone in 26 will be on 8-inch. Just to give you a flavor about the transitions. Now, we all know those pieces of capital equipment that we are making typically run at our customer for multiple years, at least five, very often 10 years. In many, many instances, external equipment keeps running for even 15 plus years. Now, with the clear view that an 8-inch is going to be the more productive, the more cost-efficient wafer size, going to be in two years or in three years, or tool selection that is being made now, And all equipment that currently is being purchased is being made having ultimately the long lifetime over the equipment with 8-inch in mind. I think this is what we meant. And now in the end, does this lead to more orders or to less orders? In the end, it's just the normal rollout. It's just the switch of the wafer size. And as we discussed already earlier in the call, some equipment is suitable for 8-inch. Equipment from other vendors is not suitable for 8-inch. And therefore, the transition has now changed the vendor base. And the incumbents from, let me call it, the 6-inch era are not necessarily the winners of the 8-inch era. I hope that explains a little bit the overall dynamic that's happening.

Yeah, that's great. Maybe I could just ask a quick follow-up. So if I'm a customer and I've already bought tools from you and I'm using them on 6-inch and then we switch to 8-inch, do I get a 15%, 20% increase in my sort of supply? Is that a number that we could use to sort of think about that transition?

Well, it depends, yeah. So our G10 generation is able to do 6-inch and 8-inch, so you can run the tool in both configurations. You can put into the tool six 8-inch wafers or nine 6-inch wafers. That is, you lose one-third of the wafer number when you go from 6 to 8-inch. But with each wafer, you gain 69% more area. And now you can do the math yourself.

Okay, thank you.

The next question comes from Martin Jungfleisch, BNP Paribas. Please start with your question.

Good afternoon. Thanks for taking my questions. I have just two, please. The first one is on the Wall Street release that you had a few days ago. You mentioned that Wall Street has chosen the G10 SIG for the JP and the Durham FAB. Can you confirm or disclose that it has also been ordered for the new Morg Valley FAB, or is this just for these two other FABs? And also, can you disclose when these tools will be shipped? Is this more of a 2024 or 2025 timeline?

So Mohawk Valley is a chip processing plant. So the equipment is dedicated for the other two sites. And in terms of shipment, some is in 2024 and some goes into an extent into 2025.

Cool. And the other question I have is on the V-Share order. Is it correct to assume this will be a single-digit number of tools and this will also be shipped this year?

So part of that is shipping this year. I don't want to comment on the number of tools because that's customer confidential. Please allow us to maintain that. I think it's already great that the customer has given their name and allowed us, but I don't want to put numbers out which allow publicly without customer consent to give indications on their ramp plan. That would not be appropriate. We take that always very, very seriously and extra.

Yeah, makes sense. Thank you very much.

The next question comes from Walter Schaumann, Warburg Research. Please go ahead with your question.

Good afternoon. The first one is on silicon carbide. These customers that suffer more from excess capacities, have these adjusted their ramp plans, maybe going into 2025 also, or is that just more of a short-term issue?

That's a very good question. No, in fact, some of those customers who continue, both continue full steam in 24. Yes, and there is also some orders which are reaching into 25 from these customers. But it's not like long-term securing something which only comes next year. No, this is really that customers continue pushing their orders and also doing some shipments in 24. They really lean all in.

Okay, so nope. No structural change of the scenario, as you confirmed earlier, for the next year then? Exactly. Okay. Then on micro-LED, you had quite a good order intake in micro-LED in the first quarter. So what does your pipeline look like for the remainder of the year? Do you see kind of a similar amount expected then for the upcoming quarters, or have you already seen the bulk of the expected order intake in the short term?

So the pipeline, as always, right, customer by customer, order by order, so to say. So Q2, it will be a little less. Q3 and Q4, you will see more again.

Okay.

Good. Thanks.

And next, we have a follow-up question from Olivia Huntington. Jeffrey, please go ahead with the question.

Hi. Thanks for taking my question again. Just wanted to clarify on the 2024 guidance. Felix, I understand that the lower end of the range, as you said on this call, is in place really in case of any further export license issues. So if we're to assume that those don't come back, can we understand, therefore, that you are still targeting the upper end of your range, which I believe is the comment you made at the last call? Or is there some other factor that could impact you getting to that upper end?

No, I would not relate the guidance rate explicitly to export licenses. As I said before, that situation has mostly normalized, so this is not the driving factor. It's still one factor that can push the one or the other towards beyond the December 31st deadline, as always, yeah, timing effect. This is why I mentioned that topic. But as I said, the range remains mostly intact or open, yeah, or wide open, yeah, in order to reflect the dynamics in the end markets and the order behavior currently, yeah. We see some headwinds on the power side, a little bit of a slowdown. If that continues throughout the year, it will be around the low end. If the momentum returns and orders pick up, we will be at the upper end, and inventories are secure to also ship the upper end.

Okay, that's really clear. Thank you. And then just one more on the silicon carbide win in China. I know before in the past you've been – there is a general worry about tools getting copied in that market. Is there any type of change to your thinking there? Or have you implemented any type of solution to prevent that from coming true?

So we have seen more simple types of equipment getting copied, single wafer reactors, namely in China. That's definitely the case. So for our more complex equipment, that hasn't happened yet. And in the end, as always, right, I mean, copying means commoditization, and the best response to commoditization is innovation. And we have many ideas to drive innovation forward and to do the next better type of equipment, such that if at some point a low-cost copy is arriving, we are so much better that the low-cost copy looks old.

Great. Thank you.

At the moment, there are no further questions. If you would like to ask a question, please press 9 and star on your telephone keypad.

There are no more questions from the audience, so I hand back for closing remarks.

Yeah, thank you very much for your participation in this conference call. As usual, the hint, if any questions pop up afterwards, I mean, please give us a call, give me a call, and we will try to help you as best as we can. Thank you very much, and have a good day. Thank you. Goodbye.