BE Semiconductor Industries

Welcome to the BE Semiconductor Industries Q1 conference call. I will now give the word to Richard Blickman. Richard, go ahead.

Thank you. Thank you all for joining this call. I'd like to remind everyone that on today's call, management will be making forward-looking statements. All statements other than statements of historical facts may be forward-looking statements. Forward-looking statements reflect BASI's current views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond basis control. Actual results may differ materially from those in the forward-looking statements due to various risks risks and uncertainties, including but not limited to factors that are discussed in the company's most recent periodic and current reports filed with the AFM. Such forward-looking statements, including guidance provided during today's call, speak only as of this date. Basie does not intend to update them in light of new information or future developments, nor does Basie undertake any obligation to update the future forward-looking statements. For today's call, we'd like to review the key highlights for our first quarter ended March 31st, 2026, and update you on the market, our strategy, and outlook. First, some overall thoughts on the first quarter. Bezi reported strong first quarter results and advanced packaging orders in an improving industry environment. Revenue of 184.9 million euros. increased 28.3% versus the first quarter of 2025 due to higher shipments for high-end mobile and 2.5D AI photonics and data center applications. Q126 orders of €269.7 million more than doubled versus the first quarter of 2025 due to broad-based growth across all basis end-user markets, with particular strength in hybrid bonding, mobile and photonics applications. Orders increased 7.7% versus Q4 last year, due primarily to a significant increase in bookings for hybrid bonding systems from multiple customers and end-user applications. Increased revenue growth this quarter favorably influenced basis profitability. Net income rose 20.6% and 63.8% versus Q4-25 and Q1-25. respectively with net margin increasing to 27.9% versus the 21.9% in the first quarter of 2025. Improved profitability this quarter was due primarily to enhanced revenue growth, disciplined expense management and the benefits of operating leverage in Basie's business model. We realized a gross margin of 63.5% in the first quarter this year, as increased prices helped offset increased component and energy cost inflation. In addition, our liquidity position improved significantly, with net cash growing by 186.9% versus the fourth quarter last year to reach 103.3 million euros. Growth in our net cash position reflected improved profit and cash flow generation from operations of 93 million euros in the first quarter of 2026, which more than doubled versus the comparable period of the prior year. During the quarter, Basie repurchased for approximately 14.2 million euros of its shares, which brings the total under the current 60 million buyback program. Next, I'd like to discuss the current market environment and our strategy. We've noticed an important improvement in market conditions since our last report, driven primarily by strong growth in AI demand and, to a lesser extent, additions to mobile and automotive capacity. The latest Tech Insights forecast calls for 21% assembly market growth in 2026 and 75% between 2025 and 2030. We expect to significantly exceed such projected growth rates, given our leadership position in advanced packaging and wafer-level assembly, particularly in flip-chip, multi-module diet-edge, hybrid bonding, and next-generation TCB systems. Favorable order trends in the first quarter of this year reflect the strength of Basie's advanced packaging market position, particularly for next-generation 2.5D and 3D AI applications. Unit orders for hybrid bonding systems more than doubled versus the fourth quarter last year and exceeded the prior quarterly peak reached in Q2 2024 with respect to total units and order value. Growth was due primarily to a larger than anticipated capacity built this quarter by a customer and to a lesser extent, repeat orders from a memory customer for HBM applications. In addition, we shipped two evaluation tools to a second memory customer for HBM applications and adoption increased to 20 customers overall. Progress also continued on our TC Next agenda with two new orders received and adoption increasing to six customers. Basie's business prospects for 2026 were also enhanced by renewed growth for high-end mobile and automotive applications in this first quarter. Our business strategy is currently focused on supporting customer adoption of our wafer-level assembly and 2.5D AI product portfolio and ramping the supply chain and production personnel necessary to meet increased order levels. We are also developing additional Vietnamese production capacity for mainstream assembly applications in order to free up incremental capacity in Malaysia for wafer level assembly production. Further, BEZI is increasing its service and support efforts in Taiwan and Korea in anticipation of increased hybrid bonding activities in such regions. Our favorable outlook for hybrid bonding growth in 2026 is also supported by a series of new products and use cases announced this year for logic, memory, co-packaged optics, and consumer applications. Such announcements suggest that the pace of hybrid bonding adoption is increasing as we approach the timing for the introduction of many new AI-related products anticipated in the 2027-2030 period. Now a few words about our guidance. Based on our backlog and feedback from customers, we anticipate that Basics Q2 26 revenue will grow by 30 to 40% versus the first quarter of this year, as strong revenue and order growth continue versus the prior year period. In addition, gross margins are anticipated to increase to a range of 64 to 66%. Operating expenses are anticipated to be flat to up 10% due to increased revenue and customer support activities. As a result, we anticipate a significant expansion of our net income and profit margins relative to Q1 26 and Q2 2025. As a result, we forecast for H1 26 that revenue will increase by 49% versus the first half of 2025, assuming the midpoint of our second quarter 26 guidance with a substantial improvement in operating and net income. That ends our prepared remarks. I would like to open the call for questions. Operator.

Ladies and gentlemen, we are now ready to take your questions. If you wish to ask a question, please press pound key five on your telephone keypad. Our first question comes from Didier Semama from Bank of America. Didier, go ahead.

The next question comes from Didier Semama from Bank of America. Please go ahead. Didier.

Didier, your mic is unmuted.

Sorry, sorry. Hi, Richard. Can you hear me?

Yes, I can hear you, Didier.

Sorry about it. I thought you lost your question. No, well, I was on mute, unfortunately. Long day. Listen, on hybrid bonding, those orders in Q1, you mentioned that you're a bit surprised by those orders. I think it was not really expected that they would be as significant as they were. Does that change anything about the profile of the ramp for this year at your main customer or EEG? leading to higher deliveries already this year because of AP7. Just give us your thoughts on this. And then, of course, I've got follow-ups on HBM.

Well, what is happening, you can follow easily in the bigger picture provided by Taiwan customer, is that we see an acceleration in adoption of hybrid bonding. And the order scheduled for installation in the first round in AP7 has been pulled forward somewhat from Q2 to Q1. In addition, the program has been enlarged. for two reasons, one for the overall, let's say timeline to fill in the anticipated 100 owners, that number we are told may be significantly higher, plus orders placed for co-package optics. So overall, you can say good news in acceleration of placing orders, and to some extent also an outlook for increased number of boomers required.

Oh yeah, understood.

And so on that front, I think you mentioned in the past in previous calls that 2027 you know, you could start to see some new AI logic customers coming on board. I mean, have you got sort of line of sight on that?

Well, we all know that AMD was the first to adopt the hybrid bonding for several families. And they continue to do that. But then we also know Broadcom. And one of the positive developments was also the Apple M5. So we see broader adoption. At the same time, we've heard, or we've been told roadmaps from another very big customer in the data center modules, that we can expect more hybrid bonding adoption going forward. So that is why we make the statement that we see accelerated and broader adoption. also the number of customers. Remember, quarter ago it was 18, now we are at 20. So on the logic front, the adoption is broadening and increasing.

Okay, makes sense. Thank you so much for that, Richard. And then on the HBM front, I think you mentioned that you had repeat orders from, I think, a memory customer, I think that customer, if I understand correctly, was the one sort of, you know, in sort of final trial phases for HBM4E16 high adoption. And I think he was expecting some form of, you know, results in shipping those samples to their large customer. Is that validation of your view that HBM4E is the really insertion point for hybrid bonding? And any idea as to the volume opportunity there? Well,

The, let's say, evaluation programs, the customer engagement and customer has also increased very well in this first quarter. That has resulted in several more orders. And if all goes well, that should lead to mainstream adoption for certain HBM devices. It's still following the timeline, which we have understood that this year will be a major qualification year. And then based on the success of the qualification, setting up production capabilities towards the end of this year for mainstream volume production in 27. That roadmap stands and it's being supported evermore by orders, by publications in the public domain of the progress. Also, one of the end customers is very clear also on their website, on their adoption strategy of hybrid bonding for HBM.

so that pace has picked up in the quarter thank you and just a final question i think last quarter you said that the rule of thumb was you know 150 hybrid bonding system deployed by logic customers that would mean the time for hvm could be 600 i mean anything that would sort of make you change your view either positively or negatively no that still stands so

if you compare a capacity of 50 bonders for logic, and you simply look at all these beautiful websites and materials about building these two and a half D modules, you can easily see a processor surrounded by three or four memory stacks. And that explains to you already one ratio. The other ratio, when you have 16 dice in a stack, you need to do that 16 times, as opposed to one logic device. So you need much more capacity for HBM than you need for logic. But that has always been the case. So the rule of thumb is intact. and also supported by customers demonstrating capabilities. One of the interesting recent documentation from TSMC is about the advanced packaging roadmap. And I invite everyone to look at that published on CNBC.

All right. Perfect. Thank you so much, Richard.

Thank you, Didier.

Thank you, Didier. The next question comes from Alexander Duval from Goldman Sachs. Alexander, go ahead.

Yes, hi there. Congrats on the strong orders and progress on hybrid bonding. I just wanted to ask a couple of regional questions. Firstly, when we look at the regional trends, it looks like U.S. was comparatively low relative to some other regions. So just curious to what extent it would be reasonable to expect an increase in the coming quarters as hybrid bonding orders for Logic expand beyond your Asian customer base and into the U.S. customers. And then secondarily, understanding on China. It looks like robust orders there. I wondered if you could help delineate what are the key factors that were driving this. Many thanks.

Excellent. Well, US currently at the levels where it is. Remember, we had a big round for the initial capacity for hybrid polling. received already about one and a half years ago. And that capacity is being filled in, is being qualified, is being tested. And based on the results at that customer, one can expect more bonders to be required or not. So that's success. is depending upon customer adoption. At the same time, we have the onshoring programs, one from TSMC to the US, one from Amcor, also Micron, and if all goes well, one can expect a shift from capacity built in Asia to more capacity onshore in the next years to come. What we heard is that in the next two years, so 26-27 preparation, building FAPs, and then as of 28, volume production. We are, of course, engaged in those programs. And timing again is according to those customers information, volume production as of 28. Then your second question about China. Yes, there are several. robust orders from Chinese-based customers. Number one, what's hot is the 2.5D coalesce-like, capacity expanding at the same time for tonics, all the pluggables, and also a recovery in... modules for high-end smartphones, so mobile, and carefully tight turning for industrial automotive. So that's the picture of China. But I can also share that more and more future capacities are built outside China. So you see more in Malaysia, Philippines, Thailand, and also coming up ever more strongly Vietnam. And that's where we have our facility building currently tools by the end of this year, the first bonding system, not hybrid, but proxy bonding. And then you see a market opening up in India, five major customers, are setting up production capabilities for mid to lower end devices, mostly power right now, but also modules for high end smartphones and also other devices more in the mid market applications. So China, although you have to segment also a China local market, which is also expanding, But the non-Chinese manufacturing in China, you see a clear change to countries outside of China.

Many thanks.

Thank you. Our next question comes from Ruben de Vos from Kepler-Chevreux. Ruben, go ahead.

yeah good afternoon I just had a follow up on the on the second memory customer. Regarding the to have an evaluation tools. Just curious around your thoughts, where you could help us understand a bit what they're testing at this stage, like this is a full. sort of tool of record type of evaluation, or is it more of a focused qualification around the specific application or configuration? And how would that conversion maybe from evaluation to pilot lines look like in terms of timeline? Thank you.

As I mentioned, the timeline is 26-27, 26 development, setting up certain pilots although small volumes for end market qualification purposes and then more production expected for mainstream market adoption 27 onwards okay and um

And that would be a full tool of record type evaluation, right?

Yes, of course.

Okay. Then just the second one regarding agentic AI. I think we've been hearing about agentic AI as a strong driver at the CPU level. Just interested to hear your thoughts, whether that would have a different impact. Packaging intensity versus maybe the cycle that has so far been GPU-led. Also, have you seen any shift in the approach of your US Logic customer on advanced packaging with you in recent months? Is that CPU angle showing up in discussions? Thank you.

No, not in those details. I can't help you there.

Okay, and just the final one, I mean, I think about like six weeks ago there was some chatter around the potential relaxation of these JDAG thickness standards for 20 high. I mean, they were talking about moving from 775 mark on towards 825 or even 900. Yeah, of course, curious, how do you read those discussions? And has that changed the conversations you're having with your memory customers at all?

No. First of all, it does not change the advantage of using a hybrid process over a reflow process. The benefits are more and more demonstrated. that you have a faster circuitry, you need less power, and that means less heat. The only reason we understand that this height should be available is for a process for one of the three, which simply requires that height. The other two are not impacted by that change. So as we said end of February already with our year and numbers, our third week of February, and that is confirmed in the rest of this quarter, we see an increased engagement and activity and also announcements. And again, look at the Samsung website about hybrid bonding for HBM. that has not changed the adoption base or rate of adoption because of the benefits.

Okay, thank you.

And you could also add those benefits are every day more proven in the logic application. And you see a broadening adoption, higher volumes, pulled in capacity requirements. So that supports also the adoption of hybrid bonding in HBM stacking.

All right.

Thanks for your answers, Richard. Thank you.

Thank you, Ruben.

The next question comes from Charles Shi from Needham & Company. Charles, go ahead.

Hi. First off, really congrats, Richard. I think hybrid bonding has been a 10-year work for you and for the company by now, and glad to see it's finally coming into fruition. But I have a few very important clarifications I want to make with you here. You said the two evaluation units is going to a second memory customer. But I thought you already have two memory customers. So is this actually going to the third memory customer?

No, you're right. We have or we had two. One is the US and one Korean who started in a lab to develop a similar hybrid solution already. Two years ago, I think. But the change is that they have moved this to the forefront. And that customer has two applications. One is logic. The other one is HBM stacking. So on the memory front, adding the third one. we now have all three who have our hybrid bonders to further evaluate and define the adoption of hybrid bonding for HBM stacking.

Got it. So the timeline you provided to us, A previous question regarding that customer who just took your two evaluation units, 2026 qualification, 2027, maybe transitioning to production. Is that still the right timeline to think for that, I mean, the third memory customer who actually came in a little bit late?

Well, the timeline is 26. And as we explained, several quarters that has not changed. The first customer aiming towards the mid of this year, June, July, and the second one a bit following behind, which could be end of Q3, Q4. So that will determine the adoption in volume for 27.

And the third customer?

The third customer is ready to go, but they are all evaluating along the same, let's say, parameters for one specific end customer. The whole world knows that customer has invited all three to have these hybrid bonded stacks available by the end of 26 to be used in end market applications in 27. thanks richard that's very encouraging uh so maybe i want to ask you uh one more question um um

uh the memory evaluation uh in general we know your leading foundry customers sticking with the standalone uh tool configuration but uh what's the landscape there uh for your memory customers between uh integrated and the standalone uh which route do you think they are going to are going after and one of the very frequent questions i got from investors is whether there's any difference in terms of the economics, in terms of the revenue dollars you get from integrated the tool setup versus a standalone on a like-to-like basis, meaning same configuration, same customer, are there any difference? Thank you.

Excellent. Well, I'll start with the dollar numbers first. So we... sell bonders and AMET sells Keenex automated lines. And they both have a sales value. And the extra which you have is the handshake between the bonder and the Keenex tool. Customers currently And we have shared that several times. And you also said that in Taiwan, still the overwhelming majority is standalone because of the initial phase where we are in. So you have multiple customers, different die sizes, different process requirements, and for flexibility reasons, that customer uses standalone. It's undisputable that in an integrated line, you achieve better process requirements, particles, also timing between the steps and the integrity overall of die-to-die and wafer-to-wafer. Those advantages are used in FrontEnd for over three decades. in the so-called cluster tool concepts. So the industry is evaluating the two aspects. Number one is the hybrid bonding process. And number two, what is the best total solution to produce devices using hybrid bonding? And as we all know, the hybrid process is very sensitive to particles, so zero particle requirement, and per definition, in an automated line, like the Kinex, you can achieve the best process environment specifications. So the verdict, you can say, in a way, is on the one hand, towards high volume production of specific devices with minimum changeover. Once you have more changeover, you require more flexibility like the Taiwanese customer. At this moment, that is still in standalone, but that is very likely in the future to change to an automated line concept simply because of process requirements. But for us, back to the dollars, it doesn't make the difference for the bonder. The bonder has a certain value, cost of ownership value, and that is the same standalone compared to integrated in a line.

Thanks, Richard. If you want to make a call today for HBM, is it more likely to be integrated or standalone? Thanks. That's the last question.

Integrated. Because HBM is dedicated for high volume production. And then it's more likely to do that automated than standalone.

Thanks. Appreciate all the answers.

Thanks, Charles.

The next question comes from Robert Sanders from Deutsche Bank. Robert, go ahead. Yeah, hi, Richard.

Just a question on HPM again. Can you talk about the yield numbers that you see at the moment in development? And what does the end customer need to see in terms of yield before they go ahead, whether it's the memory guys or the end customer? And the second question would just be, is this going to be a partial transition at HPM 40 if all things go well? or would it be a wholesale transition? I guess the reason I'm asking is because there's a lot of installed TCB capacity that the companies would continue to like to reuse. So I'm just interested to think it will be a sort of binned chip, so only the best chips will be hybrid bonded and the rest will be used TCB, and then maybe at HPM5, it will become a full insertion, or do you think it could be quite rapid? Thank you.

Well, excellent. Thanks, Rob. Number one, what we hear is clearly, and this is for forever, there's always a quality difference over a wafer on the certain devices. So you could, like we've had historically, end up with quality classes, the highest end hybrid bonders, etc., On your yield question, we do not receive detailed yield numbers, but what we know as a rule, if a process is not well up into the 99.9%, then it becomes a very difficult long-term perspective. So yields in interconnect are at those levels. Where are we today? Well, we should be able to achieve those levels. Otherwise, it would make no sense to do these evaluations and qualifications. So the confidence is certainly that we should reach those levels. We reached them, as we all know, with logic already quite some time. where the yields are very well up in the 99.99 something percent. So the hybrid bonding process can achieve that. And for HBM stacking, one still has to prove that, and that's what's currently happening. Is HBM more difficult than logic? On the one hand, you have far less IOs, so it should be more simple. On the other hand, you have vertical stacks of 16 devices. They are per definition thinner. So the process is different. And in certain ways, on the one hand, easier than logic because of bond bed pitch is less critical. But on the other hand, the vertical stacking, so they both have their specific let's say, issues to deal with. But again, coming back to why are these customers all of a sudden, and which we expected from the very beginning, putting far more effort into the adoption of hybrid bonding is simply because the proven performance upgrades are driving that adoption by an end customer, and that's a very big customer.

And any idea when the TCB market could see a downturn because of this in memory, for example?

No, one should see. If you would imagine a certain volume to be produced, it will be less TC if one uses So that's an offset in the same end volume. We should see that by the end of this year, or as we have said already in the middle of this year, we should see more confirmation from the Samsung side. So in the end, it's the number of devices produced. And whether you use process A or process B results in a different number of machines.

Got it. Thanks, Leverages.

Thanks, Rob.

The next question comes from Martin Marandon-Carrion from Oddo, BHF. Martin, go ahead.

Hi, thanks for taking my question. My first question is on hybrid-bonding use in GPUs. I mean, the biggest GPU vendor unveiled recently some aspect of their design for their next GPU coming out in 28, saying they will use 3D stacking. So first, do you expect it to be hybrid-bonded? And second, if that's the case, when do you think you will have visibility on the timing of the ramp-up? And I have a follow-up.

Excellent. Well, that's exactly one of the major game changers, and it is forecasted to be hybrid bonded. So that all fits into the acceleration, which we explained at the very beginning, anticipating on the adoption of hybrid bonding in that family of next generation products. And the timing for that then is more equipment to be ordered and installed in 27, ordered in 26, for volume production as of 28.

Okay, great. And a second one would be on the chip on panel packaging. Do you think that the shift to square panel could somewhat open new opportunities for TC-NEXT or hybrid bonding?

Well, the 310 by 310 panel is a very clear development coming to market today. Also in the next year and two years, we already received orders for certain applications. So our bonders can handle the 310 by 310. Hybrid is a bit early, but we see it for many other applications being anticipated because it saves quite some waste. And you can expect with larger die sizes, more module type of designs, 2.5D, but even more 3D, that panel will be used as a carrier more and more. So that trend is clearly visible. We will share some more information on the Capital Markets Day or Investor Day mid-June to give you some more examples. But that is certainly happening.

Okay, great. And the last one for me, just on the cost for a change, I mean, you know, the guidance for the next quarter is OPEX up around mid-single digit sequentially, which says up 30% to 40%. So can you share a bit more color on what you did there to maintain that kind of discipline on OPEX? That would be helpful. Sure.

It simply is controlling costs. That's our job. No, but there's no change as such in our structure. But with increased revenue, you have an enormous operating leverage, if that is also your question.

Okay, very clear. Understood. Thank you, Archon. Thank you, Martin.

Our next question comes from Nigel van Putten from Morgan Stanley. Nigel, go ahead.

Hi, good afternoon. I've got a question on photonics, actually. Even before moving to co-packaged optics, I think you're already seeing quite a wide range of applications in terms of your tools, like hybrid bonding. I think TCB, flip chip, and multi-module attach can all be involved here. But in terms of sort of focusing on the near term, so actually before CPO, are you already seeing more of a benefit as the market moves to silicon photonics and also and or I guess higher throughput pluggable devices? Yeah, that's my first question.

Thanks. As we have reported, started middle of last year, a significant expansion of that market segment with multiple customers building those pluggables. And also in the pluggables, you have the next generation, which requires more bonding steps. So that unfolds. in a very positive way for us. You see that also in the numbers and the details we provide. You should not mix that with co-packaged optics because that's another application and a different process. Also on that co-packaged optics, we have made significant progress. And for instance, the coop process, we delivered the hybrid bonding for accomplishing those kinds of contexts. Also there, we will spend more details on background and development roadmaps in the investor day. But again, it's certainly an extension of the hybrid bonding applications. into this rapidly developing market.

Helpful, thank you. Sorry, go ahead.

Sorry, does that answer your question?

Well, I had a follow-up, but I'll wait till the investor day then. I look forward to receiving more detail. I wanna ask my second question on order intake, which has clearly been very strong last two quarters. No, you don't really disclose a backlog, but I calculate around 400 million by March end. So that seems you could do with some digestion on the order side while still growing revenue very comfortably. However, on the other hand, I presume the backlog is for a narrower set of applications, around 2.5D and hybrid bonding, while you're also now flagging mobile and automotive picking up. So essentially, how should we think about order intake in the current quarter relative to the last two?

Well, we mentioned continued momentum, a continuing trend. Don't forget we're in an up cycle and up market. So as long as there's no signs of centralization in the end markets, you can expect that to continue. We have been able to ramp our capacities in past up cycles significantly, 50% quarter on quarter. You see that now again ramping as well. So that's as much as we can. Yeah, so far this quarter, we've seen no change.

That's very helpful. Thank you. The next question comes from Nabil Aziz from Rothschild & Co. Redburn. Nabil, go ahead.

Hi, Richard. Thanks for taking my question. I just had one on your service business. You talked about raising your presence in Taiwan and Korea for your service professionals in terms of preparing for greater hybrid bonding shipments. Have you seen a pickup in recent quarters in your service revenues in 4Q and in 1Q? And how do you see that trending through this year?

Well, certainly. Number one, When the tide turns positively, clearly customers' production lines are loading and they need more support. They need more spare parts. They need more service upgrades. And then for hybrid building, but also for certain reflow processes, you need more specialized support to reach the 24-7 supply. production requirements. And that simply is following a model used in front-end, where within four hours, a defined list of spare parts for hybrid bonders, it's close to 900, need to be available. And that's all in place. So you see a broad increase in an amount of service spares and retrofit kits.

Okay, yeah, that's very clear. And I think in recent years, your service revenues have been pretty stable, around 15, 16% of group revenues. So as we look forwards with a greater proportion of hybrid bonding in the mix and your hybrid bonding installed base growing. Should we expect the service intensity to reflect more a front-end mix, kind of towards 20%-ish range of group revenues? Thank you.

Absolutely. So what I just explained in a few words, the level of support we have to provide to hybrid bonding front-end type of environment is significantly higher. than in the back-end environment. So that 15 may very well move up towards the 18, 19, 20. For front-end, it's typically somewhere between 20 and 25%. Also, the long-term contracts in service and support are standard in front-end. So that increases and changes the model altogether.

And then just last one. So yeah, on a margin perspective, do you see that greater requirements being either a headwind or a tailwind to gross margins?

A tailwind, certainly a tailwind. So support is certainly, if you organize it right, of course, but that's with everything, is potentially a higher margin business.

That's great. Thank you, Richard.

Thank you. Any further questions?

The next question comes from Martin Jungfleisch from BMP Paribas. Martin, go ahead.

Yes, hi. Good afternoon and congrats on the strong results. The first question is really on capacities and lead times. In the press release today, you talked about freeing up incremental capacities in Malaysia. Can you just disclose what your current hybrid bonding capacity is in terms of tools per month or year and where this expansion could potentially get you to? And also, if you could provide some updates on lead time for hybrid bonders now that the auto momentum is picking up quite a bit. Thank you.

We were at 15 bonders theoretically per month. So that leads to about 180. With the increase in floor space and adjusted to a model required by several customers, we can now expand that to 250 per year. So that is a significant increase altogether. You won't see that for the number of boulders produced in a year, but how typically orders are placed and expected delivery by customers with a lead time for now the 100 nanometer of six months standard. we can satisfy any model presented to us by the big five using the current expanded capacity. On top of that, you need more people in the field to install, to support. I mentioned earlier the spare part model supporting operations. We have put that all in place. So the infrastructure needs to be ready to support that higher volume as well. So it's not just the production floor, but that is all part of our overall model, the one and a half to 1.9 billion in the next three to five years, which is prerequisites the support organization for growing revenue to those levels, which is roughly two and a half to three times what we have currently. And for the hybrid bonders, it's significantly more.

Thank you. And the other question is mainly on EMIP from Inter. There's a bit of news on increased demand for packaging. Can you just disclose what kind of relevance this business has for you and what kind of your prospects are? What do you think this could go to in the future?

We are involved since the very beginning in placement of these EMAP modules. That could be a positive business impact, but as things with Intel develop as they do, we first need to see more evidence. But they have a significant capacity installed, which we delivered the systems placing those modules. But it's good news when it increases.

That's right. Thank you.

Any next questions?

We have time for one more question. The last question comes from Madelaine Jenkins from UBS. Madelaine, go ahead.

Hi, Richard. Thank you for squeezing me in. I just have one quick question on China. I know they're building out a lot of capacity at the moment on 2.5D. I was just wondering on 3D or hybrid bonding, are you in any discussions with them about this technology? And are they indicating that they might order tools kind of in the coming years and would you sell to China that equipment? Thank you.

Number one, we only sell to China what we, and that's with any country, what we are allowed to sell. So we follow very strictly the regulations and in this case by the US government and we have that tested every six months and we are allowed simply with the current levels and the current Ingredients in the dye bonders and in the hybrid bonders, it's not much different. So that is open for use in the China market currently. There's, of course, development going on and applications are still distant. There could be a philosophy to use hybrid bonding in 3D stacking. to lengthen the node size life. So to increase the performance of those devices with a 3D hybrid bonded structure, we are of course in development of those kinds of modules, but that is still in very early stage. So the current big market in China is 2.5D mastery flow, flip chip. For us, which we also disclosed in previous quarters, which is more or less standard equipment, but very, very much advanced. Our flip chip has absolutely the best cost of ownership also in China. But you can expect that they will develop certain local Chinese device structures using a hybrid process.

Perfect. And just on that, so in terms of timing, is it a few years or, you know, obviously China, they do things very quickly over there. So could it be sooner than that?

Yeah, they are, as I just said, they are engaged in development. also very aggressive in a sense, in positive sense, to study carefully the benefits of a hybrid process. They are much more driving that. And it's also very easy to understand. The world outside China is very much trying to extend the life of a mass reflow process because we all know those processes. So the hurdle to move to hybrid takes time. In China, it is more because they can overcome that they are not allowed to invest in a next generation with smaller device geometry. So then to solve it using hybrid process, which could be a very significant market.

Perfect. Thank you, Richard.

Thank you, Madeleine.

Thank you. And with that, I will now turn the call back over to Richard Blinkman for any final remarks. Richard, go ahead.

Well, thank you all for taking the time and asking questions. You're most welcome if you need to understand some more details. We're happy to provide. Thank you. Bye-bye.