Mycronic AB (publ)

Hello and welcome to the presentation of Mycronic's Q2 report. My name is Sven Cetkovic, I'm the Director of Investor Relations at Mycronic and with me I have Mycronic's CEO Anders Lindqvist and CFO Pierre Bruchon who will be presenting today. And with that I hand over to Anders. Please go ahead and present Mycronic's Q2 report.

Thank you, Sven, and good morning, everyone. So, today, we have the standard agenda. So, talk about the Q2 in general, in short. Go deeper in the different divisions. Pierre will talk about the financials, some words on sustainability, and then we end the session with the Q question and answer session. And as usual in the material that is on the website, you also have the The market update, which we will not present, but it's there for information. So just to summarize the second quarter, it was an excellent quarter, really. Many records in different ways. So we had record order intake up 119%. But also the level is very high at 2.9 billion, so we have never been higher. And what is very nice to see is that we have contributions from all the different divisions, very much from global technologies, you will see. but also very strong development in high volume and pattern generators. And pattern generators is compared to a quite weak quarter two last year, but still decent level. Also very nice to see is that sales is also picking up. So not only orders alone, that second best level up to 2.4 billion, very much from global technologies in that increase. Very strong gross margin at 57%. Also very strong EBIT at close to 700 million, corresponding to 29%. So because of strong order intake, of course, we could say that the backlog has increased to 5.25 billion Swedish, which is quite a good level for us to have. So going a little bit more in detail on the different divisions. starting with pattern generators. So percentage-wise, it looks like you had the superorder intake with 253%, but last year, quarter two was very weak, where we had no system orders at all, actually. So the level we reached now is 625, which is a decent level, but compared to a weak quarter, a lot of percent, of course. We had four different SLX orders in the quarter, three normal machines, and then we had this one customized Aesthelix that we announced already last quarter which is a one-off project with a very high sales price, almost $30 million on that one. Sales a little bit down to $900, and this is positively impacted by the COVID acquisition by $26 million. Strong gross margin at $72, EBIT close to $500, where we had the negative impact from COVID acquisition of minus $14 million, and overall an EBIT margin of 53%, which is quite nice. Order backlog 1.7 and we have 13 systems now in the backlog as of end of the quarter. So, quite solid basic PCB assembly solutions. So here we have both positive and negative. So we have the two largest order ever taken in the quarter and both of them coming from the defense industry. So very strong orders and this is as resulted in a record order intake of 444 million. At the same time, you can feel that we continue to make a loss. We had a sales of 303 million and gross margin of 37, but still we had a negative EBIT of 44. And in that 44, there is a restructuring cost of 39, but even taking that out, we're still negative on the EBIT. And this is also why we now have started a restructuring program. where we want to bring the EBIT margin back about 10% and this should happen latest by next year at current volumes so make PCDS family solutions great again really high volume very strong demand here as well as you can see very much coming from the Chinese consumer electronics industry that has started to invest a lot in launching new products, but also markets outside of China. And we can also see in this division that we have a positive impact from opportunities when it comes to building up AI infrastructure. where we have sold the dispensing solutions to server assemblies and final assembly of optical modules. Strong order intake, almost 700 million Swedish krona, up 82%. Sales a little bit less, up 513 million. Very strong gross margin at 44 and the EBIT 68 million, which is equal to 13%. And here we have financial impact of ESOP of minus 24 as well, included in that number. So, strong backlog at close to 1.2 billion, so very good performance from high volume. The best performance of all the divisions we have in global technologies. You can see that especially in the PCB test and die bonding, but very good contributions from the other businesses as well in this division. So ordering take up above 1 billion for the first time. 1, 1, 1, 1. So 1.11 billion Swedish, which is 176% up. Sales also very good to see that this is following. up to 700 million that we don't only build backlog, but also we're building up the delivery capacity. We have a small positive impact from acquisitions of Surfex and the German company ITZ, less than 1 million. But nevertheless, very strong sales increase. And gross margin, super strong at 56%, and EBIT up to 250 million, which is a very strong pickup from the same quarter last year. Small impact of the different acquisitions. We have some noise from acquisitions in here. negative from Surfex and easy said but also positive impact of an earn out that was reversed in Surfex that was 14 million. So all that together means a very strong EBIT margin at 36% and an increase of backlog to 2.1 billion. So I think we can start to see that global technologies start to have quite a meaningful contribution to the group numbers. And all that, the strong momentum we have right now in the business, a little bit of currency also in our favor right now, has made us to revise the outlook for the full year, and we revised that up half a billion to 9.25 billion to reach that by the end of the year. So with that, I will hand over to Pierre Rochon for a while.

Thank you so much Anders and I will take you through a bit of a graphical look on the numbers. We increased year on year with 17% on a already quite good quarter last year up to the second best level at 2.4 billion in the quarter and we also had another record when it comes to off the market revenue which was 544 million just above what we had in Q1 Our EBIT margin on a high level, close to 30%, that's 29, which is not a record, but still very, very strong. If we look where we stand on a rolling 12-month basis, we have now reached 8.65 billion, with an EBIT margin at a solid 26% after two strong quarters starting this year. The aftermarket revenue crossed the line of 2 billion for the first time and that corresponds now to 24% of our net sales and this is something that we put strong emphasis on. If we look at the quarter on quarter and where did the result improvement come from, it was all in the gross margin. it was both improved gross margin which we have had in global technologies as well as in high volume and then we had a volume effect on top of that on the cost side we continue to invest both in building the organizational footprint globally in various parts of the divisions and we continue to invest in technology and this is the technology investments in R&D is this quarter more broad-based than before So in three of the divisions, we have continued to increase the spend distinctly. So patent generators, high volume, and global technologies. On the PCD assembly, we have more moderate level of spending in the R&D side at the moment. Marketing and sales and G&A, we continue to build and expand the footprint. There is a little bit of acquisition effect in these numbers as well, but we continue to expand and take advantage of the strong positions that we have. Ending the quarter at 698 or 29%. If we compare in the other direction and look division by division, you can see that all the improvement actually came from global technologies. In the quarter, patent generators had a strong comparison in the same quarter last year. In PCB assembly solutions, as Anders mentioned, we have 39 million of exceptional costs for restructuring. high volume good quarter and also loaded with the ESOP costs this year so actually underlying an improvement strong development in global technologies and that took us back to the 698 that we have reported cash flow We have a strong result, which of course is very supportive to the cash flow as well. The growth that we have is causing a bit of negative impact on the working capital, even if the effect was even bigger during last year, where we also started the year strong. But a little bit of cash impact there. On the investment side, we have relatively moderate acquisitions, ATZ and COVID, that we have invested in this year. We have also invested a little bit more in our organization than we would normally or historically have done among other things we are investing in TEBI and KISA for the PG and PA divisions on the financing activity side we had the dividend is the majority of that and that takes us to cash at the end of the period of 2.7 billion or net cash position of 2.3 billion. And with that quick walkthrough of the numbers, I hand the word back to Anders again.

Thank you, Pierre. We move over to sustainability and different topics each time, so this one we zoom in on the transportation, which is today 7% of our greenhouse gas emissions for Micronic, and we're doing efforts to reduce the emissions by changing transportation load. Many of our equipment are transported by air freight, and we try to the largest extent possible to move that into sea freight. From patent generators, we have started to ship spare parts to Asia by sea. We have also improved the flows from PCB assembly solutions between China and Sweden and shifting from air to sea transport. And also global technologies on the photonics interconnect business line. We also are starting doing sea freight for equipment going to the US. Of course, sea freight instead of air freight requires a little bit more on the packaging to protect the equipment, but also in terms of planning and so on, because it takes longer time, but we are in a good position to do that. And those initiatives, which is very much in close collaboration, both with the customers, but also with our suppliers, we're all on the same line. are contributing to reduce our emissions across the total value chain. So quite important steps here. So that was the end of the normal presentation. Now we can move into question and answer session.

Yes, thank you Anders and thank you Pierre. So now we are moving over to the Q&A session and we start with Ina Juupsund at SEV. Ina, please go ahead and ask your questions.

Yes, hi, Sven and Andersen, thanks for taking my questions. I wanted to start by asking on your race outlook again here for 2026, and if you could give some flavor on the kind of main drivers behind this and where the kind of positive delta for 2026 is coming from. And then a second, you previously indicated that you're kind of fully booked within PCB tests for 2026. Will you be able to increase delivery capacity here, and what can you say about kind of the current utilization and potential expansion plans?

So, if I take the first one with the increased outlook, we have seen very good demand in high volume. You could say that it's basically one-third, one-third, one-third. We have increased demand in high volume. We have also further increased demand in the global technologies, and then it in particular the AI infrastructure related products the dibonding to some degree PCB test and the third one is of course the currencies have certain impact as well so basically these three buckets a little bit similar in size compared to prior code

Yeah, and then it was the question about the delivery capacity in PCB tests, I think, in particular. And I think we announced already before that we're doing an expansion of the production facility, which is not yet there, but it will be end of this year, I think, is planned for. But already we are doing improvement in the total supply chains. It's not only factory floor space that is kind of impacting the delivery capacity. It's also the whole supply chain with sub-supplies and so on. And You can see that also the revenue numbers are picking up in that business. So we are able to deliver more, also improve the current situation a little bit. But the order intake is even stronger, so it means that the long lead time remains long. It's more than a year and a half right now. It depends on the equipment, of course, also. But we are super cautious. We have quite large down payment. parts in the contract and some are ready to safeguard that we don't suffer, will suffer from any cancellations or speculations in this backlog. But it looks quite good. But we are better, we are better and better on deliveries. So it's also good for the revenues, which is visible, I think.

And then Edith was super strong in global tech here in Q2. How sustainable would you say this level of profitability is for the whole division?

It's a good question. I think this 36% that we delivered in the quarter is a little bit on the high side. But if you want to have a direction, I think for now, I think we will be able to be around the 30% mark. I think that's the level where we are at with this strong demand and good volumes that we have.

Thank you. That was all for me.

Thank you. Thank you, Ina. And now over to London and Oliver Wong at Bank of America. Please go ahead and ask your questions, Oliver.

Hey, guys. I hope you can hear me. Yeah, thanks a lot. I was wondering for maybe for pattern generators, sort of, you know, I think, you know, the revenues in quarter exceeded expectations quite a bit. So I was wondering if there's any Anything flagged there? Any one-offs in terms of revenue? And also just an update, a general update on kind of the trends in terms of underlying demand for display mask riders, for China semi-mask riders, for non-China semi-mask riders would be super helpful. Thank you.

There was nothing extraordinary in the quarter. I think we delivered according to plan. I think it was five systems. That was planned and also, I think, according to what we... having the previous reports also on what should be delivered when and so on. So that was just following that. On the market situation, so starting with the display, so we have had a little bit or still have a little bit lower than normal, I would say, order intake on the display side, which I think is kind of normal. We have those cycles normally coming up and down. Also the replacement programs goes a little bit in cycles as the generations shift a little bit at the same time. So I think we're a little bit lower than normal and we should expect that to pick up but difficult to say when really. But there is nothing in the market that has changed actually. We can see that the display manufacturers on the demand is still quite high and we can also see that there is a lot of technology development on the display side. An example is if you look at a mobile phone, they start now to have integrated privacy filters into the space. That drives the mask demand quite significantly, actually, so that innovations like that are in our favor, really. On the semi side, it's holding up surprisingly good. I think we said it before that China bought a lot in the past and maybe a little bit less now, but can actually see that I think demand in China is still strong and could even be even bigger. So I think China is still moving quite ahead on the semi side and as do the rest of the world as well of course with everyone still stronger and stronger believe in owning the supply chain and also with the demand that is on the market right now, investing quite a lot. So, semi is also quite strong, I would say. So, no surprises maybe, but that's as it is.

So, semi-mass writer demand, China is quite strong, and non-China, how is that trending?

Similar, I would say.

Sounds good. Okay, and if I may ask another question? Yes, on the global tech, you know, growing very strongly, driven by PCB tests and die bonding. It seems like it's sort of silicon photonics die bonding, something like that. Or maybe just optical in general. Yeah, I was wondering if you could just talk a bit more about how you see the growth trending going forward. And, yeah, I mean, how do you see kind of your EBIT margins for the growth growing into the future?

Thanks. Yes, so on the demand side, so very much is driven by photonics and communication-related equipment. And it's really about optical, very much on the packaging of optical components into transceivers and stuff like that. So every typical customers are, of course, like InnoLight, Elementum, and those kind of people who are building transceivers for different manufacturers. And if you look on their numbers, they're very strong as well, I think. So that's... that's really following that on that side. I don't, yeah, so super strong in that. And this is impacting both, it's impacting dibonding directly with those customers, but also the whole AI infrastructure is impacting PCB test as well because then later a lot of components are coming on very complicated boards that we that we test with our equipment or not we test but our customers test that what was the second question on the EBIT more than before yeah exactly so we had 36% in the quarter on global technologies that's a little bit on the high side because we still need to build up capability and capacity in the division so Right now, the revenue and profit is moving a little bit faster than the planned cost. So when the planned cost comes to kind of a normal level, I believe, at the current demand and the current mix, we will be around 30% in this division on the normalized level. So as everything looks right now. So that should be kind of the normal rate at the current momentum.

I was wondering, you know, you say 30% normalized EBIT margins, but presumably, you know, let's say the trends continue, revenues will continue to grow. So, you know, if there's a normalized, you know, what kind of timeframe do you expect? Or do you expect more like, you know, let's say trends continue 30% that will continue to increase?

I think normalized, I mean, if you take that the current order intake translates into revenue, let's say a year from now, and then we are able to invest as we need to in that division. So I think that point in time should be within a year. That's the thinking.

Potential upside to that into the future.

Yeah, if volume goes beyond that, then that should have leverage. because the gross margin is quite strong in this division.

Absolutely. Thank you very much.

Thank you.

Thank you, Oliver. And now over to Nordea and Anders Folkeblom.

Thanks, Sam. Good morning, Jess. I wanted to ask firstly on, I mean, Anders, you said a bit about the display market, you know, being stable, expecting, you know, potentially some orders come through there as well, I guess with the Precision 8000. But just kind of balancing that with what we're seeing in terms of component price inflation and that impacting some of the display manufacturers, potentially, you know, investment willingness and such. How do you balance that against I guess a good pipeline of eventual customers taking the Proxision 8000.

Timing wise. If anything that would possibly delay a little bit maybe decisions because of course the payback calculations will look differently with the higher component cost and so on. But at the same time the development has to happen in a way. I haven't seen so much of that. If anything, it's difficult to say because you know that the pipeline is, I would say, quite normal. But as usual, the time between initial discussion and closing is extremely valuable in our case. And we don't really know always if this is depending on what is the reason for that and so on. My thinking is that it has a minor impact on decisions on that in the bigger perspective. And we should really soon sell the P8000. I think logically it should happen, but customers are not always as logical as we are, I think.

Yeah. Thanks. I appreciate that answer. And I mean, you elaborated a bit on that before in terms of global tech, and I know what you're trying to do in terms of sort of protecting, I guess, you know, your demand and your existing customers with expanding capacity and working with sub-suppliers and whatnot. But how do you see the competitive landscape evolving here? As you say, lead times are quite long, a year and a half. I mean, is there something that keeps you up at night, so to speak?

Yeah, I think it's something that we really want to improve. And, of course, in one way, it could be very convenient to have a backlog because then we know the future. But on the other hand, it's also quite a big risk. on that one. And I think we definitely don't want to expand it more or to prolong the lead time more than what we have now. But I think we can see that it kind of stabilizes. Because we are getting better and better on deliveries as well. And I think this is less and less an issue. But absolutely, this is super important. And I think right now, we don't have any... customers also have quite some lead time at their end because it's not only our equipment that needs to go into the factories and almost everyone has the same challenge right now because it's lead times from even though it's not competitors but complementary equipment is also extremely long and in many cases longer so we are not As long as we're not the worst or the bottleneck, we don't get the heat, really. But if it would be longer, then it might happen. So we should definitely keep it where it is and preferably shorten it.

That makes a lot of sense. Thank you. And I mean, I know it's still fairly early, but I would, as always, appreciate your speculation here. I mean, on the current, just you know backlog in PG all as equal how do you see you know revenues trending into 2027 in PG compared to 2026 do you expect it to be at a materially lower level or do you see kind of some some orders coming through that would support that anything you could say there would be would be great

Yeah I think we only know what we know right now in a way so that is the current backlog and the delivery schedule and as you say there are quite some gaps in the quarters for we can still fill so I think the next half year will really really tell on how well we are filling that but it's a little bit on the thin side for sure I agree to that but we work very hard to fill it but That I know you do. Yeah, but it's a product that is difficult to sell in a way that if the customer doesn't need it, it doesn't matter how good you are in selling it.

Yeah, okay. Thank you. Thank you very much for your answers. I'll get back in line.

Thank you, Anders. And now we move over to Henrik Hintze at the ABG Sundal Collier. Please go ahead and ask your questions, Henrik.

Thank you. First of all, I'd like to just follow up on one of the global tech questions there. You said you don't want to let the PCB test lead times increase further and preferably shorten them. Could you give us any detail on how you intend to achieve that?

We are expanding the factory and that effect will come towards the end of the year but it's also the whole supply chain that is in many cases quite constrained and we can see that from many different businesses right now that It's a little bit choked. So I think the majority of improvement will come from there. Right now, I think we can also improve our lead time in the factory even further a little bit. So we will be able to deliver more and more every day, you can say. Small, small, small improvements all the time. The big difference will come from early next year, I would say, when we have more space or more capacity.

And could you remind us how much your capacity should increase from current levels when that comes online?

25% more.

Okay. And on the margins in this segment, could you just give us some more detail on what has driven the sort of Q&Q change in the margin? Is it operating leverage? Is it price? Is it mix?

Okay.

It's a mix of different things. Of course, the level of fixed cost in relation to the turnover is going down as we are increasing the volume and as we are getting the throughput up. That's one important lever. We have also quite a good level of software content with the backfill functionality that we've spoken about a few times in these products. and where we have launched a second version, which is also supporting the total price paid, even if it's not the price increase on the product as such. And then, of course, given the situation, there is not so much of a price pressure. It's more a delivery pressure that we feel from the customers. So this, in combination, supports the improved gross margin in the PCB test specifically. On the die bonding side, we have since already some years worked hard on improving the cost base and focusing on highly profitable products, supporting the improvement of gross margin in that business line.

Okay, and orders in the first half here have obviously been very strong. Is 25% extra capacity really enough with the demand situation as you see it now? It doesn't sound like that much given the growth numbers we're seeing.

We believe that on top of what we have, that will at least, for what we can see, support the deliveries that we need to do.

And are we getting any indications from the customers here on sort of the longer term demand picture?

We are already taking orders with a pretty long lead time and with down payment. So we know that if the world continues to exist, then 27 will for sure be good and beginning of 28 as well. But beyond that, I think we can speculate, of course.

Okay. I would love to hear you speak a bit more, but I will get back at last.

Thank you, Henrik. And now we will move over to Mikel Larsén at DNV Carnegie. Please go ahead and ask your questions, Mikel.

Thanks. Yeah, I have one of the detailed questions first on the PD segment. You had quite good sales, I think. And I think you have delayed one SLX system delivery to Q3. And the model was still really good. So I'm just curious here about the service and upgrade revenue development in Q3, if you can elaborate on that. What that may be higher than normal, higher than usual.

It's a slight positive, but it's within what we say is normal, so it's not totally different.

It's a mix of machines delivered. We're quite strong. There was a lot of precision machines delivered in the quarter, which is having a higher price than SLXs, so that contributes, of course.

Okay. And when it comes to the R&D spending, it was a bit lower than in Q1 for the PG segment. Can you talk to us about if you are slowing down the R&D activity here from high levels or what we should expect going forward?

No, I think you can take Q1 and Q2 and combine them. It's a little bit when investment in certain external services fall more. But it's correct that it's 15 million lower in Q2 than it was in Q1. That's correct. But I think if you take the average of those, I think it's a fair representation of where we spend at the moment.

Okay. And going over to the global tech technology segment, I'm a bit curious here if you can elaborate on the different business that you have there, maybe more in detail, the profitability development and also how Certex is performing. It was a relatively large acquisition last year.

yes and it's maybe also maybe it's worth mentioning that the acquisition effect as we reported is one year and as we took on surface from the beginning of june last year there is only a two-month acquisition effect reported in in the report and actually june was a very strong month so this is you see a loss reported here for ETZ and Surfax but this only relates to April and May for Surfax and June was very strong so I think development in Surfax is at the moment strong order intake is picking up so we will be distinctly above last year when we end this year And margins are stronger than average in global technologies. So this is also supportive to the gross or will be supportive to the gross margin and the EBIT margin going forward.

Okay. And just to follow up on Surfex, I noticed that you have a litigation process ongoing or you have just started that. Can you talk to us about what that is about?

Sure. It's a US litigation process. A small competitor of ours that we are investigating whether there is an infringement or not. Of patent, yeah.

Okay. So I guess that you're doing this, I mean, for a reason that you notice that the competition is... maybe improving or, I don't know, can you maybe say something more about the backdrop of this?

I think we are always trying to uphold our IP and we have certain processes ongoing at various times. We have other processes going on in global technologies in other markets. I think there's nothing, no drama about that one.

Okay. And just a final one on global tech, if I may. So the segment is obviously performing really well, but what about further M&A opportunities, if you can talk to us about that, and how you allocate capital in that segment, if you focus more on the organic side, the capital expansions and the organic side, or if you have more M&A opportunities out there?

I think we have a number of things that we are doing organically now, in particular with the recent acquisitions. I think they still have to come up to speed, a few of them. But there is no limitation on the M&A side. I mean, we have a strong cash position. We have a willingness to invest if we have the right technology at the right price. Of course, tech valuations, as you know, they are quite challenging for now. So this may be a little bit of an obstacle. But we continue to explore and we continue to drive forward. And we think that Also in the future, a meaningful part of the growth should come from new businesses. Okay, thanks.

Thank you, Mikael. And now over to Fredrik Littell at Handelsbanken.

Thank you for taking my questions as well. I thought we could start off with PCB assembly that we haven't really dug too much into and see what you will achieve with the total 100 million restructuring charge you're taking, how you intend to spend that and what it will deliver for you in terms of lowered OPEX space. What is that most specific? It would be interesting to hear.

It's a mix of quite a lot of different things. We are reducing the workforce. This is one part of cost, of course, but we're also changing the way we manufacture and do business. We're looking into opportunities to insource possibly some products instead of manufacturing ourselves and still only offer the same kind of product portfolio that we do but maybe made in a different way this is still on investigation but it's the real target is to lower the cost the OPEX cost and to a level where we can make the solid minimum 10% EBIT even in the value or in a downturn and so on so if you take the current current sales volume or even a little bit less we should still be able to make 10% on that one then I think we have a contribution to the group

financial wise so that is the whole aim for the exercise but I think we have 8 or 10 different kind of work streams on how that should really happen so there are small pieces of everything but have you seen I mean it has been a weak market for a long time let's call it that have you seen changes in pricing dynamics as a consequence of that so that has been tougher on pricing

Not so much as we might expect. But what we see is this market is not really growing. This high-mix market, it's kind of there, and it's not that small, and it's existing, and it's quite an interesting market. The problem is there's very little growth in the market, I think, but that's why I think we can still be a meaningful player and make money in it, but more maybe on a stable basis than on a growing basis. You could see that many competitors are announcing that they are withdrawing from the PCB assembly market. We have seen announcements from ASMPT that they are what they call having a strategic overview on the PCB assembly. We saw last year that Coolik and Sofa just closed their PCB assembly business without not even trying to sell it and so on. We know that competitors are struggling. At the same time, the high-volume segment in PCDS goes quite well. So we can see that the companies like Fuji and Panasonic and those high-volume players are doing quite well and enjoying that, which means also they spend a little bit less time maybe on the high-mix side. So it's not so much price pressure. It's more that the market is a little bit too small.

Thank you.

It's not growing.

And another question, I noticed, Pierre, you alluded to ATG and a new product version that had been launched. I had a question here on when we visited Productronica, we got the A9 showcase for us. So can you describe a little bit how the innovation and how the development on the flying probe machines are looking for you? What sort of scope and time plan for more advanced machines to have?

I think this is not maybe the best case to make a future product launch but we continue of course to develop and enhance the machines that we have in the market. The A9 is relatively new. We have the back drill functionality which we have in now a second version which is better and then also priced at a different level. We have made certain acquisitions where we will also see what we can combine out of those. So there is a relevant product development taking place also in PCB test.

Okay, thank you. And just a final one from me. The P8000 went to Fortronics. Is that the first time a merchant is picking up sort of the new high-end machines for the coming 10 years? or did the merchants always be in the lead?

I think this is actually no difference to when the P800 was also a merchant going first.

Okay, thank you. Curious just.

Yeah.

Thank you, Fredrik. And now we will do a second, quicker round, I assume, but we go back to Ina Jypsund at SEB to see if you have any further questions, you know.

Yes, I can do a follow-up on the question about R&D spend. So how do you expect this to develop in 2027, and what kind of portion of the current R&D spend is it related to new product launches within PEG? And can we assume that R&D spend will peak in 2026?

That will depend on how good ideas we have in the future. But I think that we have now the big investments that we do on inspection as we have been talking about before. And I expect that we continue to run on this level at least the coming year. Because just that you get into the market doesn't mean that the product is 100% ready and that you can stop developing on it.

Okay, thank you. That was all for me.

Thank you, Ina. And now over to Oliver. Any further questions from you, Bank of America?

No further questions at this point, thank you.

Okay. Okay. Then Anders Åkerblom Nordea, do you have any follow-up questions?

Yeah, sure. One final, if I may. I mean, speaking about good ideas, you seem to have a few in high volume, at least, judging on R&D spend being up almost 50% year over year. Anything you want to say there?

I think...

No, it's nothing in particular, but I think on high volume in particular, we have been very, very good in adapting to market needs, really, to constantly develop new features and for new applications. And I think that has been quite a large portion of the growth that we have seen in this division, and we continue to do so. We still have the majority of applications of consumer electronics, but we see opportunities on the AI side, on the semiconductor side, especially we can do more on the automotive side and so on. I think we will see more and more, and also we see more and more products, actually, that requires new solutions. Now this AI glasses is very hot in China, and that requires totally new features from the dispensing equipment when it comes to how to rotate the objects and how to fill and to what precision and also on quality assurance and so on. So I think it's the majority of the innovation is really this kind of application-oriented innovation where we're solving new problems because of new challenges for customers. And by that, we are able to grow the business. And that's also quite a good way to stay ahead of competition, actually, because they have a lot of competitors on the dispensing side, but they are, I would say, most of them are quite behind because of our speed of innovation.

Okay. Very good answer. I appreciate that. Thank you.

And now over to Henrik Hintze, ABG Sundal Collier. Do you have any further questions?

Yeah, just to follow up quickly on that. You wrote in the report and you mentioned now again that you're capitalizing on some new AI opportunities in the high volume segment. Could you give us any idea of what the potential is here? I assume we're not going to see high volume start growing the way global tech is, but is it a significant potential?

I think it's a potential. I think the difference is that high volume is very broad. We have numbers of different applications and AI is a bit of that. So most likely the AI-related applications will grow, but they are maybe less than 20% of the total. So that will not, while it is in global technologies, maybe more closer to everything. So that's a difference. Of course, it's difficult to say what the potential is, but I think... you can see the rate of order intake and so on, and I think that is very much driven by new applications and also an improved market situation. So I don't really know how much is exactly AI-related and so on, but it is helping for sure, and I think it also has some spillover effects that even if it's not maybe pure AI, it's still kind of still electronics assembly will need to happen more and more.

Okay, thank you very much.

Thank you, Henrik. And now over to Mikael Asien, DNB Carnegie. Do you have any more questions?

Yeah, actually, I have a follow-up again on this high-volume demand driver from AI applications. You mentioned AI glasses. What other applications are you talking about that is relevant here?

Yeah, so that is under consumer electronics. And then you can debate if it's AI glasses or glasses with a little bit of AI functionality inside and so on. But it's still labeled like that, I think. And more precisely, it's what we referred to in the report, I think, which is this kind of heat dissipating device. dispensing equipment which is going directly into the... I think it's on the... I don't remember exactly what it was. It was the communication equipment, I think. Communication equipment, yeah.

You also have a bit on the optical module assembly.

Yeah, exactly. So this is more precise. But as previous question also, it will not create the same boom as we have in global technologies. But it will be a meaningful contributor for sure.

And you estimated to a bit less than 20%?

That was a super, super high-level estimation, I would say, but it's not more for sure.

Okay. And just to follow up on the memory market, a rising memory price and tightening supply affecting any of your business, and can you comment on that, if that's the case?

Not a lot on our cost side, a little bit, of course, but it's maybe more on the customer side where the product calculations from customers maybe look different and so on. But we don't believe that we have seen so much impact offset in any of those two ends. Okay.

Thank you. Thank you.

Thank you, Mikael. And finally, over to Fredrik Littell at Handelsbanken for your extra questions.

Yeah, I have one. If we could maybe elaborate a little bit on Kupping, that just have entered into your group. And the first impressions, how you met the company, the plans you're sort of tailoring, what the ambitions are and so on, would be interesting to get some more details on it.

Yes, maybe not give too much, but we do see good potential with the base business of COVID, and we do see possibilities to combine certain areas. We are, however, a little bit restricted in the combination because this is a national core technology in Korea, and we have to deal with it with certain precautions. So it will take us a little bit longer to combine it with our technology. but we do see some good prospects on the base business, meaning repair for panels and repair for photo masks. Okay.

Thank you. Thank you, Fredrik.

And with that, we have reached the end of the presentation of my Chronix Q2 report. But before we finish, I would just like to mention the fact that My chronic we hold Captain Markets Day on the 31st of August in Tabby at our headquarters and we invite media, analysts, you guys who participated today and institutional investors and you can sign up on the web page or through the quarterly report and there will be some exciting things happening there so welcome to that. And with that, thank you very much for attending today's presentation.