Ladies and gentlemen, welcome to the VAT Q3 2021 trading update conference call. I'm Sasha, the Chorus Call operator. We'd like to remind you that all participants will be in listen-only mode, and the conference is being recorded. The presentation will be followed by a Q&A session. You can register for question at any time by pressing star one on your telephone. For operator assistance, please press star zero. The conference must not be recorded for publication or broadcast. At this time, it is my pleasure to hand over to Mr. Mike Allison, CEO of VAT Group. Please go ahead, sir. Thank you. Good morning, everybody, and welcome to VAT's Q3 2021 trading update conference call. With me this morning is our CFO, Fabian Chiozza, and our Head of Investor Relations, Michel Gerber. After our introductory remarks, we will start the Q&A session. The call moderator will take your questions in the order you enter them. Before I start with the review of VAT's 3rd quarter business performance, I would like to thank again the global VAT team, who continued to deliver an outstanding performance during the past quarter by delivering an extremely high level despite the ongoing challenges with COVID-19 and the global supply shortages. Our growth in Q3 was supported by the ongoing ramp in our factory output in Malaysia and Switzerland. Both factories are running at record output levels. Now let me turn to our business performance. During the 3rd quarter of 2021, VAT saw continued strong markets driven by the long-term global growth in the semiconductor demand. The industry continues to run at record output levels, as can be seen from the ongoing chip shortage, and this looks like it will continue for the foreseeable future. Our ongoing semiconductor technology innovations fuel demand for all of our products. Investments in the semiconductor industry are now focused across the board on all technologies and all wafer sizes. We also see OEM demand coming on strong in some of the more niche technologies like silicon carbide. This resulted in record sales in VAT semiconductor and global service business units. In this area, VAT outgrew the market and continued to gain market share. Our leading technology position, coupled with our strong business execution across all our markets, were the main drivers of this performance. In addition, the advanced industrial business unit reported strong growth as it captured the growth opportunities in its recovering markets and continued to make progress on its strategic growth initiatives. Demand in the display and solar business remained muted, but recent order activity indicates that the bottom of this cycle may have been reached. A key lever of VAT's 3rd quarter sales performance was the strong mitigation of supply chain challenges in the semiconductor and other industries. This has the full focus of our management and supply chain teams, and so far, we have done an incredible job finding solutions for the very challenging shortages. We do expect these shortages to continue well into 2022, especially as we continue to raise factory output. We have a few bottlenecks, but by close cooperation and transparency with our customers, we're managing to meet their needs. VAT's operations team continued to increase the global production footprint. We expect to reach production output of around CHF 180 million in Malaysia for the full year. By the end of the year, a run rate of at least CHF 220 million. At the same time, we further optimized our production capabilities in Switzerland to manage the additional volumes. Group orders of CHF 299 million in the 3rd quarter were 91% higher than in the same quarter a year ago, and up 18% sequentially, yielding a 3rd quarter book-to-bill ratio of 1.3. This high order intake was driven by the generally high-level investment in the semiconductor businesses for both valves and service offerings, and was further accelerated by global supply chain constraints, which may have triggered some additional inventory buildup, especially for our smaller customers. Both the advanced industrials and display and solar business units also posted higher orders in Q3. The company's order backlog at the end of the 3rd quarter amounted to CHF 284 million, up 129% compared with the end of September 2020. VAT's Q3 net sales grew to CHF 229 million, an increase of 23% compared with the same period in 2020, and at the top end of the company's guidance issued with 2nd quarter results in August. Foreign exchange movements did not have any material impact on VAT's Q3 net sales. For the first nine months of 2021, group orders and sales are up 54% and 28% respectively, compared with the same period a year earlier. Foreign exchange movements had a negative impact on net sales of about 3 percentage points. Turning now to our business segments. VAT reported Q3 orders of CHF 250 million, up 101% year-on-year, and net sales of CHF 185 million, an increase of 22% compared with the same period in 2020. The Q3 order growth was mainly driven by the semiconductor business units, where orders increased year-on-year 117% to CHF 187 million, a new all-time record. Net sales also posted a new record level, amounting to CHF 137 million, up 31% compared with the 3rd quarter of 2020. The business unit semiconductors recorded eight specification wins in the 3rd quarter, bringing the total to 18 for the first nine months, with three of them resulting from the company's growth initiative to develop new adjacent products that complements its core valves business. We continue to be on track with our 2021 spec win targets across the various business units. Orders in the display and solar business units increased to CHF 21 million, up 59% year-on-year, representing the best quarter of 2021 so far. The main contributor to this order growth came from the display business, where the company received orders for both LCD and OLED fab expansions. In the solar business, the main business driver continued to be the PERC technology sector. The advanced industrials business unit continued a strong recovery with Q3 orders up 69% year-on-year, reaching a new record of CHF 42 million. Sales were 17% higher at CHF 33 million. The recovery was broad-based and resulted from generally improving market conditions, coupled with positive results from growth initiatives implemented during 2020 to focus on Asian markets and new product sectors. VAT saw continued strong demand in coatings, especially related to high-end applications such as mobile phones and optical coatings, and especially in Japan and China. Scientific instruments, material and life science also showed continued strong demand, partly the result of research institutes in the U.S. and Asia returning to normal activity levels after a prolonged standstill due to the COVID pandemic. VAT shipped several prototypes to large scientific instrument OEMs, which is a key initiative to increase VAT's engineered content with these important customers. The global service segment reported new record Q3 orders of CHF 49 million, an increase of 53% compared with the same quarter in 2020, and driven by strength in all four sectors of the business. That is the parts and repair, gates, upgrade and retrofits, and sub-fab valves. Net sales were up 28% to CHF 44 million. High utilization levels in the semiconductor fabs drove increased demand for spares and repairs, as well as consumables such as gates. In addition, new retrofits in the control valve space were launched during Q3, focusing on critical etching processes used in 10 nm and below nodes. Increased business activity was also seen in the sub-fab segment as the largest independent device manufacturer brought new fabs online. Let me now turn to our guidance for Q4 and outlook for the remainder of 2021. The medium-term growth drivers for VAT, mainly in the semiconductor industry, VAT's largest end market, remain firmly in place. Megatrends such as the Internet of Things, cloud computing, and artificial intelligence have been boosted by pandemic-related developments such as the shift to home office and the sharp increase in e-commerce. The current capacity shortage in all semiconductor chip categories has driven record capital expenditures by chip producers, and VAT expects this to increase well into 2022. Market analysts estimate that investments in wafer fab equipment in 2021 could increase by more than 30% to around CHF 85 billion, compared with the previous record level of CHF 64 billion in 2020. Market estimates for 2022 indicate low double-digit growth. As a clear market and technology leader, VAT is well positioned to harness this trend and continue strong above-market profitable growth. In the display markets, investments in large OLED screens and additional capacity for smartphones are expected to remain muted. However, the company believes that the bottom of the cycle may have been reached and expects business activity to gradually improve over the next 12 months. In solar PV, the current investment cycle is PERC technology. It's expected to continue with the shift to higher efficiency heterojunction solar cells is forecast to gather pace during 2022. The market rebound for advanced industrial valves remains positive, driven by both a general global economic recovery plus expected strong growth in China. In addition, upgrades of large synchrotrons continue, especially in the U.S. and Asia. The company also expects to make further progress in the area of scientific instruments with several prototype deliveries. VAT's global service segment is also expected to grow. Driven not only by demand in its main semiconductor market, but also by new product launches, as well as the increase of its large install base, which is opening additional opportunities for upgrades and retrofits. On this basis, VAT expects Q4 sales of CHF 240 million-CHF 250 million and full year 2021 net sales of CHF 885 million-CHF 895 million. The full year EBITDA margin is expected to be above the half year levels of 33.9%, and net income for the year is expected to be substantially higher than 2020. Capital expenditures for 2021 are expected to be approximately CHF 40 million. Free cash flow is expected to substantially exceed the previous year's record level as higher EBITDA more than offsets working capital requirements. This concludes our prepared introductory remarks, and we are now turning back to the call operator for the Q&A session. Operator, please. We now begin the question- and- answer session. Anyone wishing to ask a question or make a comment, please press star one of your touchtone telephone. You will hear a tone to confirm that you have entered the queue. Sorry, I'm muting your line because it's doing feedback. Thank you. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use only handsets while asking a question. Anyone who has a question or a comment may press star one at this time. The 1st question is from Didier Scemama from Bank of America. Please go ahead. Oh, thanks very much for taking my questions. I just wondered if you could maybe qualify a little bit the comments you made in your press release this morning with regards to, and I apologize if I put words in your mouth, but sort of double ordering from your semi-cap customers, and explaining perhaps the sharp acceleration order intake versus your Q1 and Q2 run rate. If you could give us a sense of how much of that, when 16% is due to additional purchases to compensate for supply constraints or fears of supply constraints, that'd be great. A very quick follow-up. Thanks. Yes. Thank you for that. We estimate about 5%-7%. We do see strong order activity across the board, across all segments, that did drive up our Q3 sales. We didn't necessarily see over-ordering, as you put it, with our largest customers. It was mostly in the mid to smaller OEM category, and I think they're concerned with the ramp-up in the industry and also with lead times increasing slightly. We think that drove from around the CHF 20 million-CHF 25 million additional orders in that timeframe. We do see order intake continuing strongly, even in the 1st part of October. We're very optimistic about our Q4 order outlook as well. That's great. Very helpful color. As a follow-up, I just wondered if you could give us a sense of where you think your customers' inventories are generally and specifically with regard to your particular products. I think pretty healthy. When I look at our end inventory position in VAT, we've got a healthy balance of inventory in-house and with our consignment inventories in the field. Actually, in September, our inventory in the field dropped a little bit, which shows a healthy pull from our customers. I think the balance looks pretty good at this point. I think it's quite hard to judge where the industry is at because there are so many specific supply chain shortages, and I think they impact every company in different ways, depending on which components they use and what type of materials they use. It's quite hard to read the exact status, but when I look at our inventory, it certainly looks pretty good supply/demand balance right now. Excellent. Thank you so much. The next question is from Sandeep Deshpande from JPMorgan. Please go ahead. Yeah. Hi. Thanks for letting me ask the question. My question to you would be, what has changed from the earlier part in the year? I mean shortages existed in the earlier part of the year. Shortages existed in the 3rd quarter. Based on what your customers are telling you, what has actually changed? Because you seem to be giving a slightly different message from earlier in the year. The 2nd question I have is regarding supply. I mean, clearly your orders are very strong. In terms of, you talked about the market growing low double digits next year. How do you see your own order shipments increasing next year, and do you have enough capacity to supply that sort of growth? Thank you. The first part of the question, I don't think too much has changed. I think there's just an ongoing challenge across the industry to get things like electronics components. I think they're well-publicized. You get different constraints with different types of electronics components. I think it's just a general supply issue across our main material and electronics sub-components. I think on the material front, maybe the 1st half of the year, aluminum was a bit harder to get and in tighter supply, I think we're seeing that free up a bit in Q3, Q4, and it looks more promising for 2022. I would say right now the number one issue is electronics components, and that's really just a daily challenge to deal with the constraints. That sometimes means we have to re-qualify new components, which is difficult, but we have to do it if there's specific issues. Supply, yeah, right now, we're forecasting in an industry growth in the 5%-7% level. We obviously expect to grow faster than that, so we've got various scenario plans running to ensure we have the capacity output. I don't see any constraints for 2022. We're ramping the Malaysia facility on plan, and we're also adding additional capacity in Switzerland. We're preparing plans for further capacity adds into 2023. I think VAT should be in a good position to meet any increase in the market. Thank you. The next question is from Michael Foeth from Vontobel. Please go ahead. Yes. Good morning, gentlemen. My first question would be regarding your supply chain constraints or capacity constraints. To put the question maybe differently is, could you have generated more revenues if you had no supply chain constraints and more capacity available? That would be the first question. The second one is on supply chain as well. How are these component shortages impacting your costs and your margins or let's say also maybe the logistics costs? How are those impacting your cost side at VAT? Yeah, I'll let Fabian talk about the cost side. I'll just say a little bit more on the output. I think it's a difficult one to gauge. Would we have been able to revenue more because it also depends on how much pull we get from our customers. As you can imagine, the larger OEMs are juggling other supply chain issues and adjusting the manufacturing output in line with them. I think realistically, we would have maybe done an extra CHF 10 million, CHF 15 million if everything lined up and we had no capacity constraints or supply constraints. The question still would have been, would it have been effectively pulled by the OEMs? Again, pretty hard question to answer. On the cost side, Fabian, do you want to say a little bit on that? Yes, Mike, I can add some color to that. With regards to your question on the logistics cost, we obviously also observe quite significant increases in sea freight rates. Also, air freight has seen strong cost increases, however, is now becoming more usable also for additional product groups. Our expectation is that there will be a slight downward trend towards the end of the year, and it also looks more stable into 2022. With regards to the effects on VAT, we sell roundabout 2/3s of our products ex- works. There we are definitely not affected with regards to the increases towards distribution to our customers. On the other hand, we do also pass on certain cost increases to our customers. On the bottom line, the effect of these distribution cost increases is very insignificant at this stage to VAT's profitability. Very well. Thanks. Maybe just one follow-up or one additional question on the specification wins in adjacencies that you talked about, those three specification wins. Can you maybe comment a bit more in detail in what sort of applications that is? Yeah. Mostly around our motion components and advanced modules. We had two major platform wins with our motion components. They're continuing to do well. I think the capabilities that we bring to the market with these specific components look very promising, and we continue to build momentum there. Same in advanced modules. As the complexity continues to grow, we're getting a lot of opportunities to add content for the OEMs. That covers things like from EUV tools to advanced etching and deposition systems. I think the capabilities we're building up put us on a great trajectory to way outperform the CHF 150 million level that we talked about in last year's Capital Markets Day. By the end of the year, we'll give you an update on how we stand with that compared to the Capital Markets Day outlook that we had last November. Okay, that's very helpful. Before the end of the year or with the full year results? No, with the full year results. Yeah. Okay, great. Very helpful. Thank you. The next question is from Sebastian Kuenne from RBC. Please go ahead. Good morning, guys. First of all, impressive order intake, but I have to ask again on the pre-orders. If I run the numbers, then you have about CHF 55 million orders that you're not going to deliver in the fourth quarter. You also tell us that the outlook for the orders in Q4 look very strong, and you guide for CHF 245 million revenues, which then means you may add another CHF 50 million to the order book. To me, that seems like much more than 5%-7% of orders being pre-orders. It looks more like 20%. Can you maybe explain a little bit why you think there's only a small portion of pre-orders in your current order book and expect for Q4? Thank you. Well, I think lead times are also increasing across the industry. We've seen some OEM lead time increasing considerably. I think that's one factor. How that plays out entirely on Q4 orders and Q1 orders, we would have to see. We're going to continue increasing our output, and you'll see that continuing to increase into Q1. I think we will be running with a higher order backlog. Some of the display orders we took in in Q3 were for delivery in 2022. They tend to have more or longer lead times than the semiconductor orders. It's a dynamic picture and it's new territory that we're in with the growth in the semi industry. We'll see how that plays out. From what we saw and the estimates we had, somewhere in the 5-7 level looked like it was additional orders from these smaller OEMs. Yeah. It's additional orders from the smaller OEMs. Sorry. The bigger OEMs do not show that behavior of placing orders now for delivery next year. They still expect you to deliver whatever they order, and they expect you to deliver it within four weeks? No, not four weeks. I think the whole industry is now working on a more like three-four months. We're getting a lot of visibility from the OEMs in terms of their need. We're running at such higher levels, I think the whole supply chain is doing a better job at trying to lay out the plan for Q4 and into 2022. That's very understandable. Good. I have a question on the outlook a bit longer term. 2022 is fine. We know what the projects are, what the investment projects are in semi. Your revenues will be fine. For the planning for 2023, i.e., orders late 2022, do you see an incremental risk from the memory side of the market? We now hear more comments on dropping DRAM prices. If I recall correctly, in 2018, that was the main early trigger for the sharp market correction. Do you become incrementally cautious on the memory side, or is everything fine as it was three months ago? I certainly agree with your comments that 2022 looks promising from a memory standpoint. You saw the announcements from Micron with increased CapEx into 2022, Samsung also, we've heard are look pretty strong for 2022. I think it's quite hard to predict exactly what will happen in 2023. The only thing I would say is that the DRAM side especially, we're seeing an uptick of new technology into the advanced nodes there, and that's definitely driving a higher CapEx per wafer. I think that's going to offset some in the DRAM market. Even if we see lower pricing in 2023, they're still going to have to make investments to increase the technology at next generation nodes. I think DRAM should continue the way advanced logic did in 2019. I think the big question mark is NAND and just how much capacity they're bringing on versus supply. I think we'll see how that plays out in 2022. At the moment, NAND looks quite positive for 2022. If they don't add too much capacity, that shouldn't lead to too much of a challenge in 2023. It's a really tough one to call with the growth rates we're seeing in the NAND business. Final question from my side. The 18 specification wins that you had, it is always a bit difficult for us to understand and to put this in context. Would those 18 specification wins indicate market share gains, stable market share, ongoing trajectory on gains? How do we read these 18? Is it 18 out of 22? Is it 18 out of 100 spec tenders, technology tenders? Yeah, I think at any one time, there's obviously a different level of platforms getting developed within the industry. It tends to be more in the down cycle that you see platform changes, and new technology introductions. There's probably a few less platforms as we come into the volume phase of the industry. Nevertheless, I would say our spec win rate is well above 80% with these 18 specification wins. It indicates future share gains, as I've mentioned in previous calls. I think we're performing at a very high level there. Perfect. Thank you so much for your help. Much appreciated. The next question is from Daniel Regli from Octavian. Please go ahead. Hello. Good morning. Sorry, my questions have already been asked and answered, and therefore, so I was not able to take me out of the queue. Apologies for that. Okay. Okay. The next question is from Robert Sanders from Deutsche Bank. Please go ahead. Hi, good morning. Thanks for taking my question. I guess my first one is just on the balance sheet. Historically, I remember you talking about returning up to 100% of cash flow and trying to target a net debt to EBITDA level of one times. Clearly, you're going to be well below that on the leverage. Is there any kind of reason why you wouldn't just return 100% of cash flow with the next dividend payment? I'm just kind of looking at it looks like something in the region of at least a CHF 6 dividend. I have a follow-up. Thanks. I'll pass that to Fabian. Yes. As we have communicated also during the August call, we stick to our earlier defined dividend policy that we will distribute up to 100% free cash flow to equity to our shareholders. With current estimates, I would also not see why we should be changing that in any way. Obviously on the dividend proposal, I'm not going to comment on today. Yeah, we stick to what we have said before. Got it. My follow-up, I think this was perhaps brought up already, but just to be clear. On the raw material costs, can you just remind us how large that is as a percentage of your cost of goods sold? What is the hedging and the trend in terms of the main drivers, whether that's steel or rubber or whatever it is, the big items? Thanks. Here we are well hedged on the raw material side, certainly into early months of 2022. Therefore, up on this point, we haven't seen any significant effects on our material costs, which are somewhere south of 40% over sales. We do, however, feel a strong push on several commodities. Mike has already alluded to earlier, where we are now in discussions with our suppliers in order to negotiate prices for the remainder of 2022. Most of all, also secure the allocations in order to keep up our production capabilities. We have already increased some of our prices, where this was necessary and would certainly also continue to absorb any potential material price increases in 2022, either by negotiation or especially with our continuous improvement programs, that is rendering substantial results in order to compensate the increases and defend our margins. All right. Thanks. Just to clarify, Mike, a point you made earlier about. Yeah the long range targets. On the full year results, you will update your long range targets, which I think are pretty much out of date now, or is it just a sort of high level change? What I mentioned is we'll give you an update on the adjacencies. They're a smaller part of our business and growing, obviously. It makes sense to look at them more on an annualized basis, to show how those adjacencies are growing. We'll update them in the full year results. Got it. Thank you. The next question is from Marta Bruska, from Berenberg. Please go ahead. Hello, good morning. I would like to follow up on just medium term targets, as I also think they're a little bit out of date. It comes back to our discussion from January this year, when I already kind of thought it's a little bit on the low side, this CHF 1.1 billion in 2025. I just wanted to ask you whether you are still standing by this. With this year, +30% growth, next year you said it will be 5%-7% for the industry, VAT above that. I'm just wondering, that will be close to CHF 1.1 billion probably already. I also kind of struggle to square this with your comments that I understood you don't expect to see the downturn as far as you can tell into the future. I'm really struggling to square how your guidance fits with the medium term view. If you can help me on that, please. Yeah. Well, I think if we go back to November last year at Capital Markets Day, the industry was forecasting a 5%-7% increase, about the same that we're forecasting at this point for next year. Obviously, it was a completely different outcome, I think we've seen the CapEx hitting CHF 85 billion approximately. It's driving, I think, a much higher level of CapEx than we expected and the rest of the industry expected. Yeah, clearly we will go past the CHF 1.1 billion we talked about then, we will revise our five-year targets. I mean, we have to do that with the strength of the industry. When we update those five-year targets, we haven't fully defined yet. I think we can safely say we're going to exceed them. The other part of your question, sorry, could you repeat that again? No, it is actually answered. Thank you. That's very helpful. Okay. No problem. I do have a follow-up, because the timing, when you will update the guidance, I believe it would reflect whether you have more visibility or the industry has more visibility, which is of enormous interest to us as well. When do you expect the visibility or the confidence a little bit to increase? What shall we look out for? Yeah. That's a question we've been asking internally. We look at supply-demand balance. We look at pricing. We look at fab investments. We've just seen in the last few days, for example, further fab announcements from TSMC in Japan. They're coming in in the 2023, 2024 timeframe. That indicates that we should see strong CapEx in the 2023. The fabs TSMC are building in the U.S. I think we know there will be a correction. There always is when you've got such high growth levels. At this point, it's quite hard to predict when that's going to be. Our last estimate was towards the end of 2022, possibly the beginning of 2023. We pushed it out to maybe the end of 2023. With these additional fab announcements, that could again generate strong spending in that period also. I think, I would imagine by the time we present our full year results in early March, we'll certainly have a better outlook on 2022. I think our major customers are also updating their plans. They generally give us one-three year outlooks so we can plan our capacity requirements. Hopefully by that time we'll have a better view into 2023 also. Basically spring, the Q1. Yeah, I would say so. Thank you. Yeah. Okay. Thank you very much. It is super helpful. Thank you. The next question is from Remo Rosenau, from Helvetische Bank. Please go ahead. Yep. Hello, can you hear me? Yes. About your own capacity potential, I mean, let's take aside any supply chain issues, assume everything is fine. Market demand continues to be great. You mentioned that Malaysia is now at a run rate of CHF 220 million per year. Further ramp-up coming. You're doing optimizations in Haag. How much sales could you generate in the best of all worlds by the end of next year? Yeah, I'd say intrinsic capacity limits at the moment are probably around about CHF 1.4 billion in total sales. That's including our service revenues and so on. We still have a bit of headroom to play with at this point. Malaysia, we planned for CHF 400, CHF 450 approximately. We can probably push that closer to CHF 500. We still have some optimization opportunities, like additional shifts, et cetera, we can run in Switzerland. That should get us to around the CHF 1.4 billion. Clearly, we have to have additional capacity coming on stream around the 2024 timeframe, possibly even slightly earlier than that. We're obviously planning that. Okay. CHF 1.4 billion is basically on the current setup without major new investments, and then the additional capacities in 2024 are kind of brownfield, right? Not totally. Yeah totally greenfield. Okay. That won't also cost a fortune. Well, the capacity increases up to CHF 1.4 billion. Yeah, I would say that is just standard. A few machines, a few assembly lines and so on. It is fairly low cost, and well within our budgets. The next capacity expansion will be a new factory at one of our locations. That will be a fairly high expense level. It will put us probably above the 4%-5% CapEx that we talked about before, but probably just for one - two years. Very affordable, and I think over the cycle, we will still maintain that 4%-5% CapEx ratio. I think you will see in the year that we are completing the building and bringing in new machine tools, you will see that CapEx ratio pop up a little bit. Okay. No, that's great. Thank you very much. The next question is from Jürgen Wagner from Stifel. Please go ahead. Yeah, good morning. Thank you for taking my question. Your service business also keeps growing strongly. How cyclical is it? Reason why I'm asking, could that compensate any potential slowdown whenever that comes? The 2nd question, what would you believe your semi exposure currently is split between memory and logic? Thank you. Yeah. I'm delighted by the progress in our service business. I think the key factor there, we're seeing very high growth rates over the four sub-segments within service. It's not just one particular area. We're also seeing it grow across all geographies, which is also important. I think our service strategy is working. Is it fully preventing a cyclical response? I would say no, because fabs are running at a huge capacity. I'd say close to 100% across the board, all wafer sizes. It's definitely driving higher than normal service performance. However, I think even during a down cycle, our install base is growing exponentially. I think we showed in Capital Markets Day that most of our service efficiency, the sweet spot, is after seven years. We're really now starting to get that install base into the high growth VAT years going back to 2017, et cetera. We expect that to generate further strong growth in our service business. Probably not the growth rates we're seeing right now, but I would expect to be low single digits even in a semi downturn. I think one important factor, though, is the size and also the profitability. That profitability will help us with our company performance when we do see a semi correction. Then semi exposure, I think the best way to look at VAT is just the CapEx that's been spent at any one point. Our products are a pretty good proxy for the CapEx at any one point in time. We've got high share across all the major platforms. It pretty much goes where CapEx has been spent in that quarter, be it memory or logic. If you take the total CapEx performance of the industry, our sales mirror that pretty well. Okay. Understood. Thank you. It's roughly 50/50 at this point, I would say. Okay. I think that's going to follow, just to follow up on that, I think that's going to follow even more that industry allocation because our specification wins on the latest nodes. Someone asked a question earlier about our specification wins. Well, our share is extremely high on the very leading-edge nodes. Over the next five years, I think we'll mirror even more the CapEx allocation to the semiconductor industry. The next question is a follow-up from Didier Scemama of Bank of America. Please go ahead. Thanks for taking my follow-up. I just wanted to come back to the clarification you came up earlier with. If I adjust for the CHF 20 million-CHF 25 million sort of excess order from tier 2 chip companies, you still have a 90% year-over-year increase in orders, which is more than double your run rate of the 1st half. I just wondered if you could explain where that acceleration is coming from. Is it because your customers are preparing for a massive boom in 3D NAND next year and therefore more deposition steps, therefore more vacuum valve demand? Or is it rebuilding of inventories because those inventories, as you mentioned, are running quite low? You see where we're coming from? We're trying to understand why such a sharp acceleration at a time where obviously the cycle is good, but we see some dark clouds on the macro side. We're trying to understand why the discrepancy exists. Well, I think overall, with the share gains and the adjacencies we've been growing, we are seeing a growing order intake in general across all customers. When I look at the percentage increase across all our major customers, it's growing quite nicely. What we're seeing at this point, I agree with your NAND comments because we're seeing from Chinese and Korean OEMs very strong order intake in Q3 as they prepare for the 1st and 2nd quarter in 2022. They tend to order with longer lead times. They want to make sure they get the supply. We saw that bubble a little bit in Q1. We saw strong order intake. Also Q4 last year, we saw strong order intake from the Korean and Chinese OEMs as they give more of a six-month view of the business. Yeah, I think 3D NAND is probably 1 of the reasons I would say driving that, but it's really hard to pin it down to one effect. There's also the display mix coming in there and the advanced industrial with extremely strong order intake there. When we looked at the data, it was pretty hard to say exactly where it was coming from. We expect to see gradual increase from all OEMs into Q4 and into Q1. You'll see our factory output ramping in kind of line with that. No question, lead times are growing. Hence, you can see that from our backlog. Got it. You would say partly it's being a bit earlier in ordering, partly 3D NAND, more steps, blah, blah. Yeah. Is there a pricing element as well, you think? I mean, you mentioned that in passing earlier on questions on input cost inflation. Not yet. I think a little bit of pricing in our advanced industrial sector where we had some challenges on some unique raw materials. I think our pricing actions will mostly kick in 1st and 2nd quarter next year. Sorry, final question. Micron, as you said, guided CapEx up next year with DRAM down and NAND up meaningfully. Is that you think an appropriate picture for 2022 for the industry or do you have a different view? I think overall it's probably a decent picture, don't underestimate the amount of CapEx required on these new advanced DRAM nodes. I think that's going to keep spending at a pretty reasonable level. I mean, you can also see EUV shipments continuing to grow as well. Yeah. They're now starting to creep into the DRAM sector as well. That will automatically drive higher etch and deposition sales. I think DRAM maybe not looking so good from a pricing standpoint from the large chip makers, but probably okay from a CapEx standpoint for the OEMs. Fantastic. Very, very clear and extremely helpful. Thank you so much. There are no more questions at this time. Okay. Well, thank you very much. That concludes our prepared remarks and questions for today. If there is any follow-up questions, please address that to Michel Gerber. Thank you very much. Ladies and gentlemen, the conference is now over. Thank you for choosing Chorus Call, and thank you for participating in the conference. You may now disconnect your lines.