Good morning, everybody, and welcome to the second VAT Capital Markets Day. It is actually on this day today, two years ago, when we held our first capital markets. None of you were here, unfortunately, because we had the COVID situation. It was all virtual. It was a little bit of challenge for us to figure out how many of you are actually showing up coming to this event, because you're so used to the easy approach to these things via Zoom, Teams or what have you. I see that physical presence is still something that is very much liked and appreciated. We have, of course, guests here from the Zurich area, from Switzerland, but we also have guests that traveled from the UK, from Germany here. Welcome to everybody. I'm actually wearing exactly the same suit as two years ago. It still fits, which is a good sign. I think it's kind of like my lucky suit because since the last Capital Markets Day, and despite the sharp downturn in the stock markets, we still have a TSR of about 40% since then. If we do at least that much in the next 2 years, I think we won't complain about that. This is the program that we have prepared for you today, as you can see. We have first 2 sessions with Mike Allison, our CEO, and Urs Gantner, EVP of the Semiconductor Solutions Group. We then break for a lunch, about 45 minutes, where you have a chance to interact again a little bit with all the management people here. We talk about our service business, Joe Haggerty and Karin Dahlström about the Advanced Industrials business before Fabian Chiozza, our CFO, closes the session with the formal presentation with the financials. We have a very short break of, let's say, 2 minutes where I will arrange the Q&A here. We'll have everybody on stage, then there is an open Q&A. We hope to close everything by quarter to 3 this afternoon. After that, for those who still want to hang around a little bit, we have prepared a small apero to further discuss what you heard today. While you're reading this forward-looking statement, let me quickly tell you that there is no fire drill or anything the like planned today. If there is a fire alarm or what have you, then it's a real event. Don't think that this is just a drill. The exits are to the side of the room. We have the six convention point people who are here to evacuate. We don't hope that this has happened. We don't think that it's gonna happen, but just make sure that you're aware of where the exits are. The emergency exits, I think they will open automatically in case of an event, so that we can vacate the room quickly. Safety is a very high priority for us all. Please make sure that you really leave the room when there is an alarm in an orderly but not panicking fashion. With that, I think from my side, it's everything I have to say, and I would like to hand over now to Mike Allison, on his keynote for today. Mike. Thank you, Michel. Good morning, everybody. Welcome to the audience here and also those who are online. I'm very proud to be here with part of my executive team. Our plan today is to talk about our purpose. That is, how we change the world with vacuum solutions. You'll see a detailed set of presentations from the team. Very strong strategic thinking, but also built up from the bottom with very believable strategies on how we grow this company over the next 5 years to 2 billion, which is our next key milestone. What you'll also see today, hopefully, is a clear equity thesis on VAT. First of all, a company at the center of many of the global megatrends, from digitalization to renewable energy, to an aging and growing population that requires tremendous more healthcare, which our Advanced Industrials business is playing much more into. What you'll also see is a company with strong technology and innovation. Finally, a company that's on a track to double within the next 5 years. You know, one of the questions I get asked a lot, as we meet investors and other people is what makes VAT so special? I think the one point to remember is VAT plays a small part in almost every single production step of a semiconductor wafer. We're a small part, 1% to 2% of the equipment that makes, that's used in every step of semiconductor processing. That makes us a great proxy for WFE, wafer fab equipment spending. That makes us low risk. It doesn't matter who wins, which OEM prevails, or which technology is being invested in at that part of the cycle. It doesn't matter. In all of them, VAT wins. If you couple that with a service business that's harnessing the opportunity in this growing install base, with great new products and a global infrastructure, and then finally with an Advanced Industrials business unit that's taken advantage of the great semiconductor technology we have and using that in a very growing network of advanced vacuum applications. Karin's gonna talk to you later in the presentation. With all that, we plan to change the world with vacuum solutions, and today you'll see the strategies and path that we will lead to that next goal. This morning I'm gonna talk about the company, give you a quick overview, talk about the markets and growth drivers, then talk about our strategic priorities and conclude before passing on to Urs for a look at the Semiconductor Solutions Group. As you know, we're the key technology leader and market leader, in the very profitable and growing vacuum systems market. We're capturing the key mega trends to drive long-term sustainable growth. We're the undisputed market leader, especially in the semiconductor business. We've earned our reputation through technology and having 300 strong army of technologists and applications people delivering and customizing our key products for every stage in this manufacturing, semiconductor manufacturing process, and also in service and Advanced Industrials. That's also complemented by a very strong sales channel, in all the main industrial regions of the world, at over 100 people supporting our key customers. On top of that, we have a high focus on operational excellence. Our performance during the last 2 years during COVID and the significant supply chain challenges has been impeccable. We recently won an award from Lam Research, one of the largest players in the semiconductor equipment space, and that was about our scalability, quality, and operational excellence. That's one of the reasons that VAT is able to harness the opportunities that sit in front of us. All of this together provides superior financial performance for you, our investor community. Looking a little bit more into 2022, it's a record year, as you saw in the video. We've eclipsed CHF 1 billion for the first time. Our portfolio is made up of roughly 82% products and about 18% services. Both are growing at very high rates, as you can see from the slide, and I think it's extremely impressive that our service group is managing to keep up with the extraordinary growth we're seeing in the products, driven of course by the high growth rates in semiconductors. This year we're on track for the midpoint of our guidance at CHF 1.15 billion. We plan to deliver around 35% EBITDA. The company has almost doubled in size in the last three years. Our operations team have done an incredible job at providing that huge increase in capacity. Alone, our Malaysia factory has seen a 60% increase in this last year. The team have worked incredibly hard to make that happen, and that factory is now approaching the CHF 300 million rate for 2022. That's gonna continue to grow into 2023, and with the investments we're making in Malaysia, we'll eventually get over CHF 1 billion. We've also managed to continue growing our market share globally. We're around about 60%, and that's all supported by a very strong IP position with over 500 active patents protecting our products and new technologies. As you'll see later in the presentation, the fact that we have a laser focus on winning every new platform in the semiconductor industry, gives us a high number of specification wins and tremendous confidence that we'll continue to grow our market share within semiconductors. For those of you who don't know, you know, the major part of our business is within the semiconductor industry. Around 80% of products and services are within semiconductors. One slight change here from before, we used to have a separate display and solar business unit, and starting the beginning of 2023, we're gonna be taking display and solar and putting them into Semiconductor and Advanced Industrials. The display market is slow. We're not seeing it emerge from the sustained downturn that we've had in that industry. We wanna have a better reuse of those talented engineers, and we're bringing the display group into Semiconductors. We also saw there was growing synergy in our solar business with Karin's Advanced Industrials. Things like coating, crystal pooling for advanced semiconductors use very similar products to solar, so we're putting solar within Advanced Industrials. From next year you'll only see the three business units: Semiconductor, Advanced Industrial, and Service. If you look at the geographical split, about slightly over half our products go direct to Asia, 32% into North America, and 14 into Europe. A lot of those products that we ship to US and Europe actually end up in Asia as most of the semiconductor manufacturing happens in that region of the world. Somewhere around 75% of our valves and other products end up within Asia, and we have a huge focus there in our services business to make sure we harvest that. This is where we play in the supply chain. Our major customer base is in this light blue area, the semiconductor OEMs. VAT has a premium position with every single one of the top 20 customers. Those semiconductor OEMs then ship their product to the chip makers, people like Intel, Samsung, TSMC. That also is where we get most of our service business. The service team are focusing more on the end users and the OEMs, but the Semiconductor Solutions Group that Urs is running is very much focused on the semiconductor OEM community. When you go into Advanced Industrials, Karin will show you we're supporting more than 1,000 customers within that sector. We get tremendous reuse of our equipment from semiconductor into Advanced Industrials, a lot of synergies there. It's a wide range of customers. In the last 2 years, we're putting a much higher focus on the OEMs in the instrumentation area, and Karin will go into a lot more detail on the opportunity that taking that semiconductor experience and systems knowledge into advanced industrial equipment will provide the ADV business unit. We are the undisputed leader in our segment. You can see we've been systematically growing our market share over the last 10 years. We've got a very strong position. We leave really nowhere for our competition to hide. We've got a huge portfolio of equipment that lets us focus in every single one of the segments. As you can see, most of our competitors are not making much traction against VAT. With that comes a lot of responsibility, and we take that very seriously. You know, with market share of over 75% in semiconductors, we have to be able to scale with the semiconductor industry. It's so important that we invest ahead of the curve to support our customers. We cannot let them down. There's no other player that can make up the shortfall if VAT don't deliver because of our share position. We take that responsibility very seriously, and we put a huge emphasis on operational excellence, which allows us to deliver that, but also allows us to deliver the profitability that you see in our financial results. Again, looking at market share in, now in semiconductor, you'll see we've been progressing even faster in semiconductor. We project we're around about 75% share today. The semiconductor industry, it takes about somewhere between 3-7 years for new platforms to come to market. The spec wins that we had 2 or 3 years ago are now coming to market. We have a very good view of what our market share is gonna look like in 3-5 years' time. We project within the semiconductor industry that we'll be around 85% market share by 2027. Again, it's very hard to substitute a part of an OEM system once you're qualified. It costs literally $ millions to do qualification on silicon wafers. It gives us a very sticky position within our sector. Just correlate that back to my early statements at the beginning about VAT being a very low risk. We're on every single platform and somewhere around 15-20 different products on all these platforms. To replace VAT is really an impossible task within a short timeframe. Very little technology risk to be substituted, and the pain it would cost both our immediate customers and the chip makers to replace VAT is super significant. Take you on a little journey back to 2020 when we made our first Capital Market Day commitments. You'll see in the first row, we set a target for $1.1 billion, 30%-35% EBITDA over the cycle. We set aggressive targets for our market share, but we also set targets to build an adjacency business. We recognize as we grow our market share, we've got to get additional growth vectors driving the company. We set a target for $150 million of adjacencies by 2025. You'll see in the very end column how we're doing today against those targets. We're already achieving our revenue target 3 years earlier. We're at the top end of the guidance we provided for 2025 on an EBITDA level. Our adjacencies, we're already at close to CHF 100 million against that CHF 150 million target. We'll significantly outperform that number by 2025. You'll see later in the presentation, we're upping the guidance for adjacencies to be around about CHF 300 million by 2027. Our businesses have grown spectacularly. Semiconductor, obviously, we've had the tailwind from the very high growth in wafer fab equipment. The services growth has way outperformed our wildest expectations back in 2020, with a CAGR in the last few years of 29%. Quite extraordinary compared to the high single digits we talked about in 2020. We already upped our guidance back in March of this year to CHF 1.5 billion by 2025, and we upped the EBITDA window also to 32%-37%. I think you'll see today we're again upping the sales guidance to CHF 2 billion by 2027. Making excellent progress on the commitments we made, and I think we've got exciting programs to then achieve our 2027 guidance over the next few years. Also, looking at our total shareholder return, this very strong financial performance that you've seen in the previous slides has allowed our stock to outperform all the major indices. Also outperform our peers within semiconductor. You can see the dark blue line is the SOX. A strong performance against all those key indices. For the lucky investors who joined us at the IPO, you've seen around about 500% TSR since that period. Okay, let's have a look at our markets. I mentioned at the start that VAT has the benefit of all the key megatrends. The first one is obvious, digitalization within the semiconductor industry. We're on a path to eclipse $1 trillion within the semiconductor industry by 2030. Some estimates are $1.3 trillion, which I'll show later. That's gonna drive wafer fab equipment up to around $150 billion-$170 billion by that period. Of course, that directly benefits our semiconductor business, but it also impacts our service business with this huge install base growth. Also, helps our Advanced Industrials business because many of the feeder industries to semicon also use products from Advanced Industrials. The second one is energy and emissions. Huge growth in electricity demand, and also a big need to stem the growth in global emissions. The big beneficiary of this megatrend will definitely be our Advanced Industrials business, especially now with the solar business there. Also, we're seeing increased spending in nuclear. For the next generation of lithium-ion batteries, we're gonna see a lot of coating technology used within the manufacturing of batteries, which Karin's group will see benefit from. In the mid to long term, there's also some exciting opportunities for VAT in terms of carbon capture and also fusion. There's a lot of public and private finance now going into small-scale fusion reactors. As you look into the mid-thirties, the amount of vacuum systems required in fusion is gonna be significant. They're not things impacting VAT in the next 5 years, but we have to think in our R&D programs and what technologies and capabilities we need. We do set some long-term funding aside to ensure we can harness these opportunities in the future. The final one is population growth and aging. Huge increase in spending within biotech and life sciences. Our ADV group is very much focused now on instrumentation, things like scanning electron microscopes that do all the research around about, for example, the COVID situation, saw a substantial increase in the scanning electron microscope growth. It's one of the few instruments that can actually see the virus. Also, other things like medical inserts, mass spectrometers, we're seeing significant growth. Big opportunities for our ADV business. One interesting fact, just in medical devices alone, the silicon chip content is also growing at 10% CAGR. All these things feed back into the growing digital trend that's driving these markets to roughly 7%-8% growth over the next 5 years. Looking a little bit closer at digitalization, traditionally, semiconductor has had the hardware du jour, so it's a smartphone or it's a PC that's driven our growth. Today, you see a much wider set of applications that drive our business. Even some of the more traditional businesses like automotive are growing, the chip component, rate at a high level. Automotive, for example, 11%, driven by the electrification, but also driven by the enhanced user experience required within the car. In fact, that's pretty close to the high growth areas like, servers and data centers. This is driving overall chip demand at around 7%-8%. If you extrapolate that out over the next, 10 years, you'll see the estimates for ICs are around $1 trillion-$1.3 trillion. I was just reading this week that semiconductors have now eclipsed oil as one of, as the, largest traded commodity in the world. That's gonna continue to increase. It just shows the relevance now of semiconductors within our lives, but also within the global economies. You'll also see the CAGR is gonna be almost double the last decade. So it's a very prominent trend for us and one that we have to plan well in advance to make sure we're ready to harness. Digging deeper into this and what it means for VAT, all this capital equipment or WFE spend is gonna have a bias towards the leading-edge technologies or the leading-edge nodes. You can see from the graph on the left, or today, roughly 36% of the capital equipment spend is happening in the green area, at 7 nanometers and below. As we project out to 2027, that's gonna increase closer to 50%. That's good for VAT because we have much higher market share on the new platforms, the leading-edge platforms than we do at the trailing edge. That's the first thing. The second thing is, when you go from node to node, you need more equipment to build the same number of wafers. This effect is more pronounced in advanced logic than it is in DRAM or NAND. If you take advanced logic, almost 25%-30% more equipment is required to build the same number of wafers. Traditionally, that scaling effect has allowed our customers to get more chips per wafer, so the economics worked out. As you'll see later, one of the challenges is chip sizes are getting bigger. You're actually needing even more equipment to build the same number of silicon chips. A real key trend for us at this drive to miniaturization is creating roughly averaging 20% more equipment per node. It's a really key trend for the company. The final trend is that, as you go down to these smaller design rules, there's more vacuum steps within the semiconductor process, and we estimate by 2027, about 70% of the equipment in a semiconductor fab will be under vacuum. That's up from, you know, somewhere around 50% or so today. Again, that's a growing opportunity for VAT. It means more valves and more vacuum components. If you take all these together, it produces a very rich environment for an increasing valve content within semiconductor, but also an opportunity for the advanced modules and advanced assemblies that Urs and his team are developing in the adjacency space. There's a lot written about the downsides, or the threats to semiconductor growth, things like the current China-U.S. conflict, the Taiwan danger. I think I wanna focus a little bit on some of the potential upsides. The first one is around about power consumption, and, if you look at the whole Scope 1, 2, and 3, total emissions from the whole semiconductor ecosystem. That's all the way from building silicon, developing silicon, through to developing the equipment, manufacturing the equipment, through to building a wafer fab, producing the chips, all the way through to the power consumption of the chips. We're on a pace to have 12% of global emissions by 2025. That's a serious number, and it's a number that the semiconductor industry is putting a lot of effort into reducing. You see it yourselves when you put your PC in your briefcase and you've left your PC on, the heat that's generated. We underestimate the power consumption of all the devices, and we now have hundreds of these types of devices in our homes. This power consumption is a key challenge. One big, big benefit of shrinking in this Moore's Law node to node is you get lower power consumption. Significantly lower power consumption from node to node. We think that's gonna become one of the biggest drivers of this generation drive that we have from node to node. Unfortunately, what happens as you do that, you get slightly less performance per transistor, which means you need bigger chip sizes. These three chips you see here are the latest, three chips in the Apple portfolio, and you can see the latest one on the right is larger than the one from two, three years ago, significantly larger. That means you get less chips per wafer, which again, means you need more wafers. This is a potential upside. There is an economic issue here because you get less chips per wafer, it means the cost per chip's increasing. There's gonna be a question how much the consumers can absorb. A five nanometer, 300 millimeter wafer from TSMC costs about $16,500. A three nanometer wafer from TSMC, fully finished, costs about $20,000. You can see the cost escalation we have to produce the same wafer. That's from the number of steps, but also from the cost of the equipment that's required to build it. There's some significant economic challenges here, but the bottom line is we want lower power consumption, and that can drive a pretty substantial upside increase in wafer fab equipment. The second opportunity I think is in renewable technologies. We see an increasing chip content going into areas like smart grids, power electronics, electric vehicles. This is driving an increase in the legacy chip sector. These are the design rules around about, you know, 25 nanometers and above, sometimes up to 100 nanometers, and that's creating quite an investment flow into the older fabs in our industry. This year is generating around about $10 billion in CapEx, and we expect that to continue for the next at least 5 years. That's an upside to the current outlook. The final one is reshoring. With the China conflict, we've seen growing number of incentive programs in the US and Europe, the CHIPS Acts, to allow more investment into those regions. Now, I believe that, you know, the top chip companies are not gonna create over capacity. You know, their life and profitability is managed by having a slightly scarcity of chips, so they can increase their chip pricing. Nevertheless, the more fabs you have spread out, the less efficient you are compared to the clusters that we see today in Korea and Taiwan. Just the spreading out geographically will mean slightly less efficiency of WFE and maybe drive about 5% additional CapEx. On top of that, you're also gonna see more regional R&D, which could drive maybe another 5%. I think this reshoring of and rebalancing of the global chip spending could create something like 5%-10% more WFE in the next five years. These are some upsides to the numbers that I showed you on the previous page. Looking at VAT and our businesses, you'll see on the left-hand side the markets that we play in. Semiconductors, the semiconductor adjacencies, Advanced Industrials, and service, you'll see this industry is growing somewhere between, you know, 7%-10%, depending on which sector, and probably sits at medium and below profitability from a market standpoint. You'll see on the right, VAT's portfolio, our markets, or our performance in those markets, you'll see substantially higher growth, but also substantially higher profitability. That profitability is gained by VAT adding value, adding solutions to our customers' biggest problems, that's really what drives our performance as a company. To summarize the market, we're playing high growth markets. We're the leader in these high growth markets. Moore's Law is still, you know, very prevalent in our plans and driving increases in WFE, equipment spending, and that is providing a great opportunity, an opportunity to expand our market share, again, because our market share is higher at these smaller nodes, but also providing us with an increase in vacuum content. We do expect. This is a cyclical business we're in. We are coming into a down cycle. I think that's well-publicized. Our key customers are talking about a 20%-25% correction in 2023. We have to look beyond that. We came out of the last downturn with three years of almost 30% growth, you know, really extraordinary growth. We have to continue investing through this and having the footprint available for the next cycle, which of course will be even bigger. You'll see VAT investing heavily in footprint and also R&D, new products through this next down cycle. Okay, looking at our strategic priorities now and what you're gonna see a lot of today in the presentations. There's a bit of repetition here from what you saw in 2020, which is to be expected because it's working. You know, why change something that's that's working as spectacularly as we've shown you earlier? The first area is focus on our market share. We have a machine when it comes to market share. Our whole business unit teams and field teams are set up to harness every opportunity that we see, and that's across all our business units. You're also gonna see a big focus on increasing our share of wallet. That's our biggest opportunity now as you look out the next 10 years, is increasing the share of wallet with our existing customers. Our existing customers like what we do. We do a great job. Operationally, we're sound, we're dependable, reliable, and we provide fantastic high-value solutions. We know what issues they've got, and we're the world experts in vacuum design, and that will allow us to increase our share of wallet. The third area is the VAT operating model. As I said earlier, it's quite a task to double the size of a company in three years. We've got to double again in the next five years, and we have to have substantial investment into our operating model to ensure we have the right people, we have the right structure, and the right processes. Finally, the fourth priority is ESG. We've had a history of having sustainable programs within VAT, but we have to make this more prominent and have a very clear roadmap to ensure we're adding value for all our stakeholders. Let me give you a few slides now on each of these topics. On the first one, gaining market share, I already explained that the investment's going into the leading edge. We're gonna harvest that. We're gonna make sure we have the right products and solutions for our customers. This leading edge is gonna provide a lot of opportunity for disruptive solutions. The technologies that worked at 7 nanometers and 10 nanometers probably are not gonna work as you go to 2 nanometers and 1 nanometer. There's a lot of old technology out there in the supply chain, and we're gonna invest organically to make sure we harvest that. You'll see today, the first look at a new pressure sensor we're bringing to market. We're not gonna harvest that until another 3-5 years, but we're starting field trials pretty soon, and it's the type of opportunity that VAT can take and grow over the next 5 years. We're enabling this through our spec win process, you can see that is how we get on every new industry platform, VAT valves customized and on these systems very early to ensure we keep that slot on the system. You can see the total number of spec wins is growing significantly over the last 5 years. We think we're running about a 95% efficiency or win rate within semiconductors. That gives us tremendous confidence to say we continually grow our market share in the coming years. This is what we plan to do across the businesses, starting with semiconductors, and I've already talked a lot about that. We expect with the share gains to grow to 85%, about 11% CAGR in that business. Our service business is capturing the growing installed base. Joe and his team are also coming out with some great new products that give our customers a wider range of options, cost, performance options. That's allowing us to take business back from third parties that we lost in the past. We believe that can, that plus the upgrades and other opportunities in service can get us to about 13% CAGR and grow our service business to getting close to CHF 400 million in the next 5 years. Fantastic opportunity for the company and one that we're very, very focused in. Advanced Industrials, I think you see a nice CAGR in that business as well, about 11%. A big part of that, as you'll see from Karen's presentation, is increasing the scope, the share of wallet, with some of our large instrumentation customers, especially things like scanning electron microscopes. We see great opportunity there, and that industry is ripe to take the type of outsourcing opportunities that we've seen in semiconductor. VAT can harness that as a vacuum systems provider. A very strong CAGR expected across our 3 core business segments. This is what life's going to look like for all our businesses. If you take Semiconductor as being our core and where we do most of our product development, where we do most of the thinking around about advanced system design and advanced assemblies, we want to take that and also reuse it into our Advanced Industrials area. This share of wallet opportunity is one we're very focused on. If you look at life today, we're still mostly a component company. We only have about CHF 100 million of these adjacencies, and we think we're roughly about 1%-2% of the share of wallet of our key OEM customers, and that's including our 75% share in semi, et cetera. We are growing our advanced modules, and we are growing our motion components. If you look out to 2027, you'll see these adjacencies grow by another CHF 200 million to a total of about CHF 300 million, that should drive our share of wallet towards the 2%-4% on the industry leading platforms. That's gonna continue to grow then in the next 5 years beyond that. That's also bringing to market new technologies and gas inlet systems, EUV assemblies, advanced pressure control, and other technologies that we're working on. If you look the 5 years beyond that, we're working on a lot of other technologies that it's too early to talk about. We also don't wanna telegraph too much to our competition. We see opportunities that we can further grow the share of wallet to around about 4%-5%. That really is the key focus. As you'll see in Urs' presentation, we're setting up the Semiconductor Solutions Group to ensure we have significant investment within this adjacency sector. The third priority is a program that we've named VAT2B. The 2B is pretty obvious. It's our financial target to achieve CHF 2 billion by 2027. It's also a program that we ask ourselves, "What do we want to be as a company? How do we wanna look like, and what structure do we need to implement?" We have a good understanding of what our customers want. We've designed a flexible operating model that will allow us to ramp ±30%. I'll emphasize the minus as well as plus there. Because we have to deal with cycles, and we have to deal efficiently with cycles. We wanna have also a best cost operating model and take advantage of our growing installed base in Malaysia, and a global supply chain out of Malaysia. We've gotta have more scalable processes. We need more efficiency, so we're investing heavily in digitalization. We've now completed the first phase of our new ERP system. We have that fully running in Romania and Malaysia, so we delivered that in the background this year, which is, I think a significant achievement for those of you who have dealt with ERP implementations. But we also wanna make sure that during this digital journey, that we optimize the customer experience. We do a good job today, but we can do even better and make it even higher value proposition in dealing with these large OEM customers. Today, these customers are over $200 million in size. If we're gonna double, that's gonna double to $400 million with some of our largest customers. That electronic interface and that digital journey has to be well synchronized, and the better and tighter we get that, the simpler it is to do business with VAT. That helps us in this journey to deliver these additional adjacencies that we wanna deliver. Also, one of our value propositions today is our ability to customize product rapidly and make sure we're first to the customer with a well-tuned, well-designed high-value product. We want to invest in the digital infrastructure around design and modeling, so that, again, we can be even faster and even a better outsource partner for our key OEM customers. Finally, we can't do this without the best people. We've put a lot of strain on our people. You can imagine dealing with doubling growth or doubling our size in 3 years, and dealing with the supply chain challenges that we've had, and then dealing with the downside, there's a lot of emotional pressure. We've gotta make sure that we are a caring and inclusive employer, an employer that can work with our and support our employees through this journey, and that we get the best employees, and we highly train them for the 10 years ahead. A lot of focus going into this VAT2B program. Fabian will touch a little bit later on some of the investments we're doing to support this, especially in our infrastructure. The fourth thing is ESG. You've probably seen we've published this year our first sustainability review. VAT has had a history of sustainability from inception, and you'll see at the bottom of the chart here, some of the things we've done in the last few years to reduce emissions, implement solar in our major factories, but also reduce waste. It's in our DNA to do that, but we just gotta do a better job at reporting and also looking at the other aspects of ESG. Another example is, we're fully compliant with the Swiss equal pay. Topics like that are important. We're gonna put a higher emphasis on ESG. We've developed a first pass roadmap, going across the 3 key streams. In 2023, we'll look at providing clear goals and targets on the environmental aspect. We'll implement them over the next period up to 2027. We're also working hard on social. We've set up a VAT Cares program this year, again, to ensure we're supporting our employees through these difficult times we've had. Those of you who are active on LinkedIn and following VAT will see a huge amount of focus in Malaysia in terms of engagement within the community. We'll also drive that towards creating diversity targets and make sure we have strong value proposition within our employer branding and make VAT a great place to work for all social groups. We're also working on our governance. We made changes in this last period to our board composition, our committee composition. This year, in 2023, we'll make changes to our articles of association, then longer term, start the journey of having incentives for the executive team with ESG targets. This is becoming a major focus, and you're gonna see a lot more on ESG from us. To conclude this first section, you know, to continue the leadership that we've shown you for the last 2 years, we're setting ourselves tough targets. We're setting high market share ambitions for all our three business segments. We're setting high growth targets for our adjacencies. We're planning to deliver more adjacencies, but also to improve the share of wallet to ensure we see a strong growth over the next 10 years. Within our infrastructure, we're gonna have an installed capacity of over CHF 2 billion. That will allow us to drive a revenue well above CHF 2 billion by 2027. We will continue to invest in our flexible business model. The main beneficiary of that is our EBITDA corridor, performing between 32%-37% through the cycle. Finally, on ESG, we'll make sure that we provide clear ESG proposition that delivers value to all our stakeholders. How this is gonna look in terms of our business growth. If you see today here at CHF 1.15, at the middle of our guidance, we plan to grow that over the next 5 years to between CHF 1.8 billion and CHF 2.2 billion. Obviously, depending on how fast we see WFE grow. You'll see the market share growth significant contribution from all of our 3 business units, and also an increase in contribution and adjacencies from both semiconductor and Advanced Industrial. My team are gonna go into more detail on the 3 business areas. You'll get a flavor for the initiatives we're putting in place. You'll see they're very believable. They're bottoms-up generated, and I can assure you that the team here are super confident that we can deliver on these targets. A strong future ahead for VAT, and it's exciting. It's exciting for the VAT team. We put a big focus also in engagement within our population, our employee population. We've just had our fifth engagement survey produced, and we've seen steady growth in that engagement number and a record in this last year. We're trying to make sure that these programs are ingrained in all of our employees, not just executive team. They understand waking up in the morning that we're here to win. We're here to win market share, to drive our adjacencies, but also to go the extra mile for our key customers. That's what happens when you're a focused company, is you deliver that extra performance for your key customers, which continues to drive our growth opportunities. Thank you very much. That's the end of my presentation. I'll now pass you on to the latest member of our GEC team, Urs Gantner. He's gonna give you an update on the Semiconductor Solutions Group. Thank you. Good morning. Welcome also from my side. My name is Urs Gantner. I'm working for VAT in different roles since 2004, so quite some time. It's quite some exciting times as well, a lot of growth in the past. I'm responsible for the semiconductor business since it was formed a few years before the IPO we had here in the SIX Swiss Exchange. Today, I'm delighted to show you the, for the first time, the newly formed Semiconductor Solutions Group. Why we are doing that, right? You have heard before that the biggest growth opportunities we have and the biggest potential to grow market is in the semiconductor business. With the fusion of the existing semiconductor business, including the display, with all the VAT R&D activities, we want to ensure that we can deliver the right products in the future. With that, we want to have all the semiconductor programs under one roof. That's the goal, that we are very close to the business and very close at the same time to the technologies. In the last years, actually, we became the leaders in vacuum valves. We had to earn that through many, many years of very close collaboration with the customer. We have to use this experience now to add technology and add experience, new technologies and new experience to come up with the new products for the future. Today, however, I will focus mainly on the business unit Semi for the next 5 years. This is mainly the core valves and the adjacent products we reported already in the last Capital Markets Day. The business unit Semi will deliver outstanding products in 2022 for all our business segments. We expect that our sales will grow about 30% in total. This will lead to an outstanding market share of 75%. We will add additional net CHF 95 million in adjacent products. The adjacent products are mainly the advanced modules and the motion components. The more than 220 R&D engineers and application engineers around the globe, they fuel actually this spec win engine in the past. Since we had a win rate over 90% in the last three to five years, this is the main reason why we achieved this fantastic market share of 75%. All is also protected. Innovation always goes with patents, with our outstanding and strong patents in the market. We'll also ensure then the business for our Global Service in the future. Before digging now into more details about the different growth initiatives, I want to show you a short video where the market trends, the technology trends are shortly explained, and also where you get a little bit a feeling where VAT is playing with their products. Semiconductors have become the building blocks of our modern society. They are everywhere and a constant companion in our life. Billions of transistors within a chip work together to power the cutting-edge digital devices we use or need today. In such a microchip production fab, we observe hundreds of wafer fab equipment tools supporting an almost endless sequence of deposition, lithography, and etching steps with constant process monitoring. All machines have in common that the silicon wafer has to be moved into the vacuum system from the atmosphere and then be transferred to the various process chambers without contamination or adding nanoparticles. VAT transfer valves solutions and modules secure this transfer in an efficient and reliable way. In the process chamber, the VAT control valves support the etch or deposition process by fast and precise control of the required process set points. The equipment in these chambers is exposed to extremely harsh environments, which deteriorates any material, especially the sealing. Fast and reliable downstream pressure control systems are critical components for the yield and productivity in the wafer processing. VAT offers valve solutions in the entire gas flow path, enabling symmetrical flow and uniformity in the hot spot. After one process is completed, the wafer is moved to the next chamber for a next process step or a post-conditioning treatment, finally unloaded from the tool and transferred to the next wafer fab equipment tool. Besides the VAT core valve products in the wafer path and the process chamber, VAT offers integration in modules and launched new products in the wafer path and upstream area, leveraging VAT's core competencies in vacuum design, sealing technologies, and ultra-fast and precise motion control. The majority and increasing number of wafer production processes require vacuum conditions, which makes VAT technology and products mission-critical to the semiconductor chip manufacturing industry. Display and semiconductor applications get fueled by megatrends around Internet of Things, artificial intelligence, the 5G 6G network, cloud services, and the metaverse. These megatrends accelerate the digital shift, enabling smart devices. Everybody's talking about autonomous driving, smart healthcare, even smart cities, and of course, smart fabrications. Not to mention AR, VR, MR. Frankly speaking, semiconductors have become the building blocks of our modern society. They are everywhere and a constant companion in our life. Billions of transistors within a chip work together to power the cutting-edge digital devices we use or need today. The long-term outlook for our industry is fantastic. The global semiconductor sector's total revenue has doubled in the last 20 years, and it is expected to double again to $1.35 trillion in the next decade. This value growth goes together with a constant increase of the units of ICs produced, leading to a sustainable growth of the wafer fab equipment. For up to 20 years, wafer fab equipment CapEx cycled around $15 billion-$35 billion. In recent years, we have helped to approach the $100 billion range. Assuming that the wafer fab equipment to semiconductor IC sales ratio stays around 12%-18%, it can be expected that the CapEx spent will further grow even beyond $150 billion towards the end of this decade. Innovation in semiconductor will never come to a rest. While the need for more compute power used to double every 2 years, basically in line with performance increases provided by adherence to Moore's Law, the raw compute power needed for machine learning AI doubles approximately every 6 months. Meanwhile, 5 nanometers get launched, and there are high volume manufacturing plans for 3 nanometers. imec presented their technology roadmap in the sub-nanometer era, thus approaching the atomic level in the angstrom dimension. Apart from pure market growth, new technologies will penetrate the market, which will need leading-edge wafer fab equipment. VAT, we change the world with vacuum solutions. We change the world with vacuum solutions. Don't forget the outlook of the industry is fantastic. I have to train that a little bit. Okay. As you also have seen in the video, the Moore's Law is still alive and kicking, and there is significant technology advances required to resolve the power problem we have in the industry, as also Mike pointed that out. This is actually always then the big challenge for the engineering team, for the process team to come up with new solution, and that's the breeding ground and the opportunities we see at VAT. We estimate that more and more vacuum processes are processes in semiconductor industry are moving into vacuum. From in the past, it was roughly 50%, now roughly 60%, and this will even grow to the 70% in the leading edge in the future. Also here we see a fantastic outlook for our business. Talking about a little bit the key drivers for VAT. In the equipment market, we see that there is a consolidation already happened in the past. You also see that there is now more consolidation happening, especially now for the big ones. The big four, they are big, they are getting even bigger. We also see some trends in the regions that local OEMs, they win more and more for their local markets, especially in China and in Korea. In common for all these OEMs, they need a reliable and scalable supply chain. That's certainly something exactly VAT can deliver. We had quite hard times the last three years with all the COVID, with the growth, everything, and our customer came back to us and told us, "Well, you now understand we have to have a second source in the future. We cannot work with VAT as a single source anymore." Our answer was, "Well, we can be your first and your second source. We have two independent supply chains, two manufacturing sites," and I think this is well accepted in the industry, and that's why we have to invest in capacity going forward. From a technology side, you have seen the shrinking will continue in logic devices, but also in DRAM and memory. It'll get more layers. Stacking will increase as well. This means a lot of vacuum equipment required. Together with the high requirements in particles, zero, high purity, zero particles, it's exactly the technology VAT can provide, and that's why we anticipate that our market share will grow over the next year once the new technology, once the new tools are going into high volume manufacturing at our customers. The Semi, for the business unit Semi, the growth plan is quite ambitious, but I would say realistic that we can achieve that. We will grow with a compound annual growth rate of roughly 11%, ending up between $1.2 billion-$1.5 billion by 2027. For us, the big next milestone will be that we cross the $1 billion. This will happen probably in 2025. We initiated four key initiatives to maintain that growth. First of all, we have to keep focused. Focused on our core, focused on our customer, our key customers. Second, we want to penetrate the advanced modules. Third, growing with motion component. Four, again, it's infrastructure, also from engineering. We have to have co-location from our expertise with our customer to speed up the time to market. With that, our targets are quite ambitious. The growth rate to 1.5 billion, and we will add roughly CHF 250 million in organic advanced adjacent products. Now we'll go in these four initiatives shortly. First, growing our core valves. Even in the core, we still have to do a lot of innovation. The requirements in the market are getting more stringent with every node, so we have to complete our digital product portfolio. Everyone talking about the digitalization, but we see all the semiconductors not yet there. Even they are kind of providing the infrastructure for a digital world. Sometimes you're still very conservative in implementing new products. We want to complete the whole mechatronic portfolio. We will add smart features to our components. We will connect them, which will allow the customers to have predictive maintenance. We have even also new materials, new coatings in the launch that will further differentiate our product. In the end, we are trying to integrate all our core products into modules and offering everything out of one hand, reduce complexity for our customers, and win and grow the market share on all the product family in that way. Talking about this integration brings us to the second growth initiative. That's the advanced modules. We have done, we have also seen in the video at the very beginning, we have done modules and valve assemblies since maybe 20 years. What's the difference between the valve assemblies we have done in the past and now the advanced modules? With advanced modules, we want to offer fully tested plug-and-play modules with additional functionality. The customer has, just have plug and play for their system. We can offer high purity, zero particles included, and additional functionality such as vent and pump down curves, very precise and specific features customized for the different application. There is a shift of what we see here. In the past, the advanced modules business was certainly driven by the OEMs. We feel the shift from the OEM-owned vacuum design, so the build to print, to more build to specification. With our modules business, we can help our customers outsourcing activities and reduce their complexity in the whole supply chain again. One of the most important component as well in the modules are our motion component, and that's the third initiatives we are focusing since a few years. At the very beginning, we were focusing mainly on the leading edge, dry edge market, just for the wafer handling. Meanwhile, we have seen that there are much more opportunities out there with our motion portfolio, and we will want to win that in the next five years and outgrowing the market by 2x. There is a lot of high-value solutions we can offer there and also help our customers on their digital journey by migrating the pneumatic products they have today into mechatronic solutions. Today, I would say, about roughly seven out of the 10 top 10 OEMs in the market are either using our motion components on the new platform or they are in qualification. The number four, it's very important initiative as well, that we expand the global engineering network. We will build customer experience center in Korea, in Japan, and in Taiwan, that we have the similar setup as we have since many years, very successfully in U.S. In Malaysia, we will also expand the technology hub. They will be responsible and own more of our product series in the future, doing product customization and supporting also operations in Malaysia. The center of innovation, however, will stay, remain here in Switzerland. We will build a new innovation center in Haag, and construction will start in Q1 next year. This new innovation center will host then all our core technology. We will have the product development for especially the future product development, the application lab, and we'll form kind of an innovation incubator space for all these new applications we have in mind, which we wanna bring to market in 5+ years. This is what also Mike mentioned, that we want to give you a flavor of what's coming maybe in 5+ year out of this innovation center soon. This is our view on adjacent products, what we have presented exactly 2 years ago during the Capital Markets Day, 2020. We were quite confident at that time that we can grow in motion components. We had some ideas about the advanced modules, but there was no real number there. We had an application, specific application in the upstream, already in the market launch as well. Today, what's the view today? Well, we can confirm motion components is a very attractive business. Needs some time because there's a lot of customization required and a lot of qualification on the future platform. We have a better view today on the advanced modules, and we also see the trend of this outsourcing from our customer and a new opportunity we had at that time in mind, it comes into the market introduction stage. That's the microGauge. This is something I want to show you briefly where we are. With microGauge, we want to revolutionize the way of pressure sensing and solve a future, a upcoming industry problem, a problem in the industry. The industry problem is mainly that they will need faster, more precise, and over lifetime stable pressure sensing. The current technology we see comes to an end, and there has not been a lot of innovation in that field in the past. With our solution, it is a MEMS-based pressure sensor, a very compact transducer. This transducer will enable totally different way of pressure sensing. It will be very accurate, no drift over a lifetime, and it can handle the multiple pressure ranges. This sensor is in the test in our lab today, and we will have a first market test in the course of 2023. The roadmap of the Semiconductor Solutions group aims to outpace the market in the next 5 years and prepare then for the Horizon Two beyond 2027 with advanced products, with new products, solving high-value problems in the industry. To summarize, our Semi business is based on customer centricity and innovation, always have been. That way, we increased the market share from 65% in 2019 to 75% this year. An outstanding achievement of the global team, the whole VAT family. Big thanks to the whole team from my side. We also formed and continuously upgraded our account teams, key account teams with different functions, wherever our customer need them. For large customers, we have totally autonomous teams working for them at the different sites. VAT is also the only company that can offer a complete portfolio for all the application and ensuring the IP for our partners. Having the outlook, we will continue to outgrow the market through organic growth. We talked about 11% compound annual growth rate. With that, we will increase also the market share in core valves to 85%. Additionally, we will add more than CHF 250 million in achieved and products in an organic way through motion component and advanced modules. We change the world with vacuum solutions. With that, I think it's time for Michelle or the lunch. Yeah. Thank you very much, Urs. You can tell that the adrenaline was quite high with the first two speakers. They were much quicker than what we anticipated, so we are actually ahead of schedule, which is a nice surprise, I would say. I think we still break for the lunch because we have an official Q&A panel at the end of the session when you also heard the stories from Karen, Joe, and then the financials. There is a lunch served outside. Should be ready now. Please also take the opportunity to get close to the guys, ask them additional questions. Not the most difficult one, please. Be gentle. No, everybody knows exactly what they're doing. They know their business. We will come back here quarter to one. We start again on point, so because of the people on the webcast. Now I just wish you a good lunch and enjoy the time and interaction with the senior management team of VAT. Thank you very much. Yes. I don't think so. Okay. Good afternoon, everybody. Nice to see that so many of you stayed. I hope this is not just for the apéro after the event, but for the next three presentations. We will kick the afternoon off with Joe Haggerty, our head of Global Service business, and he definitely has some interesting stories to tell. Joe. Thank you. The floor is yours. Michelle, I think I also have my suit from two years ago as well. Great. Great. Which proves that VAT management is very good at personal CapEx control. Let's go ahead and talk about, I think one of the really exciting parts of VAT is the service business. A little bit about myself. I joined in 2018, shortly after Mike Allison took over the company. He asked me to run the service portion of the organization. At the time, it was about $100 million and represented about 15% of the overall sales of VAT. Mike Allison kinda gave me a very clear goal. He said, "Joe Haggerty, I want you to get this over 20% across the cycles. Try to build up the service business to be 20% of the overall business of VAT." Coming from 15%, that's quite a challenge. That's what we set out to do, and I think we've, as you saw from Mike's presentation, we're not quite there yet. We're over 18% now. Probably 18.5% by the time we get done this year. This year, we have grown, estimated growth by the end of December is gonna be at 21%. We are winning, upgrades and retrofit type, battles with our competitors at a similar rate as semi, which is really good. We've now increased the install base. The last time I was here 2 years ago, it was about 1.1 million, in what we call repairable valves. I'll explain that a little bit later, but basically, these are the valves that really drive the recurring revenue stream that comes out of the service business. We've grown our market share, I think, significantly over that, over that period. We're still operating across the same base of 8 service centers worldwide, this year we made massive investments in that service center network, and I'll show you that a little bit later as well. Again, we are coming out with more and more retrofits and upgrades, and I'll kind of explain a little bit why we do that for our customers, how it benefits them and makes their products cheaper and with less defects. Kind of if we look at what we do in service, we kind of have kind of a consumable side of it, which is kind of the spare parts and the gates. A gate... Oops, sorry. A gate is this part here. The gate, this is a transfer valve, and the gate will come up and close the door. Basically, it's the door part of a valve. That wears over time. That is the part that particulates within a semiconductor vacuum system, and it can damage the devices if you're not careful. These have to get replaced on a consumable rate from time to time. It could be 6 months, it could be every 2 years, they get replaced. The other part is repair, and this is on a little bit of, excuse me, a delay. By the time a valve goes into the install base, it will work with consumable replacements for 5 or 6 years. At that point, it probably needs some kind of refurbishment. We'll actually take the valve back, refurbish the actuators, and then return it back to the field. Finally, we also sell a lot of valves and upgrades and also sub-fab valves into the market. We made great pains this time around to try to project what we think the market is doing. We try to do this in combination with the third-party sources and our own sources to try to predict where the market's heading. You can see, over the last 3 years, we've had tremendous growth in the overall market. That's been a result of just an enormous amount of WFE going into the marketplace over the last 3 years, coupled with very, very high utilization. Those are the two big drivers for service business, how much equipment is in the market operating, and what's the rate that that equipment's being used. The last three years have been kind of a unique combination of a lot of equipment going into the marketplace and it being used at tremendously high utilization rates. The fab utilization is really been at record levels. That's driven a lot of growth for the market. We do see that it's probably gonna slow down a little bit. I think you saw from Urs and Mike's numbers, a little bit of a slowdown in terms of how much equipment's going into the install base. And the utilization we do expect to moderate a little bit over the next couple of years. Excuse me. These are the 3 areas of the business, and we kind of expect this repair because It takes 5 years basically until you need to repair a valve. The relevant part of that market takes a little time in order to grow that business. That's why you have a slightly slower growth rate on the repair business. For us, we translate that market data into how many valves VAT has in the field. For me, that's the most important thing. It's not all our valves. This is where this repairable valve concept comes in. A lot of valves we sell don't get repaired that often. They get used to the point where they're done with their life, and they get thrown away and replaced with a new valve. These kind of valves, the transfer valves and the control valves that are geared towards the semiconductor market in particular, these are the ones that have basically a 20-year or more revenue stream behind them. What we're looking for is a recurring revenue stream on the service side. That's what we wanna do in the service business because we wanna buffer against some of the cycles in the semi business and the display business. We really track closely what we call these repairable valves, which tend to be these transfer valves and the control valves. Like I said, these will last 20 years in the field. We actually see because of the massive market share gains you've seen on the semiconductor side of our business, so Urs' business, that's putting more VAT valves into the field at quite a nice clip. We actually expect over the next five years that to grow by 12% per year. Every year there's 12% more VAT valves in the install base, reaching over 2.5 up to 2.6 million by the end of this strategic period. From that, we can generate this kind of recurrent revenue stream. This is kind of an example. We showed this last time, but I think it's worth reiterating a bit. Over the 20-year lifetime of a valve, we would expect to sell seal kits and gates basically every year or every 2 years over that 20-year life of the valve. Adding up all those sales over that 20 years, you're gonna get about 2 times the price of the original valve. It's consuming these consumables at a pretty nice clip. In addition, we're probably gonna repair that valve two or three times over that 20-year period. At some point, we may replace that valve completely with a new valve. That would be what we call an upgrade. If we take a VAT valve out of the install base and put in a better VAT valve, we call that an upgrade. If we take out a competitor valve out of the install base and put a VAT valve in there, we call that a retrofit. That's kind of our internal terminology. You can see over the lifetime, that 20-year lifetime, you can kind of develop this recurring revenue stream that can be up to, say, 20% per year per valve. It can be quite nice. It's very much dependent on the valve type, the process. It's different for almost every valve in every fab. On average, it's a multiple of the original sale price of the valve from 3-5 times. From that, we can develop a model for our sales plan, and this is where last time we were here, we didn't really look at this install base growth as carefully as we did this time. When we did that, we kind of realized that, hey, this market share gains we're making are really gonna have an impact on the service business. Our ability to grow at a higher rate than we expected is actually even a little bit better than last time. I think we had 9% last time, if I remember right. We're actually expecting over this period to kinda be able to grow 13% over this period. We're kind of doing that on the back of kind of 3 major initiatives. One, we wanna continue to gain our market share in the service side. We have lower market share than Semi does, and this is kind of for historical reasons. We didn't really treat the service business as a primary growth portion of the company. There was a lot of local competition that come in and did, especially local repair, against us. We're trying to win back that business. We really wanna do that with a total cost of ownership model for our customers. That's working really well with the big top 5 IDMs. Intel, Micron, TSMC, Samsung, those kind of guys. The second thing is to continue to bring out these retrofit products, especially retrofits. We like taking a competitor valve out of the marketplace and replacing it with a VAT valve, because it leads to that downstream revenue in addition to the initial sale of the retrofit. What's really exciting for me, actually, is the portion of Urs' presentation about the adjacencies, because those will open up complete new retrofit markets for me and my guys within the service organization. Let's talk about this first initiative. What are we doing here, specifically? One, we're really trying to bring new repair models. We are a pretty reactive organization. If you wanted a valve repaired, we'd fix it for you. We weren't thinking ahead of time, weren't setting up what we call fixed price refurbishment packages for the customer, so that we could define ahead of time the price of the repair, kind of a gold, silver, bronze type offering to the customer. Now we had about 30 years of legacy product we had to do that for, and now we've really kind of done that. Now we can really scale the business because we can go to a large IDM and say, "Hey, this is the price for these retrofits or these repairs, and we want to do that at that price worldwide for you in all your fabs." That's really starting to take hold a little bit over the last 2 years. The second thing I mentioned is we're investing in our service center network. Out of the 8 service centers, 3 of them this year are being completely moved and renovated. Here we're going to class 8 and class 6 clean room installations, and we've tripled the capacity that we can do out of those facilities. That's really a nice lever for us. It's also the way we try to package it up to the big IDMs. We have a world-class service center in all 8 of these locations. You're gonna get the same level of quality, the same level of repair. You're gonna get a consistent product in every one of your fabs. Whereas when they go with the local guys, they might have quite a bit of different level of repair in Taiwan versus the U.S., for example. The other thing we're doing is focusing on these gates. This is the really critical part of a valve, and we have a lot of IP that we've that we built up over the years in gates. We want to leverage and are leveraging that right now. The other thing we wanna do is make sure that we remain very cost competitive on these products. It is a consumable, especially for the OEMs who use these products to do service contracts of their own. When a new semiconductor machine goes into the install base, the first three to five years are almost always covered by an OEM service contract. They need some of these consumables during that service contract, and they're very price sensitive there. We wanna be able to provide high cost or, excuse me, high volume, low cost, consumables for the OEMs. We can do that by leveraging our new gate facility in our Malaysia factory. The second initiative is these upgrades and retrofits. Why does a customer wanna do a retrofit, for example? On a transfer valve, it's usually almost always about yield improvement. They wanna reduce the particles that end up on the chips that end up killing devices. On control valves, it's slightly different. What they're really looking for is smoother control. You can kind of see an example here of a competitor valve versus us and the level of pressure control we have. Also, as you saw from Urs' presentation, the settling time of these transfer valves is the You have to do that faster and smoother. Every few seconds you can provide on a control valve in terms of shortening that process time is money in the pockets of the IDMs. They love if we can bring a shorter process time for them, and that's typically what control valves can bring. It brings it to every single wafer that goes through the machine. The result of that is some of these payback times on these retrofits and transfer valves can be on the order of weeks or months to our customers because the value is, as Mike mentioned, of these wafers is just tremendously large, especially on 3 nanometer, 5 nanometer type technologies. What we're really focusing on are these retrofits, and really trying to do that, especially on our control valves with new controllers. These new controllers that we have do provide this functionality and is in many cases, completely upgradable to our existing VAT control valves in the field. The third really exciting part for me again, is this adjacencies market. Looking here at some of the adjacencies, the microGauge sensor that Urs talked about, I didn't really include in this analysis, but three others that are basically in the market now or hitting the market as we speak, are quite interesting for us on the service side because they have enormous install bases already. Here we're basically coming into the market with very low market share on the forward build side, on the new product side. Over the last 20 years, there's been a lot of motion components put into the field. There's been a lot of inlet gate valves for ALD, for example, and remote plasma source. That's what RPS stands for. These are all technologies that are in the market today, and when we can come out with better, more improved products, we have an opportunity in service to retrofit those products out. The really interesting thing about these valves, they don't tend to last 20 or 30 years in the field like our control valves and pressure valves, control valves and our transfer valves do. These will wear out in a shorter period of time, and that should lead to more spares, potential for us as we start to get into those markets. This initiative is probably not so relevant for the next 5 years. It's probably more relevant for the 6 to 10-year timeframe for us, because it's gonna take time for us to get that install base. It's gonna take time for us to get our value propositions for retrofits. It's really, really exciting because it's gonna be on top of that growth you saw on the standard core valve business. If we kind of wrap this all up, I think I'm pretty much on time, so that's good. We're gonna really, I think, bring higher growth than we expected in the service part of the business. We have a big install base already, and it's growing at about 200,000 valves per year on top of what we have now. You can see that's quite a fast clip. We do have the biggest network in our market, nobody else can compete with that network, and we're investing in that network, and that's really key. We're not resting on our laurels. Like Mike said, even if with kind of a potential downturn looming, we're still investing, right? We're gonna continue to invest in that market. We're gonna come out with more and more upgrades. Upgrades and retrofits are a bit of a timing thing. When utilization's really high, like it's been the last 3 years, it's actually hard to do upgrades or retrofits because the IDMs just wanna make chips. They don't wanna take down their machines to put in new technology. They just wanna crank out the chips. What we're doing now as the maybe a slight downturn comes, it gives us time to really sell these upgrades or retrofits. They can retool. They can come in and try to do some node hopping, and try to come out of their downturn with a better performing machine. That's what we're trying to do to help them. The other thing is basically on the growth side. We do believe this big install base and growing install base can lead us to this 13% CAGR that we mentioned. And try to get our market share growing during that time. Another 10% is kind of our target. It's a very aggressive target, but we think we can do it. The good news is, you know, these are calorie-rich sales. They have, you know, they have a lot of EBITDA in these sales. What's really what we're trying to do is provide that buffer against the downturns that we see, and by growing this business, we think we can do that. With that, I'll hand it over to my colleague, Ms. Dahlstrom. Thank you, Joe. Good afternoon, everybody. My name is Karin Dahlström, and I'm leading the Advanced Industrials business unit. I have been with VAT for 3.5 years. A bit about myself before we start, I am Swedish and studied mechanical engineering in Sweden. Later on, did an MBA here in Switzerland. I have worked mostly for industrial companies like ABB, Alstom, GE, and Hilti before joining VAT. I would like today to take you through a brief overview of the Advanced Industrials business and then also look through the opportunities that we're seeing in the market, as well as the strategic initiatives we have in place to address these opportunities. Brief overview of the business. We are serving today around 1,600 Advanced Industrials customers in five main markets. Those five main markets that you can see on the upper left side of the chart, the business is relatively evenly distributed. The largest market is actually the rest of the Advanced Industrials. You can ask yourself, what is really this? Well, the third generation semiconductor material is actually manufactured from silicon carbide, and there we deliver the vacuum valves for those applications. Other applications are smaller but very fast-growing applications requiring vacuum for electric vehicles as well as fuel cells. The second-largest market is scientific instruments, where electron beam microscopes, these are microscopes used for health science as well as material science applications. The third largest sector is research. This is research applications into space simulations as well as particle accelerators. You know, most of you CERN here in Switzerland, as well as fusion technologies. To serve these demanding applications, we have 25 dedicated sales experts. To work in the more fragmented markets, we work with over 40 distributors around the world. What we do, I will show you afterwards, we customize a lot of the existing semiconductor offering into these markets. To do these customizations, we have over 65 dedicated application experts and engineers. We have grown a lot as well in the past year. In 2019, we were at 27% market share, and we're looking now at a 36% market share in these Advanced Industrials markets. We will close the year roughly at 19% net sales growth, and with that delivering over 110,000 vacuum valves and bellows. As we customize these products into these markets, the customers really value these customizations. We deliver a little bit more average EBITDA than the rest of the VAT Group. Now you can ask yourself, why does a semiconductor company like VAT do the advanced industrial markets? Well, there is very powerful synergies serving both the semiconductor OEMs as well as the advanced industrial customers. What you can see here highlighted in green are product categories representing roughly half of VAT's product sales last year. You can see the reuse, especially high on angle valves, where 51% of the products went into the advanced industrial markets. Second highest is gate valve, and third is bellows. We can still grow a lot in a control valve, and I will show you in the next slide also integrated solutions that you saw from Urs this morning and from Mike, as well as transfer valves, how we can reuse them. It is very clear, we take these products, we customize them, and it is valued by customer as also you can see in the categories, we are slightly higher in the margin for majority of the products. Speaking about the markets, last year, the advanced industrial markets was roughly half a billion. If we look at the expected market growth over the next five years, we expect 5% compound annual growth rate up to 2027, a little bit higher volume than CHF 700 million. What we have seen was, you can see in the graph, the COVID downturn in 2020, a very fast recovery, mainly due to the mega trends that Mike spoke about earlier. Speaking about what's happening in the market at the moment, and especially the outlook for next year, we saw a very strong growth in the first half of this year. As we are diversified into several of these markets, it's a mixed picture. Let me go through each of these markets and speak about what we're seeing at the moment. For space simulations, that has always been project business and continues to be. We see business continuing here. Meanwhile, the particle accelerators, they consume a lot of energy, so we expect them not being used this winter. However, a lot of the scientific instrument experiments around the world are done in these accelerators, and therefore, of course, they will recover. We expect also early spring recovery in this area. If you look at the fusion due to the energy crisis around the world, even though fusion still has to be proven, especially the commercial viability, there's a lot of pressure to see what can be done with fusion, we see an accelerated schedule. We also have seen more than $4.8 billion of private funding going into this sector in the past 12-15 months. Scientific instrument, we address the e-beam microscopes in health science as well as material science. You all know, the whole world is looking at replacing plastics and looking for more sustainable material. Material science here requiring these microscopes is, we still see a very strong demand going forward. If you look at health science, very similar. We're just coming out of the, what Mike spoke about, COVID. Of course, there are still threats around viral diseases, but also cancer, Alzheimer's. These microscopes are used for a lot of fundamental research around the world. The forecast we have for next year from all our customers is strong growth continued. Looking at solar, especially with the energy crisis around the world, we really see an accelerated demand, short term. In coating, I think all of us have seen, due to the inflation pressure, less spending, consumer spending on consumer devices, electronic devices. There we are seeing balancing that geopolitical investments so that investment's going in both in Europe, U.S., as well as rest of Asia. Similar in the rest of the advanced industrial market, where we have seen strong growth in silicon carbide, and there also we see geopolitical investments. Overall, if you look at the VAT market share in these areas, you can see we have high market share in relatively small markets like research and solar. Where we are looking and we are seeing growth opportunities are, of course, in the larger markets where we have only 27% market share as an example. I want to show you in the next couple of slides how we can leverage what Urs and Mike showed in the beginning from semiconductor capabilities and solutions to address customer needs and pain points with these microscopes. Similar also, we can grow in coating as well as advanced industrial markets. Having seen that we can grow market share in these advanced industrial markets, we also look at how can we increase customer value. If you look at what is similar between semiconductor and advanced industrial, and especially speaking about these microscopes, it is particle management and, of course, reliability, availability as well as quality. What we did is looking then what potential VAT can deliver in terms of value to the customer processes, and you see that on the y-axis. Coming back to the advanced assemblies with pressure control that Urs showed, we also see the potential in these microscopes as an example, but also in research for fusion, where we have already concepts for system integration with valve assemblies that I will show you in the next slide. On this slide, you can see very specifically this is a typical but somewhat simplified microscope. We see three main areas where we can grow in the advanced industrial area. At the top, you see the electron beam path, and there we can integrate isolation valves, so angle valves and gate valves, and that is of course to isolate the electron beam and also to allow pump bypass operations. Urs speaks about the wafer path for semiconductor. We speak about the sample path. For this material and life science, you speak about the samples. There, of course, we can leverage the load locks that you see in the middle of the picture and of course the isolation valves with angle valves. At the bottom, we can also integrate angle valves as well as gas control valves. With this, we can see we can increase the value we deliver to customers, as well as also leveraging the advanced assemblies from semiconductor. Interesting also for Advanced Industrials is that we are seeing several emerging new markets that use vacuum valves. On this chart, you can see a much longer timescales. What's interesting is that several of these markets have high market activity already this year. You see in VAT green some of the RFQ queues that we have received this year, and also in the darker green where we already today are delivering prototypes and doing pilots at the moment successfully. What we're doing here is researching and making sure that we position VAT very strongly for the future growth. Not all of these technologies will succeed, but with this portfolio, we're very well convinced that we can have strong, sustainable, profitable growth for the future. Based on that, the Advanced Industrials business unit has outperformed the expectations in the past three years. We have actually raised the bar for the next five years. You can see here we're targeting between CHF 250 million and CHF 300 million, and basically an outperformance of the market by a factor over two. We have focus in our strategic initiatives on innovation as well as market reach. Our most important initiatives focusing on as we customize into these markets, we need to make sure that we retain that ability to customize, at the same time electrify. You saw the focus from Urs on the semi, on mechatronics. Here we can leverage a lot of this, but at the same time build more platforms to have an even better cost position for the future. We're looking at more configurable product platforms in the future. As I mentioned, in the e-beam area, we are looking at leveraging these integrated solution capabilities, also leveraging the pressure sensors, and by that, serving our customers much better. As we have a strong market focus, and this is highly specified business, we therefore need to be very close to our customers in the market, and that means that we are investing in direct sales force, both in Asia as well as in the US. With the future, also what Mike showed earlier, we are digitalizing, making sure that we can serve our customers throughout the whole value chain much better by having stronger web presence and interaction with customers online. To wrap up, what you have seen is that we have a strong product reuse from the semiconductor market into the advanced industrial markets, and by customization, the customers are really valuing this, and we therefore have slightly higher profitability in the advanced industrial markets. We have a strong position in these markets with still room to grow, so we are at 36%, targeting 40% in the next five years. By looking into these future markets, we are making sure that VAT is well-positioned to capture also the long-term growth. Most important is for us also these opportunities to increase the value to customer by also increasing the share wallet, leveraging the integrated solutions from semiconductor. With this, thanks a lot, and I hand over to our CFO, Fabian. As you have now heard from my colleagues, we have some fantastic programs and initiatives in the pocket. As we are now on the final approach of this capital markets day, I'd like to add my financial perspective of how I see the business over the next period. As most of you know, I'm now for a little bit more than one and a half years with VAT, and I spent a lot of time interacting with all of you, our financial community, and I'm very pleased to see a lot of familiar faces also here today. Over the course of the last 20 months, the most exciting part of my job, I would say, were the very insightful, inspiring, but also motivational dialogues that I was able to have with our global workforce as we embark on our VAT2B journey building, as Mike has mentioned earlier on, the capabilities to execute on our strategy. Before I dive into the financials, and there will be quite some, I'd like to show you the key vectors of how we would like to successfully implement our strategy. As my colleagues have elaborated throughout the course of this day, we have phenomenal market growth opportunities that we would like to capture across all our BUs. We will further leverage our technological leadership valves to adjacent products and solutions as my two colleagues just elaborated on now after the lunch break. Therefore, R&D investments are the basis for our growth ambitions as we are extending our reach into these adjacencies. Investing ahead of the curve, that's a kind of a buzzword that I'm gonna use throughout the presentation, is really the key success factor, the magic source that makes VAT as successful. I would like to elaborate a little bit also on how our CapEx programs are evolving over the course of the next five years as we ensure that we have sufficient production capacity for our customers. Our resilient, scalable and asset-light operating model is the foundation for the strong profitability and also one key pillar for sustainable free cash flow generation over the cycle. Last but not least, I think we have proven focus on capital allocation as we strive to return a high share of our economic value generation back to our shareholders. Before we go into the outlook, let me just quickly recap on what we have accomplished so far since the company went public back in 2016. I think we can proudly say that we have a strong track record on delivering outstanding financial performance that is based on strong double-digit growth as market share continuously increased over the last year. Coupled with our strong sales growth, we also delivered on the bottom line. We constantly increased our profitability throughout the business cycle from 26 to now 35%. With a disciplined approach to CapEx spending, we also ensured superior free cash flow conversion. Last but not least, also our economic value generation is quite significant with strong returns on invested capital 2.5x-5.5x over our weighted average cost of capital. As Mike mentioned at the beginning of our Capital Markets Day this morning, we are well on track to deliver on our 2025 commitments. I also felt in some of the exchanges that I had with you over the course of this day that this is probably one of the most remarkable accomplishments that we weathered through the manifold storms that are out there, especially for the last 1.5 years, be it macroeconomical, geopolitical nature. We had supply chain disruptions, still experiencing constraints. I think our performance in this environment is just another proof of a successful operating model. Since the 2020 Capital Market Day, we have delivered around 40% TSR to shareholders that are invested in VAT, assuming since the 2020 Capital Markets Day. We are beating all of the main indices such as the SPI, the Nasdaq, the SOX. This is ultimately the result of our crystal-focused business model that enables us to grow over the period of these three years at 29% CAGR, sorry, the last two years. Also on the bottom line, we have increased the EBITDA margin by 4.6 percentage points. Thanks to its superior performance, VAT has also been included in the SLI, that is the Swiss Leader Index, composed of the top 30 companies traded on the SIX Swiss Exchange. Now let me elaborate a little bit on the stakeholder value proposition, and I would like to reconfirm the 3 pillars that we have introduced to you 3 years ago. The good news is they're still valid. That is around growth, profitability, and capital allocation. You have seen this slide before where we summarized the different angles of our growth strategy. I just quickly wanna reiterate that. In Semi, we're expecting a CAGR of 11%. That brings us to CHF 1.35 billion sales at midpoint, including the adjacencies that Urs has introduced. In Global Service, on the back of this 13% CAGR, we are going to achieve CHF 375 million of sales at midpoint by 2027. Last but not least, also Corinne's group is looking at stellar growth opportunities, yielding an 11% CAGR and CHF 275 million of sales at midpoint. Summing that all up, we get to the CHF 2 billion of sales at midpoint by 2027. You might remember from Mike's presentation this morning, the key success factors in our business are flexibility and scalability. At VAT, we address this through our flexible operating model in combination with our global footprint, and I would like to highlight here three elements of how we drive operational excellence in the company and build also this downside resilience into our business model. First, starting on the left-hand side, we operate with about 25% of flexible workers. That not only means that we are working with temp contracts, we also have flexible work models and shift patterns to be able to flex and quickly react to any changing market conditions. Secondly, the growing installed capacity in Malaysia also enables us to enhance our best cost country sourcing volume from currently 25% to 55% by 2027. Here I have to apologize for a typo for those of you who are looking into the printed version where we had the right-hand bar set to 2025. But even our ambition level is not high enough that we can achieve 55% by 2025, so it's really 2027. Apologies for that. Last but not least, and element that we also reference to at all the discussions that we have with you is our insource-outsource ratio. Well, what does that mean? We source about 75% of our components from sub-suppliers, hence focusing really on our capabilities for the parts which we produce in-house, and that gives us enormous flexibility but also scalability as long as our supply chain colleagues really focus on the continuous development of our supplier base, and this is now especially important as we continue to grow in Malaysia. Coupled with this insource-outsource ratio, we also have about two-thirds of our cost on a variable basis, which again underlines our flexibility. Let me quickly talk a little bit about our footprint, focusing on the lead factories in Switzerland and Malaysia. As of today, Switzerland has an capacity of about CHF 800 million factory output, and we are gradually increasing that by 2027 to about CHF 1 billion. The most exciting contribution to our CHF 2 billion sales plan is, however, gonna come from Malaysia. We have in our existing factory an output this year of about CHF 275 million. That's for the full year. The run rate is above that, as Mike has mentioned earlier. With the addition of our second factory, which is currently under construction, we're gonna boost this factory output that's gonna be contributed for Malaysia beyond $1.1 billion. As I said before, we need to look at Malaysia as really an integrated part of our value chain, and therefore, we are also putting a lot of efforts into further enhancing the capabilities of our suppliers, growing our supplier base from currently 60% best cost country purchase volume to 80%. Also in Switzerland, you can see that we are shifting quite a bit of our sourcing to best cost country, which enables us then to achieve this 55% share by 2027. Let me again summarize our stakeholder value proposition based on growth, profitability, and capital allocation. On growth, as my colleagues have elaborated on during the whole day, we're focusing on market and WFE growth, share of wallet and adjacencies, and then also these market share gains. That will allow us to hit low double-digit sales growth over this next period up until 2027. Based on operational excellence, our cycle management with the operating flex model, but also this best cost country footprint, we are confident to confirm this EBITDA margin band of 32%-37% and also the free cash flow conversion rate of 60%-65%. As I said before on the capital allocation, we stick to the proven metrics, being leading-edge innovation focus with 5%-6% of sales over the next five years. CapEx investments ahead of the curve. I'll come to that again later on, 4%-5%. Also, the participation of our shareholders with a dividend payout of free cash flow to equity of up to 100%. On the next couple of slides, I will give you some more details on some of these key metrics. Since the last trough in 2019, early 2020, we have seen significant bottom line margin increases, which were generated thanks to our operational leverage, so a higher absorption of our fixed cost in combination with our focus on operational excellence, continuous improvement, but also, the acceleration into best cost countries. As our business remains of a cyclical nature with swings of ±20% being the underlying assumption for our EBITDA margin band, we are constantly monitoring the development of our scenarios. For the financial steering of the group, I use what we call the flex model, which helps us in decision-making to stay within the target profitability range in any given swing within that range. On the next slide, I would like to quickly show you the development of our economic value generation measured in return on invested capital over the average weighted cost of capital, which is set at around 10%. You can see here that we have historically generated significant value thanks to the organic growth, but also our asset-light business model. This is evidenced both by the ROIC, but also by the cash return on invested capital. We envisage to continue on that path, thanks to the asset-light strategy with these levers that I have introduced to you before. Also, the invested capital is not expected to grow over proportionally in the coming years despite the organic growth strategy. Investing into R&D and CapEx are two key pillars of our capital allocation strategy, and we will continue to do so to honor the trust, but also the commitments from our customers in our capabilities to invest ahead of the curve. We will see around 10% of sales investments into CapEx and innovation. The R&D investments will stay as you can see here also historically, relatively stable over the next period. Whereas, CapEx fluctuation already historically reflected the periodic investments in the production capacity ahead of the curve. Also for the years 2023 and 2024, we will continue to see front-loaded investments. That means we're gonna spend around 6.5% of our sales to really ensure we bring Malaysia Two on stream, we build the innovation center, and also further enhance the capacity in Switzerland. As I have shown you before, from 2025 onwards then, I expect the CapEx again to be below the 4% range, that we will then ensure we have this 4%-5% band over the next 5 years. Again, good news. The capital allocation principles, the proven principles that have been introduced 2 years ago, they will not change. I think we have demonstrated that we are capable of investing our funds into organic growth, that we're investing ahead of the curve. Much more importantly, we are boosting our investments into R&D with the innovation center, adding a large amount of R&D experts to work on the next generation of products. Also, returning cash back to our shareholders is and remains one of our key value propositions. To round up not only my presentation, but this 2022 capital markets day of VAT, I would like to close with a slide that you have seen before. CHF 2 billion, that's our ambition level at midpoint, equaling a CAGR of 12% for the group. EBITDA margin band, 32%-37% over the cycle. This is only achievable by this strong growth that we are expecting from the market, but also from our share gains. The expansion of the share of wallet that Mike and also my colleagues have alluded to earlier on, plus this substantial and exciting growth opportunities that we want to unleash in our adjacencies. Last but not least, we would like to maintain this high profitability over the cycle with our flexible cost structure. Let me close again with the financial commitments for the next five years. I think the VAT remains a unique combination of profitable growth and high cash returns to our shareholders. We have already now touched on the elements which are confirmed also for the next five years. EBITDA margin corridor, CapEx 4%-5% over the cycle, R&D spend 5%-6%, free cash flow conversion, but also the dividend payout up to 100%, free cash flow to equity to our shareholders. The updated guidance, plotted here in green. Sales growth, low double digit over the next 5 years, aiming at this CHF 2 billion sales at midpoint. ROIC over 45% over the cycle. I have consciously increased the working or the trade working capital target from 22%-24%. We have experienced over the last 2 years, maybe the last 20 months, how fragile our global supply chains are. For us at VAT, it truly pays off to invest into our supply chains, making them even more resilient and always being in a position to fulfill and meet the demands of our customers. We continue to operate with a solid balance sheet to support our growth targets. With that, I think I will close from my side the presentation on the financials. Thank you very much again for your continued attention. We will now move over to the Q&A session. Thank you. Yeah. Thank you. Thank you, Fabian. We will now have kind of like a 30-second break because we need to rearrange the stage a little bit. We will have all the senior management guys you have seen presenting here on stage for the session you have all been eagerly waiting for, which is the Q&A session. I will try to moderate it a little bit, so to see, taking questions from the room. We might get question over the webcast and maybe even over the phone. What I like to remind you when you're here in the room is really wait for the microphone to reach your spot, because otherwise everybody on the webcast, I heard we have more than 120 people on the webcast as well, so that they can hear your question as well. With that, I think Mike and the team, please join me here on the stage for the Q&A. Let's go over there. Right. Spread out. Okay. Sebastian. Yeah. Sebastian Kuenne, RBC. My first two questions are just market questions, really. Mike, you mentioned the 20%-25% drop in wafer fabrication equipment market potentially next year. You didn't fudge when you said it. I wonder what that implies because your customers still sit on like 6 months order backlog. If the market expectation is now for 20% drop of revenues next year, what would that imply for the new order intake for your customers and also for you? That would be question number one. Question number two on China, can you just reconfirm what your current exposure is to Chinese clients, and what are the Chinese capabilities in wafer manufacturing? Is there actually a local player who, in 3 years' time, could become the supplier to their own industry? Thank you. You know, we're in a tricky period right now in the cycle. It's not straightforward because we have weakening consumer demand for sure, high inflationary environment. At the same time, we have this confusion over the China situation, what's gonna ship, what's not gonna ship. Our customers do have a strong backlog for sure, and that will continue into the first quarter, almost second quarter. It's really hard to triangulate what the overall reduction in CapEx plus that's gonna mean. For sure our customers are saying that a large% of the backlog is gonna end up at the leading edge to continue with the advancement in especially advanced logic, but also on the leading DRAM nodes. I think it's. I've said this a few times in the past and it has played out that our customers can't wait too long to invest in those leading-edge nodes. If you get behind, especially in the memory market, you don't make any money. It's as simple as that. It is difficult to predict next year what the 20%-25% reduction means. Our customers can't tell us. You know, they don't have accurate models that can work all this out. There's also the situation where many of the OEMs have deferred revenue sitting out there, you know, sometimes quite substantial, about 6 weeks of revenue in the marketplace. How this plays out is difficult. I try not to focus too much on that. I focus in getting with this team here, the company ready and how we deal with it. We're already taking actions. We're already looking at the temp workforce and optimizing that. We're talking to suppliers. We're trying to manage our inventory levels. We know we're gonna have an impact next year. We just don't know how big that's gonna be. I think the other key thing I'm focusing on, thankfully, in the 18-19 period, we didn't cut too deep. We got it right. You know, we kept the core investments running as a company. We continued to invest in Malaysia. I remember those conversations that I had with you guys about why are you investing in capacity when you're about to see a 25% sales reduction. That decision proved really pivotal in the 30% growth we've had, compounded over the last 3 years. They were the right decisions, and I believe they'll be the right decisions going forward. You've got to have a little bit of patience next year. I think the important thing is looking at the products we're lining up and the market strategies we're lining up for the subsequent years that will propel the company forward. I don't wanna give any predictions on next year. I can assure you we're planning and we'll be ready. The second situation, Urs, what do you think? I mean, they're all your customers in semiconductors obviously. Karon has also a big market in China, but in the semiconductor side, what do you think about the China competitors? Well, I think in the semiconductor it's also in China, quite a consolidated market from the OEMs. There are just a few key players in China. If they wanna succeed and achieve a certain level of node sizes, they have still to rely on technology, leading-edge technology. It's still a niche market as well. We are playing in a niche market. It's a fantastic obviously learning market and industry outlook, but it's a niche market. It would need a lot of effort to come up with products that can compete with our products. Of course there are competitors but more in the, let's say, in the commodity markets and commodity products, but not in the real critical products they need for the semiconductor. I think this similar valid for ADV, right? Yes. In commodities, yes, there is competition, but for the real high-end applications, they rely on Western technology. Mm-hmm. Correct. We see it is really advanced industrial applications. We don't play at all in the low-end market, neither in China nor in other markets, and therefore the reliability and quality lifetime that VAT can provide today, none of the competitors can do. Can they develop in the next three years? Very challenging, I think, to achieve that. I think one other point there, on the competitors. One good news is that a Chinese valve manufacturer isn't gonna be selling valves to Western OEMs, so it would only be local China market that they play in. That restricts a little bit their ability to impact our markets in the Western areas, including Japan and Korea. Okay. Next question from Michael. Maybe one thing we should say regarding IP as well, of course, we are stepping up IP protection for VAT and making sure also that we protect, not just in China, but for sure in Asia, our technologies. Okay. Thank you. Michael Port from Vontobel. Maybe just an add-on question to that China question is what risks do you see that you might as well get restricted to sell into or ship into China at all? I mean, Competition there is then irrelevant if you're not allowed anymore to ship there. Yeah. Excellent question. You know, one of our strengths and one of the reputational elements of VAT is we've been able to be a key provider for all the large OEMs, and they compete heavily against each other. We've instilled firewalls and ways of working to protect IP across all our key customers. Now, we recognized that there was a potential that IP could leak from our high technology OEMs into the emerging China market. I think Urs and his team did a great job of restricting the type of products that we would sell into China. We sell less customized products and less tailored products to the China market and manage that IP. It's more standard catalog. Not quite catalog, but more standardized products we sell into China. That protects us a little bit from sanctions. It's absolutely possible that, either the European governments, or the American government starts to, you know, muscle into, our sector and place restrictions. We can't count that out. We've just got to be ready for it. Thank you. Maybe just a second question. If I remember correctly, in the last capital markets day, M&A was still part of your growth strategy, but you haven't mentioned really M&A today, although you have made some small, quite impactful acquisitions in the last two years. Maybe, if you could say a word on your M&A strategy going forward? Yeah. We've certainly added some resources to look at M&A. You know, You've seen our financial returns and the profitability ambitions we have. There's not many sectors within our industry that you can generate that, a level of return. We're pretty picky in what we wanna do, and we've kind of got an insatiable focus on adding value and driving the customer value as the primary value proposition for how we position our products. To be honest, most of the M&A opportunities we see don't provide the level of technology differentiation that we can generate gross margins and EBITDA margins at that level. It's been disappointing. You know, it's not for a lack of trying. We've looked at numerous companies. We're very close working with our board and thinking about that, what could be next for VAT. We've got some ideas for the future, we only wanna do it or do something if it can add significant customer value. As you saw today, a first glimpse of the microGauge topic, we see there an opportunity in the future where we can add value to our existing products by bringing a differentiated new technology to market that will be a little bit disruptive. I think that's the model that we're trying to look at. All our business units are looking at that. You know, what can we bring that really changes that dimension, especially on the journey to 2 nanometers, 1 nanometer, sub 1 nanometer, where things have to change. You know, process control, all the dynamics within a chamber, how chambers operate. There's gonna have to be new ways of thinking. You've seen recently the advent of ALD. ALD is becoming a very prominent deposition technology. That's changing the landscape. You're gonna see more technologies like that coming to market, which means different component structures and different types of requirements around the chamber. We wanna try to lead that. It means taking some risks, you know, and in our R&D program that Urs is setting up. You saw how Urs is setting up with the standard business, valve business adjacencies, and also the advanced products group. We're gonna be incubating a lot of new technologies in there to try to bring that pipeline in the future. Okay. Okay. Before I take the next question here, I have one from the webcast from Henrik Knudsen, Secure Capital. I think it's interesting, you want to clarify the 2 billion capacity that we mentioned to have from a factory output point of view by 2027. Does this include the service business or parts of the service business, or what is this 2 billion actually referring to? Mm-hmm. Thanks, Michel. Let me maybe clarify this. When we speak about factory output, this is the capacity that we can generate in the factories. On this CHF 2.1 billion plus by 2027, you can assume another 10%-12%, 15% of non-factory output related sales. Therefore, we have always to distinguish between what is the factory capacity and what is our sales ambition. As we have alluded to earlier on, as we are investing ahead of the curve, we are also keeping at any given point of time enough headroom in order to react to any sudden customer demand changes. Okay. Thank you, Fabio. I think Marta had a question here. Thank you. Marta Bruska from Berenberg. I would like to ask, with regards to your raw materials, you know, going into 2023. We know the steel is like down 50%, but about 75% of your components are bought from outside that we just learned. How much of the delay is usually embedded in your purchasing contracts on average, so we have a little bit of a feeling with how much of the delay we will be dealing? I have two more, please. Yeah, maybe Marta, let me take that one on the raw material. We are operating with around 3 to 6 months of inventory on the most crucial commodities. As we are now using, producing these goods, what we will then actually have is exactly what you're pointing at, is then the effect of increasing raw materials onto our P&L. In order to cope with that, we have our continuous improvement program that I introduced to you before, where we have 3%-4% of productivity. Also we have set in motion a price increase program throughout all the relevant customers, which also helps us to absorb that. As you have a lagging effect on your raw material, you also have a lagging effect on your price increases. I think there we are, we are well covered. Another challenge is definitely the price increase, let's say, pressure that we are facing from our suppliers on that 75%, as you rightly pointed out. Therefore, I said before that supplier development is crucial, but it's definitely also the collaboration with our trusted suppliers on cost-down activities. It's not just that we focus operational excellence on our in-house production, we're also doing that on our suppliers, which then helps us not only to further unleash productivity potential at their side, but also to avoid too much of a cost increase on our books. Thank you. Just to clarify, you don't see the raw material cost going down in 2023 just yet? Is almost the $1 billion question today. If we look at all the commodity forecasts that we have available, I still see mid to high single-digit inflation cost increase expectations on our main material commodities. Should the macro environment change, obviously also these commodity prices will change. I think, as I said before, we need to be able to operate in these scenarios and then also prepare ourselves accordingly. Right now, our purchasing groups, they're still expecting increases for next year. Whereas, I believe if we go now into a macro recessionary scenario that this increased pressure will certainly also fade to a certain extent. Thank you. If I may have one more, please. How much of the service business goes via OEMs and how much directly to the end users? I believe Joe would be the best person to ask, please. Joe. Yeah. It's roughly 50/50. It's in that range. It'll vary year to year, but it's roughly that. Okay. Next question is Sandeep here. Yeah.... Hi, Sandeep Deshpande, JP Morgan. Just quickly actually on the pricing again. You've seen some pricing increases in your own components during this period. Do you see, you know, an impact of that cooling down in the next couple of years as the economy cools overall? Or is that now in stone, and that will not change very much? The second question I have is on your adjacencies. I think there is about CHF 90 million+ of adjacency revenue this year, and you're guiding to CHF 300+ something in 2027. I mean, in the valve market, you are, I mean, you know, by far market leader. In those segments which you are entering, where is your market position at this point? That may mean that that part of the market has a different dynamic than the valve market where you are, you know, by far head and shoulders leader. Okay. Component purchases, yeah. You know, it's a very interesting dynamic right now, where you've got certain component families which are fantastic availability, and you've got certain components, especially the components going into the automotive sector, which are still really tough. You know, and we still see a shortage situation in some of them today. On the first grouping, prices are stabilizing, whereas they're still pretty extreme on the shortage categories. The challenge in the shortage categories is they're mostly done through brokers. There's just a tremendous amount of price inflation, sometimes 20, 30 times the original price from the chip makers. I'm hearing that that's gonna continue through 2023 because the capacity hasn't come online yet in some of these legacy nodes to make a good enough dent in the shortages in the legacy side. In the leading edge, there's leading to mid edge, there seems to be enough capacity, and prices are stabilizing or dropping. The second question, do you wanna comment a little bit on that? Yeah. I think we have a very good view on valves, as you have seen, because there are published market data available. There are no such kind of data for our adjacencies. It's also quite difficult to offer us. We have our own model, but these are not public data so far. We have our own model and how we want to approach that. As we mentioned also with the merger, we always want to add value to our customers. If you just would do build to print for some stuff, we would get even more business, but that's not our business. We want to add value into the component, and then it's of course, kind of difficult. What is the market size where VAT can add value? I think we are working on that model as well to get a better understanding. Today, I would say it's not that easy to calculate a market share. Maybe with motion, we know we will be probably the largest single motion component supplier within the next two years already. Because a lot of these components are done by the customers on their own. There, we certainly will see, and we will probably for, in one of the next or one or two years, we will have a better feeling about our market share. In advanced modules, it will always be quite tricky to find the right addressable market for us. Yeah. The advanced modules are all built to print today. The OEM design it and then farms out the design to a major industrial supplier like a Flex or something like that. It's quite a distributed market, whereas the motion components are mostly small regional suppliers, you know, supporting the OEMs on a local basis. Yeah. Yeah. Okay. Take one question over here before we go over to Serge, and then Remo, can you get your one as well? Hello, my name is Andreas Lechner of RV Capital. I was wondering, with your share of wallet of 1.5%, you may be flying under the radar screen with respect to clients applying price pressure. I was wondering if this might change as your share of wallet grows to 5%. That's one question. The other is, have you thought about what would happen if Moore's law comes to a halt or slows down once we reach the one nanometer level? Mm. Thank you very much. I'll let Urs answer the Moore's Law one, as he needs to really think about that. We don't really slip under the radar screen. You know, in some of these large OEMs, when you've got $200 million worth of business, you're pretty visible, even at only 1% to 2% of business. We have to work very closely with them on total cost of ownership. You know, the way to think about it when we look at our advanced assemblies is we try to take out their cost. We try to redesign things in a way that we can share some of the pain. They're always tough negotiations. We try to find a balance. We could easily charge more in some cases, but they're the same customers that we're trying to grow our adjacencies and other products. We try to focus on a win-win. A win that allows us to grow at the margins we wanna grow at, but a win for the customer that we deliver a total cost of ownership solution that makes sense to them. It's a fine balance. Sometimes we get it wrong and, you know, we scream at each other and we try to figure out some other way. The majority of cases, we're getting it right, and I think gaining respect from our customers that we can run a successful company, but give them a tremendously reliable supply base. Now we'll find out how we deal with Moore's Law under 1 nanometers. Well, 1 nanometer means 10 angstrom, right? Then we have again a 10, and we have something to decrease over time. I think that exactly that is what happening. If you follow the IMEC presented their roadmap over the next 15 or even 20 years, I guess, and there is so much to come, still to come, what they think that they need in the future, especially to reduce the power consumption. Today, I think everybody has to charge the smartphone once in the night, right? The future technology will be that it will last for a week or even more. I think it's still a long roadmap to go and it will not come to rest. Even maybe the... It's not the real shrinking, the most important, but more also the three-dimensional, that is more the stacking, kind of goes to the third dimension. They will have problems, and they will find solutions, and this will bring via the also challenges to come up with new products and solutions to our customers. That's why we say also from a technology point of view, it is a fantastic industry to work in. I think the 3D element and stacking has to become more prevalent and also exotic materials because the sheer cost of scaling, you know, once you go to 1 nanometer and below, you've seen the price of the latest lithography systems. This economic equation that's developing, I mean, $20,000 for a 3 nanometer wafer, you can't deal with $50,000 for a 1 nanometer wafer. You'd have to have one heck of an application that someone's willing to pay, you know, $200-$300 for a chip at that point. There's a lot of manipulation gonna happen here to get the economic model in line with the scaling model. I think the answer will be more three-dimensional structures and different architectures and stacking of chips as well. The TSV, chiplets, chip modules are certainly also gonna be a potential solution. Okay, now here, Serge. Yes, good afternoon. Serge Rotzer from Credit Suisse. I have a question about the hit rate. Really impressive high hit rate of 90%-95%, and currently you have a market share of 75%. I'm wondering, this tells me also that only 5% of your competitors can have a win, you know. Where are the remaining 20%? Did they left the business, or did they reduce their business, or do they go tender? Or, I don't know. Are you reducing prices because of the scale you have, you can keep the margins and therefore you go with lower prices? The next would be to achieve 85% market share over time. Does this imply that you have to keep this 95% hit rate? Lastly, is what is the highest risk that this hit rate will come down? First question. It's... Yes. Well, yeah. Well, we tried to show during our presentation. Our spec win rate must be high, but we also have to play in the right field. We also have to select the right battles. I think that in the leading edge, most, I would say, most of our competitor stepped out or our customers, if we cannot do it, they do it on their own. I think that's why we need this technology advances, the new skills to help our customers as well to solve this high-value future problems they were facing. They are willing to work with us as a technology partner in the future. That's the biggest challenge we have, that we are on technology, on leading edge, perceived as leading edge also from our customer. It's less, especially in Semi, I mean, ADV is always a little bit different because their, the portfolio, is a little bit different from commodity to leading edge. They move more, our competitor move more towards maybe the solar business or the less, critical, applications. They also saw during these last two years, our customers that having dual sourcing didn't always work because it's really hard to have two pure play competitors on the one platform. The qualification rates, the cost of qualification is just becoming astronomical. And the smaller niche players weren't able to have the power to get through COVID and the supply chain shortages. We demonstrated in the last two years that a single supplier, an optimized supplier, a supplier where you have super close communication with, is actually a better model. That's where the playing the economic game sensibly and working with them on total cost of ownership becomes critical. I think it's becoming more common in semiconductors that you have single sources. The industry can't necessarily afford dual sources. In ADV, it's probably different, with your OEMs. Yes ... because of simpler components maybe, yeah. Yes. We also have more project business, so it's of course not locked in in the same way. That's why we are looking also for this more highly specified business that you saw that we are developing as an example in scientific instruments. We're going into more the semiconductor direction. Today, definitely you can dual source more and we win more on the technologies and the value that we provide to customers. There's one other point that I think is becoming critical, is the talent shortage. You know, our customers can't get the number of engineers they need to drive their roadmaps and to develop the next generation complex system. They need to put that talent on solving the biggest process problems, not on trying to second-source valves. The value proposition just isn't there. You know, saving a couple of hundred dollars or $1,000 on a valve doesn't make any sense when you're not delivering on your core technology. I think there's a strategy of providing turnkey qualified modules really starts to play significantly in our benefit, you know, when you've got such a talent shortage. Okay. Many thanks. Very helpful and gives sense. The second question, I probably will stop then. Okay. On page number, 40, advanced modules, you have a nice chart which obviously shows a steep increase of the sales. However, you have two hikes in 2024 and 2027. Does this tell me something, or is this a mistake from the IR? What, another mistake from. No, no. What's the reason? I don't know. Are there any specific launches of machines, of OEMs or? Yeah. We are having a bottom-up model, so the number coming from a bottom-up model, where we do expect specification wins and where our expectation when the new launches from our customers will kick in into the market. There is a model behind, and, yeah. We, of course there can be changes, plus/minus one or two years even, depending on how the market reacts and the technology they need. In advanced models, certainly it's a very important one, is, certain processes going into vacuum in the future, and this is a big driver. Okay. Before taking next questions from the room, I think we have Rob waiting on the phone for asking his question. Operator, can we please have Rob? Sure. Mr. Sanders from Deutsche Bank, your line is open. Yeah. Hi, yeah, good afternoon. Thanks for taking the question and thanks for the presentation. I guess the first question would just be around the valve inventory that the OEMs are looking to hold going forward. I seem to remember that valves were one of the most kind of challenged products in terms of lead times during the sort of last couple of years. I was just wondering, given we're going into a downturn in next year, will the OEMs look to hold higher strategic stock levels because of the experience of the last couple of years? Or do you think they'll look to normalize? I have a follow-up. Thanks. You can start. Yeah. I think on valve, valves are a critical component, especially control valves. We've had tremendously reliable supply of valves into the market, and I wouldn't say we've been... In fact, we haven't been the bottleneck in all the major OEMs. Now, a couple of the niche OEMs, we had a few problems with unique controllers and so on, but nothing that stopped the manufacturing processes. I don't think they're treating us any difficult, any more or any differently than they would any other component. They've had much more of a problem in areas like power supplies, high usage of electronics components or some of their software systems, controllers and so on. I think they're definitely addressing strategic inventory on that side. Anything includes silicon chips. Valves, no, I don't think... Our lead time haven't changed dramatically in semiconductors. They have on the Advanced Industrials side because, you know, one of the challenges in an upturn is that our large customers get some level of priority and it always impacts Karin's business, and that's something we're trying to look long term how we address because, if we don't, we will limit the success in your, in your markets. Yeah. I think the answer is no real difference in supply strategy. My follow-up just would be around raw material input. You know, can you just remind us how much of your cost of goods sold is kind of variable cost that's driven by, you know, the market price for aluminum, rubber, whatever it is? 'Cause I guess if we do go into a macro slowdown, presumably, the prices of these inputs will decline. If I was a customer of yours, I'd probably look for a price down in parallel with those declines. I'm just wondering how that could play out. Thanks. Well, as I pointed out before, I think it's really a crystal ball that we're looking at right now predicting how commodity prices are gonna evolve next year. At VAT, our material costs are somewhere below 40%, quite on a stable level. I believe we are also striving with all the initiatives that we have in place to keep it right in that neighborhood. A common misperception that many are making is that you can't correlate the LME development with the prices that we have to pay for the aluminum. You always have to look at the LME, and then you have to look at the premium and the conversion cost. While the LME was going down over the course of the last months, the conversion cost has gone significantly up because there you see the reflection of all these energy price increases. For us, if I buy aluminum today, the price is pretty stable and I think that that's also something that all the other market participants experience and understand. We also do some hedging as well, you know, you try to manage price on the way up with hedging, but it can hit you on the way down. In some commodities we've also got hedging in place. Okay, quick one from the webcast, and then I promise you I'll be back here in the room. It's from Thomas Grieser from Goldman Sachs. He's interested in the development of our employee base over the next couple of years out to 2027, especially between Switzerland and Malaysia. Yeah, today, if I look at our population, in Haag, we have somewhere between 1,500 and 1,600 people. With the factory output increase that I have shown you before to CHF 1 billion, plus the additional R&D resources that we're gonna put into the innovation center, I expect that the head count in Switzerland is somewhere gonna be above 2,000 by 2027. In Malaysia, we are currently between 800 and 900 colleagues, and that number will obviously significantly increase beyond the 2,000 level as well. Okay. Thank you, Fabian. As promised, we're back here in the room. First one with Remo, then Tim, and then Harold. Thank you. Remo Rosenau, Helvetische Bank. How much of your installed capacity is actually occupied or rather not occupied by the Global Service business? I mean, spare parts need to be produced, but few service and maintenance repairs don't need to be produced. You know, what I wanna go at the end is, in a given year, if you would be fully utilized with your capacities, how much more sales could you generate than that? Well, I mean, as you saw, a lot of the Global Service sales are valves themselves, so that gets put into the factory output portion, that gets put into our MRP runs, and it's treated just like any other product. That's really calculated in. Now, the rest of it, a lot of it is bought in parts, for example, or we produce them ourselves, like the gates. This capacity is pretty We're putting in a lot of capacity for the gates, for example, in Malaysia. We're putting in a lot of headroom that we can, we can go ahead and produce that product, well, in line with the $2 billion in sales. We'll continue to invest in Malaysia in gates. We don't really see any, I would say, capacity limitations as it relates to the service business, with the possible exception in the past of probably repair out in the field. That's why we did the investments that we did. We put in the three biggest areas, Japan, Korea, and Taiwan, we did actually have some capacity limitations due to underutilized, too small facilities. Couldn't do the bigger valves very easily or very well. We couldn't do the very, very clean products that we need to do. We had to invest in better clean rooms, and we had to invest in better cranage to be able to move these very heavy control valves, especially in and out of the service center so we could produce. A lot of our capacity is out in the field, and we're trying to also stay ahead of the curve in terms of investments out in the field to support our customers. We plan that into our capacity. I mean, the last thing I wanna do is not deliver on 45% EBITDA service business. That very much is in our thinking as we think about our capacity expansions. What I want to know, some part of the business doesn't need production capacity, right? I mean, Some of it's bought in parts. Yeah. I mean. So if you- it's purchased product. ...because by 2027, your capacity will be 2.1 billion. According to your own, you know, predictions or estimates, if it runs all well, it could be 2.2 billion. Yes. You know. It will be only 2.1 capacity. There must be some spare CHF 100 million at least. You actually don't wanna run at 100% utilization anyway. Of course. I mean, think about the businesses. When we talk about factory output, we're thinking about assembly output, okay? Yeah the gating is our assembly, and that's very labor intensive, human intensive. 75% of our components for that output is purchased components. Only 25% we have to think about getting the right capacity. We actually plan above that rate because when you're in a ramp, you can't assume your suppliers are gonna deliver. We plan our machine capacity at a slightly higher level than the 25%, because history tells us that, in an extreme ramp, you need a few buffers in place. There are some buffers within that supply chain, that we can pull, you know, if we see upside. I think in your business, probably, say half of it requires- Yes. requires capacity that could be used for product. Roughly. Okay. Okay. Good. Thank you. Okay. Yes. Tim, now. Thank you. Tim Schultz with Landat Redburn. I had three very quick questions, if I may. The first one was, you talked about 60% of process steps in semi being under vacuum, going up to 70%. Can you maybe just give us a bit of color about what particular area is the main driver of that increase? What process step is the main driver, please? The biggest one certainly will be the lithography, that's going vacuum. There are also other steps behind, so more cleaning steps as well, we see in the future in the vacuum. Okay. it's an EUV driven-. Yeah. driven, yeah. clean. Yeah. Don't underestimate the. You know, as you go to smaller design rules, the percent of inspection and metrology. I mean, look at KLA, for example. I used to work there. The growth of that company is quite spectacular as well, because you need more E-beam tools to do both inspection, but also what they call dimensional measurements, CDSEMs. They're becoming more and more under vacuum as optical technology runs out in the inspection area. Okay. Whilst ALD is growing, that's not the real biggest driver of that increase that you see. It's more those. Yeah. I think deposition and etch overall are growing as well. You know, ALDs, growing fast, et cetera. There's a little bit in the deposition and etch steps as well. Got it. Second question for us, in terms of the market share gains that you flagged, particularly transfer valve seems to be particularly strong, from 75%-90%. Can you maybe just give a bit of color there? Is that a new OEM conquest or a new process spec win? What's the driver? Well, the key driver certainly always is the new platform that go to market and be ultra-pure and zero particle solutions. Especially in the transfer valve. You can imagine the wafer is always passing that valve many, many times. It's a very high requirements in terms of particles and cleanliness. I think their futures, the process steps, they need our latest technology. We see that with the spec wins. Whatever we see here now that is grow, we see that we had already spec wins or we are in the qualification of our latest technology on the new platforms. Okay. The visibility on that share gain is pretty good. Just third and final one, the sort of shorter term one, probably for Mike, just some color in terms of consignment inventory pools. I think you've been quite clear about the challenges for next year and maybe near term, long term, just how VAT's experience may differ from some of your peers. Thanks. Yeah. We've managed our consignment inventory quite prudently in the last six months. I mean, we could see. We've got experience in, you know, understanding the cycles. We have the benefit of dealing with every OEM and almost every end user, so we can, you know, come up with our own ideas before the markets and where the business is going. We started trimming our consignment inventories, back in, I'd say, the early third quarter. We started moving down. They're certainly in better shape than they were back in 2018, where we really came into that cycle with some pretty high inventories. At that point, there was also one big OEM who was doing an SAP transaction, transition, sorry, that probably was sitting on double the amount of inventory it needed. That also caused a bit of a headache back in 2018. These are things you only learn about a year after they happen. You know, when you're at dinner or something, and you hear a casual conversation. That is, I think in general, better shape. I think inventory in our factories are probably higher, obviously with the higher output we've been running at. That gives us a free cash flow opportunity, you know, which is always the nice thing about a down cycle is you still generate very strong free cash flow, which is good news. We watch it very closely and we always try to react first. Surprisingly before our customers actually. Hello. It's Harold from ZKB. Two questions, please. First one, regarding your 27 guidance, the lower end aims for $1.8 billion and the upper end obviously for $2.2 billion. How should we think about these numbers? Would the lower end reflect a more cautious China scenario? Second question would be regarding the market normalization process, what would be the base case? Are we heading more for a quick recovery probably going into 2024, or could it be a more muted, prolonged recovery? Thank you. Yeah. Both, both tough questions. The first one, I think back to 2018 and how we looked at the market then, and even back in the capital markets day in 2020. We thought our forecast, in fact, many of you told me our forecasts were ambitious. We try to be a little bit more, let's say, adventurous in setting a higher WFE target at the high end of 27. Our customers are telling us, you know, to expect around $150 billion in that timeframe. Even they don't know entirely. You know, the chip makers are giving them estimates on what likely CapEx is gonna be, and then they try to spin that down to us eventually. That's the range we hear from our customers. It's also the range from some of the commentators. We also look at historical data, plus our share gains and other things to think about what that translates to from a revenue perspective. I think the 170 is probably an optimistic scenario with strong growth expected from, especially from 25-27. The second question, again, we're really not getting much visibility from our customers on what and how long they think this down cycle could last. The chip makers are being a little bit more vocal on that. Some are saying memory could recover in the second half of next year, but I think that's still speculative at this point. I think it's good to plan on a year, and be ready to go faster or slower depending on what exactly works out. I don't think we've had any more information than that from our key customers. No, that's what we hear. Everybody is pointing on a strong 2024. It's also they think, well, it's still far ahead, right? That I think, as you, as you pointed out, Mike, we have to be flexible and react fast when something's changing. The key takeaway is nobody knows and you've gotta be ready. Right. You know that provides some quite challenging investment, crystal balls to make sure that we can take it up. You know, you win market share in an upturn if you have capacity. History tells us that time and time again. You even saw that with the OEM community, this last year. The guys that had capacity won extra market share. I'm certainly not gonna compromise our opportunity in the next upcycle by cutting too deeply in this. I'd even go as far as saying I would sacrifice that EBITDA corridor to make sure we kept our R&D spending at the right level, and also kept our operations at a level that we could rebound quickly. Okay. I think... Soboda, do you have a question? Okay, then Jörn. Just the front. Yep. Yeah. Okay. Um- Go ahead. Thanks. Two questions, please. The first one is, how independent are your market share gain revenues and your adjacent product revenues from the cycles? When in 2025, for example, we are still staying at $90-95 billion WFE CapEx. I mean, shall we add around $100-150 million additional revenues on this? Or is this really that it could also be more or less flattish because your adjacencies and market shares so much depend on new platforms and capacities coming in. It would be the first question, please. It certainly depends on the how fast the new platforms get to market. At the moment, we have an assumption, and I think if it's a downturn, yeah, they're still bringing that to market but not in the high volume. It's certainly correlated also to the market environment for sure. I think a lot of these new platforms being leading edge will go to advanced logic. Yeah. That may help us. We may see not quite as steep an impact on the adjacencies as we do in our high volume valves. I think there's a chance adjacencies could stay, you know, flat to ±10% compared to a higher number for the volume valves. The second question, please, because management is so important for the capital market. Mike, you just turned 50. May I quickly ask about your thoughts? Do you have already initiated kind of succession plan? Do you want to stay as a CEO for the next 3, 4, 5 years to end the 2027 period? If you can already share something or comment on this would be appreciated. Wow. It's a tough question. Maybe it's contact with your wife. She's asking. Yeah, yeah. You always have to have succession planning, not just for retirement, but for accidents, for health, all these things. You know, we really take that seriously as a company. We've got a tremendous talent pool developing. You know, we've got people who've been in the industry for a long time, and we're ready for any eventuality. You know, we'll work the right plan. I'm very happy to hear that I'm only 50. Yeah. I certainly still feel 50. You know, you constantly have to plan and be ready, and we look at that very actively. Thank you very much. Okay. We have a question here in the front. I go back to the webcast question. Jürgen Wagner from Stifel. Thank you. Your 27 or you mentioned that you increase or you penetrate more process steps. What does that mean for your memory exposure in 27? Thank you. For our memory market share? No, your memory exposure overall in semis. Any thoughts? Yeah. Actually, if you see the wafer fab equipment tools from our customers, they are using similar configurations for logic, memory, and DRAM. Of course, in the process chamber itself they have their secret sauces, the whole of the vacuum platform, the wafer fab, the platform they use, they are quite similar. For us, often, we don't exactly know where our products go. Is it dedicated to memory? We know, often we know while this OEM is stronger in memory and this OEM is stronger in maybe in logic or with that fab and that fab. Overall, I think we are quite agnostic. Whatever is ramping, we will ramp as well, we will also suffer if one of the technology goes down. Okay. Thank you. Okay. An interesting one that we get more often when we're in the US, this is about the share buybacks and dividends and why not combine this and why not do one or the other. Maybe Fabian? I think I showed you the capital allocation strategy that we now also reconfirmed again. First and foremost, we are investing our cash into R&D and CapEx and then the rest we are distributing to our shareholders. Both the management here, but also the board, we are convinced that we have an optimal cash allocation strategy in place. Also the discussions that I have with stakeholders like you kind of reassure that opinion that we have. Whereas share buybacks might be value creating in the short term, as we are interested really in the long-term value creation, that instrument is nothing that we would right now see as a priority, even when a lot of bankers are approaching me on this and trying to sell this as a, let's say an instrument of creating additional value. No, we will stick to the allocation principles that we have set out. Any more questions? Yeah, maybe one then from the webcast. In a way we already answered it a little bit. Have we seen some double ordering so that our backlog that we have bears the risk of cancellations, or what do we think our backlog, how, let's say, robust is it? Yeah. The double ordering question came up quite a lot in the early cycle. I think that's kind of normalized. I don't think that's as much of a factor now as pushouts. You know, where our customers are seeing the large chip makers deferring plans by maybe 6 months. You know, you've seen Intel, for example, pushing some projects. Micron announced some significant cuts in CapEx. I think that's gonna result in pushouts. I think that's maybe more a factor for us right now than a double ordering situation. I think the orders started returning to a more reasonable order pattern in the second and third quarter compared to in the previous year, late 2021 and early 2022. Yeah, I think that's pretty normal now. The next couple of quarters will be challenging as all this plays out within the market, the China situation, plus the CapEx deferrals that you're seeing in some of the major chip makers. Okay. Being a Swiss company, we try to stop on time, be ready for the apero at 2:45 P.M. I think with that, Mike, maybe over to you. Great. Thank you. our closing. Well, first of all, thank you all for attending and spending time with us today. A few acknowledgments. I'd like to say a big thanks to my team who I think have worked very hard this year to get the right strategy in place. Thanks to the team here, but also the other members of the team who are not here today, including our COO, who's busy chasing chips somewhere, you know, to secure our output. These guys have worked tremendously hard and did diligently to supply to our customers during a tough time. Big thank you there. I think you see the strength of our team. I hope you saw today the strength of our strategies. They're not plucked out of the air. They are real bottoms-up plans around market share, around new adjacencies, and also thinking differently about our business. How can we extract a higher share of wallet from our customers by adding more value? How can we set a platform for the next 10 years of bringing in new types of components like the pressure gauges? You're gonna see a further stream of ideas and components coming from us in the subsequent years beyond that. We're pretty excited about the future. I think the opportunity has never been better. We've got the megatrends behind us. I think we've got customer trust behind us. You know, we've worked hard to generate that trust in the last 3 years. I think that's gonna stand us in tremendous ground for the next 5 years. You see our commitments. I hope we have the same luck we've had in this last two years since the last Capital Markets Day. You always need luck. You, you generate luck, but you always need a bit of luck. I think this all plays through. You're gonna see a spectacular growth from VAT. Thanks once again, and I hope now you'll join us for a quick apero and maybe get some final questions from you. Thank you.