Good morning and good afternoon, ladies and gentlemen, welcome to Besi's quarterly conference call and audio webcast to discuss the company's 2023 Q1 results. You can log in into the audio webcast by visiting Besi's website at www.besi.com. Joining us today are Mr. Richard Blickman, Chief Executive Officer, and Mr. Leon Verweijen, Senior Vice President of Finance. At this time, all participants are in listen only mode. Later, we will conduct a question and answer session. Instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission from the company. I'd like to turn the call over to your host today, Mr. Richard Blickman. Please go ahead, sir. Thank you, George. Thank you for joining us today. We will begin by making a few comments in connection with the press release issued earlier today and then take your questions. I would like to remind you that some of the comments made during this call and some of the answers by management in response to your questions may contain forward-looking statements. Such statements may involve uncertainties and risks as described in the earnings release and other reports filed with the AFM. For today's call, we'd like to review the key highlights for our Q1 ended March 31st, and also update you on the market, our strategy, and the outlook. First, some overall thoughts on the Q1. Besi's Q1 operating results were within guidance and in a challenging industry environment. Revenue of EUR 133.4 million decreased by 3.1% versus the Q4 of last year, primarily reflecting general weakness in high end and mainstream computing markets from both IDMs and Asian subcontractors, and a temporary reduction in shipments for automotive applications. Such adverse influences were partially offset by increased shipments for high-end smartphone applications. On a year-over-year basis, revenue this quarter declined by 34.1%, reflecting the impact of the current downturn on Besi's business. In addition, demand from Chinese customers remained weak, representing approximately 27% of total revenue this quarter. Our trends in the Q1 reflect both the negative effects of the current industry downturn and the favorable prospects for Besi's wafer level assembly portfolio. For the quarter, orders of EUR 142 million declined by 21.3% versus the Q4, primarily due to the pull forward of some high-end smartphone bookings into the Q4, and to a lesser extent, decreased orders for mainstream computing and hybrid bonding applications. Orders for smartphone applications for the most recent two quarters significantly exceeded those for the comparable period of the prior year, but were less than previously anticipated. Demand for automotive applications improved in the Q1 versus both the Q4 last year and the Q1 last year. We received a EUR 10.5 million order from a Chinese subcontractor subsequent to quarter end for automotive applications, indicating ongoing strength in this end user market. Bookings this quarter also included orders for multiple hybrid bonding systems, with follow on orders anticipated in the Q2 from multiple customers, including two new customers. In addition, the first order for our TCB chip to wafer system was received subsequent to quarter end from a U.S. customer. Besi's profitability was solid in the Q1, with gross margin reaching 64.2%, due primarily to the current product mix and cost control efforts. Operating income of EUR 41.7 million exceeded the midpoint of guidance. Excluding share-based compensation expense, Besi's net income and net margin were EUR 43 million and 32.2% this quarter versus EUR 42.3 million at 30.7% recorded in the Q4 last year, despite lower revenue levels. As seen in this next chart, our financial performance has significantly improved at this point of the industry cycle as measured by a comparison of Besi's results for the last 12 months, ending March 31st this year versus the comparable period ending March 31st, 2019. With revenue orders and operating profit increasing by 44.7%, 66.5%, and 82.7% respectively. It is also a positive indicator for business target achievement in the next industry after. Besi has significantly increased its capital allocation in recent years. In 2022, we distributed EUR 416.3 million. To date, in this year, 2023, we will have distributed almost EUR 300 million, including the dividend for fiscal 2022. Progress also continues on our EUR 300 million share repurchase program, under which we spent EUR 77.8 million in the Q1 this year to purchase 1.1 million shares. This brings total purchases under the program to 2.9 million shares at an average price of EUR 59.33 for a total of EUR 174.1 million. Our financial position remains solid at quarter end, with cash and net cash of EUR 644.9 million and EUR 325.8 million, respectively. In addition cash flow from operations rose strongly to EUR 61.4 million in this quarter, up 36.4% versus the Q1 last year. As a result of recent conversions, there remain outstanding only EUR 600,000 and EUR 13.4 million of our 2023 and 2024 Convertible Notes. I'd like to speak a little bit about the current market environment and our strategy. As seen in this next chart, industry conditions have continued a downward trend since the Q2 last year, highlighted by slowing memory, mainstream computing, and data center markets, continued weakness in China, and CapEx reductions made by many of the largest semiconductor producers. The outlook for 2023 remains negative as we work through the current industry downturn. Analysts have further lowered market estimates for this year while forecasting a renewed upturn starting in the second half of this year. We are prepared for various industry scenarios with a highly flexible production model and strategic initiatives in place to enhance profitability regardless of the industry direction. In the interim, we continue our investment in R&D programs and service support in preparation for the next upturn and the significant projected growth of our wafer level assembly portfolio over the next three to five years. We are currently updating Besi strategic plan with the aid of an external consultant. At present, the principal focus is on R&D as we prepare our existing and wafer level assembly portfolios for the next industry upturn. Progress in hybrid bonding and other wafer level assembly adoption continues apace, with yields improving at customer sites and increased interest received from the development community and customers, primarily for data center, mobile, and memory applications. We are working closely with AMAT on the commercial development of an integrated production line, which shows significant promise at the first two customer locations. From an operational perspective, our principal focus currently is adjusting headcount, supply chain, and production overhead to align with challenging industry conditions. We continue to work to complete new clean room space in Singapore and a new tooling facility in Vietnam by year-end to support future growth opportunities outside China. A few words about our guidance. For the Q2 this year, we forecast that revenue will increase by 15%-25% versus the Q1 this year, with gross margins remaining elevated at 62%-64%, due primarily to our projected product mix. Operating expenses are forecasted to decrease by 0%-5% versus the Q1, as lower sequential incentive compensation expense is partially offset by a one-time strategic consulting expense. That ends my prepared remarks. I would like to open the call for questions. Operator. Thank you very much, Mr. Blickman. Ladies and gentlemen, if you'd like to ask an audio question, please press star one on your telephone keypad. Please also ensure your mute function is switched off to allow us to reach equipment. Once again, please press star one to ask questions. This first question is coming from Madeleine Jenkins, calling from UBS. Please go ahead. Your line is open. Hi. Thanks for taking my question. My first is on hybrid bonding. I was just wondering if you could quantify the orders you received this quarter. You also mentioned in the release two new customers that were ordering Q2. Should we be modeling a kind of significant ramp-up from Q1? Quickly, ASMPT mentioned in their release today that about a kind of first customer order for hybrid bonding. I just sort of wanted to hear your take on how their tool may compare to yours and more generally, how you see your technology lead versus competitors. I have a quick follow-up, if I may. Well, excellent. Thank you very much. Yes, we had in this quarter several follow-on orders, already for, those customers where systems are installed. We have a very clear indication that we will receive in the next week or two orders from two new customers. That tells you the proliferation of hybrid bonding is continuing. It's difficult in this phase to forecast exactly how many machines will be required, because also in the high-end computing applications, it's a matter of qualifying processes and also expected market growth. Compared to three months ago. Sorry, it's two months ago, as of February. Things have further improved. Also the yields on the installed base, the largest base in Taiwan, which is over 20 machines now, we reached yields of well above 99%, so that means that installed base is very capable to serve the mainstream. So that's what happening on the hybrid front. On the TCB, we proudly announced to have received a first order. As explained earlier, this system for TCB processes, again, stretches the envelope, tighter specifications, far less consumption of certain chemicals, gases in this case, higher accuracies, as mentioned. That should be the next benchmark for these type of processes. We can offer the complete solution, offering hybrid bonding TCB for those press processes where that is preferred. In addition, we have this Bridge Attach machine, which we also have already supplied several, which is the basic tool required to build chiplets. I hope these comments help you. Yeah, yeah, that's helpful. Sorry, also on the ASMPT, they announced about their hybrid bonding tool, and, they had a first customer order. Could you talk a bit about how that compares, to yours and your kind of technology lead there in hybrid bonding? Thank you. First of all, it's very positive that, compared to two years ago, when there was significant, let's say, debate about how fast hybrid bonding would be adopted, that now also we see competitors jumping on the bandwagon. The concept as we know is different. It is certainly not comparable in terms of mainstream high volume capacity compared to ours, as far as we know. It's still in very early phase. One thing I should add, what I understood is they are marketing this system with 150 nanometers. We will ship in the next few days, the first 100 nanometer accuracy system, which is definitely required to expand the use of hybrid bonding into the next generation, so in the three, even two nanometer chip design geometry. We are definitely on track to further expand our market positions. Great. Thank you. Very helpful. Just quickly on the automotive end market, you touched in your release about last quarter being weak, this quarter you also flagged a large order from a Chinese subcontractor. I was just wondering if you could maybe give some more color on how you think this end market will develop as we go through this year. Thank you. First of all, the automotive market has been very strong already for the past several quarters. There was, just by, I would say coincidence, less orders in the Q1 books, but then immediately after quarter ends, we mentioned a major Chinese one because that stuck out because of its size, but also all the other. You may have noticed that in their communication to the shareholders, big plans for expansion, whether it's Infineon or STM, but also in the U.S., same for China. There are major expansion plans on the way for power devices, especially in the electronics for electrical and hybrid cars. We are benefiting very much from that as opposed to still ongoing weakness in high-end computing. As we mentioned, less orders than expected for this year's round in high-end smartphones. That's the picture. Thanks very much. Thank you, ma'am. Thank you. Next question. Thank you. The next question is coming from Charles Shi calling from Needham & Company. Please go ahead. Your line is open. Hi, thank you for letting me ask that question. Richard, I want to start with the backlog. I think last quarter you disclosed the backlog to be about EUR 270 million. Given that your book-to-bill was above 1 Q1, seems like a backlog grew a little bit. If I compare the Q1 quarter end backlog with your Q2 guidance, seems like your backlog coverage, which I calculate as backlog for the prior quarter, divide that with the revenue for the next quarter seems to be 1.7x. Historically, especially in downturn years, that ratio tend to be like 1.2x. Seems like your backlog has still remained relatively high relative to historical. It's a little bit unusual in a downturn year. Do you kind of expect that ratio to go back down to somewhere around 1.2x or maybe closer to 1x maybe by the end of the year? What's the expectation there in terms of the backlog? Well, Charles, thanks. We are comparing, let's say a different product portfolio in this downturn to the previous one. Don't forget that for the hybrid bonding orders, lead times are longer. We mentioned also end of February that the orders we received are not for a typical, let's say, eight to 12 weeks turnaround in conventional assembly equipment, but they have six, nine month lead times. Also, when we talk about systems to be integrated in automated lines, the lead times are even a bit longer than that, even 10 months. They, out of that 270 plus, there is an substantial amount for Q3 and some for Q4. Even a few for Q1. That has to do with the new customers, simply programmed to adopt this hybrid bonding. So it's not apples-to-apples comparison. We also book, of course, orders. We had a good April month, more to come in May, June. Needless to say, there is some uncertainty in the market in this current environment, so one should always be more on the conservative side in guidance than to expect that things should develop more positively. One never knows. Still, it is expected that somewhere in the second half of this year, certain markets will need, again, capacity. Although many of the utilization rates are somewhere around 70%, some a bit higher, also some lower still. We're not yet up in the 80s, which are typically turning cycles. That may well happen in the second half. That's what VLSI Research, TechInsights today, they all expect this type of pattern. For us, this backlog is a very good one. Thank you, Richard. I wanna ask- Does that answer? Yes, excellent. Thanks, Richard. Always appreciate the color you provide to investment community. Maybe a quick follow-up? On the smartphone side of the business, I think you talked about high-end smartphone orders seems to be a little bit lower than you previously expected. I wanna ask, overall smartphone revenue, I know there's high-end, there's a mainstream, but to combine those two, high-end seems to be doing a little bit better than last year. But I don't hear you talk about the mainstream side. Do you expect the total smartphone revenue? I think you call that mobile internet in your annual reports. Is that gonna be flat or slightly up or slightly down? What's the expectation for 2023? Well, it can be either one. There are certain new applications under development for next years, but that already has to be established in a certain initial volume towards the second half of this year. On the Internet, you can find many articles about configurations expected for 2024. That could mean Yeah, the uptick in 2023 for a strong year, 2024. For 2023 itself, yeah, whether it's flat or slightly more. I can color it maybe a bit different. It looked like in the second half of last year, a more, let's say, higher growth expecting, let's say, model for 2023 than it currently looks like. We've had this in previous years as well. It's always hard to tell the marketing decisions which are made at those brands, how much they will, yeah, let's say order in terms of then capacity available. I'm just telling you the situation as it is right now. Thank you, Richard. Thank you, sir. We'll now go to Rolf Bulk calling from New Street Research. Please go ahead, sir. Your line is open. Yes. Thank you. Thank you for taking the question. I wanted to ask about the memory market, specifically, SK hynix this morning mentioned that it expects the high bandwidth memory market to grow around 50% this year, with a lot of that growth driven by generative AI. My question is, of course, hybrid bonding is a candidate for adoption in HBM in coming years, and I was hoping you could give us an update on how your discussions with the main memory manufacturers is progressing, and also whether their interest in hybrid bonding is still consistent despite the CapEx pullback we see in memory. Thank you. Excellent. Thanks, Rolf. That's a very good question. The two customers which we mentioned, where we expect the adoption in the next couple of weeks is exactly for this HBM5. Also we are continuing successfully to stack memories on top of CPU. We now have certain stacks with eight and also working on 12, which are then hybrid bonded onto one another, and that is definitely picking up pace. From the start in CPU, we are now entering into memory applications and then combined in the end with stacked onto CPUs. Thank you. That's very helpful. You also mentioned for my follow-up question that orders for hybrid bonding have decreased sequentially. How should we think about this? Does any of this relate to a slowdown in adoption of the technology in a particular end market? Or is this just regular lumpiness with some of your customers placing large orders in particular quarters that might not necessarily repeat in subsequent quarters? That's a combination. One is of course, the nature is always lumpiness. As I mentioned earlier, yields of our bonders have increased significantly. The volume available as, remember a year ago we were at yields of about 20% and, we have accomplished in this 12 months that these machines are now running well above 99% yield. Supposedly that covers today's demand. Further proliferation is on the way. New devices are qualified like the MI300s. We have a suite of products from Intel which are being tooled up. It's not that hybrid bonding adoption is slowing. It is more a matter of a combination of our machines' output and maybe end markets. Let's say adoption of new devices. That sometimes takes longer time, the adoption is well on track. Thank you. Very clear. Any next question? Yes, sir. Very sorry about that. Just my microphone got stuck there. Just going to tell the audience once again, please press star one for questions, if your question has been answered, you can remove yourself from the queue by pressing star two. Thank you. Next question is coming from Mr. Robert Sanders from Deutsche Bank. Please go ahead, sir. Yeah. Hi, good afternoon. My first question would just be about optics, in particular, the periscope zoom lens. I was just wondering how big an opportunity that could be for you as it's rolled out at your largest customer. Can you give us an idea of this is a larger opportunity relative to prior camera innovations, like Duo Cam and Trio Cam? Thanks. It certainly is a major opportunity, and as I tried to explain in an answer to an earlier question, the qualifications should be, let's say, reached in the second half of this year. We will see in the number of machines which are connected to that first round, how big the rollout next year is expected to be. A significant next round. Got it. Just my follow-up would be on TCB. You sound like you've received your first order from a U.S. company, which sounds like it might be Intel. I mean, as I understand it, the TCB market is going to remain large for quite a while. Does this mean that you have an opportunity to recover share here against ASMPT? You know, how long do you think the TCB market will be larger than hybrid bonding? That's an excellent question. Number one, I think we answered some calls ago. We have developed this tool simply because that customer has requested us to help to do that. Their current installed base is not able to follow the roadmaps and specifically down to one micron accuracy. Well, that is, of course, tied to a certain expected market volume. Otherwise, we would not develop that machine for that customer specifically. There are also other customers interested in this tool. It looks very positive. As we shared in the Capital Markets Day, we will share it in the next Capital Markets Day, again, more detail. For definitely the next five years, you will have a mix of TCB type of connects, whether or not fluxless, and then you will have the hybrid bonding. The combination is a very strong, let's say, support to those customers who are especially developing chiplet architecture devices. With this first benchmark, the first machine, qualified also, ordered and accepted, that offers us a very strong next product line. Got it. Thanks. Thank you very much, sir. Next question is coming from Mr. Marc Hesselink from ING. Please go ahead, sir. Yes. Thank you. First question also on hybrid bonding. What are your discussions currently with your largest client? I think you just said, it should be capable for mainstream with the current yields and the current shrinkage. Is it likely that it will happen soon, going into mainstream? I think I have to read that going into the smartphone device. Thanks. That's again an excellent question. We don't know for certain, but we are read of what is happening. They want to move in an accelerated fashion to the 100 nanometer spec, and this is likely to be linked to a next processor for a high-end smartphone application, which then should hit the market in the model 2024. So qualifying this year, multiple systems installed in the first half next year in time for volume application in the models launched in Q3 2024. Maybe it is first for the high-end tablets, and the year they're after smartphone. No one really knows that. It also depends on other factors than the factors we can influence, but that's our current read. Clear? Yeah, yeah. No, sure it does. Sure. Okay. Then the other question is actually more on the second half for this year. If I read it correctly, yeah, you have probably a bit more hybrid bonding. And automotive continues to be strong, and your backlog is still very well filled. Is it fair to assume that the second half of the year will be a bit stronger the first half of the year than your normal seasonality? The best comparison is 2019. That is the bottom in 2019 was at exactly April, May, June 2019, and we saw orders pick up in Q4. After, let's say, the industry tide turned early 2018, a similar pattern. The only thing which is different is that the peak in 2021 was significantly higher than the peak in 2017. How much of that is AI-related or other applications related is difficult to tell. What's also different is the global economy, how much that will impact semiconductor demand. Who knows? The China situation, on the other hand, we recognize now rapidly building capacities outside China. Before year-end, we'll have certain new programs also for high-end smartphones in India. We are preparing organizations to support that locally. Same with Vietnam. That is gaining traction. That could lead to orders in the second half of this year. Still, always sort of rule of thumb, the first half is stronger than the second half, apart from 2019. As I mentioned earlier, we track very closely the utilization rates at customers. It varies per region. China is a bit lower than Taiwan and also Southeast Asia. Southeast Asia is also typically more automotive-related, but it's somewhere around 60, 70, some areas slightly above 70. We're working through this correction phase. Whether the tide really will turn in the second half, yes, anyone's best guess. We have some unique new technologies which could accelerate as well. Very interesting, very positive. Clear. The third question, final question is on your investment levels. Obviously, you always adjusted for the output levels, but you're also now structurally investing a bit more to prepare for among others hybrid bonding. What should we expect for the coming quarters? You mean CapEx or? No. Sorry. Sorry, more the OpEx. The combination of R&D and the more structural SD areas. Not the near-term, but more the things that you're building up because of hybrid bonding. Well, the current levels, support our plans, as they are. There's no significant, there's no increase of any materiality. The organization is in place. The support is organized. I would guess, on the OpEx side that we would stay at similar levels. If you take out the one-time effect always in Q1 share-based payments, yeah, those are typical levels which are sustainable. Okay. Very clear. Thank you. Thank you, sir. We'll move on now to Mr. Didier Scemama, calling from Bank of America. Please go ahead. Thanks for taking my question. Thanks for the update on the, and the thoughts, Richard, on high-end smartphone adoption for hybrid bonding in 2024. I think that was really one of my questions. I wanted to ask you also about 2024 on hybrid bonding. Which one do you think is gonna be bigger for you? Do you think it could be high-end smartphones, or do you think that the generative AI, high-performance compute sort of thematic could be a bigger driver for hybrid bonding adoption? Specifically, you mentioned high bandwidth memory and CPU, which is a no-brainer for hybrid bonding. I'm wondering whether you think the GPU market and training algorithm could also benefit from hybrid bonding, perhaps next year. Thank you. GPU market, certainly. If you ask us today, as I also answered to an earlier question, we would guess that the high-end tablet is the first, let's say, application for a processor using the hybrid bonding and probably chiplet architecture to some extent, as opposed to high-end smartphone, but we could be wrong. It's definitely the case that they are developing with a lot of effort to be able to use the three nanometer, maybe even two, geometry in that next generation. A lot of effort is being invested. From a mainstream application and volume, I would guess more 2025, more likely. But that is for all, let's say, major volumes, hybrid bonding. 2024 for high-end, definitely. The first, let's say, product families from Intel processors and big volumes to be expected 2025, 2026. The infrastructure is being organized. These will all be established on integrated lines. Putting me on the spot for 2024 is still too difficult to answer with a definite answer. We will update everyone again on the Capital Markets Day, June 6, in some more details. Yeah, that's as much as I can share right now. All right. Well, that's great color. Just also being a bit more down to earth on the, on the second half. Is there any particular reason why, let's say, historical seasonality would not play out in Q3 and Q4, above and beyond the current macro uncertainty? What I mentioned earlier, we did not expect in 19 the tide to turn positively in Q4. That was to us, all of a sudden, the tide turned. We had sort of a hiccup in March due to COVID. Immediately it picked up further in April. The rules of thumb, six to eight quarters up and then six to eight quarters down. By Q4, we will have reached definitely six to eight quarters. We have been, although nobody believed that, we have been careful since Q2 last year. We saw definitely signals of, let's say peaks past. It's also hard for us to understand what is the impact of GDP in this case. Will next year interest rates be low? I don't know. Yes. Thank you. Thank you very much, sir. Next, we'll go to Ruben Devos calling from Kepler Cheuvreux. Please go ahead. Yes, hello. Good afternoon. I've got two questions, both on the hybrid bonding. The first one, is something you mentioned in the annual report. You sort of provide a rundown of the potential hybrid bonding applications, which is an impressively wide range. Yeah, in this call, we've talked mostly about computing, AI and smartphones, but in the annual report, you also mentioned autonomous driving, medical, gaming. I was curious, how far out is development for these type of applications and to what degree is maybe Besi working towards potentially addressing these other markets at some point? That's my first question. The gaming certainly is already part of the, let's say AMD first product range. I mean, we're talking, as you rightly say, about computing and high-end smartphones, which is expected. Certainly the high-end smartphones, when that is adopted, that is really a game changer in terms of volumes, and you need many machines for that. Computing a bit less, the high-end computing. From a numbers of machines, the biggest impact will be, in positive sense, the adoption for mainstream high-end smartphones. That's the expectation as it stands. Automotive, yeah, is more autonomous driving. Of course, you need more intelligence. That's currently not seen as the imminent driver. Same for medical. Gaming, yes. I should add to that the chiplet architecture element. It's not just connecting single devices, but the architecture of multiple devices to create an electronic circuit, for many end products is what you see in conferences also when you simply look online, what are the objectives to be reached of designing a chiplet architecture using hybrid bonding and also TCB for that matter. All right. Thank you. Maybe a second question. I believe you provided an update in the prior release that you shipped about 35 units to date, of which four bonders incorporated in integrated production lines. was wondering whether you could offer an update as to shipments, but also which type of systems you currently have in the backlog. yeah, in a previous answer, you talked about a clear direction into integrated lines, but, how should we think about the incremental traction for, let's say, integrated bonders relative to standalone tools? Thank you. Well, there are several questions. We certainly have shipped a few more bonders Q1, but as we indicated also two months ago, the quantity in orders we received will be shipped Q3, Q4. Not so much in Q1 and Q2. The other question, and I mentioned that several times, this whole concept of integrated lines is gaining more and more traction because of the simple fact yield impact by particles. An integrated line offers less particles, and the qualification of the first line in Taiwan is as we speak, same in the U.S. Those should become the standard, you could say, workforce for hybrid bonding in this industry. But again, in qualification phase as it is right now. Over time we will ship more bonders to be integrated into integrated lines than standalone bonders. Okay. Thank you. Thank you much, sir. We'll now go to Nigel van Putten calling from Morgan Stanley. Please go ahead, sir. Hi. Good afternoon. Just clarifications really. First on the high-end smartphone optics or periscopic lens. I think there was some assumption that that would be maybe due for shipment this year, maybe already in your backlog. From an earlier question, I got the impression that the qualification still needs to be finalized and you see this more of a next year development. Is that correct? Partly. The orders for multiple systems should still happen this year or early next year. Those orders were not yet booked. Understood. That's clear. Another question. I think your temporary FTE count in Asia this quarter was 232, that compares to 60 in the Q4 on similar revenue levels. I know you managed that very carefully. Does that imply that there's a lot more work now going on converting the backlog into the next quarter? Is that flagging some optimism into the second half of the year, perhaps? How should we read that? Well, the biggest is of course the ramp to go in the midpoint from 133 to 160. Certainly some. If you take the backlog also into Q3. We have to, yeah, let's say carefully anticipate that next year we might go into a higher gears, and you have to train people. The best you train them once you have volume. Anyway, part of it is that but as you said, we are very close, tight ship. Look at the margin. By the way, nobody asks about the margins. We've had many questions for the last hour and supposedly that's the industry standard now, 64% gross margin. Anyway, you only achieve that when you run a tight ship. Understood. As a follow-up to ask a question about the gross margin. Going forward, how should we think of that? Is that now another step up, slightly 62%-64%? Does this continue or was there any specifics in the mix? I think you already gave the answer, but still wanna provide you the opportunity to provide more color. Well, there are several things. First of all, don't forget we had a wonderful dollar in the second half of last year, nearly parity to the Euro. We've also been able to increase prices early for inflation and other issues. Of course, the ongoing development of new machines with successful applications. That all helps to bring that margin again at higher levels. Despite the fact that we have less effect of serial production, volumes are, yeah, nearly 40% lower than peak, or about 40% lower than peak, so it's very inefficient. You have several factors which help to further increase the margins, but may also with a different currency model have another impact. Needless to say that once you have reached these levels, and especially in downturns, that tells you that things are developing continuously in a better margin control. Yeah. Yeah. Understood. Very strong indeed. Maybe one quick last question in the order book. Combine sort of the statements you made before but also today about a large U.S. IDM and their plans into perhaps already the second half of the year. If I can sort of read you correct, that is not yet in the order book, but there's quite high confidence that those orders will still materialize in the second half of the year as flagged before. Is that correct? Yeah. That, definitely, we've mentioned that also in previous calls. You, there's a phase which is an initial adoption and qualification. Then you have sort of an initial production capacity, which is around, 20 machines at a minimum. Now these machines also start to say that again, run at very acceptable yields. That offers a mainstream adoption from an end market perspective. Once that really becomes yields definitely above 99.9%, customers can start scaling. You need multiple systems. The minimum picture is typically 50. We're somewhere in between the low twenties and 50 in Taiwan. We're still below 10 in the U.S. with definitely an big potential this year that could move up to what you just suggested. The adoption is continuing. End markets are a bit, you could say, look at AMD and Intel, less at this moment. There are definitely signs that should turn at the minimum next year. Understood. Thank you very much. Thank you very much, sir. We still have a couple of more questions. The next one will be coming from Johannes Ries, calling from APUS Capital GmbH. Please go ahead. Yes, Richard. Good afternoon. Hi, Johannes. Hi. Some follow-on questions to what we discussed before. First, generative AI, how much you have realized in the last months, because my feeling is it really spread around everywhere, and it, maybe it's just at the beginning. How much this maybe changed the plans maybe of your customers, especially by the adoption, you mentioned, of chiplet technology and so forth, could help you going forward with all you have to offer, sir, bridge attach and also bonding technologies? Well, as I tried to explain earlier, more and more the industry is moving in this direction. There are many indications, broader adoption. Remember, two years ago, we only had one customer in Taiwan driving the bus. Then in the U.S., but slower, and now also Korea. Also memory in the U.S. And then more and more clear examples of designs used in those end market applications. Yes, there's an ongoing adoption. With our portfolio now, both hybrid and TCB and bridge attach, and don't forget our flip chip, we are able to cover, yeah, most of that spectrum and certainly at the very high end. This AI boom is also maybe further maybe driving the adoption of this chiplet technology. Yes. That's what everyone tells us. Maybe on the 100 nanometer hybrid bonding, the next generation, if I got it right, that's maybe also maybe the generation which is used for this high-end smartphone solution, maybe start next year. Remind us a surprising difference between this generation first and generation second, so compared to the 150 nanometers. Well, this first round from 150 to 100 moves, depending upon which loading automation is used and whether it's connected into a line. We call it Generation 1+. It's not yet Generation 2, because it's based on the same system platform. We move from between EUR 1.5 million, EUR 2.5 million, from EUR 2 million to EUR 3 million. That's where it currently stands. This is early, simply confirming the capability of 100 nanometers. You would need more of automation around such a system, you have the cleaning, wet cleaning, dry cleaning. In the automated line, yeah, the price of the bonder is again a touch higher because of the interface. Right. That's not the end because in the longer term, We discussed it, last call, said move to 50 nanometers, that's some time out in the future, right? Yeah. That's three years away. As I mentioned, we are in a prototype phase developing such a concept. It's moving along because there's definitely customer pressure. That will not be ready before 2026. Maybe in prototype 2025, but that's what the market also expects. Back to this memory topic. How big could be this memory market opportunity for Hybrid bonding compared to the logic part? Well, it could be much larger than the CPU because you have more variety in how many memories, 2Ds, 3Ds. Yeah You use. The biggest, let's say, volume upside is this chiplet architecture. If you combine more devices, every combination needs a bonding step. We explained that also in the Capital Markets Day. That is the real, let's say, game changer in hybrid bonding volume. Not so much the difference between CPU and memory. Bringing all this together on one device, that's a big driver, it's clear. Totally other topic, a big boom in compound semiconductors, silicon carbide, gallium nitride, silicon carbide, gallium nitride. Is this anything also you're benefiting from? Yes, because they also need to be connected. Yeah. They need to be packaged. That's also definitely helping, especially in the automotive applications, power modules. Big plans in Germany, Bosch in particular. Yeah, that's definitely a growth segment. Great. On this geopolitical investments which are made now in U.S. and in Europe, now, say, definitely now has just started, maybe the front-end things are coming, but in the end, although maybe after some time, also they have to invest in backend solutions. When you expect from these investments also maybe a further push in orders, is it maybe at the end of next year, or is it 2025 topic? 2025 topic. Before you have a front-end fab and it takes you two years. Don't forget the CHIPS Act is still in a political environment, that also takes time. We don't count with that before 2025. Nevertheless, it's not so far with another growth driver. Finally, on China, we hear also from the front-end guys that not in the high-end, they can't, but in the middle end or even basic, mature nodes, there is a huge investment going on in China. You mentioned your China business had quite been weak, but could you also see an uptick going forward if this front-end things are also need to, a need for backend? We mentioned already that in automotive, we had a big order in the first week of April, which for China was a typical major order. That is what people also expect could support a next investment round in the second half of this year. Anyway, many more questions. We are past the hour. No, I come out of the things. Thanks a lot. Call me in case you have further questions, we can set up a call, and look very much forward to have a longer discussion. Yep. Mr. Blickman, the last question has been withdrawn. We do not have any further questions at this time, sir. Thank you very much. Thank you all for calling. Please, in case you need more details, don't hesitate to contact us. Thank you. Bye-bye. Thank you, gentlemen. Ladies and gentlemen, that will conclude today's conference. Thank you for your attendance. You may now disconnect. Have a good day and good night.