Earnings call transcript: BE Semiconductor misses Q2 2025 expectations

BE Semiconductor Industries NV (BESI) reported its financial results for the second quarter of 2025, revealing a miss on both earnings per share (EPS) and revenue forecasts. The company’s EPS came in at €0.4, falling short of the expected €0.4974, while revenue was €148.1 million against a forecast of €151.77 million. According to InvestingPro data, four analysts have recently revised their earnings estimates downward for the upcoming period. Despite these misses, the company’s stock saw a 2.71% increase, closing at €127, reflecting investor optimism about future prospects. Based on InvestingPro’s Fair Value analysis, the stock appears to be trading above its intrinsic value.

Key Takeaways

• BE Semiconductor’s Q2 2025 revenue grew 2.8% sequentially but fell short of expectations.
• The company experienced a significant increase in cash and deposits, up 90.6% year-over-year.
• BE Semiconductor’s focus on Advanced Packaging technologies for AI and data centers is showing positive traction.
• The company anticipates a revenue decline of 5-15% in Q3 2025 compared to Q2.

Company Performance

BE Semiconductor’s performance in Q2 2025 was marked by growth in certain areas, despite missing analyst forecasts. The company reported a sequential revenue increase of 2.8%, driven by its focus on Advanced Packaging for AI and data center applications. However, the first half of 2025 saw a slight year-over-year revenue decrease of 1.8%. The company remains a leader in Advanced Packaging technologies, which positions it well amidst anticipated market growth in AI infrastructure and cloud computing.

Financial Highlights

• Revenue: €148.1 million, a 2.8% sequential increase
• Operating Income: €43.5 million for Q2 2025
• Net Income: €32.1 million for Q2 2025
• Cash and Deposits: €490.2 million, a 90.6% increase year-over-year
• Share Repurchase: €72.2 million of a €100 million authorization

Earnings vs. Forecast

BE Semiconductor reported an EPS of €0.4, missing the analyst forecast of €0.4974 by 19.58%. Revenue also fell short, coming in at €148.1 million compared to the expected €151.77 million, marking a 2.42% miss. This deviation from forecasts represents a notable miss for the company, which had previously shown stronger alignment with market expectations.

Market Reaction

Despite the earnings miss, BE Semiconductor’s stock rose by 2.71%, closing at €127. This increase suggests that investors are focusing on the company’s strategic initiatives and future growth potential rather than the immediate financial results. The stock remains within its 52-week range, with a high of €152.75 and a low of €79.62, indicating room for growth.

Outlook & Guidance

Looking ahead, BE Semiconductor expects a revenue decline of 5-15% in Q3 2025 compared to Q2. However, the company anticipates a significant increase in orders for hybrid bonding and 2.5D applications, which are expected to drive growth. Gross margins are projected to be between 60-62% in Q3. The launch of a new flip chip tool with 1-micron accuracy in Q1 2026 is also expected to bolster the company’s market position. According to InvestingPro data, analysts maintain a cautiously optimistic outlook, with price targets ranging from €117.48 to €205.59, suggesting potential upside from current levels.

Executive Commentary

CEO Richard Blickman highlighted the importance of Advanced Packaging in differentiating AI systems, stating, "Advanced Packaging is one of the key ways to achieve AI systems differentiation." He expressed confidence in the company’s growth potential, saying, "We expect to exceed market growth rates given our leadership position in Advanced Packaging."

Risks and Challenges

• Forex effects impacting pricing and margins
• Potential challenges in mainstream computing and mobile markets
• Dependency on the successful rollout of new technologies
• Market volatility and macroeconomic pressures

Q&A

During the earnings call, analysts inquired about potential orders for HBM4 memory applications and the company’s roadmap for hybrid bonding technology. BE Semiconductor addressed challenges in mainstream computing and mobile markets, as well as the impact of forex on pricing and margins.

Full transcript - BE Semiconductor Industries NV (BESI) Q2 2025:

Conference Operator: Good morning, good afternoon, ladies and gentlemen, and welcome to Vasey’s conference call and audio webcast to discuss the company’s twenty twenty five second quarter results. You can register for the conference call or log in to the audio webcast via Bayes’ website, www.bayes.com. Joining us today are mister Richard Blickman, chief executive officer, and missus Andrea Cook, senior vice president finance. Currently, all participants are in a listen only mode. Later, we will conduct a question and answer session and discuss, and instructions will follow at that time.

As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in a whole or in part without permission from the company. I would like to remind everyone that on today’s call, management will be making forward looking statements. All statements other than statements of historical facts may be forward looking statements. Forward looking statements reflect Basie’s current views and assumptions regarding future events, many of which are by nature inherently uncertain and beyond Basie’s control. Actual results may differ materially from those in the forward looking statements due to various risks and uncertainties, including, but not limited to, factors that are discussed in the company’s most recent periodic and current reports filed with the AFM.

Such forward looking statements, including guidance provided during today’s call, speak only as of this date, and Basie does not intend to update them in light of any new information or future developments nor does Basie undertake any obligation to update the forward looking statements. I would now like to turn the call over to Mr. Richard Flickman.

Richard Blickman, Chief Executive Officer, Besi: Thank you. Thank you all for joining us today. For today’s call, we’d like to review the key highlights for our second quarter and six months ended 06/30/2025, and update you on the market, our strategy and the outlook. First, some overall thoughts on the second quarter and the first half year twenty twenty five. Besi reported the second quarter revenue, operating income and net income of €148,100,000 €43,500,000 and €32,100,000 respectively.

Revenue and operating results were at the midpoint of prior guidance in the mainstream assembly equipment market, still affected by soft demand for mobile and automotive applications. Market development in Q2 this year was also affected by increased customer caution due to global trade tensions. Q2 twenty five revenue and operating income grew sequentially by 2.810.7%, respectively, as we saw an increase in shipments to Asian subcontractors for AI related data center applications, combined with a 4.3% decrease in sequential operating expenses. Orders for the quarter decreased by 3% versus the first quarter as weakness in mainstream, computing and mobile applications was partially offset by new orders for Besi’s TCB Next system. For the first half year, revenue of €292,200,000 decreased by 1.8% versus the first half last year, reflecting broader assembly market trends as weakness in mobile and, to a lesser extent, automotive end markets was significantly offset by growth in hybrid bonding systems revenue, which more than doubled versus the first half last year.

Orders decreased by 17% due to the timing of customer orders for hybrid bonding systems and a lack of new product introductions in high end smartphones. The first half twenty five operating and net income decreased by 816.2%, respectively, versus the first half last year, primarily due to lower revenue and a 2.7 reduction in gross margin from a less favorable product mix, adverse net ForEx effects from the decline of the U. S. Dollar versus the euro and increased interest expense related to Besi senior note issuance in July. Liquidity remained strong with cash and deposits €490,200,000 at the June, increasing by 90.6% versus 06/30/2024.

The sequential decrease in cash and deposits at quarter end reflected the timing of the annual dividend payment along with the purchase of our Davin, Netherlands facility for €14,900,000 As of 06/30/2025, euros 72,200,000.0 of the current 100,000,000 share repurchase authorization has been used to repurchase approximately 644,000 ordinary shares at an average price of €111.96 per share. As of 06/30/2025, Besi held approximately 2,000,000 shares in treasury, equivalent to 2.5% of shares outstanding. Next, I’d like to discuss the current market environment and our strategy. Tech Insights currently forecast assembly market growth of 9% in 2025, which is below last quarter’s forecast of 13%, driven by a pushout of the anticipated mainstream assembly upturn to the second half of this year. Anticipated growth, 25%, is focused primarily on AI and data center logic and memory applications.

They expect cumulative growth in the twenty six-twenty nine period of 63% based on continued advancements in AI use cases, new product introductions in twenty sixtwenty eight period and a cyclical recovery of mainstream assembly applications. We expect to exceed market growth rates given our leadership position in Advanced Packaging. We believe the outlook for Besi’s business in the second half twenty twenty five has improved in recent weeks based on customer feedback and order trends subsequent to quarter end. Extended CapEx budgets for AI infrastructure have been confirmed by each of the leading industry players in recent quarters with new use cases emerging in cloud and edge computing along with co package optics. Advanced packaging is one of the key ways to achieve AI systems differentiation, develop innovative consumer edge AI devices and provide the most energy efficient data center performance.

Advanced Packaging demand for AI applications remains strong, given new device introductions expected twenty twenty six to twenty twenty eight period. We believe we are well positioned in the fastest growing Advanced Packaging market segments, including data centers for TONICS, AI and ART PCs and mobile devices and EVautonomous driving. As such, orders for hybrid systems are expected to increase significantly in the second half twenty five versus both first half twenty five and second half twenty four. In both advanced logic and HBM4 memory applications, as customers advance their technology road maps for new product introductions in 2026 and 2027. Customer interest in our TC NEXT system for both memory and logic applications has also expanded significantly.

TC Next cycle times have improved with shipments anticipated in Q4 this year from orders received in the second quarter this year. We also anticipate increased orders for 2.5D advanced packaging systems for AI related data center applications from both global IDMs and Asian subcontractors. In addition, there are early signs of a recovery in our mainstream assembly markets, principally related to increased demand by Asian subcontractors for high end mobile applications and high performance computing applications for consumer markets. Now a few words about the guidance. For the third quarter twenty twenty five, we anticipate that revenue will decline by approximately 5% to 15% versus the second quarter of this year based on the order book at quarter end.

However, orders in the third quarter twenty twenty five are expected to increase significantly on a sequential basis due to increased demand for hybrid bonding 2.5D advanced packaging applications. Besi’s gross margins is anticipated to decline to a range between 6062% in the third quarter due to the adverse impact of a 12% decline in the value of the U. S. Dollar versus the euro in the first half of twenty twenty five. Operating expenses in the third quarter are expected to be flat, plus or minus 5% versus the second quarter despite increased R and D spending.

That ends my prepared remarks. I would like to open the call for some questions. Operator?

Conference Operator: If you wish to ask a question, please press key 5 on your telephone keypad. We kindly remind you that you are limited to one question and a follow-up. If you wish to withdraw your question, please press key pound six on your telephone keypad.

Charles Shi, Analyst, Needham and Company: The Thanks for additional color on the expected hybrid bonding orders. So if I

Analyst: sum this up, second half is going to be stronger than both the first half of twenty twenty five and the second half of twenty twenty four. That’s helpful. Can I just tease you and ask what about the first half of twenty four when you received a sizable order from one customer? Should we think similar ballpark, higher, lower? Any additional color will be helpful.

Thanks. And I have a follow-up.

Richard Blickman, Chief Executive Officer, Besi: Well, that’s always hard to tell. It’s usually orders in sequence, in lumps, as they call it, quarter by quarter, but it can be somewhat higher or somewhat lower. So what has been the trend so far? The highest we received was 26 from one customer in in one quarter. And then typically, somewhere between twelve and twenty, in other historical, let’s say, order patterns.

But we also mentioned we don’t expect from only one customer. We expect from other customers, but those are not bigger volumes. They are below five orders, systems at a time. So your question is a very good one, but that leads to in in summing that up somewhere in that range. But what is more important is that we also see continued adoption in, more applications in Logic, but also now an ever more serious commitment in the stacking of memories, the h b m four, also confirmed publicly by, the Korean companies.

And that could also lead to, orders which we have no clear visibility yet, in respect to the intended volumes.

Analyst: That’s really helpful. I have another question, on the order book of you reported in the second quarter twenty five. The orders out of China and rest of Asia are picking up, but rest of world, including Europe and and US, dropped quite significantly. Now if I’m not mistaken, that’s usually driven by by two US customers, one in mainstream compute and one in mobile. And, yeah, you highlighted as much in the prepared remarks.

But considering some worries in the market about especially that mainstream compute customer, should we expect this to remain at a lower level going, you know, into the rest of the year or maybe even next year? Like, is there any additional color you could provide? Because, yes, we both under yeah. I mean, I understand that conditions in especially mobile haven’t really picked up, but it is, I think, one of the weakest orders intakes from that region in a while. So any color will be helpful.

Thanks.

Richard Blickman, Chief Executive Officer, Besi: Yes. To add to your observation, in Europe, it’s very much related to automotive industry being soft, but there are some early signs of some recovery for new products mainly. But Europe is is for that reason, low. US, clearly, two big, drivers. One, the compute, and the other one, the the mobile, but there’s also other customers as we know.

But the one you are referring to, which starts with an I and ends with an l, yeah, we all know from daily publications that the situation is, pretty unclear. One would expect based on, similar situations in the past with, companies in our industry that the outcome will be a continuation with the high end, with the applications, which also are next generation technology. And you may expect less investment than we already see that in the more mature and certainly the lower end products. We are less involved in that second category already for many years. Our engagement is more at at that forefront.

So we are anxiously, waiting, and we’re working day and night with that customer, to see how how the next round will be, organized. For the time being, CapEx is very low. That’s also publicly known, which may at some point turn because the demand for semiconductors doesn’t change. On the mobile front, as we explained, for the outlook, we see certainly demand for new features in next generation devices where we are clearly involved, which is very positive, that this year is a soft year. So far, it’s also clear.

It’s maybe a bit longer than what we had in in previous cycles for high end smartphones. Maybe that also has to do with the last peak in ’21. So a longer lasting, let’s say, digestion of the features at that time. But there’s a whole list which is publicly shared of features expected in next generation high end phones, and that should be a market next year, where you see Thank always initial

Analyst: you very much.

Richard Blickman, Chief Executive Officer, Besi: Developments here before. Okay.

Analyst: Thanks, Richard.

Richard Blickman, Chief Executive Officer, Besi: Next question.

Speaker 4: Next question comes from Sandeep Deshpande. Please go ahead.

Sandeep Deshpande, Analyst: Richard. Just a quick question on your TC orders and the customer base there. I mean, you announced some in Q2, and you would ship them later this year. I mean I guess they are part of that improvement in orders that you expect in the third quarter. I mean how broad is the customer base there?

And is this going to be a significant contributor to your orders and the sales later this year or early next year? And I have a quick follow-up as well.

Richard Blickman, Chief Executive Officer, Besi: It’s slightly different than what is in your mind. So we did receive from that customer in the second quarter a nice order for five systems, 20,000,000 plus. And as we indicated, the shipment is expected Q3, Q4, probably at the end of Q3. And it depends a bit on how the buy off evolves, whether are able to ship in Q3 or whether or Q4. That’s why there’s this range in revenue between 515% less than Q2.

Next orders from that customer may be expected after installation of these five lines and successful product launch. As we indicated earlier, it’s for a memory application, and that could then lead to orders probably early as Q4, but maybe more realistic in Q1. And that can be a sizable expansion. Then we are gaining traction with this TC system because remember, it’s developed for the next generation below 20 micron bonded pitch. The world today is somewhere around thirty, thirty five micron as we understand, and that finds its way into the logic space.

There’s data available published by IMEC in Belgium on our equipment, which even successfully has bonded devices with bonded pitches below 10 micron. So that fills the world between the inevitable hybrid bonding shift and extension of the the reflow process in a TC technology for for the next many years to come. So successful so far in in both, because remember, the development started for Logic to be ready below 20 micron bump at pitch, and then being tested already for stacking memories. And this will be for HPM four, probably three and four, because the system offers significant improvements as we explained in the Capital Markets Day details. So I welcome you to look at that if you are interested in more details.

But that’s roughly the DC road map. Thank you, Richard.

Sandeep Deshpande, Analyst: I mean, just quickly on following up on your hybrid bonding road map. I mean, there’s this one memory customer who is looking at hybrid bonding for the HBM four and beyond HBM four plus or whatever. I mean, where is that in terms of qualification? Because that is, I think, the moment, simply a pilot line. There is no production planned yet.

So where is that on track, you see, or is it too early to say?

Richard Blickman, Chief Executive Officer, Besi: Number one, it’s on track. And number two, if you follow the the news in the last few days, it is both stepped up by the major Koreans, the two, that they will have these hybrid versions available for customer sampling because simply the customers drive this demand. So that is in line with the road map. We have understood ’26 qualification and mainstream production towards the end and and also certainly in ’27. That is how the road map for HBM today, hybrid bonding looks like.

Developing in in a certainly a positive way.

Conference Operator: Thank you.

Richard Blickman, Chief Executive Officer, Besi: Thank you.

Speaker 4: Next question comes from Didier Seymama from Bank of America. Please go ahead.

Didier Seymama, Analyst, Bank of America: Hi Richard, thank you for taking my question. I’ve got two questions. First question on, let’s say, your main advanced packaging customer for logic customers. I think you mentioned that they opened or they are about to open a second factory, which would need about 100 systems at full capacity. Given what you told us today in terms of order intake that should be meaningful about meaningfully above, you know, in the second half, as your confidence that that factory will ramp in line with what you thought, I think you were thinking like it would take two years to fill in the fab.

Has that confidence strengthened? Or is it still more or less the same as it was at the CMD?

Richard Blickman, Chief Executive Officer, Besi: Well, if you look at the recent publication of the financials from this customer, you could expect that that timeline is intact. There are no negative signals. We understood. In addition to that, the global demand is the global demand. And with the issues with The U.

S. Customer, currently, as discussed in the previous question, it could well be that the beneficiary of that is is with the other customer, but that’s all to be seen. Key is that the adoption is continuing and also gaining pace. On the other hand, TC Stretch is also in place as we discussed also to the earlier question. There is no reason to answer your question in this way to have in one month time a different road map.

It’s more a positive confirmation as we read it than in in another perspective.

Didier Seymama, Analyst, Bank of America: Okay, perfect. Second question is on gross margin. So Richard, I mean, just help us understand a little bit what happened in the gross margin this quarter? And maybe just give us your thoughts as to whether you will take any actions to improve the cost structure in COGS or how we should be thinking about gross margin in Q4 or into next year? Should we go back to the 62% to 64% or even like the the higher level that you were thinking about at the C and D?

Richard Blickman, Chief Executive Officer, Besi: Well, there are two aspects which are key to gross margin as we know very well. Number one is pricing power. And pricing power in a world which is, let’s say, continued in in, let’s say, a softer mode is is is what it is. You can only distinguish yourself by better better yeah. Let’s say, specs and and cost of ownership.

That’s the way you succeed on the top line. On the cost side, it’s a never ending battle and a very positive one, where on the one hand, we are successful because it’s a buyer’s market today. On the other hand, with the development of the dollar, as it did in the past four months, it is very hard to, translate that immediately into, yeah, let’s say, least effect. But if we look at it, what what happened so far that we more or less, yeah, have between 23% effects of a dollar, which has declined by more than 12%. That that still tells you that that the the first reason, the product positions allow that we adjust our prices, which are in euros because we’re a euro based company, to to, yeah, different exchange rates.

But it’s and to say that again, your profit is in your cost. So everyone is extra challenged. How can we improve our operating models for every one of our systems to improve those margins over time?

Didier Seymama, Analyst, Bank of America: Okay. At least it

Richard Blickman, Chief Executive Officer, Besi: seems that

Didier Seymama, Analyst, Bank of America: your gross margins are gonna go up then.

Richard Blickman, Chief Executive Officer, Besi: Well, that that that depends on two things. Number one, do we maintain the product position? And does the dollar finally settle? But we’ll enjoy that together at TDA.

Speaker 7: Yeah. Absolutely. Alright. Thanks so much, Richard.

Richard Blickman, Chief Executive Officer, Besi: Thank you. Any next questions?

Speaker 4: Next question comes from Madeline Jenkins from UBS. Please go ahead.

Madeline Jenkins, Analyst, UBS: Hi Richard, thanks for taking my questions. So I just have a few on the new flip chip tool that you announced at your CMD. I’m just kind of wondering when you’re expecting to see the order ramp from this. And the comments you made about improving 2.5 d demand, is this more a kind of a share gain? Or is this actual kind of capacity being added?

That would be interesting. Well,

Richard Blickman, Chief Executive Officer, Besi: that’s an excellent question. Number one, it is not based on the new system. This is well, it’s not old, but it’s the top in the world, and we have and we said that in earlier calls. And and very high market share for these two and a half d, which are mass refloat. And that is, yeah, continuing.

So whether we gain share, I think we will because it is it’s it’s also broad as we explained it. It’s not only one customer. It’s many subcontractors who are all tooling up. And they select our systems, which which is also perfect. But then the new system, which you refer to, is going to be launched q one next year.

It will have tighter specs. The current systems are somewhere in the three micron accuracy space. The new one is one micron accuracy. It also has other options. It’s called flex because you can the customer can handle more device types.

It’s a bit of combination of an MMA and a flip chip, but we explained some details in the CMD, but we’re happy at another moment to show you some more details. That will that offers further expansion of market share because that’s all directly tied to these two and a half d modules, which is the way forward. So, yeah, that’s that’s what it is.

Madeline Jenkins, Analyst, UBS: Perfect. Thank you. And just, I guess, a follow-up on that. Is this also a tool that could be used in sort of high end mobile applications? And, you know, when Apple changed their packaging, is is this something that could be inserted?

Thank you.

Richard Blickman, Chief Executive Officer, Besi: Exactly. So it is for, you could say, chiplet type of architecture and also two and a half d, so stacked versions, which gives the customer more ability to combine different ties to be placed and also components so that fits exactly in those categories. In the real mainstream high volume consumer and products. In other words, that whether that is mobile or edge AI mobile, edge AI probably in in other portable devices. That’s where it’s intended for.

And at the same time, don’t forget the glasses, the Google glasses, but now also others. That also is has a has a very strong focus.

Madeline Jenkins, Analyst, UBS: Perfect. Thank you, Richard.

Richard Blickman, Chief Executive Officer, Besi: Thank you, Madeleine.

Speaker 4: Next question comes from Martin Jungfleisch from BNP Paribas. Please go ahead.

Martin Jungfleisch, Analyst, BNP Paribas: Yes. Hi. Good afternoon. Thanks for taking my questions. I have two.

The first one is mainly on the expected orders you were talking about. So can you just confirm that these orders or some of these orders have already been signed in early Q3? Or is there an expectation that these will be signed in Q3 or Q4? That is the first question. I have a follow-up.

Richard Blickman, Chief Executive Officer, Besi: Well, certainly, we have received already orders until date in q three. And as was mentioned in one of

Analyst: the

Richard Blickman, Chief Executive Officer, Besi: sentences, it it also accelerated from the first day of the quarter. So customers decided not to place in Q2 but to place in Q3. So some of it, you can qualify as being ordered in in q three, which may have been ordered in q two. But, anyway, it it certainly is is abroad, as we said before, for many applications, and and that should should be significantly higher than than the second quarter orders.

Martin Jungfleisch, Analyst, BNP Paribas: Okay. And then just a follow-up question on the Q3 guidance and the full year. And for Q3, you’re expecting revenues to decrease quarter on quarter. But at the same time, you’re also saying you’re seeing early signs of recovery in the mainstream business. So how should we think about the seasonality of the mainstream business now for the next quarters given that signs of the early recovery?

Is that something different in over the past couple of quarters or past couple of years now?

Richard Blickman, Chief Executive Officer, Besi: No. Well, the emphasis is on AI and and very careful certain areas like automotive, for instance. It does not further decline. You see some improvements. Same with high end smartphones, which was very soft until date.

So you see a pattern which may be similar to 02/2019, where we had a pickup towards the later part of q three, which now may be a bit earlier coming out of a downturn. And that then, if all goes well and Tech Insights forecast should lead to a higher growth in in 02/1926. That that is what you could, let’s say, analyze as as a as a cyclical trend. But today, there’s a lot more in the world happening, which makes this uncertain. On the other hand, people expect that by that time, we should have some more clarity.

But anyway, your guess is mine. Okay.

Analyst: Makes sense.

Richard Blickman, Chief Executive Officer, Besi: Thank you.

Speaker 4: Next question comes from Charles Shi from Needham and Company. Please go ahead.

Charles Shi, Analyst, Needham and Company: Richard, I have two questions. Maybe the first one, you you talked about the HCM related hybrid bonding orders seems to be improving into q three, and you talked about the some of the recent news out of Korea. Based on our understanding, you do have couple tools of install base at two of the HCM customers. You guys have have made very, very significant progress there. But, I think the burning question for from me and, obviously, for a lot of investors is, any progress, is with the HVM leader, in hybrid bonding.

And, are they still in the face of testing mainly in Singapore? And, when do you think you can ship a evaluation system to that HVM leader? Thank you.

Richard Blickman, Chief Executive Officer, Besi: Well, excellent. And and you’re absolutely right. That is a very important development to watch in this quarter. Number

Sandeep Deshpande, Analyst: one,

Richard Blickman, Chief Executive Officer, Besi: which is encouraging, is supposedly they have shared at a conference that hybrid bonding readiness is for them a must because their customers are demanding a hybrid bonded version. Then we know that and we’ve been developing this on an ongoing basis, that traction is gaining at the others. So as I said earlier, it is according to what we expect, in in our beautiful road map since about four years, all focusing on further adoption in ’25, ’26, and then having production devices available towards the end of next year and certainly in ’27. That road map is what we hear. The activity around that is increasing and has increased this quarter significantly, and that’s also in line with the publications.

So, Besi, as part of that whole development, the only question is how much share will we be offered? Will this be, yeah, major? Are we are we the process of reference or somebody else? We we don’t know yet. But we are in a good position.

The data we can achieve is very solid. Process window is increasing. So that looks promising.

Charles Shi, Analyst, Needham and Company: Thanks, Richard. So maybe the second question, I wanna ask a bit more about the the mainstream business. I think your first half twenty five revenue is I mean, yes, it’s down a little bit versus first half twenty four, but the largely flat. Let let let’s call it flat. But you are saying hybrid bonding revenue doubled from the first half twenty four level.

Obviously, we don’t know the hybrid bonding revenue baseline from first half last year, but but it kinda implies a very big decline in the mainstream business in first half twenty five. My math is telling me it’s down 20% from a year ago. And if that number is right, your mainstream business is basically back to the 2019 level. Is it is it right, or is it that bad for the mainstream business in first half twenty five? And and and we really wanna know, like, how bad the mainstream is.

So so, you know, the thing is the bad news. Today, maybe it will become good news tomorrow, but we really wanna know. Yeah.

Richard Blickman, Chief Executive Officer, Besi: Well, that’s absolutely right. For certain areas, you’re you’re you’re spot on. The industry and and look at automotive is is a beautiful example. Look at our key customers in in that area. The world is is is not growing in that area.

But then, yeah, let’s be very positive about about the development in the new area. So, yeah, you can also say it in this way. If we would not have the successful advanced packaging AI, the numbers would look different. Yes. Certainly.

But is that is that a concern going forward? We don’t think so because if you look at our margins, still the new submicron business compared to the conventional business is still much smaller. So also the conventional business for new device development, whether it’s in lead frame world or whether it’s in the substrate world, look at the flip chip flip chip success in many applications. Yeah. It’s it’s at low levels, but it it they’re very, yeah, successful new product launches, which should be increased in volume in the next round.

Charles Shi, Analyst, Needham and Company: Maybe, Richard, just really wanna confirm. Is is the mainstream really down 20% year on year in the first half twenty five or higher or lower?

Richard Blickman, Chief Executive Officer, Besi: Well well, we haven’t figured out those numbers in detail, but it could well be somewhere somewhere around that. Chinese subcontractors were very low as well, so I would have to calculate to give you a precise number. But as a trend, it’s it’s it’s it’s certainly the case.

Charles Shi, Analyst, Needham and Company: Yeah. Thanks, Richard. That’s all from me.

Richard Blickman, Chief Executive Officer, Besi: Thanks, Charles. Any last question?

Speaker 4: Next question comes from Martin Morandan from Auto BHF. Please go ahead.

Richard Blickman, Chief Executive Officer, Besi0: Hi. Thanks for taking my question. First one on the mainstream business, I just wanted to know what do you think the next upturn will look like for the mainstream business and notably for for mobile? Because in the past, I mean, we saw quite a brutal growth in the upturn, know, growth like 50% to 60% sometimes for the mainstream business. But maybe the pace of innovation in the mobile space has slowed down a bit to some extent.

But at the same time, we see new AGI functionalities, new type of chiplet packaging, etcetera. So, yeah, it’s just do do you think the next upturn for mobile will look like the previous ones?

Richard Blickman, Chief Executive Officer, Besi: Well, it’s also a very good question. Usually, with an extended downturn, the pattern is that the expected upturn is also lowered. We see that right now with Tech Insights numbers, which we shared, that they lowered, of course, what happened this year so far, and then they lowered the forecast for next year. That always is is following that same trend. And as when the tide turns, you will see the opposite.

You will see, on the one hand, a a new product launch success, but then you also have a sort of catch up investment around because not everything is new, which is then unexpected. But that’s typically how this industry works. So you you have to analyze these cycles from the start to a next start through a cycle, how that forecasting develops. And it’s very interesting that at the end, people start to look ever more dark to whether this is growth industry at all. But somebody mentioned ’19.

I did also myself, I think. You had a similar sort of but then, yeah, we had the abnormality of a COVID. Whether this time we will have an abnormality, who knows? But that that historically, we have this nice site going back to 02/2006. You you have these movements, 50 up, 50 plus down, is is what happens.

Richard Blickman, Chief Executive Officer, Besi0: Okay. Very helpful. And I have a quick follow-up on on silicon photonics. Whether you think for the next couple of years, let’s say, that the markets the addressable market for Besi will be bigger for flip chip or for hybrid burning tools? Because we know that hybrid burning is addressing the will be addressing the switches notably, but but flip chip maybe the addressable market is bigger in terms of products because it’s considered applicable, etcetera.

So what what do you think would be the bigger market for for Besi?

Richard Blickman, Chief Executive Officer, Besi: Well, if you look at it today, you’re absolutely right. Flip chip is is the bigger the bigger market, and that could very well be continuing for the next one, two years. But then when dimensions decrease, you will certainly move to hybrid bonding specs. And that is also developing very positively for us. So you have the one the, yeah, the two applications.

And one is the co package of six, which is still a bit further out, and you have to connect us. Well, we are involved

Richard Blickman, Chief Executive Officer, Besi0: since Thanks,

Richard Blickman, Chief Executive Officer, Besi: Martin.

Speaker 4: Next question comes from Tim Schultz Melender from Rothschild and Co Redburn. Please go ahead.

Speaker 7: Hi there. Thanks for taking my questions. I had two, please. Maybe just the first on the Gen two hybrid bonding tool. I think there was some talk that maybe it could be a kind of September type time frame.

So maybe just kind of six weeks away. And I just really wanted to think about that time line. Might that cause customers to delay order placement? Or is the tool eval and sort of industrialization time frame sort of long and that it doesn’t disturb near term demand? And then I had a follow-up, please.

Richard Blickman, Chief Executive Officer, Besi: Well, excellent. We have always, let’s say, qualified this first tool as a development tool. So, it will take at least nine months after shipments, probably a year before the tool has been qualified to use in production. So cannibalizing or changing is is not foreseen in a year. But what if you look at that second generation has two main targets.

Number one is to be able to place even preciser than we place today, so from a 100 to 50 nanometers. But then also and that’s because it’s also named generation two, explained in the Centimeters Capital Markets Day. Because of the design and also the dynamics and the balancing, etcetera, the machine should run with a larger process window, so a higher throughput, so reducing ultimately the cost of ownership. The cost of the machine is certainly higher than that of generation one plus, the 100 nanometer. But that challenge we will face, which is a very positive challenge, hopefully, once the system is is becoming in the stage where it is production qualified.

So we will find out, and we will share in the next quarters the progress. Shipments, probably early October, whether it’s late September, don’t know yet, but but you can see it on the floor. So it’s getting there. But it’s a real milestone in higher accuracy and especially because of stability, higher throughput.

Speaker 7: Awesome. That’s that’s really, really helpful. And then maybe just one quick housekeeping one. I think in response to Didier’s questions, you talked about euro pricing, but you also talked about FX impact on margins. Apologies if I missed it, but could you just maybe just help me sort of understand maybe the magnitude or what the mechanics are for Q3 or if I just misunderstood the pricing currency?

Well,

Richard Blickman, Chief Executive Officer, Besi: we are, of course, in a dollar world. The semiconductor industry, for definition, is a dollar world. Our business in the same way. So we we set prices because we’re a euro based company. A price in euros, we offer that to customers, and there’s also always disclose when the exchange rate varies at time of ordering by plus minus two and a half percent, an adjustment is is is being requested.

And that usually let’s say, because the swings are not that big, that usually can be can be organized. With the big swing we have had in negative sense for the dollar in the past four or five months, that that has caused some some delay in that process. So customers have a certain price for a machine in their budgets, in dollars, and that price has to be increased. Since we are in in a specific equipment business, these are not standard machines, only part of it, based on on many criteria, but also competition facing exchange rate issues, that settles at some point. And we have to be a bit smarter to to build better machines and at lower cost.

So that was my discussion with DDA.

Speaker 7: Got it. That’s very clear. Thank you so much.

Richard Blickman, Chief Executive Officer, Besi: Got it. That’s very clear. Thank you so much. Thank you. Well, that brings us to the end of the call.

Or is there one final question?

Conference Operator: There are no more questions currently. You can now hand over for closing remarks.

Richard Blickman, Chief Executive Officer, Besi: Thank you very much. And if there’s any further questions, don’t hesitate to contact us. Thank you for attending. Bye bye.

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