Earnings call transcript: BESI Q1 2025 earnings miss forecasts, stock rises

BE Semiconductor Industries NV (BESI) reported its first-quarter 2025 results, revealing earnings per share (EPS) of €0.40, falling short of analysts’ expectations of €0.4916. Revenue also missed forecasts, coming in at €144.15 million compared to the anticipated €159.94 million. According to InvestingPro data, five analysts have recently revised their earnings estimates downward for the upcoming period. Despite these misses, BESI’s stock rose 1.85% to €94.90 in pre-market trading, reflecting a complex investor sentiment influenced by strategic initiatives and future market potential. The company currently trades at a P/E ratio of 44.68, suggesting a premium valuation relative to its peers.

Key Takeaways

• BESI’s Q1 2025 EPS and revenue fell short of forecasts.
• Stock price increased by 1.85% in pre-market trading.
• Strong cash position with a 10.8% increase from the previous quarter.
• Continued investment in hybrid bonding technology and collaborations.
• Market outlook anticipates growth in advanced packaging for AI applications.

Company Performance

BE Semiconductor Industries NV faced a challenging first quarter in 2025, with revenue declining by 1.5% year-over-year and net income decreasing by 7.4%. Despite these setbacks, the company maintained a robust cash position and continued its strategic focus on innovation and collaboration within the semiconductor industry. The broader market context suggests potential growth in assembly and packaging, particularly for AI applications, which may bode well for BESI’s future performance.

Financial Highlights

• Revenue: €144.1 million, down 1.5% YoY
• Net Income: €31.5 million, down 7.4% YoY
• Gross Margin: Trending towards the lower end of the target range
• Cash Position: €159.4 million, up 10.8% from the previous quarter
• Proposed Dividend: €172.5 million (€2.18 per share)

Earnings vs. Forecast

BESI’s Q1 2025 EPS of €0.40 missed the forecast of €0.4916 by approximately 18.6%. Revenue also fell short by €15.79 million, coming in at €144.15 million against the expected €159.94 million. This miss contrasts with the company’s historical performance, where it has often met or exceeded market expectations.

Market Reaction

Despite missing earnings and revenue forecasts, BESI’s stock saw a 1.85% increase, reaching €94.90 in pre-market trading. This movement can be attributed to investor optimism regarding the company’s strategic investments and potential market growth in semiconductor assembly and packaging. The stock’s performance is notable given its 52-week range, with a high of €171.3 and a low of €79.62.

Outlook & Guidance

Looking forward, BESI projects Q2 2025 revenue to remain flat with a possible variation of plus or minus 10%. The company expects gross margins to be between 62-64% and anticipates a decrease in operating expenses by 0-10%. InvestingPro analysis indicates a revenue growth forecast of 16% for FY2025, suggesting potential improvement ahead. The strategic focus remains on expanding its hybrid bonding capabilities and leveraging collaborations with industry leaders like Applied Materials. With an overall Financial Health score of 2.55 (rated as "Good"), the company appears well-positioned to execute its growth strategy.

Executive Commentary

CEO Richard Blakeman highlighted the company’s leading position in hybrid bonding technology, stating, "We are currently with the hundred nanometer well advanced in comparison to everyone else." He also emphasized the potential growth in the assembly market, noting, "Tech Insights currently forecast a 13% assembly market upturn in 2025, followed by a 26% increase in 2026."

Risks and Challenges

• Potential trade tariffs could impact supply chains and costs.
• The hybrid bonding technology is still in the testing phase for memory applications.
• Operating expenses increased due to higher consulting costs.
• Market volatility and macroeconomic pressures may affect demand.
• The timing of new technology adoption remains uncertain.

Q&A

During the earnings call, analysts inquired about the timeline for hybrid bonding technology reaching volume production. Management indicated that significant progress is expected, with potential volume production starting in 2027. Other questions focused on the impact of potential tariffs and the company’s strategy to mitigate these risks.

Full transcript - BE Semiconductor Industries NV (BESI) Q1 2025:

Conference Operator: Morning, good afternoon, ladies and gentlemen, and welcome to Basic Quarterly Conference Call and Audio Webcast to discuss the company’s twenty twenty five first quarter results. You can register for the conference call or log in to the audio webcast via Besi’s website, www.besi.com. Joining us today are mister Richard Blakeman, chief executive officer and missus Andrea Cobb, senior vice president finance. Currently, all participants are in listen only mute. 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 will now turn the call over to Mr. Richard Blickman. Please go ahead, sir.

Richard Blakeman, Chief Executive Officer, Besi: Thank you. 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’d 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 Besi’s current view and assumptions regarding future events, many of which are, by nature, inherently uncertain and beyond Besi’s control. Actual results may differ materially from those in 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 Besi does not intend to update them in light of new information or future developments nor does Besi undertake any obligation to update the forward looking statements. For today’s call, we’d like to review the key highlights of our first quarter ended March thirty one of this year and update you on the market, our strategy and the outlook. First, some overall thoughts on the first quarter.

Besi reported solid first quarter results, important new advanced packaging orders in a challenging market environment. Revenue of €144,100,000 was down 1.5% versus the first quarter last year due to the ongoing weakness in mobile and automotive end user markets, partially offset by strong revenue growth from hybrid bonding and other AI related computing applications. In contrast, orders increased 3.3% versus the first quarter last year and 8.2% versus the fourth quarter last year due primarily to increased bookings by Asian subcontractors and AI related data center applications. Basics profitability in the first quarter of this year remained at attractive levels despite ongoing weakness in mobile, automotive and Chinese end user markets and expanded R and D investment in next generation assembly solutions. Net income of EUR 31,500,000.0 decreased 7.4% versus the first quarter of last year, primarily due to lower revenue and gross margins realized, partially offset by an 8.9 decrease in operating expenses.

Besi’s gross margin has trended towards the lower end of our target range over the past three quarters due to primarily a less favorable product mix, particularly with respect to high end smartphones and net ForEx headwinds beginning in the second half of twenty twenty four from adverse movements in some of our principal transaction currencies versus the euro. On a sequential basis, Q1 twenty twenty five, operating expense growth of 10.3% versus the fourth quarter of last year was due to higher consulting costs. It was at the lower end of guidance as we continue to control overhead development despite increased R and D investments. In addition, cash flow generation remains positive with net cash increasing by 10.8% versus the fourth quarter last year to reach €159,400,000 which represented 26.3 percent of our latest twelve months revenue. As such, we continue our highly attractive capital allocation policy.

In Q1 twenty twenty five, we repurchased EUR 22,100,000.0 of our shares, bringing total cumulative purchase to EUR 50,000,000 under the current EUR100 million program. Further, at our AGM today, shareholders approved the proposed dividend for 2024, which will distribute EUR 172,500,000.0 in cash to shareholders, which equals EUR 2.18 per share. Next, I’d like to speak a little bit about the current market environment and our strategy. Tech Insights currently forecast a 13% assembly market upturn in 2025, followed by a 26% increase in 2026. Most analysts continue to expect significant growth in advanced packaging for AI applications in 2025 and the second half turn in mainstream assembly markets.

However, the slope of the current trajectory anticipated for mainstream markets this year is subject to many variables, including the potential impact of tariffs on the global trade. Despite near term uncertainty, we believe that the long term fundamentals of our market remains strong due to the ongoing AI build out, onshoring of advanced packaging fabs in The U. S. And Europe and increased adoption of hybrid bonding and other next generation assembly systems for new AI, logic, memory and consumer use cases. Of note, significant progress was made on Besi’s wafer level assembly agenda this quarter as we received hybrid bonding orders for two leading from two leading memory producers for HVM four applications as well as follow on orders from a leading Asian foundry for logic applications.

Further important announcements were made by two leading semiconductor producers with respect to future hybrid bonding applications such as ASICs and co package optics. In addition, a leading U. S. Logic manufacturer successfully began production of AI related logic devices utilizing Besi’s hybrid ponders in integrated production lines. Finally, Applied Materials announced on April 14, a 9% ownership position in Besi.

Besi and Applied Materials have been successfully collaborating since 2020 to develop the industry’s first fully integrated equipment solution for die based hybrid bonding. The collaboration brings together applied expertise in front end wafer and chip processing with base leadership position in bonding accuracy and speed. We welcome their shareholding as a strategic long term investment and view it as further validation of our wafer level assembly technology and strategy. Now a few words about the guidance. Besi’s business development this year reflects the contrasting growth trends seen in the assembly equipment market between AI and mainstream applications.

The timing and trajectory of a mainstream assembly upturn is more difficult to predict now given new tariff uncertainties. However, demand for advanced packaging for AI applications remains strong given upcoming new device introductions and use cases planned in ’26 to twenty eight time period. We continue to assess the potential impact of tariffs on basic customers, supply chain and end user markets. For the second quarter twenty twenty five, we forecast that revenue will be flat, plus or minus 10% versus the first quarter of twenty twenty five, with gross margins in the range between sixty two percent and sixty four percent. In addition, aggregate operating expenses are forecast to decrease 0% to 10% versus the first quarter this year, primarily due to a reduction in consulting cost.

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

Conference Operator: Thank you. If you like to ask a question or make a contribution on today’s call, please press 1 on your telephone keypad. To withdraw your question, please press 2. We kindly request you to limit the number of question to two question per person. You will be advised when to your question.

Martin Youngflash, Analyst, BNP Paribas: We

Conference Operator: will take our first question from Nigel Van Putten, Morgan Stanley. Your line is open. Please go ahead.

Nigel Van Putten, Analyst, Morgan Stanley: Hi. Yeah. Thank you. Good afternoon. Got a question on the hybrid bonding orders you’ve received for HBM.

If my understanding is correct, both customers already received two a couple of years ago and were also working with you in Singapore and Austria. So now they put in new orders. Can you provide some context what you think that means? What stage of development they are and if you have any clarity on their intent. And I have a follow-up.

Thanks.

Richard Blakeman, Chief Executive Officer, Besi: Well, as we all know, the preferred technology to stack memory is a reflow process. TC, thermal compression, is used by all three major memory manufacturers today because the cost is simply more advantageous than using a hybrid bonding process. Hybrid is better because it has less metal in between the contacts because a reflow process is reflowing a soft metal and driving current through a circuit, you need simply more current, and that means that the performance of a hybrid bonded device is better theoretically than a reflow bonded device. Cost is also a factor four, some people say six, higher using a hybrid process compared to a reflow process. So nothing new in the past year, exactly a year ago, JDAC released their standard to allow 16 stacking of devices using this reflow process resulted in a height above the standard.

So the industry has been developing, which is very, very understandable, this technology which is proven in the next generation. And at the same time, they are developing the hybrid bonding process as an alternative. Number one, for a better performance, less energy consumption, less heat dissipation required. And so all of them are testing this hybrid bonding as a next preferred solution. And you can see in this quarter continued testing and also taking a latest machine.

So we’re talking about single machines, not not the whole production facility. But these are testing machines, which should provide the answer in the second part of this year. Is for HVM four, a certain part, using a hybrid bonding and another part using the conventional process, a TC process. So it’s important to understand what this means. It means simply continuing development, testing the benefits, understanding better how we can impact the cost, and in preparation of a next step in stacking 20 dice where it is likely that a reflow process has hit certain limits, and then hybrid bonding is the only way to go.

So that’s in a nutshell where we are. Understood. That that was actually very helpful.

Nigel Van Putten, Analyst, Morgan Stanley: Do have a, well, a quick quick clarification, I guess. You’ve you’ve just repeated customers are still looking at sort of a dual parallel track for four or four sixteen high. I think you’re involved at least at one customer on both sides, also TCB. So maybe can you provide, you know, any color on your your your TCB, developments with within memory and also where you think sort of, you know, both tracks stand. I think you’ve been you sort of implied that there may be some testing going on already at sixteen, but the big implementation is beyond that.

Did I understand that correctly? And then also, how do you look at how you do you look at your, you know, Besi’s TCB venture? Thanks.

Richard Blakeman, Chief Executive Officer, Besi: Well, our TCB is a continuation of focusing on this reflow for the past twenty five years. And you have seen in this first quarter a significant increase in demand for mass reflow flip chip machines. TC is used for those processes where mass reflow is too critical to accomplish with smaller bomb pet pitches. So we entered the TC world twelve years ago, and we have developed six years ago a next generation TC, which can produce at smaller bump at pitches than the current market suppliers. And that process is coming into the window of those customers gradually as we reported in the last quarters.

So we have said all along that the first half of this year, ’25, should also make clear whether this next generation TC is being adopted for HBM four to a certain extent. So that will be exciting to understand in the next few months what will what will happen. Bayesian has in its offering so all three. So we have Mass Refill, Flip Chip for many, many years, and today, very successful. We have TC, which is also very successful in focusing on the next generation.

We shipped another system this quarter, which already has produced data for bump pitches well below the current next generation, so below 20 micron bomb pet pitch. Data has been produced below 10 micron bomb pet pitch, so that system comes very close to hybrid bombing. So offer the customers both solutions in a reflow process and the most advanced hybrid building process. But this year, again, will be very important year to understand how much of h b m four will be refloat and which are the machines used in the industry by which competitor, and then which part may be hybrid bonded. Is that h b m four e, or is that for the next generation?

So we will update you quarter by quarter. Also, in the next month, we have the Capital Markets Day. So an exciting development in the memory front.

Nigel Van Putten, Analyst, Morgan Stanley: Perfect. Thank you very much.

Conference Operator: We will take our next question from Charles Cerner, Needham and Company. Your line is open. Please go ahead.

Charles Cerner, Analyst, Needham and Company: Hi. Thanks for taking my questions. Richard, congrats on the two additional hybrid bonding orders from two memory customers. Sounds like you were you are expecting maybe they will get they will they will be qualified for HPM four for e generation, the earliest. And but if I look at NVIDIA’s latest road map update, the Rubin Rubin Ultra HPM four will come to the market second half twenty six.

HPM four e is, like, sec second half twenty seven. Yeah. Memory makers probably need to stop production a little bit before those NVIDIA product availability timeline. So wonder what’s about getting your hybrid botting tools in right now. Is that enough time for you to get qualified for the e generation?

How much confidence do you have in that, timeline? Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Well, that’s, of course, a very important question. So there are two two important factors. Number one is is what is the window of introduction that that is often up for revision because it is not only the bonder, but there are many other processes. And number two is the competitive landscape. What is available by what time?

So as I said, also in response to the earlier question, it will be very exciting in the next couple of months to see how the industry will fill in this demand and which processes will be used. As much as I understand today.

Charles Cerner, Analyst, Needham and Company: Thanks. Maybe a second question, Richard. I think in your earnings press release, last quarter, you you talked about, maybe a second half recovery for the mainstream business. But, obviously, the language in the press release in the current quarter turned a little bit more cautious. So you’re no longer saying you’re expecting maybe a second half recovery.

Wonder what you think about the potential revenue trajectory for for the mainstream business can be. Do you think at least the second half can be flattish over the first half, or any any additional color on the second half would be great? Maybe maybe let me add one thing. The the reason why I asked this is when I look at the consensus revenue numbers, looks like a lot of the the the my peers are modeling a much bigger second half revenue estimates. Yeah.

And what’s your what’s your thought? And any any color you can provide would be great. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Well, it’s, I think fair to say that since February 20 and and April 23 in the world, a lot has happened. And there are major major impacts to be, let’s say, expected or considered, however you want to phrase that, of these different tariffs. If you look in historical perspective, any disruption to an economical situation is for our industry, nine out of let’s say, 10 out of 10 has a negative impact. So more caution. And that is why we are yeah.

Let’s say, probably more careful than simply following the statistical trends in this industry. That often results in when things have crystallized that you may have an even steeper recovery. So that could also very well happen. Take the 02/1989, the financial crisis as a reference, or take, for that matter, 02/1920, and then the impact of COVID. So these impacts are first causing some caution and then after that, again, a a stronger increase.

So our caution is because of this phenomenon. We also see that as customers. We mentioned in the call February 20 that already before the Trump tariffs, there was a big, yeah, let’s say, slowdown in automotive, also disappointing in high end smartphones. Not a big big year to be expected. So why with all this tariff uncertainty, would all of a sudden the market look better in the second half?

We do see, and you see that in our order intake, some improvement year over year, quarter over quarter. But as long as it is single digit, it is not a very strong upturn. And when you would see second this year a major uptick, you should see orders increase dramatically in the first and the second quarter because there’s a lead time. So in a longer answer, Charles, I hope that you are right, that that we do see a strong recovery in the second half. Baby has demonstrated we can ramp very quickly.

We’re also prepared for that, of course. But in the current state of tariffs and economies and a lower dollar, that usually has a negative effect.

Charles Cerner, Analyst, Needham and Company: Thank you, Richard.

Richard Blakeman, Chief Executive Officer, Besi: Thank you, Charles.

Conference Operator: We will take our next question from Didier Simamat, Bank of America. Your line is open. Please go ahead.

Didier Simamat, Analyst, Bank of America: Yes, thank you. Good afternoon, Richard. I just had a question on the first quarter order. Did it play out the way you expected or did you see any push outs from anyone, whether it’s the IDMs or the subcontractors? The reason why I’m asking is because it’s really in response to the previous question.

It’s really because if if the customers are worried about, you know, tariffs, in some respect, they might pull in as they see as they’ve done probably for semis. But when it comes to back end capacity, they probably pushed out. Right? Not knowing exactly how it’s gonna play out. So if we were to have a bit of a clarity on those tariffs and, you know, who knows, that might happen, do you think that they come back quickly in q two to actually catch us for the seasonal uptake for smartphones and PCs that you normally see, especially smartphones for bedding?

Ruben Davos, Analyst, Kepler Cheuvreux: I ’ve got a

follow-up as well. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Yeah. That that is what, I tried to explain just now. If you look back in in whatever downturn scenario we’ve had in the past many, many years, You have a hesitation because our customers don’t, let’s say, have the confidence in the end market demand. You sense that it takes longer. Also, take the Intel specific situation, Intel restructuring, whether it’s announced or not, but people expect a major a major, let’s say, restructuring

Martin Marandel, Analyst, Cowen, ODDO BHF: impact.

Richard Blakeman, Chief Executive Officer, Besi: That usually slows down orders for some time, but then it catches up. But it always catch we have this nice slide in the deck going back to 02/2006. I invite you to look that quarter by quarter, and you see those impacts in every in every cycle along the way, and always the recovery is very steep. The question is, however, will that be in the second half or the first half of next year? But it will recover.

Didier Simamat, Analyst, Bank of America: No. No. I get that. Sorry. Sorry.

Trying to be a bit more precise on that. Did the quarter play out the way you expected? E g, you know, did you miss by 10,000,000, 20 million, or or just help us understand how much you think your orders missed so we can try to understand how much it can it can sort of recover if and when tariffs are a bit more clear.

Richard Blakeman, Chief Executive Officer, Besi: Well, revenue was fine, was okay. It was also, yeah, more or less in the middle of the guidance. So that that was not disappointing. Orders, I just phrased it in in other words, but we feel some delay. How much delay is?

Whether it’s 10,000,000 or 20,000,000, it could very well be. On the other hand, look at the the orders and the guidance. So we received in orders much less than what we guided, so we expect some orders still to come. And and that will, if all goes well, may well have an upside that we guided plus minus 10% on a hundred 44,000,000. The order intake was much less.

So that that more or less gives you the answer, DBA. But the Okay. The bottom line is that that we feel there’s some caution. Let’s put it that way.

Didier Simamat, Analyst, Bank of America: Yeah. I think it makes complete sense. And sorry. Just as a as a quick follow-up, on the hybrid bonding side from foundry customers, you said you have some follow-up, orders. Can you elaborate a little bit?

Is it is it coming for AI applications, computing applications, co package optics? Just give us a sense of also the magnitude of that contribution to revenues in the second half, please. Well,

Richard Blakeman, Chief Executive Officer, Besi: we’ve said all along that that customer in in Taiwan is not very transparent in terms of the end application. The end application, we hear from their customers. So whether that’s AMD or whether that’s NVIDIA, NVIDIA, as we all know, is developing very much on this co package optics. We also know from high end smartphone applications where certain modules are being assembled using the hybrid technology. So there’s an ever growing application field using hybrid bonding.

Currently, a fleet of 50. A few more systems will be added August, September. If all goes goes according to plan, there’s a big program for ’26. There’s a site announced advanced packaging, which potentially is twice the size of the site which currently is operating the hybrid bonding systems. So they’re big plans and, a lot of development, and that should kick in somewhere ’26.

So then you should receive orders in the later part of ’25. But, anyway, that that is what we understand today. Okay.

Aditya Metuku, Analyst, HSBC: Okay?

Nigel Van Putten, Analyst, Morgan Stanley: Alright. Thanks very much, Richard.

Richard Blakeman, Chief Executive Officer, Besi: Thank you, DTI.

Conference Operator: We will take our next question from Robert Sanders, Deutsche Bank. Your line is open. Please go ahead.

Speaker 9: Yeah. Hi. Good afternoon. Hi, Richard. I just had two questions.

Firstly, if you could just talk a bit about Hynix. They’re in a quite public dispute with Hanmi at the moment. I was just wondering if that could potentially create an opportunity for you either in TC or hybrid bonding. And then the second question would just be if you could just confirm that you had mid single digit orders in the quarter just to help our modeling for hybrid bonding, that would be great. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Yeah. The last is is is even more precise. Yeah. In the mid single digit. On the Heineck situation, and that is public knowledge, they are they are like the other two, developing both technologies and continuing using the MUF process and reflow, and they are also continuing to test hybrid bonding solutions.

They are also preparing local supply and a second source So that fits into the total picture. The ’25 may well show some direction in those three continuing to use reflow plus starting to more seriously develop hybrid pumping stacking. So partly relying on our the the AMAT Center of Excellence in Singapore, also development in Hartford, and that’s where it stands. On the dispute you are mentioning, yeah, there’s and we’ve mentioned that in every call, the current landscape of TC bombers is able to produce with a certain bomb pad pitch and a certain process, but that’s not good enough for the next generation. It needs to be a tighter bomb pad pitch.

It needs to be flux less. Then which flux less solution? Is it a plasma solution, or is it some type of chemical solution? That that is currently, in full swing. And some are are more advanced in their solutions offering than others.

Great. Thanks a lot. Thanks.

Conference Operator: We will take our next question from Aditya Metuku, HSBC. Your line is open. Please go ahead.

Aditya Metuku, Analyst, HSBC: Yeah. Good afternoon, guys. Thank you for squeezing me in. So firstly, Richard, maybe when I look at the roadmaps for AI accelerators, Rubin Ultra, which is meant to ship in the second half of twenty twenty seven, is expected to be the first accelerator that uses 16 high HBM. Until then the market seems to be dominated by 12 high HBM.

So given this backdrop, even if hybrid bonding gets qualified for 16 high HBM despite all the short timelines, Would it be fair to assume that hybrid bonding will not be used in volume production until 2027? Or do you think it could still be earlier maybe with some versions of some test versions of 12 high HPM. And I’ve got a follow-up.

Richard Blakeman, Chief Executive Officer, Besi: Yeah. Well, the way you you summarize it is pretty pretty much how it is presented to us. And, again, we come back to the basic, reason why using hybrid bonding and stacking is simply the performance. So is there a differentiator using a hybrid building process, which is more expensive compared to a reflow? And that is up for the debate at each of the three producers.

And that’s where we are continuously doing tests in the hybrids, but also in the TC. So in another way of putting it, it’s it’s on everyone’s mind. But how it will sort itself out is not yet clear.

Aditya Metuku, Analyst, HSBC: Understood. And and and as a follow-up, you mentioned earlier that smartphone applications are looking at hybrid bonding. TSM on their last call, not not the one this month, but in the previous quarter, they were specifically asked if they see smartphones going to hybrid bonding anytime soon and they and they basically know. So I don’t know. Is is are these use cases being developed by somebody else, maybe not your main customer in Taiwan?

And also, just wondered if you might be able to comment on the competition from China. There seem to be a lot of companies coming up in China addressing hybrid bonding. Thank you, and apologies for the third question.

Richard Blakeman, Chief Executive Officer, Besi: No. The, they’re good questions. Number one, there is no final answer in, whether it will be used or not at this moment. So they’re all testing. They’re all understanding the benefits of one over the other.

So the hybrid gonna process over refill. They’re all aware of the, yeah, the performance increase. Cost is a major issue right now because it has to take place in clean room, and there’s a factor four to six more cost. So to ask the question, will it be included in the iPhone 02/2025? The answer is no.

We have always said, going back Capital Markets days, I think three years, maybe even four, that we expect 02/1927 to be the first in using that. So you have to be, also aware that this testing is ongoing, and and that doesn’t mean that this is well, maybe not used this year, but it can very well be next year or the year after. Please help me with your second question. Hello? Sorry.

Can you repeat your second question? Yes.

Aditya Metuku, Analyst, HSBC: Apologies. I was on mute. I was just saying, recently, there’s a lot of news flow around hybrid bonding competition coming out of China. I’m probably going to mispronounce the names, but, the names I’ve seen are Toujing, Shanghai, Yingguan and a couple of others. So I just wondered if you could give us your thoughts on how you see hybrid bonding competition arising out of China.

Richard Blakeman, Chief Executive Officer, Besi: Well, there’s, of course, a lot of activity not only in China, but also outside of China. Everyone now understands that hybrid plumbing, at some point for the application we dis applications we discussed earlier, is a fact of life. So anyone building a precise bundle is is developing also a hybrid version. So that’s not new. How advanced they are is still a big question, but you expect more competition coming from every region.

We are currently with the hundred nanometer well advanced in comparison to everyone else. And certainly, when we will ship the first fifty nanometer, which should be by the end of q three, early q ’4, that is not available at anyone else in the world. Also, a hundred nanometer is not a standard used by anyone else. So we have we continuously build on our lead. We follow closely the road map of TSMC, and we also fulfill that road map.

In China, the status today is with many of the devices, like also the COLs, is is a reflow process. So a TC process, mass reflow process, not yet in production, an HB process, a hybrid bonding process. We are very successful in the Chinese market today, delivering a lot of mass reflow flip chip systems. We have two types. We have the 2,100, and we also have the Quantum, which are used for similar two and a half d modules in China.

So the process of reference, having a market share of close to a %. But, anyway, your question is absolutely right. But with Bombers Forever, we have seen Chinese competitors trying to capture a certain segment in this market.

Aditya Metuku, Analyst, HSBC: Understood. Thanks.

Conference Operator: We will take our next question from Ruben Davos, Kepler Cheuvreux. Your line is open. Please go ahead.

Ruben Davos, Analyst, Kepler Cheuvreux: Yes. Yes. Good afternoon. Thanks for letting me on. I just had one regarding the co packaged optics.

I think in your prepared comments, you talked about two leading semiconductor producers that have made announcements. I think you’ve alluded to NVIDIA in this call, and and I think Intel has also been quite explicit on on its road map with the hybrid bonding applications into ASICs and Copacas Optics. Yeah. Could you maybe talk about your engagement with those two, but also maybe with some others that might also be candidates? I’m just thinking Marvel or or or AMD and these types of names.

And then just on a follow on on on that, I think last year at the Investor Day, you talked about sort of the market scenarios for hybrid bonding, but you always excluded co packaged optics. Yes, very curious your thoughts on how you think that size the size of that market could be maybe, relative to, for instance, the HBM market or the high end logic market with with server processors?

Richard Blakeman, Chief Executive Officer, Besi: Well, we did not I cannot remember that we left co package optics out of the potential market, applications. It’s more, well, there are two areas in this in this, application field. There is these connectors where we are forever with, photonics applications, which is done with, a two micron, one micron precision. We have major market position in those applications with a broad range of customers, also the top ones. Those are those connectors which are included in the data center processors directly.

And then we have co package optics where we are also engaged with the customer you just mentioned and also the other one, since early days. So that that is a very, yeah, let’s say, interesting market, which is in also in early days. We have the right technology for that. Also the customers for many, many years. So at the next Capital Markets Day, we will make very clear to you what the potential of that market may well be and what are the different processes, but it’s a key focus of our product strategy.

Ruben Davos, Analyst, Kepler Cheuvreux: Alright. Great. Looking forward to that. I then the second question just on, Applied Material. I believe you’ve been working with them since 2020.

Could you walk us through how that collaboration has evolved, in the past five years? And and now that they’ve taken a stake, you see that more as a strategic hedge, or or or could it be the first step toward maybe deeper integration? Yeah. How are you thinking about your independence long term as as packaging and maybe process control starts to converge? Thanks.

Richard Blakeman, Chief Executive Officer, Besi: Oh, that’s a very big question. But let me start with the beginning. We started nine years ago with TSMC to develop this hybrid bonding for, yeah, CPUs for for logic devices because the smaller bump at pitches require a different process. As soon as that became, let’s say, into an end market device in 02/2019, I remember vividly the first discussion we had with Applied in how can we work more closely, to or let’s say, together, in a closer way for the industry to support the adoption of this technology with offering, number one, process development applied as a center of excellence in Singapore, and at the same time, support the development of automated lines because that improves the process window and the process quality. So from then on, 02/2020, we formalized that corporation just before COVID broke out.

And ever since, we have worked very closely on a weekly basis review, in bringing this technology to ever next and higher levels. It also has created in the market a clear model whereby a front end company having the experience with front end processes operating in front end fabs and a back end company for which this next generation has to be developed. So that has worked, step by step, customer by customer in the logic arena, in the memory arena, also in other areas. And we are very positively surprised by Applied announcing an ownership stake of 9% in Beijing. That will only intensify our corporation and lead to leadership position ever more into this market.

So that’s that’s what it is.

Ruben Davos, Analyst, Kepler Cheuvreux: Okay. Thank you very much.

Conference Operator: We will take our next question from Martin Marandel, Cowen, ODDO BHF. My

Martin Marandel, Analyst, Cowen, ODDO BHF: first question is on memory. What do you think are the key advantages in memory that allow you to win orders versus competitors for hybrid burning? Because in logic, it’s maybe a bit more obvious as the precision requirements are higher, and it seems that there is a technological gap between busy and competition in that aspect for hybrid mining. But in memory, I’m curious to know about what makes the difference to to win over competition.

Richard Blakeman, Chief Executive Officer, Besi: Well, on memory, number one, the dice are thinner. So the complexity is different. So on logic, you have more context. Memory, you have less context, but the device is thinner. So the stacking is very much influenced by how you are able to control this variation in ultrathin devices.

And one of the advantages of reflow process, and that means a soft metal in between the two dyes, accommodates for some of the delta in thickness. With hybrid bonding, it has to be completely flat. You have less room to accommodate the patient and sickness. But the process itself is better because you need less current, produce less heat. So the performance of a hybrid bonded device is better than that of a reflow bonded device.

And then you have the cost. The cost is in fact four, six, more expensive using hybrid. So the whole memory world is developing on an ongoing basis the advantages of both processes and understanding when our crossroads in using one over the other. In logic, you concluded already yourself that decision is more close and has been made by many customers. As we explained in detail, Intel finally also moved second half of last year at TSMC already three years earlier.

And the advantages are ever more clear because you have closer contacts, the bump head pitches are smaller, and you have simply less issues with with heat. So that is where we are today. Bayesian again follows both road maps. So the reflow process from what I mentioned also earlier, mass reflow, it starts flip chip, then TC, individual devices, then hybrid bonding, and that is the complete offering.

Martin Marandel, Analyst, Cowen, ODDO BHF: Okay. Thank you very much. And I I have a a follow-up on on your US customer. What do you think needs to happen with your US customer before receiving a follow-up orders for hybrid? Do you see they would wait to see what’s the commercial success of their new CPU using hybrid bonding?

Do you need them do you think they need to figure out what’s what they need to do first, or do you think they will necessarily have new capacity soon as their new products now move more and more away from TCV and transition more and more to hybrid benzene?

Richard Blakeman, Chief Executive Officer, Besi: It’s about as you as you have just summarized, they are sampling the market with hybrid bonded devices, Clearwater Forest. We will understand, that’s what we are told, towards the early part of the summer, how successful that is and what we can expect in terms of capacity increase. We are currently running every single day, and they’re all test devices tested with customers. And then there’s a next device, already, let’s say, presented, which will be more for high end computer applications, not so much for data centers. It’s hard to forecast how successful that will be, but there’s an enormous amount of pressure, commitment to to make this all work.

Martin Marandel, Analyst, Cowen, ODDO BHF: Okay. Thank you very much, mister Eiffel.

Richard Blakeman, Chief Executive Officer, Besi: Thank you, Martin.

Conference Operator: We will take our next question from Madeline Jenkins, UBS. Your line is open. Please go ahead.

Richard Blakeman, Chief Executive Officer, Besi0: Hi. Thanks for taking my question. I just have one. We’ve been hearing that the Koreans are actually working on a sort of combined HPM solution. So the hybrid bonding and TCB are in the same kind of HPM stack.

I just kind of wanted to get your view on, like, on the technical side, what the viability of this is, and also if it’s something you’ve been involved with. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: We have been involved in development stage.

Conference Operator: There are

Richard Blakeman, Chief Executive Officer, Besi: many different ways to to skin a cat. So, yeah, this fits into the category what’s all possible and what makes sense. The excellent thing of our center of excellence in in Singapore from Applied Materials is that that is a center of all kinds of those developments for the industry. We’ve added into our part also the TC NEXT, product, which, then allows customers to develop both and exactly addressing those two, combination of those two processes. How far that will go?

Where you will also see that is at IMEC. We shipped, as I mentioned earlier, the first quarter, the latest, TC NEXT. They’re already producing, already when the system was in Hertford, all kinds of devices. But we will share more data about that at the Capital Markets Day.

Richard Blakeman, Chief Executive Officer, Besi0: Okay. Thank you, Richard.

Richard Blakeman, Chief Executive Officer, Besi: Thanks, Madeleine.

Conference Operator: We will take our next question from Martin Youngflash, BNP Paribas. Your line is open. Please go ahead.

Martin Youngflash, Analyst, BNP Paribas: Yes. Hi, good afternoon. Thanks for letting me on. I just have one quick one on the Q2 guidance. If you could just run us through the moving parts here quarter on quarter.

So do you expect hybrid bonding shipments to be relatively flat quarter on quarter given the remaining shipments to the Taiwanese and also The U. S. IDM? So basically, does the midpoint of the guidance imply flat flat mainstream and flat hybrid bonding quarter on quarter? Or is it not the the right way to think about it?

And maybe if you can also tell us the backlog of the hybrid bonders that you should now have. Is it in the teens? Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Well, we are not providing specific information about, yeah, what we ship or what we schedule to ship, But your your assessment is also quite interesting, and it ties to an earlier comment. If there is a recovery partly, which are quick turnaround machines, then you can see a positive effect on which that may result in the higher end of the guidance. How many hybrids are still in backlog? We don’t disclose. But the key of your question, if I understand it correctly, the wide guidance range is typically or is because of this certainty, will the second half of this year show recovery in the mainstream business?

If that happens, we have quick turnaround of epoxy burners, soft solar burners, flip chip burners, not to forget. Quoting activity, yeah, continues. So that’s the reason why we we guide this this range plus minus 10%.

Martin Youngflash, Analyst, BNP Paribas: Okay. Got it. But just to follow-up, order to The U. S. IDM, it has that been fulfilled of the as of q one?

Can you comment on that?

Richard Blakeman, Chief Executive Officer, Besi: No. There’s still a few systems in q two. But the I could say 80% has been shipped.

Martin Youngflash, Analyst, BNP Paribas: Sounds great. Thank you very much.

Richard Blakeman, Chief Executive Officer, Besi: And exactly according to plan, what we have shared in the last updates.

Martin Youngflash, Analyst, BNP Paribas: Okay. Sounds good. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Thanks, Ratin. So we’ve We will take our Sorry?

Conference Operator: We will take our final question from Tim Schultz Malandra, Redburn Atlantic. Your line is open. Please go ahead.

Richard Blakeman, Chief Executive Officer, Besi1: Yes. Thank you so much for just squeezing me in here at the end. I had two quick questions, please, Richard, if I could. First one, if we just leave hybrid bonding to one side and look at the core sort of much well established business, could you just maybe share with us any color you have in terms of the utilization rates that are on that? Think if we look at foundries, they’re running at about 80%.

I’m just curious if you could share some kind of flavor of what the specialist test assembly packaging industry is tracking at. And then the second, maybe more forward looking question I had was on the launch of the Gen two or the introduction of your new hybrid funding platform. And I just wondered if you’d be able to share with us what the sort of expected time line would be. When when is the first tool coming? How long should we think about sort of eval qualification?

And just kind of how that plays out through 2025 and into 2026. Thanks again.

Richard Blakeman, Chief Executive Officer, Besi: Excellent. Well, the first, why are we a bit cautious? Utilization rates, yes, are are somewhere in the 80%. But if you look at the data provided by the industry on inventory and pricing, and pricing has gone down again recently in in the latest data from March. January, February looked up.

March went down. That that is yeah. That’s an overall picture which doesn’t tell you there’s an immediate shortage. But that’s hard to tell whether customers are are reacting more cautiously because of the overall situation. We don’t know.

But in any case, for certain areas, there are shortages. One of them is the AI devices. As I mentioned earlier, there are Chinese versions, which are definitely in high demand, and and but then that’s not the general market. Automotive, we’ve also not seen yet. We’ve seen technology buys new devices, power modules, but the big volume is still to come.

Then we intend to ship the 50 nanometer generation two by the September, early October. And what the plan is that throughout ’26, that tool will be made fully production ready in Taiwan and used for mainstream production ’27 for those devices under two nanometer design geometry. So that is well on track, and we will continue to update you on on that progress.

Richard Blakeman, Chief Executive Officer, Besi1: Great. That’s very helpful. Thank you.

Richard Blakeman, Chief Executive Officer, Besi: Thank you, Tim. Thanks, everyone. Excellent questions. If you have more questions, don’t hesitate to contact us directly.

Conference Operator: Thank you for joining today’s call. You may now disconnect.

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

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