Earnings call transcript: SUSS MicroTec SE Q3 2025 sees AI demand recovery

SUSS MicroTec SE reported its third-quarter 2025 earnings on November 6, revealing a mixed financial performance and a cautious outlook. The company's revenue for the quarter reached €118 million, contributing to a nine-month total of €384 million. Despite a significant drop in its order book by 35.9% compared to the previous year, the company remains optimistic about future AI demand and market opportunities.

Key Takeaways

• SUSS MicroTec SE reported Q3 sales of €118 million, contributing to a nine-month revenue of €384 million.
• The company's order book declined significantly, down 35.9% year-over-year.
• AI demand shows signs of recovery, with expectations of increased orders in Q4.
• The company plans to launch new products in 2026, including a mid-range photomask cleaner and new UV scanner generation.
• Free cash flow from continuing operations was €0.7 million in Q3, with a year-to-date total of €28.2 million.

Company Performance

SUSS MicroTec SE's performance in Q3 2025 reflects both challenges and opportunities. The company's revenue reached €118 million for the quarter, contributing to a nine-month total of €384 million, which is 78% of its midpoint forecast. However, the order book saw a sharp decline of 35.9% compared to the previous year, indicating potential market challenges. Despite this, the company is optimistic about AI demand recovery and has plans to launch new products in 2026 to enhance its competitive position.

Financial Highlights

• Revenue: €118 million in Q3, €384 million for nine months.
• Free cash flow: €0.7 million in Q3, €28.2 million year-to-date.
• Gross profit margin: 38.4% for nine months.
• Book-to-bill ratio: 0.62.
• Equity ratio: 58.2%.

Outlook & Guidance

Looking ahead, SUSS MicroTec SE anticipates a modest decline in sales for 2026 but remains focused on its long-term growth strategy. The company expects AI-related orders to pick up in Q1 2026 and is targeting an operating expense run rate of €30 million. Additionally, it plans to present new midterm expectations at its Capital Markets Day on November 17.

Executive Commentary

• "We do see quite some momentum here," said Burkhardt Frick, CEO, highlighting optimism about future demand.
• "The current margin pressure does not impact our 2030 ambitions," Frick assured, emphasizing long-term goals.
• "We will present our new midterm expectations at our CMD on November 17th," Frick added, indicating forthcoming strategic updates.

Risks and Challenges

• Declining order book: A 35.9% year-over-year drop could signal market challenges.
• Margin pressures: Current pressures could impact short-term profitability.
• China market: Reduced order intake share from China, down to 18.5%.
• Competitive landscape: Strong competition from Tokyo Electron and EV Group.
• Macroeconomic factors: Global economic conditions could affect demand.

SUSS MicroTec SE remains cautiously optimistic about the future, with plans to leverage AI demand and introduce innovative products to maintain its market position.

Full transcript - SUSS MicroTec SE (SMHN) Q3 2025:

Sarah, Conference Call Host: Dear participants, we warmly welcome you to today's conference call of SÜSS MicroTec SE following the publication of the nine-month results of 2025 earlier this morning. SÜSS is represented by the CEO Burkhardt Frick, CFO Dr. Cornelia Ballwießer, and COO Dr. Thomas Rohe. The management board will speak shortly and guide us through the presentation, followed by a Q&A session. Before we start the presentation, let me hand over to Sven Köpsel from Investor Relations.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you, Sarah. Yeah, and many thanks. Welcome to our Q3 conference call. As you probably know from earlier calls, this call is again being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission, and participating in this call implies your consent to this procedure. Please be aware of our safe harbor statement on page two of the slide deck. It applies throughout the conference call. Now I hand over to our CEO Burkhardt for some opening remarks, followed by our CFO Dr. Cornelia Ballwießer presenting the financial development. Burkhardt, please.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Sven, many thanks and welcome everyone to this call. I will go a bit faster over the next few slides to have more time to focus on the margin analysis you guys are all interested in, I'm sure. We showed the next page. We showed exactly this page already nine days ago in the extraordinary call. Nothing new here. The changes, there are no changes to the figures since then. We also mentioned the low level of EUR 70 million in orders received in Q3. After various customer meetings in Korea and Taiwan last week, I'm very happy to report that activities are picking up in the fourth quarter. Orders exceeding EUR 100 million are likely. We do see quite some momentum here.

We already communicated last week about the pressure on margins and the fact that we had to adjust our guidance for the gross profit and EBIT margins once again. I will go into details of margin development in a moment. However, I would like to state that the current margin pressure does not impact our 2030 ambitions. We will present our new midterm expectations at our CMD on November 17th. Last week, the development of our two segments was not yet included, so I'd like to highlight a few things here. First, advanced backend solutions. The order intake remains strong for coaters, but this was not quite enough to offset the decline for bonders. The demand for our UV scanners remained intact. Imaging and coating systems showed year-on-year sales growth of larger than 50% each. Bonders still showing slight growth after nine months. Gross profit margins significantly impacted.

More on this shortly. Photomask solutions, we have a very low order intake again. Orders from China now down EUR 32 million versus previous year. More significant orders expected in this Q4. Still high year-on-year sales growth, but Q3 sales was lower than expected. Unfavorable product mix is the main reason for low gross profit margin of 31.7%. Now we have prepared three pages where we compare our initial 2025 guidance for sales, gross profit margin, and EBIT margin with the actual year-to-date nine-month figures. Firstly, on sales. After three quarters, we reached EUR 340 million, sorry, EUR 384 million, or 78% of the midpoint of our sales forecast, and therefore are on track and achieved what we expected to do. Q3 sales, as expected, with EUR 118 million, lower than previous quarters. Reason here, lower order intake in the first half of 2025.

In the fourth quarter, we need sales of EUR 85 million-EUR 125 million to meet our forecast. EUR 105 million would therefore lead to the midpoint, which is EUR 490 million. The product mix is different as planned at the beginning of the year, with more coders and fewer bonders based on orders received in the first half of the year. The recent postponement of two high-margin projects to 2026 will have a negative impact on gross profit margin in Q4. Now we'd like to provide more transparency on our negative gross profit development. Let me first explain the methodology we applied here. The table on the left shows our actual figures for the first three quarters. These are the left columns.

A projection of what our gross profit would have been if actual sales had a gross profit margin of 40%, which is the midpoint of our original forecast of 39-41%. Our analysis shows we have a gap of EUR 16 million, which we like to explain. On the right-hand side, we allocate these EUR 16 million to special effects, quantify them, specify the timing, and if these effects can be considered as one-offs or not. From top to bottom, first the UV scanner in Taiwan, the ramp we performed there in the first half of the year. We had extra expenses for training and supply chain efforts amounting to EUR 3.2 million, and that's a one-off. Secondly, we had a write-down on discontinued technology projects amounting to EUR 2.2 million. That affected Q2. Also, that is a one-off.

Expenses for our new site in Tsubei, EUR 1.2 million for double-rent relocation and utilities. They affected us only from Q3 onwards, and this will have an impact on expenses in Q4 as well as in Q1 2026. Rework during assembly and customer ramp-up support, amounting to EUR 2.4 million since Q1, were necessary to support customers to improve performance of recently installed multiple lines and maximize the output and availability of these in the field. This was really important and is an ongoing effort and also will open the door for follow-up business, which we are, of course, looking forward to expect. The last point is the unexpected product and customer mix changes, which we often use also to explain deviations in our margin. This is for.

More coaters, less bonders, many low-margin photomask tools for key customers, and that results in also lower fixed cost coverage due to lower sales and overall business activity. That amounts to EUR 7 million in Q3. In total, EUR 16 million, of which slightly less than half can be characterized as one-offs. Now, on this page, we focus on the EBIT. We applied the same methodology. The left column shows the actual development of first three quarters. Right column, the projection with midpoints of initial gross profit and EBIT margin targets, which was 15-17%. The gap here is EUR 7.2 million, which means that more than half of the gross profit gap of EUR 16 million was offset by stricter cost management and a positive balance in other operating income expenses. According to the original guidance, we allowed for OPEX of EUR 92.3 million.

After three quarters and would still be on track to achieve the original EBIT margin targets. The actual OPEX, that is expenditure on R&D, sales, and administration, amounted to EUR 86.8 million. This shows our short-term cost-cutting measures are having an effect. Savings of more than EUR 5 million compared to Q2. In Q4, OPEX is expected to be below EUR 30 million. However, most likely above Q2 level. Based on increased expenses on IT and digitalization projects, as well as rising R&D costs, also to support. Scheduled product launches. I think I said above Q2. I should have said above Q3, right? Title there. Yeah. We will correct this and we will see it also in the tables. Now, after all these numbers, here are a few impressions from last week's opening of our new site in Tsubei, Taiwan. It was an amazing day with a great atmosphere.

We welcomed over 100 guests, including Taiwan's Vice Minister of Economic Affairs, a C-level representation from a leading HBM manufacturer, and management from the top foundry in Taiwan. We got a broad confirmation that it is important to increase our presence close to the heart of the semi-industry sector. We introduced our large clean rooms and made it clear that we are set for future growth. First modules and tools are already being built in Tsubei and will be delivered to our customers in early 2026. Leases for all old locations will terminate by the end of Q1 2026. The financial double burden will also end at this point. With this, I'd like to hand over to Cornelia to provide some more insights on our financial performance.

Sarah, Conference Call Host: Thank you, Burkhardt. After we've already discussed Q3 in detail, I will just summarize some additional developments on the next slides. We already talked about the slow order intake, which leaves us with an order book of EUR 276.1 million as of end of September. This is 35.9% below the level of the first nine months of last year. Tool orders worth roughly EUR 140 million are scheduled for delivery in 2026. The visibility for 2026 is improving. Our free cash flow from continuing operations came in at EUR 0.7 million in the third quarter, with operating cash flow of EUR 5.9 million and cash flow from investing of EUR 6.6 million. After three quarters, free cash flow is now at EUR 28.2 million. For the full year, we still see potential to generate around EUR 28 million of free cash flow so that we could end up at end 2025 in slightly positive territory.

Total CapEx for the nine months is EUR 70.8 million, mainly driven by our new fab in Taiwan. At the end of the year, we expect to land at CapEx level of EUR 25 million. In 2026, we will return to a level of clearly below EUR 20 million. Without additional projects, the level will be approximately at EUR 10 million. On this slide, you see the development of our most important key performance indicators for the last seven quarters. You can very clearly see the margin development, especially in the last quarter due to the effects we already talked about today. On this slide, you see the two segments. In the advanced backend solution segment, margins in the third quarter were roughly at the same level as in the previous quarter. Burkhardt already mentioned the most important drivers. In photomask solutions, the margin level is in the first two quarters of the year.

Higher. Overall, we're still at 38.4% gross profit margin for the nine-month period. However, the third quarter was weak, mainly due to an unfavorable customer mix, as already explained. Here you see our order intake by segment and regions. The book-to-bill ratio continued to remain at a very low level of 0.62 for the nine-month period. This is, of course, far too low for a company with growth ambitions as we do have. As already discussed, we expect increasing orders in Q4. Demand from China continues to be very low. The China share of total order intake in the first nine months of 2025 is now 18.5%. In 2024, also after the third quarter, the share was at roughly 30%. Generally speaking, we do not have major shifts in the order intake by region. Finally, let's go over the main developments of the balance sheet.

Total assets increased by EUR 22 million. For the non-current assets, the main driver was the Taiwan expansion with the right-of-use asset for the site and further installations at the site, as well as CapEx in Germany, which we already showed in our half-year report. Current assets, we have a decrease by EUR 29 million to a total volume of EUR 413.3 million. Inventories declined and are now EUR 12.9 million below the value of end of December 2024. Contract assets and trade receivables increased by EUR 22.7 million. Cash and cash equivalent decreased by EUR 41.8 million due to free cash flow in total of EUR 31.5 million and the dividend payment, as well as repayments of financial debt, including the leasing liabilities. On the liability side, the main changes also happened in the first half of the year with the inclusion of the leasing liability from the Taiwan site.

In non-current liabilities, the major driver in the nine-month period was also the inclusion of the lease liability for the Tsubei site, which already happened in the second quarter. Current liabilities decreased. Here, the major drivers are still lower advance payments from our customers, who supported last year's ramps, and less orders from customers which have prepayments. After the nine months, the equity ratio is at 58.2%, which means we improved the equity ratio while we had our ambitious investments. Thanks, Cornelia, for Burkhardt. Now, let's turn. The outlook for 2025 as a whole. First, here is a page that was already shown last week with the reduced guidance ranges for gross profit margin and EBIT margin. Everything stays the same as communicated last week. Last week, we already explained that we are discussing possible measures to sustainably improve the cost structure.

However, I ask for your understanding that all decisions will be carefully considered. I do not currently expect that we will be able to communicate these possible measures already in 2025. For now, our full attention lies on Q4 to bring in the anticipated new business and set the stage for 2026. We are now opening the floor for your questions. Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your presentation. Ladies and gentlemen, we are happy to take your questions. If you would like to speak directly to the management, just raise up your virtual hand. If you have dialed in via phone, you can use the key combination star key 9 to enter the queue, followed by star key 6 if I unmute you. You can also submit your questions in our chat box. We will start with the first raised hand with Janardine Menon. Please go ahead and ask your questions.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Hi, good afternoon. Thanks for taking my question. I just want to go back to the order increase that you're expecting in Q4. Nine days ago, you had said that you would see an increase in orders. You said above EUR 100 million is possible. At that point in time, you'd also commented that your Q4 is always typically quite strong. You've seen a very healthy double-digit increase in quarter-on-quarter in your Q4 orders in both 2024 and 2023. My question is, this increase that you are expecting in Q4, is it purely a seasonal thing, or do you see an underlying trend of improving orders amongst your customer base? Especially, you've been seeing quite low orders on the temporary bonding side. One of your big customers, it looks like they're getting qualified or have got qualified, who knows.

Is there a clear upswing that you see in that market? Also, on the UV scanner, are you seeing an upswing? What I'm trying to get at is the sustainability of this order. I mean, it may not be huge, but does Q3 mark the bottom? More than the seasonal, are we getting a more improvement into next year? Whatever your current thoughts are. The second question is just on the margin. Just trying to piece together the whole thing. You'll end up at about 36% gross margin this year based on your guidance. Do you think that as some of those one-offs go away in the first couple of quarters of next year, you're likely to get to a higher margin than that?

Any kind of color on where we could expect, based on current expectations, where you assume your sales are down in line with consensus for next year? Where would your gross margin end up for next year? Any thoughts there would be great. Thanks.

Yeah, of course, we have to be careful in forward guidance. Let me start with the order intake. Yes, there has been some seasonality in the past years. Customers order when they really have demand. Therefore, I would not really call it seasonality at all. I would rather see it as a consequence of activity in the AI space picking up again. That has been, of course, communicated for the frontline AI players already a quarter earlier. It takes a while until this goes through the entire equipment chain and also leads to orders. There is not an immediate effect. The moment a big memory supplier gets qualified or posts their future plans, it will not immediately trigger orders.

This is more a question of how utilized are your lines, how much throughput can you get on the existing lines, and when is the next window to increase. That seems to now be nearer than before. That is also why we are confident that we get AI-related orders in the first quarter, especially after those discussions we had with our lead customers. This will be a mix, of course. There will be HBM-related orders, but also COWOS or packaging-related orders requiring multiple systems. We see a clear upward trend. How big this one is, as I said, I feel confident that it will be larger than EUR 100 million, I stick to that number. How large we have to see because we also have to make sure we can also.

Deliver and build these machines on short notice because the demand is required on short notice. On the second question on the margin expectations. I can hand over to Cornelia. Of course, we want to improve our margin performance. There's no doubt in that. Even in line of potentially declining top line, we have to make sure that we do this with good sense.

Dr. Cornelia Ballwießer, CFO, SÜSS MicroTec SE: Yeah, in terms of margin, of course, our ambition is to have a better margin or to achieve a better gross margin in 2025. What I can say is it is probably lower as 2024. Currently, we are preparing our budget. As you see and as explained, the margin depends on the customer and product mix. We are working on this. That is all I can say for the moment regarding your one-offs. Yeah, there are, of course, one-offs that will not occur again in 2026, for example, the write-down of the discontinued technology project, then our double-rent relocation and utilities costs in Tsubei and Taiwan will end at the end of the first quarter, 2026. Yeah, the rework, we will see. It depends how we can satisfy our customer or what is needed. That is what I can say regarding the margin for the next year.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Understood. Thank you so much.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your questions. And then we move on with Ragozza. Please go ahead with your questions. Ragozza, I can see that you're unmuted, but unfortunately, we cannot hear you.

Speaker 4: Can you hear me now?

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Yes.

Speaker 4: Yeah, great. Great. Sorry for the background noise. A few questions. On the order backlog, can you give a little bit the split in ABS segment? What is the COWOS, the scanner part in the order backlog? And then in the cleaning equipment market, what is the part of the China business in the PS segment? In the backlog, right? Not for the entry.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah, we are not being specific on the individual products on our backlog. Please accept that because we do not give this granularity. The China portion, of course, is declining, as already previously mentioned. We see it in both sales, but order intake significantly. We have, for China, for example, only 18.4% of the order intake are China-bound. For Taiwan, for example, in contrast, it is close to 40%. That is usually what we can disclose. In terms of further information on the backlog, we have, of course, also announced that EUR 140 million of the current backlog is already bound for 2026. We can also safely state that we have about EUR 20 million in service and upgrade business also for 2026 already slated.

Speaker 4: Okay. Maybe let me ask a little bit differently. On your COWOS, I think the scanner is a little bit older technology generation, right? If I understood that correctly. The question would be, what are your lead times? I mean, when the customer places an order with your scanner business till you ship and final acceptance, what is the time lag there for the scanner business?

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah, for scanners, of course, it's around six months. Of course, as we stated also in previous calls, we tripled our output capability this year. That means also we are pretty full in that sense. That is also why we concentrate on our main application field, which you rightly state is COWOS. Now, of course, we also get inquiries, how quickly can you top this up? That is exactly the discussions we are currently having with those lead customers because they expect basically deliveries already as early as in Q1 next year. Right now, we have very active engagements with these customers who also realize that our lead time is reduced, but I think they are waiting really till the last second how to place orders. We also have to make sure that we can react very quickly. That keeps us busy.

That's also causing a bit the positive momentum of the last days.

Speaker 4: Okay. Would it be fair to assume that the gross margin, the product mix impact was also due to this high-volume ramp in scanner business and that this is a little bit more service intense for you in order to have the machines up and running with your lead customer? That might change with the second generation of the scanner tool you are planning to introduce next year?

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah, it definitely will change with the next generation of scanners. You need to distinguish between product margin and supporting efforts. I think the supporting efforts of our scanner are not higher than other 2.5D or HBM-type products. You need to account for that. For some of our products, our support efforts were higher than anticipated, which I explained earlier, which caused the extra cost. I mean, you're absolutely right that the scanner is not our highest margin product.

Speaker 4: Got it. And then, final one. If you look at your product mix or backlog, what you have right now and the EUR 140 million for 2026, do you expect that the share delivered from your Asia business will be substantially different from this year? I mean, that you have much higher shipments in your Asia locations than here in Europe. And if so, what would be the incremental there, the incremental shipments?

Burkhardt Frick, CEO, SÜSS MicroTec SE: You mean shipments from or to?

Speaker 4: No, from your Asian manufacturing footprint, right? Your fabs in Asia.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Thank you. First of all, our regional mix will not change except what we explained, the decline of the China portion. In terms of the products we manufacture out of Asia, they are the same products we are currently manufacturing. Of course, this can change if we are introducing new products. As you know, we are launching up to five new products next year. We have to see also where we will produce those products. There is a fair assessment, a fair judgment that the amount of products will increase, which we are going to produce in Asia.

Speaker 4: You cannot quantify like EUR 50 million more sales from your China-Asia footprint versus this year. It's not possible right now from your backlog.

Dr. Thomas Rohe, COO, SÜSS MicroTec SE: No, but I can answer this. We use both sides really. Pretty flexible in terms of where we do have rich capacity. We try to leverage our load of the factories in both sides, as well as in Asia, as well as in Germany.

Speaker 4: Thank you very much.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your questions. By now, we have four participants left who raised their hands. Please be patient. The next one who's able to ask his question is Michael Kuhn. Please go ahead.

Hi. Thanks for taking my questions. I'll start with one on the guidance once more. If I just use the midpoint of your sales and gross margin guidance and then combine it with the midpoint of your EBIT margin guidance, I'm ending up at Q4 OpEx of EUR 34 million, which is clearly above the less than EUR 30 million you're envisaging for the final quarter. Let's assume you do midpoint sales, midpoint gross margin. Is it fair to assume that you would rather end up at the upper end of the EBIT margin range, excluding obviously any one-offs you might book in the fourth quarter?

We calculated various scenarios over the last past days. If we achieve the gross profit margin in the middle of the range, let's say 36%, it is likely that the EBIT margin will end up above the middle. Yes. Could be.

That is good to hear. Thank you. Then one more. In the context of OpEx. We are obviously in the upper 20s run rate-wise right now. This is still including some double costs. At the same time, I guess IT costs will rise into next year. From today's point of view, what would you think is a realistic OpEx run rate to assume for next year, maybe from the second quarter onwards when you do not incur the double cost in Taiwan anymore?

Yeah, a good question. Our ambition is. That we have a run rate, let's say, EUR 30 million.

Around 30. Okay. Last but not least. You mentioned product launches already. Obviously, those include new products in the photomask area, including the mid-range product. Do you think part of the softness you see from Chinese customers right now is due to those customers waiting for those products? That said, is there a chance of, let's say, a little China revival at some point next year once the new product range is available for orders?

Burkhardt Frick, CEO, SÜSS MicroTec SE: China revival sounds like the Rolling Stones on concert. Obviously, the mid-end range of the mask cleaner is really geared for nodes between 30 and 90 nanometers, which are the predominant nodes China is running on. In the past years, they bought very high-end equipment, which was basically overspecced because they do not have EUV equipment in China. The mid-end range is a better fit for the Chinese market. Yes, we do expect that that business will pick up once that system is in mass production. We already have several reservations, and quite some are out of China. Of course, this mid-end product is interesting to replace the aging fleet of old mid-end mask cleaners. Therefore, there is also quite some replacement need aligning up.

Sounds good. Okay. I'll continue to hope for the revival. Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much. And then we will move on with Madeleine Jenkins. So please go ahead with your questions, Madeleine.

Speaker 0: Hi. Thank you for taking my question. I just have one clarification. The customer that is pushing for kind of expedited deliveries in Q1, I think you said. Is that memory or logic?

Burkhardt Frick, CEO, SÜSS MicroTec SE: It's fair to say both. It's not a single customer who's pushing.

Speaker 0: Okay. And then in terms of on the kind of HBM side specifically, are you still running it under utilization at your Bickering customer, or is that kind of back to the levels where you'd expect incremental orders?

Burkhardt Frick, CEO, SÜSS MicroTec SE: I think we have two out of three HBM players. One is really running at full swing. Of course, that is also the one which kind of further scales up. The other one is just about to accelerate again, and they still have, I would say, headroom left. We do not see short-term exit business coming up there because I think they are not running at peak utilization.

Speaker 0: Okay. So the kind of Q4 orders isn't necessarily driven out of Korea. Is that?

Burkhardt Frick, CEO, SÜSS MicroTec SE: Correct.

Speaker 0: Is that fair? Okay. Thank you. I just had a—you've got a high-NA cleaning tool, face mask cleaning tool coming out. Could you just give us a sense of kind of when you expect to see first orders for that and also what sort of ASP uplift versus the low-NA version? Thank you.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah. Melanie, you're referring to the Masterflex Smart Cleaning Platform, which is launching pretty much as we speak. We are working with some lead customers who want to position this system in kind of—it's more than just evaluation. It's kind of an early production state. We do expect that we get the first orders still this quarter for this first system. We are, of course, in the middle of the negotiations. It's important that we get this first volume customer order for that system. We anticipate it this quarter.

Speaker 0: Just on the ASP, sorry. Yeah. Thank you.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Sorry? Say again?

Speaker 0: Just on the ASP, is it kind of a significant uplift versus the last generation?

Burkhardt Frick, CEO, SÜSS MicroTec SE: It is somewhat more expensive than the Masterflex Pro. As you know, it highly depends on the configuration. This is a tool which can be configured to a larger extent and therefore will be also more expensive than the existing platform.

Speaker 0: Perfect. Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your questions. We move on with the questions from Johannes Rees. Please go ahead.

Speaker 7: Yes. Good afternoon. Also some follow-on questions to the cost side first. Maybe as the first. The leasing cost for the old production site, which will fall away at the end of Q1, how high is this maybe regarding to the full year for the remaining nine months? Therefore, what is maybe the positive impact? Maybe on the bonders, if the bonders recover, will they have the same margin like in the past? There have been maybe some special high prices regarding the shortage or maybe the urgency at the customer side to cut the products in the past. If I had to, are you achieving the same pricing at the temporary bonding site like in the past? On the coaters, is anything possible also to increase some margins there because it seems that they have comparable low margins?

I know there is more competition for Tokyo Electron, for example, but maybe also an update there. We talked a little bit now on mask cleaners. How is the ramp for all the new products with better margins? The scanners, I have also something like you have a new quota coming on the market for next year. It is maybe all impacting a little bit the cost and the margin side. Therefore, I took all these questions in one.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah. Thanks, Johannes. That's a load of questions. Let me try to start. Taking them down one by one. The bond orders, of course, we had at the very early phase of the ramp. They did have somewhat better margins because these were rush orders. We had to expedite things. Once we got into real volume phase, also we had more volume prices applied to that. The initial systems were more profitable than the volume systems. This has stabilized now. We do not anticipate unusual swings there. They are above average compared to the rest of the portfolio. On coaters, we keep getting stable repeat orders from existing OSAT customers. That is a very stable business. Also, this customer continues to place these orders. That was also one of the customers I visited early last week. We can also expect.

Good solid business there. You are absolutely right. The competitive situation is very strong. When you're a tool of record, you at least can retain your seat. You have to price competitively. That's why coaters usually are more on the average spectrum of our margin. For the photomask tools we are launching, the new systems, they are completely redesigned. They do have a different margin structure. You cannot just increase margin without offering new features. It's always a mix of both. I think you had a question on the rental cost, right? Yeah.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Yes. The impact of the additional rental cost for the old site rental cost that turns out in a positive impact next year is EUR 600,000 per quarter.

Speaker 7: Per quarter. Okay. Thanks. When will the scanners be launched, this new scanner generation? Will it happen in the first half next year?

Burkhardt Frick, CEO, SÜSS MicroTec SE: No, I think that's a bit too early. We will deliver the first system around mid next year to the first customer. Of course, we get more feedback. The broad launch of the system is more towards the end of next year.

Speaker 7: Okay. Super. Also, maybe, there's definitely much more that I would not go into too much details. The wafer cleaning product will also not launch next year, or will it come over the year next year?

Burkhardt Frick, CEO, SÜSS MicroTec SE: They will launch next year. We kind of get the first hardware at the turn of the year. Of course, we need to refine the processes. We have one lead customer who will start evaluating. We will have not only the volume tool because the first one is a 200 wafer cleaner, low volume. There will be high volume tools coming shortly after. Since we kind of got quite some customer traction, we have now 300 customers interested in that tool as well. We are also now checking how fast we can launch a 300 tool. Wafer cleaning will be a family of tools, the first one coming next year.

Speaker 7: Super. Great. Maybe also. On our calculation for next year, you mentioned you have on top of the €140 million in product backlog for next year, you have also €20 point something on service and spare parts. What is the normal number for service and spare parts for the whole year? I think it's more than €20 million.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah. Johannes, usually it's about 15% of the total revenue. I think the numbers I think we stated before were, of course, the first nine months. And then the portion of 26 out of those first nine months. But I think you can roughly assume 15% of the total revenue is the service-related part.

Speaker 7: Only maybe a follow-on. You mentioned it already in the comments. Recovery you see maybe in the pipeline coming. Maybe it's the whole backend market and also driven also partly by the strong business in AI. It's not only the OEMs, it's also the OSATs you see a recovery.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yes. They, of course, are somewhat connected because the 2.5D players are closely linked to OSATs as well. You have all these new sites evolving, based driven by CHIP Act projects, which are also starting ramping. I mean, all the big news were, of course, for the front-end fabs, but you also need the backend operations somewhat close by. That is starting to evolve as we speak.

Speaker 7: Okay. Thanks a lot. All other questions in one and a half weeks at the capital markets day.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your questions. Before we move over to Martin Maradone, who's waiting for such a long time in the queue, please be reminded that it's still possible to ask questions if you may have. With this, Martin, please go ahead with your questions.

Hi. Sorry. Thanks for taking my question. The first one is on temporary bonders. I was wondering there if you mentioned the AI demand picking up. There is also the qualification of one of your customers. I was wondering if the transition to HBM4 is already a factor here because we know that the number of layers are increasing, the average number of layers. It should demand more equipment. Do you think it has started now, or will we see these effects maybe a bit later and have some follow-ups?

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah, that's a good question. Of course, at least one of our lead customers is in active pursuit of, also planning their ramp for HBM4. And we received the good news last week that we are qualified with our temporary bonder for the HBM4 process. That is good news because the ramp of that will start from late Q1 or starting Q2 next year onwards.

Okay. That's very clear. Maybe still on temporary bonders. I mean, Johannes mentioned some competition with Tokyo Electron, but I was wondering about new entrants as well. Like EV Group, for instance, if that's something that you see at some point, multi-sourcing in that market, or you do not see it at the moment?

Yeah, we do see, of course, our competition. There are no new entrants. They are the same. They have been the same in the past years. Indeed, EV Group and Tokyo Electron are our main contenders there. Yes, they are actively pursuing our base. This is happening to some extent. I think for now, we have the majority of our equipment at those existing customers of ours.

Okay. That's clear. The last one is on the EBIT margin for next year. I mean, I know it's too soon to give a guidance. I'm just wondering, with the backlog that we see at the moment, it probably implies a down year next year, and you have the consensus down by about 15%. I'm just wondering, in that context, let's say of a double-digit decrease of sales, how much space do you have to reduce cost on the OPEX side next year? Do you think that, for instance, mid-single digit could be a credible scenario if you have such a down year, or is it too aggressive?

You mean mid-single digit for what?

For decrease of OPEX.

Yeah.

Speaker 7: I think that's reasonable.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah, I think that's a reasonable assumption. I think we need to stay below EUR 30 million. I think this was mentioned before. We also said that we will not reach gross margins of the heydays like 2024. We will be also there, I think, definitely below 40% but above the numbers we are currently seeing, because we have to compensate this with a lower top line.

Okay. That's super helpful. Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you for your questions. Now we have a further virtual hand from a person who's dialed in with the phone ending 847. You can unmute yourself by pressing the star key six. I can see that you're unmuted. Unfortunately, we cannot hear you.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Can you hear me now?

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Yes. Now we can hear you. Thank you for unmuting.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Okay.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Please introduce yourself to us.

Burkhardt Frick, CEO, SÜSS MicroTec SE: It's Mojosha Wanlowa, research. This question is a follow-up to the former question of, related to Chinese, waiting for the new tools and the environment of the demands. I would broaden that to the overall customer base. Do you see potentially, among other customers, kind of holding back because you're about to introduce new product generations? I mean, you indicated a pickup in activity and in the pipeline. But do you see generally some customers holding back in light of the upcoming product workovers, or is that not really the case? That's very hard to say because we cannot judge if they're waiting for new products. But some of these new products are only launching late next year. So if there is a demand and we don't have the right product, I'm pretty sure customers will order elsewhere. If they wait, of course, good for us. But.

Where we see a kind of more wait behavior, that's on the mid-end cleaner because that is the right tool for that market. There we get a lot of inquiries. Of course, we have to get the first tool out first before we can be bullish about that. Other than that, I think customers simply wait to the last moment until they order. Then they're rushing. We have to see how we can, even with our reduced lead time, make it happen. That's the current discussions we have also among our sites.

Speaker 7: Yeah. Okay. On the rework on some tools that impacted the gross margin, what caused that, basically? I mean, this happens from time to time. What caused it this time? Was it kind of a design flaw? Was it new customer demands? Was it the potentially extreme ramp? Do you think that you more or less sorted these out? I mean, you indicated that this is kind of a mixed effect, so it might reoccur next year. Maybe you can expand a little bit more on that topic.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Malte, Thomas speaking here. The question cannot be easily answered, to be honest, because it is a lot of facts which really come into this point here. On the one side, for sure, our customers are also very demanding with the request for support there because they also ramped up in a pretty short time. They already have by themselves a very demanding customer. The support was really requested by customers to be there on site, sometimes even 24/7, to support this ramp-up of our customers. This was really only partially anticipated. We were really a little bit overwhelmed by the request and also the hard request from customers. Nevertheless, we supported them pretty good, I guess.

This is also why we still have really very good relations with these customers because they are taking us into account also for our next generation, HBM4, as Burkhardt already said. Also, if you go really in this deep ramp-up, we see sometimes also some topics which we did not see if we use our tools in a normal way or two-shift way. This is some, let's say, improvements which we also did. Also because customers changed the process chemistry partially, but we also had some learnings together with our customers. These are the main reasons why we had to support more than we anticipated before.

Speaker 7: Okay. The reason why you indicated that it is mixed is a fact that you think you're not fully sure. That might reoccur?

Burkhardt Frick, CEO, SÜSS MicroTec SE: I don't think that it might reoccur. We learned a lot, and we learned together with customers, and they let us learn together with them. From that point of view, the learning curve also for us should go down so that we really reduce it. It will not go away completely, but should really be reduced significantly.

Speaker 7: Yeah. Yeah. That's fair enough. Okay. Thanks.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much. We have a further virtual hand from Nicole Winkler. You can unmute yourself, Nicole.

Dr. Cornelia Ballwießer, CFO, SÜSS MicroTec SE: Yes. Thank you for taking my question. So basically, I have one left regarding operating cash flow development. So basically, in Q3, you turned positive again. Can you give us an indication of what we should expect for Q4 and where we could end up for full year 2025? Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Yes. As you said, in Q3, we turned in terms of operating cash flow into a positive number. And we think that there is a good chance that we can end up at 2025 in a positive territory. This means in Q4, we will have, or there is a good chance to have the EUR 28 million cash inflow that we need to get in a positive number.

Burkhardt Frick, CEO, SÜSS MicroTec SE: That's for free cash flow continuity, right?

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Free cash flow, yes.

Burkhardt Frick, CEO, SÜSS MicroTec SE: For operating cash flow, for sure, this would mean that this number should be a bit higher because we also still have CapEx ongoing.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Yes, that's right.

Dr. Cornelia Ballwießer, CFO, SÜSS MicroTec SE: Thank you. Understood.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: It's around. Yeah. I would say. EUR 30 million-EUR 35 million we need in terms of. Operating cash flow.

Dr. Cornelia Ballwießer, CFO, SÜSS MicroTec SE: All right. Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you for your question, Nicole. We have a follow-up from Vizor. You should be able to speak now, Vizor.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah. Hey. A brief question on your next-generation scanner tool. If I remember correctly from the previous calls, this is also enabling panel-level packaging, right? If you can give a little bit color around, I mean, what we hear, panel-level packaging could bring cost advantages to TSMC, etc., well above 30%. The technology seems to make sense. Can you elaborate a little bit? Are you covering different parts of the manufacturing process? Can you give a little bit color on the competition part of the business? Are you working with one lead customer and you're exclusive there, or are other companies in the qualification process as well? A little bit color would be great. Yeah. Thanks for the question. I mean, obviously, yeah, this is really for panel-level packaging. This new UV scanner can handle both wafers and panel-level package applications.

There will be several versions of that, also with a path to one micron resolution. It is also a more accurate system. This will not be launched from the get-go. The first focus is indeed panel-level packaging for that one lead customer, whom we developed this closely together with. This is the launching platform. This will be applied in similar application spaces as the current ones. We have access to more layers and more process layers than before. It will open the door for more other customers because this is a very interesting field to be in. We will be able to broaden our exposure there.

Competition part?

Competition is the same as we have now, which are I-line steppers and scanners. You have already in the market. We currently have a lead over them in cost of ownership and throughput. We, of course, want to maintain that lead.

Thank you.

Sven Köpsel, Investor Relations, SÜSS MicroTec SE: Thank you so much for your follow-up question. In view of the time, we will come to the end of today's earnings call. Thank you to the management board for your presentation and the time you took, and also to you, dear participants, for joining and your shown interest. Should further questions arise, yes, Sven Köpsel from Investor Relations will be happy to assist you. On that point, it was my pleasure to be your host. Sven, final sentence belongs to you.

Burkhardt Frick, CEO, SÜSS MicroTec SE: Yeah. Thank you so much. Just one remark. You know that we are going to have this CMD on Monday, the 17th of November. If you have not registered yet, or if you are unsure, maybe please just contact me or Florian Mangold as soon as possible. We are still accepting registrations. Take care. Goodbye.

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