The conference is now being recorded. Good morning, good afternoon, ladies and gentlemen and welcome to Besi's Quarterly Conference Call and Audio Webcast to discuss the company's 2021 Fourth Quarter and Annual Results. You can log into the audio webcast via Besi's website, www.besi.com. Joining us today are Mr. Richard Blickman, Chief Executive Officer; and Ms. Hetwig van Kerkhof, Senior Vice President, Finance. At this time, all participants are in a listen-only mode. Later we will conduct a question-and-answer session and instructions will follow at that time. As a reminder, ladies and gentlemen, this conference is being recorded and cannot be reproduced in whole or in part without written permission from the company. I would now like to turn the call over to Mr. Richard Blickman. Go ahead, please.

Thank you. Thank you all for joining us today. We will begin by making a few comments in connection with the press release we issued earlier today and then take your questions. I would like to remind you that some of the comments made during this call and some of the answers in response to your questions by management may contain forward-looking statements. Such statements may involve uncertainties and risks as described in the earnings release and other reports filed with the AFM. For today's call, we'd like to review the key highlights for our fourth quarter and year ended December 31, 2021 and also update you on the market, our strategy and the outlook. First, some overall thoughts on our performance. Besi performed solidly in the fourth quarter last year despite the adverse impact of a flood at one of our Malaysian production facilities. For the quarter, revenue and net income rose by 56.5% and 50.4%, respectively, versus the fourth quarter of 2020, while gross margin, excluding a onetime flood-related inventory impairment charge increased to 61% versus 60.4% in the third quarter of last year and 58.3% in the fourth quarter of 2020. Revenue for the quarter was aided by continued growth for automotive and high-performance computing applications in a quarter which is typically the seasonal low point in smartphone demand. Orders of €202.6 million were above December guidance of between €180 million and €190 million, reflecting strength by IDMs for automotive and mobile applications. Profit efficiency also maintained at elevated levels, with net margins reaching 39.1% in the fourth quarter last year versus 40.4% net in the third quarter last year despite lower shipment levels. For the year, Besi reported strong results which exceeded many of our key strategic planning targets two years ahead of schedule. Revenue, orders and net income rose by 72.8%, 98.9% and 113.5%, respectively, versus 2020. In addition, net margins rose solidly from 30.5% and to 37.7% in 2021. And return on average equity increased from 39.5% to 57% despite the many challenges faced during the year. Strong revenue and order growth this year benefited from increased demand across Besi's principal end user markets, geographies and customers. It was also supported by favorable market conditions driven by underinvestment in assembly capacity over the past decade. A new 5G smartphone product cycle, continued investment in advanced packaging applications to support digital infrastructure growth and increased investment from Chinese customers for mobile and mainstream electronics applications. In addition, Besi received initial orders for hybrid bonding systems from two leading producers with initial shipments made in the fourth quarter last year. Substantial growth in profit levels and efficiency were aided by operating leverage in Besi's business model as we limited expense development to 18.9% relative to a 72.8% revenue increase. As such, operating expense margins declined from 25.1% to 17.2%. Expense trends were even more favorable given that reported and gross R&D spending increased by 10.6% and 25.8%, respectively, as we accelerated investment in Besi's wafer-level assembly portfolio. Besi ended 2021 with a solid liquidity base consisting of cash and deposits of in total €672.2 million or €8.62 per basic share. Cash generation was strong this year with cash flow from operations increasing by 71.5% versus 2020 to reach €277.9 million or 37.1% of revenue. Further, net cash of €370.4 million increased by €171.7 million or 86.4% versus the year-end of 2020. Given profits earned in 2021 and our solid financial position, we proposed a cash dividend of €3.33 per share for approval at Besi's 2022 AGM. It will be the 12th consecutive annual dividend paid and reflects a payout ratio relative to net income of 92%. Including the proposed dividend, Besi will have returned €1.2 billion to shareholders over the past 11 years or approximately 25% of cumulative revenue during this period, amazing. Next, I'd like to speak a little bit about the current market environment and our strategy. As seen in this next chart, the semiconductor equipment industry has continued it's upward growth trajectory into 2022. CapEx budgets of the major players have been increased on multiple occasions in 2021, particularly for high-performance computing and automotive applications. According to industry analysts, the current market upturn is anticipated to continue in 2022. PSI revised upwards both their 2021 and '22 forecast in February, with growth anticipated of 55.6% and 14.3%, respectively. The assembly equipment market is expected to reach US$6.4 billion this year, excluding any contribution from hybrid domain revenue driven by data center, artificial intelligence, high-power computing and new 5G phones and applications. The current upturn is unique and the challenges faced with respect to production and shipment schedules both at Besi and at our customers. At present, we are shipping -- shipment constraints due to shortages of a variety of components such as wafer handling systems and mainly electrical components which we buy from third parties. In addition, the timing of shipment has also been affected by delays at certain customers who don't have planned facilities or production lines in place as per schedule. As such, our backlog has increased significantly over the past year and currently extends into the third quarter. Despite such challenges, we continue to execute on our strategic priorities, the most important of which is the development of our wafer-level assembly portfolio. During 2021, we refined the strategic plan, '21-'25 and initiated changes to our organization and management structure to better realize it's potential, while maintaining the existing -- the exciting growth opportunities available for Besi's existing products. In the fourth quarter last year, we began shipping hybrid bonding systems to a customer with additional orders and shipments expected in the upcoming quarters to support their second half 2022 production objectives. The introduction of hybrid bonding crusher tools is also on track for H1 of this year. In addition, significant interest has been expressed by the industry's largest customers for other Besi's sub-10 nanometer assembly systems for 3D chiplet-based architectures, such as our TCB chip to wafer and embedded bridge die attach systems. I'm also pleased to note significant progress in our ESG activities. Besi expanded reporting against SASP and GRI frameworks in 2021 and is preparing to comply with the new TCFD requirements in 2022. We also significantly reduced usage on a relative basis in the areas of emission, energy, waste and water consumption this past year. In many areas, Besi is already ahead of targets set for 2022, even despite significant business growth in '21. Further, we set an objective of net zero carbon emissions by 2050. Now a few words about our guidance. We have a favorable outlook entering 2022, as evidenced by Besi's strong order intake in the fourth quarter last year, backlog at year-end of €327 million and increased CapEx spending announcements by many of the leading semiconductor producers recently. It also reflects ongoing investments by IDMs in high-end advanced packaging solutions, capacity shortages in a number of Besi's end user markets and favorable order trends to date in Q1 of this year relative to Q4 last year. For Q1 '22, we forecast that revenue will increase by 15%, plus/minus 5% versus the fourth quarter last year and by approximately 38% at the midpoint of guidance versus the first quarter of last year. Given supply chain constraints, we expect our backlog at the end of Q1 to increase versus year-end levels. In addition, we estimate that Besi's gross margin will range between 59% and 61%. Further, we expect baseline operating expenses to increase by 0 to 5% versus the fourth quarter last year and for overall operating expenses to increase by 35% to 40% versus the fourth quarter due to approximately €9 million of noncash share-based compensation expense. That ends my prepared remarks. I would like to open the call for questions. Operator?

The first question is from Mr. Didier Scemama, Bank of America. Go ahead, please.

Hey good morning, good afternoon and thank you. I just had a few questions, Mr. Blickman, if I may. So first of all, can you give us an update on your hybrid bonding installed capacity and capacity plans really going forward? Because when I look at your largest foundry customer CapEx plan, especially for advanced packaging and I think the plan announced yesterday by your largest IDM customer, with regards to PCB and hybrid bonding ramping in the second half of '23. I'm just wondering whether the previous guide of 12 to 15 units production per month in terms of capacity is appropriate or whether you need to scale that up a little bit more. And I've got a follow-up.

Well, excellent. Number one, it's always very encouraging to hear customers confirm further roll out of next-generation technology which is, in this case, hybrid bonding. Our capacity in place -- and you mentioned 50 to 20 systems that is for the new facility we opened up in Malaysia but we also have and cleanroom facility in Austria. And due to the flooding end of last year in Malaysia, we were forced to develop another facility in cleanroom which helped us to overcome the cleaning and preparation of our cleanroom facility in the main facility in Malaysia. So all in all, it is more than the 15 to 20 systems we have indicated earlier. But in two numbers, if we look at both customers, we will certainly be able this year to fulfill their demands because as we mentioned earlier, in 2022, 2023, 2024, the capacity will be built gradually, not all at once. And if we simply translate their indicated numbers to numbers of machines, we should be able in the next two, maybe three years to be able to fulfill that demand in our current facilities. In case we need to expand further, it takes us about nine months to add an additional facility and to train the people. So we will certainly be in time to be able to deliver additional systems beyond what we have indicated as our capabilities so far.

Very well. So the 12 to 15 is now 15 to 20 and going higher as far as I understand from your answer. Would you share with us maybe what you think order intake for Q1 might be with regards to hybrid bonding? And whether you feel Mr. Blickman, we feel confident enough to give us some form of guidance for the full year when it comes to hybrid bonding units or revenues? Is that something you're prepared to do at this stage?

No. We are, in that sense, always careful because in the semiconductor industry, plans are always very positive but execution depends on many other factors. So it's not only our beautiful hybrid bonding tools but it's also depending upon, in first instance, the availability of wafers and also the availability of the relative devices required. So we are dependent upon certain input and experience has taught us not to be overexcited. On the other hand, as answered to your earlier question, we have to be prepared. So -- that's the best I can share and we are prepared. We have -- and can you give some more color. We've had two very important months January, February in terms of adoption of hybrid bonding. We, as we mentioned, shipped systems in Q4, also in Q1. And the systems are in full production and that has always focused on performance issues which all have been resolved in a very positive way which has given us significant confidence in further rollout. So remember, last year, we were in the very initial phases. Now we are in full production phase and that transition is very critical. But it's fair to say that we have accomplished that in a very positive sense. So that bodes well for further rollout in this year and the years to come.

Thank you so much.

The next question is from Mr. Stephane Houri, ODDO BHF. Go ahead, please Sir.

Yes, thank you . Good afternoon. Thank you for taking my questions. I just wanted to come back on your visibility on the year. You've shown this the LSI forecast for 14.3% growth for the year for the assembly equipment market. Is there any reason why -- and this is not including by the way, hybrid bonding and spare parts and services. Is there a reason why you think you could not do at least this kind of growth for the year 2022? And I have a follow-up.

Well, if you look at our quarterly revenue over the past year, we are certainly able to do more than what we have done in the fourth quarter and what we are guiding for Q1. So our capacity basically is in place. We mentioned there are certain supply chain risks and that is consistent with all of our peers in this industry. There's a certain shortage in electronic components, also in certain modules. We've been able to overcome many of them in the past two years on an ongoing basis by redesigns, finding other sources. So the limitation is not our ability to do that. It's certainly not our product position at our customers, evidenced by our financial metrics, the risk in market growth is simply supply chain. But that is also to repeat what was in the comments at our customers. Our customers, some are facing limitation simply because of physical expansion but also other suppliers in the supply chain causing delays. But then in China, for instance, because of COVID issues, certain regions have been closed down and that has led to a delay in delivery of machines simply because those factories are closed. So there are certain let's say, risks, uncertainties ongoing but the market demand is intact and we continue everything there to find solutions for certain constraints. And in the meantime, it has become our hobby. Nothing is impossible. So we look at all this very positively.

Okay, very good. And I just wanted to come back on the hybrid bonding story. Do I understand correctly -- did I understand correctly in the question of Didier that you're now talking about 15 to 20 tools for the Singapore -- for the Malaysia facility. And if you take all your facilities together, how much hybrid bonding tools you think you can produce every month on at full speed, let's say?

No, what I indicated, that 15 to 20 is max. But don't forget, customers don't set up these capabilities in high volume at once. There are many aspects. It's in front-end environment, you need the people. You need to qualify these machines which takes longer than, let's say, in, I would say, ordinary assembly environment. So that will go gradually. But key is that it has become in the last two years, you can say from development and longer-term road map, transition to mainstream. And that is evidenced also by the goal of a major IDM yesterday and that bodes very well. And Besi is prepared for that and basically will further prepare as demand develops but also with support centers. We are setting up support centers in Taiwan in the U.S. We are gaining every single day, a lot of experience. Also, we should not forget the center of excellence in Singapore, applied Materials, where since December 2020, a hybrid tool is developing on an ongoing basis, all kinds of samples for the major five in this industry. So the momentum is gradually building.

Okay. And just one last point. Would you say that your hybrid bonding order book has increased during the quarter?

We have -- otherwise, we would have mentioned we haven't received a major volume. We received major volumes in Q2, Q3 which are now being delivered, installed and our next round, as we mentioned, should come in the following months.

Okay. Thank you very much.

The next question is from Mr. Robert Sanders, Deutsche Bank. Go ahead, please.

Yes, hi. Good afternoon. I wanted to pick up on TCB. One of your competitors, K&S talks about the flux-less TCB project that they have and they argue actually that TCB will be several times larger as a market than the hybrid bonding. And I think the argument is just that hybrid bonding is expensive and TCB will be good enough for a lot of the sort of 50 to 10-nanometer sort of area -- So -- a micron area. So I just wanted to get your thoughts around that? And also related to that, whether you thought that there would be a sort of virtuous circle from the adoption of hybrid bonding on your TCB demand or whether you thought that perhaps some customers will choose your hybrid bonding but use another third-party for TCB?

Well, as we mentioned, TCB is on our road map since over a decade, we were -- I would guess one of the first with real production systems. And that's an ongoing development which has accelerated for applications chip to wafer. And so there's a chip to substrate world, TCB and a chip to wafer world. And there are many applications, the bigger devices, smaller devices, integrated devices with -- yes, the opportunity of building chiplets which offer significant advantages in speed, in cost and also in heat dissipation, energy consumption. So there are many drivers for moving the needle more towards a combination of hybrid bonding and chip to wafer. And the messages we receive from customers, from publications, conferences on an ongoing basis is that it certainly will be a variety of technologies going forward. But important answer to a previous question in the past two years, hybrid bonding has developed from a development-stage technology to a mainstream technology which offers significant growth in the years to come.

Can I just ask one follow-up which is just on this large IDM that was talking last night as well as your other large customers, the large foundry. Are you seeing these companies willing to pay big prepayments? Because obviously, ASML is receiving much larger prepayments than historically. I was just wondering if you were able to secure much larger deposits as part of longer-term deals.

Well, if you look at Besi over the years and we mentioned that on many occasions, we are not market share driven, we are margin-driven. So in this technology-driven market, it's a matter of saying yes and also saying no to opportunities but attractive commercial payment structures to customers. In my experience, are not the critical factor. The critical factor is the performance of your tools and the consistency of that, the support and that translates in payment conditions and also in cash generation. We will move more with this hybrid bonding into the front end, you could say, business environment. And that is different from the back end. So one can expect that over time also the contractual obligations and related to that, the payment structures will be more similar to that of front-end companies. We are now in combination with in our partnership with AMAT in the initial phase of combined offerings and that already brings those terms more closer together.

Got it. Thanks a lot.

The next question is from Mr. Marc Hesselink, ING. Go ahead, please.

Yes, thank you. My first question is also on hybrid bonding. In the elaborate presentation that you have on your website on the end of last year, you stressed that is the potential to significantly exceed the initial expectations? What needs to happen then? Is that simply a very strong end market for those leading nodes? Or would that also mean that the design companies really started in design your way of the chiplets that you can produce on your machines. You need that change from these guys? Or is that the wrong way to think about it?

No, no. That's precisely the way to look at it. So every chip company designs circuitry for an end application and they have to decide which technology to use. Do they use a substrate as an interposer or a hybrid bonding or chiplet whatever design and those decisions will determine which technologies will be used. What I haven't said to previous questions, of course, it's all a matter of cost. So this industry is in many views, the industry over years over time which has been able to combine technology and cost savings in the best -- in an exemplatory way. And that's every day in the decision of customers which process technology to use is a combination of what is feasible and at the same time, what is the most cost-effective way. The beauty about hybrid bonding and chiplets is that also addresses a cost because it eliminates many other cost factors in substrate-based technologies and in combining individual components. And that is why hybrid bonding has gained more traction than initially was anticipated. But time will tell.

Yes. So the big improvement that AMD mentioned, I mean, that kind of things are driving it that other design also have to move into that direction.

Well, for certain applications, it's not -- I mean there's a myriad of device designs and applications. So you can't say for every application. So you have to be more specific for which application but those customers will advertise which technology they use.

Okay, clear. And then my other question is on the favorable order trends that you mentioned versus the fourth quarter so far. Last year, you had a very strong first quarter on order intake. How does it compare to that one? And maybe taking into account also where are we now in the 5G cycle? Is it is the next generation of 5G? Is that going to be pretty much incremental on the very strong year that we saw last year? Or is that all a bit too early to tell?

It's a bit early to tell. On the other hand, as we mentioned in the press release but also in the call, we received already initial orders in the fourth quarter which is relatively early, mostly, it's in the first quarter. That also has to do with supply chain constraints. Probably there's also a cycle, one year there are more new features than in other years. But it's hard to tell which features will be decided in this next-generation high-end smartphone to be launched in September time frame. That's always exciting. We have to be ready for that. Time will tell.

Are you willing to share if you're also up year-over-year on the order intake or just on the year first to fourth quarter?

Well, I haven't -- no, the first quarter is still underway. So it's -- it's too early to tell what will be the complete outcome. It's exciting and we will share that with you end of April.

Okay, very good. Thank you.

The next question is from Mr. Charles Shi, Needham. Go ahead, please.

Hi, Richard. Good afternoon. Thank you for taking my questions. I want to go back to the order trend from -- I mean, your direct or indirect customer, the largest U.S. smartphone manufacturer. So this year, through the supply chain, we see a common theme that this particular company is prebuilding a lot of stuff -- prebuilding for their late 2022 new product launch, a little bit earlier than the previous years. So the seasonality pattern for a lot of the companies in the supply chain seems to be pulled forward a little bit, meaning Q1 seems to be above seasonality. Q2 seems to be below typical seasonality. So my question for you is that are you seeing the similar trend or it's still unclear at this point?

We see a similar trend. Don't forget the supply chain constraints are forcing and that's not only for high-end smartphones but also -- as we mentioned, our backlog continues to build feasibility into the third quarter which is for us unusual at this stage, only for certain long lead time machines. But that is a phenomena, still, it's very healthy, one could argue building backlogs in retrospective pointing towards overcapacity but these are all identified. And as you mentioned, for well-identified end product launches. So -- as said, we can't confirm your statement. On the first time, maybe this time and that's why I said you have to look at all products and not only high-end smartphones. There's clearly automotive is growing. There are many capacity expansions and new product launches scheduled for this year and also well into next year. Also the data center, the whole -- the computer space expansions are expected to be significant this year. Every year is different in that sense. The patterns are different. But it's too early on February 17 or February 18 today to understand how this unpredictable industry will develop in the next four quarters.

Yes, understood. So maybe a question on the supply constraints. Obviously, you did mention in the press release it's not only supply constraints on your side, I mean, because of the flooding but it seems to be also because of your suppliers you are still supply constrained in Q1. That's my takeaway from your press release but can you confirm that? And if you don't really have the supply constraints we can try to quantify what the Q1 revenue would have been? I mean, your guidance would have been.

It's very simple quick math. As we indicated, €25 million revenue was impacted. We were able to pull forward certain machines which helped us and especially our customers that we did deliver in time or with a slight delay. But that €25 million which we pulled forward, we were not able to fill that gap immediately. That will take a few months, simply because of supply chain availability. Think about controllers, electro motors, precision, guardrails and there are many critical components which suppliers do not have on the shelf. So whether it's the €25 million more but a major portion of that, could there be more revenue in Q1.

Got it. So my last question, I want to go back to the question on TCB, you just gave a very specific application -- or description of the application. You mentioned that chip to wafer TCB. My question for you is, obviously, your competitor is talking about the thermal compression bonding for heterogeneous integration. Is your TCB, the traction you're seeing a similar application or different applications here. Thank you.

Well, we don't know precisely which application but -- but if the ones we do know, our competition is not the U.S. equipment manufacturer, it's the Hong Kong, Singapore.

All right, got it. Thank you. I appreciate it.

The next question is from Mr. Didier Scemama, Bank of America. Go ahead, please.

Well, thank you for taking my follow-ups. I just wondered, Richard, whether you could talk a little bit about the business outside of advanced packaging, flip chip, let's say, your more mature technologies, etcetera. Some of your OSAT customers appear to be guiding CapEx flat. Some others have got CapEx up. I mean is that the way to think about your -- the trajectory of your business for '22 for the non-advanced packaging part of the portfolio? And I've got a quick follow-up after that.

As I mentioned, there is certainly growth expected. Let's start with automotive. And that is covering all of our products. So that is die attach and especially the Soft Solder die attach, then packaging, molding thermoform , plating for that matter and that's very strong at this very moment. Maybe it's better to also mention where we see some weakness. In China, for, we think, reasons of simply customers being able to set up more capacity. There is some expected temporary delay in further expansion. They've been enormously expanding in the past couple of years on an ongoing basis. We do not see that at others. In the computer space, I mentioned that earlier, there's ongoing expansion, major expansion. So the only softness to speak of is further expansion at OSATs in China. One of the reasons also this COVID where I mentioned that certain regions are closed for some time, so systems cannot be delivered.

Okay. And that's great. Yes. No, I just wondered also on the IDM front, I mean, historically, these guys have not been investing heavily in assembly and packaging. And you see now sort of rejuvenation of capital investment and capacity expansion in Europe, in Japan, certainly in the U.S. companies giving very substantial CapEx forecast, not only for the '22 year but also for the longer term. And one of the real focus is obviously front end. But as they mention, if you increase your front-end capacity, you also want to have more onshore back-end capacity as well as offshore. So do you think that this sort of rejuvenation of the lagging edge effectively from the diversified semiconductor companies in automotive, industrial market is going to lead to a more once prolonged assembly equipment up cycle, if you want. And if you've got that visibility on those plans, etcetera, if you go into '23 and beyond.

What we hear in those conversations with customers is what may change is next-generation infrastructure. It's not anticipated that capacities will be moved over the world from Asia to Europe, for instance, or to the U.S. It's all focused on next generation. And in the past, that would be then assembly developed in Asian facilities. And in the future, that may well be expanded, again, onshore in Europe and in the U.S. And we see those developments already happening.

Okay. Thank you so much.

The next question is from Mr. Nigel van Putten, Kempen & Co. Go ahead, please.

Hi, thanks for allowing me to ask a question. Actually, I had one exactly on what you just discussed this China. I think AZ -- was it this week or last week kind of said we don't understand why Chinese OSATs are still investing, considering, I guess, they would have more of the orders, etcetera. I mean 36% of revenue in the first half, I'm assuming a similar number in the full year. So can you talk about maybe utilization of the machines at these OSATs, I mean you said softness but to what extent should we kind of expect this to materially impact revenue in the year?

Well, the numbers we can track and that's a very important number is the utilization rate. So utilization rates below 80% is pointing towards, let's say, sufficient capacity, below 60% is overcapacity. But there's also the seasonal effect. Q1, Q4 are always a bit softer than the second quarter and the third quarter for new products and whatever seasonal patterns. So the key is to understand what happens in April or let's say, March, April, May, whether that utilization rate is above 80% and more equipments will be required. That's the picture.

Yes. Yes, got it. I guess, CapEx intensity has gone up significantly if I look at the three major ones. But like you said, it's also partly seasonal. On that, your own seasonality, what should we sort of assume or at least keep in the back of our head in terms of maximum capacity you can ship in the quarter. I think last year, second quarter was quite maybe a surprise to some. So maybe just to have that correct this year. And I mean, also, I mean, as a follow-up, I guess, if capacity is a constraint expected into especially the second quarter.

Well, the €250 million is a demonstrated availability but we have a mix of products and we have 18 different platforms. And as we have shared in previous calls, the ASPs for hybrid bonding tools are between €1.5 million and €2.5 million a piece. So if you have many hybrid tools, the revenue becomes a different picture compared to a year ago. But in essence, we certainly have the infrastructure available supply chains. There are some critical components as I answered to previous questions which limit the full capacity at this moment that can also change in the months to come. Everyone is building capacity. Basic materials is also a major issue like lead frames and wafers. But in every corner of this industry, capacities are being expanded. But we can certainly handle more than what we have done in the peak cycle, in the peak quarter last year.

Got it, that's clear. My last question, you've talked about the €25 million that couldn't be shipped in the fourth quarter. I think if my notes serve me well, you've said not everything is included in the guidance for the first quarter. Just to get a sense, how much of the €25 million sort of missing is now in the first quarter and which is still in the back -- which will still sit in the backlog or delivering later in the year?

I would say -- and again, it's difficult to say that precisely because it depends on both supply chain parts and it depends on customers ready to take that. I would guess it's about 50%, 60% of that €25 million will be shipped in Q1.

Okay, got you. Appreciate it. Thank you.

The next question is from Ms. Najet El Kassir, UBS. Go ahead, please.

Good afternoon, everyone. Just two questions for me, please. If you can help -- if you can split your backlog between the order intake between the legacy tools and the hybrid bonding tools that very helpful. And my second question is related to the capitalized costs which have increased to €23 million in 2021 from €18 million last year, how we should think about the capitalized cost going forward?

Excellent, thank you. We mentioned in the third quarter call, end of October that we had received orders for hybrid tools in the teens -- in the high of the teens which is close to €20 million. And then we received some more orders of individual systems. So if you take an average of about €2 million per bonder and we have shipped so far a certain portion of that, a bit less than half then you can calculate how much hybrid is in that backlog of €326 million which we or €327 million which we shared. So it's not a lot it's growing but it's still small. We mentioned that in every call, it could become very substantial once mainstream adoption in full volume becomes a reality which is supposed to be towards the end of this year and certainly '23, '24 onwards. So it's still a small portion. Then your second question, yes, due to IFRS, we are forced to capitalize R&D and it has increased last year versus the year before because of major investments in new developments in advanced packaging, in particular. So for certain hybrid bonding applications, chip-to-wafer, rich attach there are many other developments ongoing. And yes, they will be amortized as soon as we start shipping and we are starting already to amortize on the hybrid.

Thanks very much.

The next question is from Mr. Trion Reid, Bernberg. Go ahead, please.

Hello, there. Good afternoon, Richard. Hi, it's Trion from Berenberg. Hello, hope you're well. I have one question could be -- one question which is not related to hybrid bonding but you mentioned in the press release about executing strategic initiatives to drive profitability and shareholder returns. And you also mentioned that you've made some changes to the organization and the management structure. I wondered if you could give a bit more detail on what you're doing here and what you expect that to realize. And it's not too delicate to ask whether that includes any succession plans for yourself?

No, no. It -- certainly, it's not a hidden message related to me. What is in difficult words explained, it's very simple. Because of the significant growth in the die attach arena, we have organized the structure and we may have explained that in previous calls, I think so. And we've called that Engine 1 and Engine 2. Engine 1 is the current technology in die attach and Engine 2 is the sub-micro, hybrid, chip-on-wafer, chip-to-wafer TCB and certain other next-generation development programs. And we have made changes to the organization to maintain full focus in order to avoid dilution. We've added a significant amount of people, resources, both in Austria and in Singapore, the support center for die attach for Asia. And those -- we very -- yes, thoroughly, as always developed those in a strategic plan 2021, '25 which took us a good part of last year, second half with our management team to develop an organization ready to support the €1 billion plus, plus target we have set out for the organization in the next round which we have shared with you already end of July. So the €1 billion plus, plus almost in June in the analyst or the Capital Markets Day; so that's preparing the organization to support that growth.

Got it. Thank you, Richard. Thank you to everyone .

The next question is from Mr. Timm Schulze-Melander, Redburn. Go ahead, please. Timm Schulze-Melander: Hi there, good afternoon. And thank you for taking my question. I just have one and that was thinking about the hybrid bonding backlog deliveries. You've already got two customers now taking this forward. As you look over the next four to six quarters, could you just let us know if you can already identify any lumpiness? And then the second part of the question is, you talked about mainstream adoption at the end of this year. What specific product area should investors be focused on to judge whether that growth and that inflection point is coming through?

Well, the last question first, we will report on an ongoing basis on additional orders. So lead times being six, seven months for these complicated tools orders we should see in the first half of this year, first quarter, to support that rollout schedule as it is anticipated now. At the same time, we should see other customers at that forefront, entering hybrid development and in particular, the memory side of the world. We also mentioned that earlier with the U.S. memory manufacturer and at some point, the combination of logic and memory with the same technology offers the maximum advantage of using hybrid bonding in those multi-application chiplet designs. So on an ongoing basis, the key is always to look for the evidence in orders. Timm Schulze-Melander: Okay. I was -- indeed, I was, I guess, trying to fish for whether there was an end market consumer or enterprise product that investors should be especially focused on to...

Yes. Sorry, I misunderstood then. But the first mover in a clear product is AMD with a graphic set which has been launched in September last year and has created a lot of visibility on the adoption of hybrid bonding in many ways. There are other customers also announcing, using this technology. So one should look for, of course, the end applications. And if we are part of that, it will be evidenced by more orders hopefully. Timm Schulze-Melander: Fair enough. All right. Thanks very much.

Thank you.

Mr. Blickman, there are no further questions at this time.

Thank you. Thank you all for joining this call and wish you all a good weekend. Bye-bye.

Ladies and gentlemen, this concludes the event call. Thank you for attending. You may now disconnect your line. Have a nice day.