Good morning, good afternoon, ladies and gentlemen, and welcome to Besi's Quarterly Conference Call and Audio Webcast to discuss the company's 2023 Second Quarter 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 Mr. Leon Verweijen, Senior Vice President, Finance. [Operator Instructions] 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. Please go ahead, sir.

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 of our second quarter and six months ended June 30 and also update you on the market our strategy and the outlook. First, some overall thoughts on the second quarter. Basically, we reported solid second quarter results with revenue and operating profit above the midpoint of prior guidance in a challenging industry environment. For the quarter, revenue of €162.5 million and a net income of €52.6 million increased by 21.8% and 52.5% respectively versus the first quarter of this year. Sequential revenue growth benefited from increased smartphone demand this year versus 2022, partially offset by weakness broadly in computing end-user markets. Net margins also grew to 32.4% versus 25.9% in the first quarter of this year, reflecting revenue growth, gross margin improvement to 65.6% and strict cost control efforts of production and operating overhead. Revenue and profit development in the first half year 2023 also reflected the impact of current adverse market conditions on Besi's business this year with revenue and orders each declining by 28.9% versus the first half year last year and net income decreasing by 39.2%. Current year revenue and order trends have been adversely affected by a broad-based downturn in computing applications in particular versus the first half of 2022, partially offset by a slight uptick in the amount for high-end smartphones versus last year's levels. Automotive order trends remained favorable in this first half year, although slightly below the strong contribution reported in the first half of last year. Of note, revenue from China increased by €10.5 million or 11.4% versus the first half of 2022 reflecting modest improvement in demand for automotive, power and smartphone applications, although no meaningful uptrend has been established yet. We are pleased with our profit performance in the first half of this year despite industry challenges with peer leading gross and net margins of approximately 65% and 30% respectively. As seen in this chart, Besi's performance this cycle is also significantly ahead of the last downturn versus the comparable period of the prior cycle. In addition, we completed a four-month strategic review of Besi's business in the second quarter of this year with a leading consulting firm to help advance our ambitions for expanding revenue and profit potential in this next up cycle. Besi has committed to enhancing the shareholder value via long-term financial performance, sustainability efforts and capital allocation. To date 2023, we have distributed €367 million to shareholders of which €289 million was distributed in the second quarter of this year in the form of dividends and share repurchases. This brings total capital allocation to €1.7 billion over the past 30 years equal to approximately 30% of total revenue. In addition, we're on track to complete our €300 million share repurchase program by October this year. We ended the quarter with a strong liquidity position, including cash and deposits of €378.3 million post the large Q2 this year capital allocation. Decrease in our cash position at the end of the second quarter is consistent with historical trends following the payout of the annual dividends and increased share repurchase activity this year. Next, I'd like to speak a little bit about the current market environment and our strategy. It appears that the assembly equipment market formed a bottom for this downcycle in this past second quarter posted a steep decline beginning last summer. In addition, customer utilization rates have increased recently, although it is too early to say whether such increase represents a seasonal or structural trend and when a meaningful upturn may begin. This traditional assembly equipment cycles hold, one would expect an upturn either at the end of the third and the fourth quarter of this year. Most analysts anticipate an industry upturn in the second half of 2023 with significant growth returning in '24 and '25 as per TechInsights based on the strong long terms secular drivers in Besi's customer end-user markets. At present, we are primarily focused on profitability, navigating the current downturn and initiatives to capitalize on market opportunities in the mixed sector. We reduced our overhead and headcount in alignment with current market conditions and continue to increase our R&D investments for the next generation systems. In addition, we have updated our strategic planning to help achieve business model growth objectives over the next five years. Progress also continues on our hybrid bonding and wafer level assembly roadmap. Activity associated with hybrid bonding adoption has increased significantly over the past six months with the primary focus on customer qualification and testing of processes for next generation architectures and new market applications. We believe that the prospects for wafer level assembly growth have increased successfully each quarter. This belief is based on the high level of interest expressed by significant resources committed to and sampling work done by leading front-end customers, also ourselves and the development community, particularly in the areas of data center, AI, mobile and high bandwidth memory applications. The favorable outlook also reflects basis first mover advantage, successful move to volume production, improved yields and ongoing progress in developing integrated hybrid bonding production lines together with Applied Materials. We are also encouraged by the shipment of Besi's next generation TCB system for qualification in high volume production. Further, the Singapore cleanroom facility was completed recently to support process development for hybrid bonding adoption. From an operational perspective, Besi is targeting key expansion projects by year-end including Vietnam tooling support facility. In addition, we formed a new company in India as a result of increasing mobile assembly demand in that country. And then there were also some organizational changes at the end of Q2 with the retirement of Ruurd Boomsma, CTO. Ruurd will continue his involvement with Besi's Chairman of a new Besi Technology Board to be organized in the second half of this year. Its responsibilities have been resumed by the CTO office and members of senior management. I personally want to thank Ruurd on behalf of everyone for his important contributions to the growth of many years. Now a few words about the third quarter guidance. Near-term market outlook remains uncertain despite the initial signs of improvement and varies per end-user markets. Accordingly, we anticipate that revenue will decline by between 20% and 30% versus the second quarter due to typical seasonal patterns and current industry conditions. In addition, we expect gross margins to range between 62% and 64%, therefore, operating expenses to decline by 10% to 15% versus the second quarter. We also expect that the fourth quarter revenue will significantly exceed the third-quarter revenue levels based on scheduled shipments from backlog particularly for wafer-level systems. That ends my prepared remarks. I would like to open the call now for questions. Operator?

[Operator Instructions] We will take our first question from Ruben Devos from Kepler Cheuvreux. Please go ahead. Your line is open.

Yes, good afternoon. Thank you. I have two questions. The first one relates to the production capacity for the hybrid bond. As I think in the past, you talked about 15 per month or about 180 on annualized basis. I was just curious, at what point could we sort of reasonably assume that this capacity will be filled? You've been quite specific historically in terms of how many hybrid bonding orders you realized. I think at one point, it was about 7 to 8 per quarter sort of the run rate, but we missed the basic of that detail in this release. So also could you maybe talk about the phasing of orders heading into 2024 and beyond? That's the first question.

Excellent. Well, as we have explained, the theoretical production capacity of 180 systems per annum has been put in place in the past two years simply to convince customers that when adoption becomes mainstream, taken, let's say, expect delivery of systems to those levels from us, which should satisfy that demand in the next three years. We've also said that '23 and '24 are typical qualification years. So, as we mentioned in this call, the qualification is continuing very rapidly. And those of you who have witnessed the SEMICON West event last week were in a panel discussion with our key customers AMD, Intel, Qualcomm. Confirmation was provided that this ongoing qualification will lead to an adoption in the mainstream in the timeframe as we have explained also in the Capital Markets Day and '23, '24 qualification major volume, CPUs '25, '26 memory kicking in. And what was interesting, we mentioned that following memory and high-end smartphones would kick in, message last week that could also be earlier. So that tells you there's an enormous drive in the industry to design next generation devices for interconnect using hybrid bonding processes. So that roadmap stands and orders quickly come in, in batches. There is no average - well, in hindsight, you can calculate an average, but it depends on programs. So, the question would be, where are we. And we have received earlier this year orders for our next expansion in Taiwan. Those orders will be delivered this year. That's also why the comment for the fourth quarter was made and we expect certain orders for setting up initial production capacity here in the U.S. on top of already systems installed and those should come in, in the next quarter, next two quarters and production sites are being prepared. Don't forget that we are talking in hybrid bonding about front-end environment that takes longer than the wafer assembly. Key message I'd like to share with everyone is that it's perfectly on track.

All right, very helpful. Thank you. And then just my second question, I think just around high bandwidth memory. So, I think we've seen quite a big update by the Koreans. They've also been quite aggressive to grow strong year. You've talked a bit about the memory market roadmap in the CMD, but is there a fair possibility that these roadmaps could be accelerated considering the very strong demand out there. And - yes and how should we think about the relative use of both TCB and hybrid bonding within memory or within high bandwidth memory?

Well, also very good question. As I said to your earlier question, the roadmap memory are also as they are - has not been pulled forward or delayed. And there is an enormous qualification development activity with the major memory manufacturers using hybrid bonding technology. And so it's simply that roadmap stands. For other question on TCB that's another application area. The question, of course, is will that be a TCB or hybrid bonding. The advantage of hybrid bonding is also confirmed in many of the public documents, conferences over TCB, but they will be dual, let's say, technologies for the coming years and ultimately hybrid bonding should be the major ones in the future horizon because TCB is limited for further shrink of interconnect design geometry. So, that difficulty with TCB remains. That's as much as we can see about this.

All right, thank you very much.

Thank you. We will move on to our next participant Charles Shi from Needham and Company. Please go ahead. Your line is open.

Hi, good afternoon, Richard. Thank you for allowing me to ask a couple questions. So if I look at your guidance for Q3 and you provided some preliminary color on Q4. Q3, the numbers will be slightly below seasonal, but I am actually a little bit surprised to hear that you are seeing significant higher revenue in Q4, which is definitely above seasonal if I understand correctly because for typical seasonality Q4, it should be down Q-on-Q. Can you provide a little bit of a breakdown to where - why the pattern looks like this? Was there some delays in terms of backlog shipment from Q3 to Q4 that that caused this pattern? And how confident you are in terms of shipping out of backlog in Q4 because - well, just because it's in the backlog, doesn't necessarily mean it will ship. So really just want to have a little bit more understanding about your confidence level at this point. Thank you.

Excellent, Charles. Well, it is like you - like you summarize. And typically, second half is less than the first half. And Q3 with some exceptions is also typically lower than Q2. You can see the statistics also in our presentation. This time it is a mix between the Engine 1 business, which is still impacted by the industry downturn and orders are on the lower levels with some positive maybe because we see utilization rate increase. I say that carefully because it doesn't tell you whether that's structurally, yet that needs a bit more time. But why this increase. We say that again is because of shipments, systems in the backlog for the sub-micron technology and they are tied to customers being able to accept and to install these systems in the cleanroom. And also the ASP and the number of machines helps to simply understand that higher revenue level. But as always there are risks, but most of it is, of course, in the backlog and certainly the longer micron systems already that's little scheduled or being prepared, so that's the picture supported by backlog in place.

Yes. Thank you. So, is it fair to say that incremental revenue from Q3 to Q4, the primary driver is the wafer level assembly systems here.

Yes.

That's first part of the second.

Yes.

And then are you expecting some additional orders coming into Q3 to really support that incremental revenue from wafer level assembly? And sounds like the U.S. customer maybe the top driver for that or is that correct?

It's the other side of the Pacific and the orders to be expected. We still have a lead time of nine months for the assistance, especially with some additional features. So those will be delivered in the first half of next year. But these are orders placed in the first half of this year.

Thank you, Richard. So, okay, just wanted to clarify the U.S. customer. What's our current outlook right now in terms of wafer level assembly? When do you expect that orders for their initial volume production capacity and when do you expect those will be shipped? Thank you. That's my last question.

Well, if all goes well, you should see that in the coming months.

Thank you.

Thank you. We'll move on with our next participant Madeleine Jenkins from UBS. Please go ahead. Your line is open.

Hi, thanks for taking the question. So my first is just on your new TCB tool. I was just wondering if you could see any interest from other customers? And also whether it would be a candidate for next generation CoWoS?

So your first question is on the TCB tool. The answer is yes. There is interest from two other major customers. So, if all goes well, the machine as you all know has been shipped, is being qualified as we speak in a trajectory of about six months. So we could expect October-November timeframe whether this is already to be used in the next generation or would that take a bit longer. That's always with certain uncertainty. But the pressure on the system performance is very high. So that's good news. The other two customers will use it for slightly different applications, but with the same process. One is related to memory, the other for another CPU type of device, so that looks very good. Your second question on CoWoS, well, there's a lot happening and there is lot of, let's say, information shared publicly about CoWoS expansion. We are certainly involved in that. And not only with one customer, but also second customer in Korea, but still we can't say that often enough volumes in that CoWoS are relatively limited in the sense that this is not huge volume. But anyway, it's good business.

Okay, great. Thank you. And then I just had a very quick follow-up on hybrid bonding. I was just wondering if your major competitors still the same as yours in terms of is it targeted in similar applications or are there any differences between the two?

There's - and that's again an excellent question. At this time, why use hybrid bonding. I've said that a little bit in answer to the earlier question, the reason to do that is to have a more, let's say, a higher yield interconnect solution compared to a TCB solution. And that price this solution and at the same time, when this is really feasible for mainstream, it allows you also to create these chiplet architectures and some have already reached the market, take AMD. And there's a lot of, let's say, enthusiasm about this next step because that also has the potential to extend Moore's Law, which is very important for the overall cost of semiconductor manufacturing apart from the performance of the devices. So since this hybrid bonding, July - September '21 officially, the first devices were in the market, the industry started to really focus broadly on this before that time it was, of course, known, but not that expected to becoming at that time frame. So also competitors after that first products, successful in main applications started to focus on developing hybrid bonding applications. And like in any market, which has a growth potential, which is at the forefront of technology that invites everyone at customers, so like to have different choices. So far we have been very fortunate that we were early adopters. In a sense, seven years, eight years ago, we started with this whole development. We have mid-20 machines in full production, by year-end more and others qualified. But in this chiplet architecture, you can imagine not every device is the most complicated device. So you may end up with a selection of devices, some leading accuracies below 150 nanometers and we delivered the first 100 nanometer machine and 50 should be available in two-three years from now and that's really for the most complicated devices. But then there are other devices which need less accuracy in placement. You may see market developments in that direction, but this is still early days. Our systems, we now have this 150 to 200 nanometers and 100 nanometer cover the entire spectrum and are running every day with higher yields and faster speeds, so that's the way to maintain certain head start in this technology. Does that answer your question?

Yes, thank you very much.

Thank you.

Thank you. We'll move on to Nigel van Putten from Morgan Stanley. Please go ahead. Your line is open.

Hi, yes, thanks. I have a follow-up on the hybrid bonding roadmap for smartphones and thanks for posting the video, the AMAT symposium on the website. So just summarize Qualcomm's comments correctly, I think they basically said, we're thinking about it a lot. We want to do it, but cost limits adoption right now. So my question is two-part. I guess, first on is how large is the cost effort differential versus, I guess, flip-chip? And where do you see companies like Qualcomm would be happy with? And then second, have you formulated more of an explicit roadmap maybe together with AMAT to bring costs down? And if so, could you provide some color on what the upcoming signposts are and the time frame? That's my first question. Thanks.

The best signpost is throughput. As you may remember, we indicated our machines today around with the devices, which are being produced at about 1,500 UPH. The machines as such are able to run twice that speed, 3,000 UPH. Any close competitor is at one-third, so it's 500 UPH? And, of course, there are models - cost of ownership models and we should expect in the next year that we bring this throughput speeds up and it all has to do with the software, with also preparation and you have to recognize certain device structures and translate into accuracy placement and that in the end will determine whether it's cost competitive using whatever flip-chip today and partly to be the flip chip for simply the majority still? And those machines run at 6,000 UPH, 7,000 UPH. And it's all about the design of the device. So it's the combination of design geometry cost and production cost. But your question are we focused on that? Of course. And not because we - but these customers really are demanding those solutions. So it will take some time, but every day progress - significant progress is made. That's why we also extend the capability of process development. Our Singapore lab is currently ready and machines are being installed. And as of August or early September, we will be able to do side by side with AMAT on the other side of the road, test on individual bonus and on integrated lines and that all has to do with adoption in those categories and especially in the high-end smartphones.

Got it, thanks. So, if I summarize, I mean you with AMAT - well, your part of the equation is still increasing throughput and I can't imagine there's plenty of other developments needed as well, but that doesn't seem to be any structural hurdles. It's more improving the current process. And I won't try to pin you on what now the new timeframe is for smartphone adoption, but that does seem to be what you flagged, maybe 2027, at the Capital Markets Day, let's just say that that is more likely now it seems. Is that sort of fair to say?

I would say differently. I was a bit or let's say positively encouraged by the fact that Qualcomm - but it's not only Qualcomm, that they are more actively 27 is too far out. It all depends whether we can realize that. So there's a very positive pressure on us to be able to achieve that.

Understood. And then maybe switching gears a little bit different question. In your prepared remarks, you said you formulated a new business objective for the next five years. I'd be very interested to hear what the revenue target is for that model. If you're able to share any color or a number that would be helpful.

Well, first of all, we have to always reach the targets we have set so far. So our model €1 billion plus, plus, plus, which equates to the €1.3 billion model is the first hurdle and with a very again concentrated effort on what does it take to get there with our Engine 1 business. The Engine 2, the submicron world, customers engage in our whole organization in a period of 16 weeks. And we need, of course, an upcycle for that. Anticipating whether the upcycle comes. Yes. And in the past, we have always been able to reach those goals and even higher than that. So remember the €800 million model, the €600 million model, the €400 million model, so that's how it works.

No, that's exactly the reason for asking. I think the 2025 model, it's not €1 billion plus, plus, plus. So it seems to be more of a sort of cycle beyond that model. So I think I was just curious to hear if I could tease out a number, but I'll leave it there. Thank you.

Next question.

All right, thank you. We'll move on to Marc Hesselink from ING. Please go ahead. Your line is open.

Yes, thank you. Maybe first question. On the strategic review that you're doing, can you maybe share what's your intention and what kind of things are you looking at increasing the revenue opportunity? Is it further increasing the efficiency, which is already at a very high level? Just share your thoughts about doing this review.

Well, like we shared each time there is an enormous development at this moment ongoing. If you simply imagine this wafer level universe, hybrid bonding, also picked wafer in cleanroom environment that requires from a company to shift from its assembly market environment forever into a front-end universe, different sides of customers, different process requirements. And you have to organize that very carefully because the risk run, if you don't do that right, you may lose both. So the fact that we organize these reviews with the entire management is to simply do as much as we can with our customers and partners to be able to get there. And don't forget, we're in the initial phase, 150-200 nanometer accuracy are gradually going to 100-nanometers, then down to 50 nanometer. That is something. And compare that to lithography, for instance, in the past decade, these are major inflection points. So the reason to do these exercises just to make sure as much as we can, that we realize those objectives. When organizations change, there are new people on board. The organizational structure has to be adjusted. Business developments don't forget to support in the U.S., in Taiwan. Over years ago, we only heard of the name TSMC and then Korea for that matter. So, a lot has to be organized apart from the change in the geopolitical changes, due to the geopolitical landscape. You mentioned Vietnam, balance China and then India not to forget. So there are many aspects, which provides enormous growth opportunities still maintain that growth and then with margins, which we have demonstrated, simply requires that you spend more on your strategy than the usual process in an annual sequence. So that's a longer answer to your question.

Okay, thanks, clear. And then second question is actually on the gross margin again exceptionally high. And I know you just updated that guidance at the Capital Markets Day. But given that you're so many times ahead of the year of that guidance, is it at least to be upside risk to that numbers on a quarterly basis?

Gross margins. There are many factors which influence, but number one is product position. So on ongoing basis, our products are in a position where pricing allows these margins. Again, there are other factors like ongoing cost reductions. One of the major things we have extended basis, we adjust very rapidly the lower demand or higher demand. So that is also unique. And then you have currencies in. They are supported by high dollar, the Asian currencies are under pressure. But all those factors, they - and we manage this business and some of you know, on a practically daily business every Monday, Wednesday and Friday and that all adds to controlling your cost, but also at the same time improving your market position. So that combination, this is what determines your margin. And we can easily see that over the years, our product position has improved cycle by cycle and it's the result of a very, very clear focus. I'm not making too many mistakes, although we make many mistakes.

But then the reason that you're still ahead of your own guidance, is that - what's driving that and like the very short period that you sometimes have even higher than the normal range?

Well, that can be in a moment. I mean, don't forget, we have 18 or now with TCB 19 different platforms and different supply chain cost structures. And as I said, there are sometimes pluses and there are sometimes disappointments. So it's not that if we would have one product that will be different. So that's the best answer.

Okay. Thanks. The final question that I have is - I'm just wondering on which level, do you have the strategic discussions? You clearly have at with your direct clients, but you also - do you also have that on hybrid bonding and other sub-micron? Do you have that strategic discussions with the established companies?

Of course - it's all the customers in those advanced development of devices for the winner end products. And in the three categories, communication, so high-end smartphones, but also the other devices, wearables, et cetera. And then you have the whole computer space, then you have automotive. So in all three, there is this forefront technology development ongoing and that you have to constantly analyze are we focused on the right programs. I will start with those programs, which are not mainstream feasible. And there is no roadmap to cast in stone. So you have to align those roadmaps constantly. And what's key at this time, when there's a major change in this whole interconnect technology to align with the right customers and the right partners. And one of them is applied materials. And the other is, of course, to understand what's happening in the lithography space. So it's not just one customer.

Okay, very clear. Thanks.

Thanks, Marc.

Thank you. We will move on to Michael Roeg from Degroof Petercam. Please go ahead. Your line is open.

Yes, good afternoon. I have a couple of follow-up questions on the Q4 sales guidance. Is the expected uptick in Q4 is that's only because of hybrid bonding or is TCB also making a contribution in that quarter?

It's only a hybrid bonding.

Only hybrid bonding. And will that big order for your time when these customer pick it entirely deliberately in the quarter or is there a tail slipping into Q1 as well?

Still slipping into Q1.

Okay, that's good.

But anyway, that's the answer to earlier question. We are end of July. Those are the schedule since they are right now. And as always, these - the other factors, which impact our shipments as well. Anyway, that's the best knowledge we have.

Okay. And then maybe a three question for Q4. The significant increase quarter-on-quarter, is significant meant to represent the 12% to 20% according to the mock scale?

Whatever it is - it's more than single-digit.

Okay. Good to know. Then I have another question on AI. Lam Research says something interesting about AI, like 1% of all the data centers would convert from enterprise servers to AI servers and it would represent 1 billion to 1.5 billion wafer fab equipment spending. Have you seen something similar or have you made calculations what the AI potential could mean for your business for your end market?

Yes, certainly. And these models are underlying the model for adoption of hybrid bonding. And that's why we have this lower-case, mid case, higher case. And apart from whether it's CPU or CPU and memory or let's say high-end communication device applications, so there are different scenarios. But there are many models made today and I would simply be a bit careful. Those models are always the best ever.

Okay. And they indicated indeed AI servers have a lot more leading-edge chips and much more DRAM and NAND storage. So AI for you is especially in the hybrid bonding segment or does TCB also involved in there for you?

Well, combination.

Combination.

Big bonanza is hybrid bonding.

Okay. So Engine 2 opportunity for you. Good. That's it from my side. Thank you.

Thank you for your question.

Thank you. We'll move on to Timm Schulze-Melander from Redburn. Please go ahead. Your line is open. Timm Schulze-Melander: Hi, guys. Good afternoon. Thanks for taking my questions. Just had a couple - maybe - could you just maybe take a step back just in your hybrid bonding product development? You talk about moving to a sort of a Gen 2 platform, could you just give us a quick update of how that's going? And then baked into that, you are managing your operating expenses, clearly good news for profitability. Just curious is that falling equally between R&D and SG&A, any color you could give on that? And then I have a follow-up. Thank you.

Well, if I understand your questions correctly. First, on the cost, yes, it's clear that the R&D cost for next generation hybrid bonding tools is higher than in the Engine 1 space, we have said that all along. And especially at this time, the investment is significantly higher in a market which is in early stages of development. But as long as major customers are driving this adoption, that justifies and also that are buying our machines that we're on the right track. But we don't look at it from whether that is equally shared. The - every product in our view is always a company. It's an individual entity. It has to simply perform financial metrics, which justify long-term success, return on capital for every one investing. So, I can't answer that question in a different way. Is this what you asked or did I'm able to understand your question. Timm Schulze-Melander: No, you did. I guess what I'm specifically thinking about is you're spending on the hybrid bonding portfolio, is it protected? And is that an area that's still going to grow within the backdrop of cost control or is it also subjects to cost control and less investment in Q3, Q4 as part of that cost control effort?

No. Timm Schulze-Melander: Okay, great.

No, certainly not. And it's an amazing, let's say that question is very important. But if you look at our financial metrics, we just explained that you can develop this hybrid bonding technology based on the financial metrics of your Engine 1 business also in a downturn where business is down by more than 25% tells you that all of our business engagements are in a very high-margin environment. And cost is under control in operations because we simply build less machines, to be any less people, you need less people to install machines - will use less machines. Timm Schulze-Melander: Right.

So that's where we cut costs, but on R&D, we only increase. Timm Schulze-Melander: Okay, that's reassuring. So maybe how is that next two platform development going and when will you be able to showcase something to your leading customers?

Yes, the second are the OnePlus, sold from 150-200 which is generation one. We shipped the first-generation OnePlus. That's the 100 nanometers, which has demonstrated to be able to do that, I wouldn't say easily, but certainly also below the 100-nanometer. And that should cover from next year onwards once it's qualified. The most advanced devices with hybrid bonding, then we're engaged heavily on developing the 50-nanometer, which should be ready in three years down the road. So those programs are fully supported by our financial means, our balance sheet, our backbone, so there's no slowdown in this development. Timm Schulze-Melander: Okay. And then the last question I have was just on shipment cadence. If - do we understand it correctly that in 2Q, 3Q likely you had low or no hybrid bonding shipments and they are now clustered in Q4? If you could maybe just provide some color on that, that'd be really helpful? Thank you.

We did ship some hybrid bonding tool in Q2, but as I explained earlier, it is lumpy sometimes they call that. It started to orders from customers. And in your assessment, yes. But this was always planned for shipment towards the end of this year, second half, we mentioned. Well, it is in Q4. It could have been in Q3, but that's the place where still it was not yet ready. So anyway, that is sort of background. Timm Schulze-Melander: That's really helpful. Thanks very much, Richard.

Thanks, Tim.

Thank you. All right, we now move on to next participant Didier Scemama from BofA. Please go ahead. Your line is open.

Hi, there. Good afternoon, Richard. Thanks for squeezing me in. I've got some really dumb questions, I'm afraid. Yes. First of all, can you tell us in Q2, how many hybrid bonding systems you booked and how many did you ship? And can you also reiterate or change whatever your number of hybrid bonding system shipments for this? I think, you used to say flat this year, is that still the case given your guidance for Q4? Thank you for the follow-up as well.

Yes, it - as we have said, in many instances, in '23 and '24 our initial qualification and a little bit of expansion of these first-generation devices, which we have talked about many times, the AMD products and the initial qualification for the others. So high volume production orders we have not received. So, of course, exciting to expect and hopefully we will see that for the second half of this year for the preparation more high-volume production to be installed in '24 to be ready for '25. So, that's the situation. So no programs have been delayed. Programs are on track and important again to repeat that. Is that customers AMD, Intel, Qualcomm openly, let's say, support that this is the technology they are developing for the next generation and that should result at some time in more orders?

Got it. That's helpful. The second question is going back to hybrid bonding and the longer-term picture. I think on the last earnings call, you mentioned that high bandwidth memory could be a bigger opportunity in AI for you guys than perhaps GPUs. I mean, is that still the view you've got given the number of players in high bandwidth memory or have you started conversations with GPU players for AI servers for adoption of hybrid bonding as well?

Let's say, the development is across the board. So for all these devices, there's a lot of development in the Center of Excellence in Singapore, shortly also in our own facilities simply because we can't accommodate everything in the Center of Excellence. Center of Excellence is more focused on integrated lines, simply see advantage reducing particle risk further. And then on the individual bonding processes in our own lab, but that's combined. And what will be sooner or later translated into mainstream applications. It's not fully personalized. We mentioned earlier to an earlier question we thought three months ago that that smartphone adoption would be later. If you hear the current comments in publicly made, it could also be earlier. So that tells us as long as our machines can do those applications, once it becomes mainstream and we are ready for that.

Makes sense. The final question on bookings, obviously Q2 bookings look pretty low. Now going to ask you about Q3 bookings unless you want to comment, but the normal seasonality typically for bookings to be down I think Q3, Q4 versus Q2. I guess, we are looking at things slightly differently, but I just wondered if you could give us any color on the trajectory of bookings for Q3, Q4?

Some statistics, if you look at the last down cycle 2019, '18, it started in the second quarter. And then in a similar pattern, the trough was in the middle of '19 and orders started to pick up in Q4. Then we had the abnormality of COVID hitting the royalty in February, March '20, but it should become more clear in the next two-three months whether this increase in utilization rates currently, whether that's only seasonal or whether that is leading into a next subject. There are definitely different views and TechInsights is very, let's say, convinced, '24, '25 will be a major up cycle again. There are some others, which are a bit more careful, a bit more - should start in the second half of '24. Nobody is right in the following cycles. We are prepared whatever way it goes. One thing is for sure, current levels are significantly higher than the levels we had in the past downcycle '19, which is very encouraging. So anyway that's as best, Didier, as I can answer your question.

Now, that's great. Thank you so much, Richard. Hope to seeing you soon in London.

Look forward to.

All right. We are at the end of this scheduled end time and I'd like to turn the conference back to Mr. Blickman for any additional or closing remarks. Thank you.

Well, thank you all very much for your interest. And if you have any further questions, you know where to find us. Please do not hesitate. We'll be happy to answer. All the best and have a good summer. Bye-bye.

Thank you for joining today's call. You may now disconnect. Have a nice day everyone.