Welcome to Melexis Capital Markets Day 2025 here in our company headquarters in Ypres, Belgium. Happy to see many faces that were also here in 2023. I was not, but I understand that the weather is also in a much better place today. Thank you for joining us, people in the room, but also for those joining us online today. My name is Philip Ludwig, investor relations at Melexis, and I'm going to take you through a very brief introduction to get this day started. We're excited to tell you about the progress we've made since 2023. Also a different time, still in an allocation period, and we'll hear more about that, as well as talking about the strategic initiatives that we've been taking since then and how that's going to build our future.
Before, however, we move into the actual heart of the event, I need to do a couple of housekeeping tasks. The first one is actually not even on this slide. I'll leave this slide on for now. We've been asked for wifi codes. Please go to Melexis guest and the password is guest. Hopefully that works for everybody. I leave the obligatory disclaimer for now. I assume that you've read it. It's also in the slides. This event is being live streamed, recorded and the replay will be online after the event. I can also share that the slides are now online, so you can please download those at your convenience. Finally, I would like to ask all of you to put your devices, phones, tablets, what have you into silent mode not to disturb the event today. Brief look at the agenda.
I'm not going to read all of the lines, but we've basically built today around two main parts. There's a part before the break and a part afterwards before we'll talk about our markets, our strategy to continue winning in those markets and continuing on our growth trajectory with a focus on our innovation machine and a deep dive on Robotics. After a Q&A and a short lunch break, we'll return looking at our automotive growth drivers. Then we'll also do a deep dive on China, which is relevant of course, for both automotive as well as Robotics. Then we'll bring that all together in financials and have some key takeaways before another Q & A. I would like to invite our executive team on stage to join me right now, please. Today, hello.
Today we're joined by four of the ET members, Tony Dusters, who you should now be able to see on your screen. Tony, Chief Business Officer, was not able to join us today due to previously made customer commitments. We're also very happy to be joined today by Maxine Amor, who just joined us very recently as Chief Operating Officer. Maxine, very happy to have you on team Melexis. Thank you. Equally we're joined by our Chief Innovation Officer Vincent Hiligsmann, our Chief Financial Officer Karen Van Griensven and our Chief Executive Officer Marc Biron. With no further delay, Marc will take the first section. We're very curious, Marc, to hear more about the markets and our strategy. Now the floor is yours, Marc.
Yeah. Thank you, Philip. Good morning to all of you and thank you for having made the travel to Ypres.
Yes, sorry to interrupt, but I don't have a username. I want to follow the markets. Username and how do you. In one word.
Is it okay? Can you help? Okay, I suggest we start then. Good morning everybody. Thank you for having made the effort to travel to Ypres in order to listen to the Melexis journey. Indeed, Melexis is changing and the Melexis of today is different than the Melexis of five years ago. You will see that the Melexis in five years will be obviously different than the Melexis of today. Melexis is changing because the world around us is changing. There are much more business opportunities in the semiconductor industry. There is also much more competition. There is much more pressure. I could use an analogy from a Swiss watch company who says do not break under pressure, do not crack under pressure.
I think it's a nice sentence for a watch company and to not crack under pressure but for Melexis, it's obviously not enough. We need to put the bar higher. Of course we don't want to crack under pressure, but we want to use the pressure to strengthen the company to become a more performant company. It's what we call antifragility. You will understand more about this concept during the presentation of Vincent and also during the presentation of Karen. This antifragile. We want to become antifragile. Before we move in the detail of our strategy explaining how we are going to win, how we are going to improve our top line, how we are going to improve our bottom line, I would like to take you through the world we are operating in which is obviously also more and more complex.
Starting with the mega trend, which is climate change, which is aging population, which is also all the geopolitical tension. We can say that geopolitical tension is a threat, it's a constraint and we need to make sure that we have a supply chain close to our customer, close to where we sell the product. For the climate change and for the aging population, it's a threat. There is also a lot of opportunity for a company like Melexis, because I really believe that the semiconductor industry can reduce the CO2 emission. We can provide solution to reduce the CO2 emission. We can also provide solution to make the life of our elderly people more comfortable and more safe. Moving to our core market, which is automotive.
I think it's clear for all of us that the center of gravity of the automotive industry is moving from Europe to China. Moving from combustion engine to EV engine. You will understand in the presentation of Vincent that there is a lot of opportunity in this move for Melexis, but the overall Mobility is changing. E motorbike, e bicycle, drone, those are new Mobility regions who will also provide new opportunity for Melexis. The software defined vehicle is also a big change for the industry. It's a big change for the OEM. It's a big change for the Tier 1, the Melexis customer. For Melexis, those are also a lot of opportunity. Because at Melexis we are expert in sensor and in drivers. The sensor sense the environment. We measure the pressure, we measure the temperature, we measure the position.
All those measurements which are done at the periphery of the car are used by the ECU from the SDV in order to take decision and then also to actuate the valve and all the mechatronic. It is why we are sensing, we sense the environment, we and also we drive the environment, meaning that we actuate some valve in the car. This sense and drive competency for sure important asset for the car. It is also an important asset for the future of the world. Because the world is much more robotized, much more automatized, much more electrified. And many applications in the world will also need this sense and drive capability. Again, Vincent will give some concrete example in his presentation. All those changes around us are very, very quick. There is a lot of change, but it is also very, very quick change.
It means that we need to adapt the company and quickly in order to stay in the game. We need also to adapt the competency of all the employees of Melexis. All our competency must be adapted in order to stay in the game in those new changes. This is about technical competency. I will give some example later. It is also about soft skill competency that we need to adapt. Usually I say that we need to learn, we need to unlearn, and we need to relearn, and quickly if we want to be able to stay in the game given all those changes. I think this is one of the duty of the company, to make sure that all the employee of the company are able to learn, unlearn, relearn, and quickly. How are we going to win? This is.
I think the main goal of the presentation today is to explain how are we going to win, how are we going to improve our top line, how are we going to improve our bottom line and quickly. I would say innovation is one of the pillars of the strategy. We do not want to copy existing product. We want really to innovate and innovative solution that solves some unmet need of the customer. The customer is also in the center of the strategy. Because to be able to solve unmet need, we need to understand the need. We need to proactively understand the need. When we discuss with the customer, innovation, customer centricity. For sure, AI will be also part of the strategy. Vincent will explain it. Because AI is one way to increase the performance of the product.
AGI being an example. AI will also help us to improve our operational aspect. This is indeed the complex world where we are operating in. Our strategy is based on this fact, let's say on this fact around us. Before we move in the detail of the strategy, I would like to take a step back and look at the history of the company in terms of revenue. You see that we had two big waves of growth in the company. The first one during the first 15 years. The second one during the last 15 years. Those waves of growth have been interrupted by downtime. The first one. For the first 15 years we were focused on automotive. Only automotive. Our customers were mainly Western Europe, customers mainly Germany, I would say.
We were developing and selling ASIC. It means that the customer sent specification to us. We develop the product according to the specification of the customer. We sell this product exclusively to this customer. It was the business model during the first 15 years. During the last 15 years we become more knowledgeable, I would say from the market. Meaning that we were able to define ourselves what would be the product to be developed. Because we knew the market. We have developed standard product. The advantage of the standard product is that we can sell those products to all the customers. We do not have any exclusivity because the specification, the requirement has been created by we have expanded our portfolio with different product line. Vincent will give some detail.
For sure, Magnetic was an important part of the portfolio and also from a regional perspective, it was not only Europe as a main customer, but it was Europe, Asia and also the U.S. The objective of the capital market day is to explain what we are putting in place now, what we have started to put in place in the past in such a way that we can secure the third growth wave. In order to secure this third growth wave, I will explain the strategy and the strategy is based on four pillars. The first one is technology leadership, customer intimacy. I will explain our fabless model and then I will explain that we want to sell more than the chip. We want to sell an overall solution, something beyond, beyond the chip.
In terms of technology leadership, I'm using here an analysis from TechInsights, which is a market analysis who shows that for the automotive sensor, Melexis is ranked number four. We were number five the year before and we moved from five to four at the end of 2024. I think we can be quite proud because when we see the name of the company that are in front of us, Ansemi, Bosch, Infineon, those are very big, very big company. The smaller triangle are the CAGR. The last five years CAGR, you see that we have grown by 12% in average during the last five years, which is if you compare with the competition, which is quite good, some competitors did not grow, some competitor grow less than 12%. That with 12%, I think we have a good growth. I repeat, it's about automotive sensors.
You will see from the current presentation that the automotive sensor represents roughly 75% of our turnover. If we go a bit more in detail in the areas where we are leader, I would like to highlight the steering and the braking system, which are important systems of the car and will become even more important in the car of the future with the autonomous drive. Because in the autonomous drive you need to have e-brake and e-steering system with a lot of safety, meaning that the electronics will be very important in those systems. For the ADAS, and we are leader with our position sensor, can be magnetic sensor for some systems, can be inductive sensor, but it's usually via our position sensor. Another type of sensor where we are leading is in the EV powertrain, the EV powertrain.
It's more with our current sensor, also with our temperature sensor to measure the temperature of the power system. Also, we have some magnetic position sensor in the motor of the powertrain. In terms of thermal management, we lead for our sensors, but also for our driver. Thermal management is a very important system in the EV car because it's a thermal loop who ensure that the battery stay at 25 degrees Celsius and ensure that the cockpit stay around 25 degrees Celsius. It is a very complex thermal management loop. There are two loops, one for the battery, one for the cockpit, with a lot of electronic, a lot of sensors to measure position, to measure pressure, to measure temperature of the loop, and also a lot of drivers in order to actuate the different valve in the loop.
In terms of drivers, last but not least, we are also leading with our LED driver for the static LED. Today in the car they are mainly static LED, but the new wave will be dynamic LED, dynamic light. We are also leading this kind of application. This is to highlight, let's say, our technology leadership. The second aspect of our strategy is the customer intimacy I mentioned in the introduction. Very important to be close to the customer because we need to anticipate the need of our customer, listening to our customer. I do believe that one of the strengths of Melexis is that we are big enough to serve and small enough to care. Small enough to care means that we are small enough to adapt ourselves to some specific requirement from our customer.
If you compare with very big company, they are so big that they do not want to adapt to some specific requirement. Melexis, we are small, we are agile, then we are willing and able to adapt. Big enough to serve means that we have a supply chain which is strong, which is resilient with some sort of source in such a way that we can serve our customer in all the circumstances. As a matter of fact, during the chip crisis, yeah, we did not put one, we did not put one OEM line down because we did not, we did not deliver. In terms of customer, sometimes the OEM are the direct customer of Melexis. I would say the modern OEM are usually direct customer to Melexis, but usually our direct customer are the tier one.
You see on the slide that in terms of OEM you can find Melexis product everywhere. I mean we are a global company and we contribute to the different OEM. You can find European OEM, OEM from China, OEM from Asia, from Korea, OEM from the U.S. Vincent will give some example of cars with some example of Melexis content in the different car and it's the same for the Tier 1. Our direct customer. We are a global company. We address many, many types of customer. Big customer, small customers from all the regions of the world. Interesting to note that 10 years ago or 15 years ago, we have received a lot of awards from European customer. I remember I've received an award from Continental 15 years ago, but now since two years.
Interesting to note that in fact we receive much more award from Chinese customer. You have some example on the screen award that we have received in 2023, in 2024 and in 2025, which is a kind of testimonial showing that we have a very good customer intimacy also in China. We are recognized by the customer in China as a good, as a good supplier, good and reliable supplier. I think it is important for the future to understand that indeed Melexis is well recognized in China. The third pillar of the strategy is our fabless model. Being fabless means that we concentrate our resource, being our financial resource, but also our brain power resource. We concentrate those resources on defining the right product, developing the right product, testing the right product, making the marketing of the product and also selling the product.
This is really where we want to concentrate our effort. This is what is represented by the top of the horizontal line. You see on the bottom of the horizontal line, those are the processes that we outsource. We outsource the wafer process, we outsource the assembly. You will understand later with Vincent that we want also to develop some module and we will outsource the module in the future. In terms of wafer fab, if I make a small stop on the wafer fab aspect, you see that there are different technology nodes that we use. The vast majority of our products are still using 8 in wafer from 350 nm or 110 nm. We are also now using more and more different technology nodes. We are using the 130 nm from a foundry in Korea in order to increase the capacity.
One of the lessons learned from the chip crisis is that we did not have enough capacity then. We are now using another wafer supply in order to diversify our supply and to increase our capacity, having also access to a better cost in our supply chain. We are also using 90 nm, which is a 12 in ratio. Twelve in wafers from a Chinese supplier. This is part of our China strategy. Vincent will explain the China strategy. In this China strategy, we are using a wafer in China in 90 nm, and for some specific robotic product that require a lower feature size technology, we are using a 40 nm process in a wafer fab in Singapore for some specific robotic product. This is our fabless model, and the objective of the fabless model is to concentrate our resource on our expertise.
The pillar number four of the strategy is the system solution, which is something new because historically at Melexis we develop an IC with a standard package. We want to move up in the value chain. It is why in some innovative products, for example in Robotics, we want to provide more than an IC. We want to go beyond the IC. We want to provide an IC in a specific module, in a specific mechatronic module. Julien will give an example. We have some development with different kind of system. We have also a development for what we call the Tactaxis, which is a sensor that we use in the E bike. We are also more and less embedding software in the chip to create some intelligence in the chip. We are continuing to use complex packaging.
The Triphibian is an example that we have launched earlier this year, which it's a pressure sensor, a pressure sensor solution. We will continue to develop some complex package. Those are some examples of system solution because we want to really to provide more than an IC in the future. Vincent will highlight some examples. Those are the four pillars of the strategy. To execute this strategy we realized that we need to also to upgrade, I would say the corporate competency. In order to reach this new competency at company level, we have defined some strategic team and we have regrouped different initiatives in three strategic teams. The first one is about innovation. Innovation from a product aspect, but also innovation in a geography aspect and also innovation from different applications. The second strategic team is about the people.
It's about having a high performing team or higher performing team in the future. The third one is about our operation. How do we increase the efficiency of our operation? In terms of innovation, I think a good marker of our innovation machine is the number of products that we launch in the market. All those products are defined by Melexis, developed by Melexis, and then launched by Melexis. You see that if we look at the last 10 years, the number of products that we have launched year after year is increasing, meaning that we bring more and more innovative solution on the market. In 2024 we have launched 20 products. In 2025 we will launch probably 19 products. It's important to note that the green part of the graph is indeed products outside automotive.
You realize that in 2024 and even more in 2025 we have launched much more non-automotive product innovation in terms of product. Also, innovation in terms of market geography. This graph shows our quarterly turnover during the last 10-15 years. You see that the green part of the graph is in fact the Asia revenue, the red one is the U.S. revenue, and the black one is the European revenue. It is clear that the green part, the Asian revenue, is increasing quarter- after -quarter. To be successful, we need to be successful in China. That is why there is a deep dive later on about China. The second aspect of the strategic team is about our team, our people. How do we improve the performance of our team? Because as I mentioned, the changes are coming very quickly.
We need then to modify or to adapt the structure of the company. We also need to adapt the competency of the people adapting the structure of the company. We did it last year and we have merged the development team inside the business unit. The goal was to have the development team closer to the business unit, closer to the customer, to create a better dynamic in the development team. I think it's one of the reasons why our product launch have increased last year and this year is because we have a better mix and match between the business unit, the customer and the development team. This is about, let's say, the corporate adaptation. It's also important to upskill, reskill the competency of our people. I gave the example of the mechatronic module. It's something new.
Melexis we do not have or we did not have those competencies in the company, then we need to develop those kind of competencies in the company. As an example for the mechatronic modules, the same for the software. Ten years ago we did not have any software engineer. Five years ago we had some software engineer. And now we are recruiting a lot of software engineers in the different region because we need those software engineers to develop the software for the company or to develop the AI solution for the chip. It is also important to have the right strategic workforce planning because we have 18 sites in the company and it is crucial to have the right competency on the different site. This initiative or this strategic team around the team include also the diversity aspect and the inclusion aspect.
We are doing a lot of program, a lot of training with our people to highlight the importance of the inclusion and the diversity. Because according to me, diversity is mandatory. To have an innovative team, you need to create the right innovation. You need to have different competency, different age, different background, men, women. I mean the big diversity is really critical to ensure the right innovation is why we are also investing a lot of time in training and in communication to the company about the need to be inclusive and the need to welcome diversity. Last but not least, the third strategic theme is about our operation and about how to ensure high performance or more performant operation team. It's important to be more performant, but it's also very important to be zero defect because we could be quick but with a bad quality.
The quality is also one of the main assets of Melexis. For example, in China. I mean we could say that China does not care about quality. It's really a myth, which is not correct. I would say China care even, even more about quality than other region of the world. Because it's one of the strengths of the company, we need to be more performance but we need to keep our high, high quality level. Being performant means that we need to create a resilient operation system with second source as an example in order to be able to change sources in case of geopolitical problem. It's important to improve the efficiency of the operation. AI is one of the way to have for example a quicker test, a lower cost of test or a better yield.
It is also important to have the footprint across the globe in order to be resilient about the geopolitical decision or geopolitical tension. It is really important that our footprint is well spread over the world. Those are all the elements that are part of our strategy. We have reassembled all those elements in what we call the Strategy House. The Strategy House is in fact our North Star. It is our roadmap in order to make the company more performant. It is our North Star in order to improve our bottom line and our top line. I will not go through the full Strategy House because this is really the combination of what I have explained. I want to highlight our ambition. Our ambition is to develop innovative solutions for the good of the planet and the good of the people.
Those solutions are based on sensing and driving product. Our approach is based on the four pillars I mentioned: technology, leadership, customer intimacy, fabless model, and system solution. I have highlighted the three strategic themes that I have just mentioned. On the right, world class operation; in the middle, high performing team; and on the left, all the innovation aspects. Vincent now will go on stage, and Vincent will detail more all the innovation aspect of the strategy map. I think, Vincent, you are welcome on stage.
Thank you, Marc. Welcome, everybody. For this second part of this Capital Market Day, I have a slide to start, similar to the one of Marc, with, of course, other elements on it. The high-tech world we operate in, we are a semiconductor company. Look, it's important there to look at some of the key aspects related to semiconductor. One of them is the node. You have probably heard about those mature node and those advanced nodes. This describes our, our, let's say, semiconductor industry. We are Melexis, operating in the mature node. Mature node means typically, let's say, from 1 micron down to 90 nm 8 in. Often, for the majority of them, 8 in diameter size of the wafer. And 8 in is like a 45 RPM when you were using record vinyl. It's the dimension of that.
The advanced nodes are rather down there. Even today, 40 nm would be considered as less advanced than it used to be. Advanced is often today seen as, say, 6 nm or below. There you have very dedicated fab to do that. They work also with much bigger wafer, 12 in, which are equivalent to the 33 RPM LP type of records. Look, we operate in mature node. As already, let's say, mentioned by Marc, we are operating mature node also at 12 in. Look, very important, that's a trend in China to have those line in 12 in also. Second, we also use some, let's say, more advanced node compared to the mature. Not as advanced as the one used by, let's say, the super GPU type of chips at the 40 nm that we use for high digital content.
Because why we use mature node is because it fits well what we want to do. It fits well robustness versus, let's say, supply versus temperature versus all the external environment. That's why we like those mature node. They are, let's say, well suitable for the product. We do sensors and drivers. The advanced node, we touch on it when we need more computing power and we need more memories. That's why for a modern product, for Robotics, we are, let's say, addressing that with a 40 nm die in combination also with 180 nm die in order to get, let's say, the system in package. The solutions that Marc mentioned, we do that also for Robotics, of course at chip level, combining, let's say, two technology in such a way that we bring the best solution for the customer.
Another part of let's say description of the semiconductor industry is to look at the silicon. We use silicon CMOS at Melexis. You have probably heard about silicon carbide, gallium nitride. Those are also let's say semiconductor material. They are usually called wide band gap because silicon is a narrow band gap. The wide band gap would be for silicon carbide, gallium nitride. They are used for power. There is a need of course of power electronic for all those robotized and electrified words that Marc mentioned. Look, very important that we have power electronic and silicon carbide and gallium nitride are enabling that. At Melexis, we like CMOS of course, but we also are the friend of silicon carbide and gallium nitride, not by doing those power stages, but by doing all the protection of those FETs, of those field effect transistors.
The protection, let's say, is really one of the niche we also want to explore and also to get revenue from. I will describe that a bit later. There is no presentation today where you would not touch on AI. Marc already touched it. I touch it again here with Edge AI and Cloud AI. Cloud AI, of course we use it a lot with our test data to optimize our process. Also we use it to optimize some of our model. We also use it for helping us to design the simulation data and so on. Cloud AI is definitely something we use. Cloud AI is also something we enable. Cloud AI is definitely, let's say, a power hungry. You have probably heard that one of the biggest consumption of energy is in all those server farm.
If there is energy, although everything is very efficient, there is still a need for cooling. We are at Melexis, let's say, part of that ecosystem with cooling of servers and server farms, with our motor drivers for instance. Edge AI is definitely part of our world and even closer to us in terms of the chips and the solutions we produce and we develop and we sell to the market. Edge AI is where we want to really process the sensor information right at the spot, right where they are taken in such a way that what we broadcast to the rest of the system can be an SDV vehicle, an SDV architecture.
What we broadcast, let's say, is already a pre-processed information to enable, let's say, also faster and higher level of operation on the next stage. Then also somewhat linked to AI. You have the era of data I mentioned already a couple of times. I'd say there is a lot of need of data, of simulation data, operation data, production data, and data is also part of the SDV. To come back again to that terminology, the SDV architecture, they need a lot of data from the peripheral and that's what we can provide. Then there is also the era of electrification, robotization, and automation. What Marc referred to be the robotization of everything and electrification of everything. Those are of course two domains that we like because they are enabling, let's say, a lot of opportunities in terms of semiconductor content.
For the one who have been with us in previous events, that will probably be a refresher. For the one who joined us for the first time here on site or online, that will maybe be an interesting, let's say, few minutes, let's say. To give you a portrait of Melexis, Marc gave some high level description. Here we go a bit more in our portfolio and our markets in such a way that you understand, let's say, who we are and how we also want to change, how we want to pivot in our industry. Your pivot means always remaining one foot on solid ground and the other foot is moving. The solid ground being automotive for us. We move of course in other chosen markets. First of all, the product portfolio Melexis is known.
If you need to remember something about our product sensors and drivers, with that you already cover quite well what our portfolio is. Sensors are essential to come back to the previous slide, essential to provide the data, the data to the systems, the data in order to enable, let's say, an extra level of processing, let's say at the next stage. Data are provided by sensors. The data come from all the peripheral elements of that architecture of the vehicle or of the robots or of anything else. Those sensors provide data. We do drivers. With drivers, we enable action because if you have data, you process them, you want to do something with it. Something is, of course, driving, is changing the environment. That's what we do with drivers.
If you have still a little element of, let's say, more precise on the sensors. We are covering, let's say, position sensor needs with magnetic technology and inductive technology. We do also current sensors to measure the current flowing into a wire. We measure also pressure. We have pressure sensors in different types, absolute and relative. Small range of pressure, higher range of pressure, temperature. We also do contactless temperature measurement with a far infrared thermopile. We also do light sensors. The position, current, pressure, temperature, light are the five key measurements that we do today. You will learn that we have new technology coming in and with, let's say, enabling further expansion of our portfolio. Today that's what we have on the motor side, on the driver side, sorry, we drive motors.
When it is about action, if you take a robot you need to move an arm. There is definitely an action there. This is driven by motors. We drive those motors. In a car you will have pumps, you have valves. They also need to move or rotate. For that you also need motors. That is the way our driver product is used. We also drive LEDs. Light. You have in a modern car a lot of light options that you can activate in the door, in a dashboard, in central console, under the seat, wherever you think they put light on it. Also external starts to become a grill with light. The rear side of the car gets more and more aesthetic light on it.
Next to the, let's say the legal light, as we call them, the driver of LEDs is definitely one of our key portfolio, key product portfolio that we have at Melexis. If we go again a bit deeper to understand, let's say from where we come, the sensors can be either integrated, where we have on a monolithic chip, everything together. The transducer to sense the position, for instance, as well as the signal conditioning. Sometimes, let's say we take the sensor signal from our customer, he has an external transducer and then we read out the signal of that sensor to provide a high level information to the next stage in the chain, the external conditioning. ICs were with external transducers on the driver side. We have also two types. Either we have the internal power stage, we drive directly the motor and they order LEDs.
We have drivers. If we, for higher power application, would not drive directly the motors, the power stage will be external and that is where we have pre drivers. Those external power stages can be gallium nitride, for instance. That is why we are also, let's say, developing pre drivers to enable the use of gallium nitride, which will not come from us, but our pre drivers will drive those transistors. Just to come back, you know, we are silicon CMOS, but we are the good friends of silicon carbide and gallium nitride. If we go to the markets of Melexis, here I put them, let's say, at equal level. Of course, you know, automotive is our core business for three decades or more. Automotive, let's say, is 90% of our business today.
It's represented here like one part at 20% in terms of real estate on the slide. You know, it's 90%. That's also why we have a specific section after the lunch, just to keep you, let's say, energized until that transition comes, that you know what our perspective in the automotive, that's what we will cover, let's say, this afternoon. This morning we'll be focused more on the four on the right, which is, let's say, the way we want Melexis to transform to pivot in chosen markets outside the automotive. Robotics, Alternative Mobility, Sustainable World, and Digital Health are the four chosen markets. We already presented, let's say, two years ago. We want to give you a bit more highlight on, let's say, where we are on that journey.
You may also say, yeah, you have been trying to do that for quite some time and we do not see really that, let's say, projected, let's say, in the revenue, the big change, and that is what we will also highlight today is the fact that we really develop, let's say, new product, let's say, from the start. We do not start to reuse product or to modify some automotive product to attack those. We are really grandly investing, let's say, in new product also to understand the market needs and develop new product in such a way that those four segments will become a reality in the next event and in the further events. Moving forward, I will go rapidly over this slide because we have a full detail chapter this afternoon on automotive, but maturing market growth in automotive.
We have five areas of focus that I will illustrate and detail this afternoon. We cover that with ICs and with solutions as already introduced by Marc. We go beyond ICs, we come with solutions. That is also something we do in the automotive. More on that this afternoon. If we come back to the, let's say, other chosen markets outside automotive, we have Robotics, Alternative Mobility, Sustainable World, and Digital Health. Why do we focus on those? We could have of course selected others, but we select those four because we see a high intrinsic market growth. They need data, they need sensors, they are electrified some way or another, they will need drivers to actuate things. Also, robotization is part of course in Robotics, but also in other aspects.
Robotization can be considered and therefore we think that there is a clear intrinsic growth and we will confirm that there is a higher value proposition that we can bring to those markets. ICs solution as mentioned by Marc, but also modules as also introduced. That is where we think that we can play automotive. Those modules are typically coming from tiers and they have been there forever. We do not want to replace our customers. In those, let's say, new market for us and also still emerging. Although Robotics have been there for a lot of time. Of course you see robots in manufacturing chain for a long time. The Robotics we refer to here are more those cobots, those humanoid things. This is still a market fragmented, but in the building.
There is clearly on our side, let's say, an intention to move up in the value chain from ICs to system and to modules. We'll also explain that with Julien in a couple of minutes. High multiplier in Robotics, that's something we like. Also like in car we have typically, let's say, 18-20 chips per car. You will see other examples where we have even bigger number this afternoon. In Robotics there is an intrinsic high multipliers because a lot of joints, a lot of degree of freedom that you want to obtain with those robots in such a way that you have many points of actuation, many points of sensors where you want to sense the position. Therefore there is a high multiplier that we like in Robotics.
Look, if you add, let's say, a pretty good tailwind on Robotics combined with high multiplier and a higher position in the value chain, you get a pretty significant business case we are pursuing with our strategy. Last point on Melexis that you know a bit how we are organized. You have the business units and we have the representative of the business unit here today. We have a BU position where we have the position sensors being magnetic based or inductive position sensors. We have the BU current where the current sensors of course are located, but where also we have our electrical protection device that we refer to for the silicon carbide and gallium nitride protection devices. They will be in BU current because there is always use of those power stages and need for protection. Close to where our current sensor are used.
There is a kind of synergy in terms of application where those products are used. We have the BU Optomems, where we have the MEMS pressure sensors and also the temperature sensors based on MEMS thermopile. Look, that's why we have it Optomems there. And the BU Drivers, of course, where the first three are really the sensor part of the house and then the BU Drivers is covering, let's say, the second part, let's say the driver part of the house. Global sales is also included in that business unit to have that global reach that Marc referred to. That global reach, let's say, is obtained from the business unit. Underneath you have the business innovation serving mainly.
That is maybe something that I can put a little beam on this slide serving mainly the four chosen areas beyond automotive, being the Robotics, Mobility, Sustainable World, and Digital Health. We also contribute, of course, to the automotive. What I want to mention there is really where the business innovation is focused on those with new type of product. Innovation is not only in that group. Innovation is also in the business units. I will describe that in a couple of seconds. Let's see how we innovate, how we move through the innovation chain. The business unit are equally innovating together with the business innovation in order to provide, let's say, new product, new solution, new idea, address new pains, let's say, on the market.
That is why we have, let's say, plan to bring you to that journey from ID to revenue, from ID to dollarization or Eurozation. That is what you can see here on this step. It starts with innovation on the left and it goes to recurring revenue on the right. Through different steps of development, launch business opportunity, design wins, and then you get eventually the revenue. Timeline is important. You always ask when do you get there? When do we see some signal or signs in your revenue target? Innovation can take up to five years. Some products, of course, get started and get sooner converted into development. Others die within that innovation period. It is not that everything is successful there. Innovation is there to de-risk. We want to de-risk some of the ideas we have, some of the technology we want to acquire.
There is a development phase to develop an IC. It takes some time. On average, you could say two years for new generation, new platform, rather three years. When it's about a little iteration, you could do it in a year. That is the time window you need to consider for a development of a product. Once that product is finished, we launch it. A very important metric that Marc already mentioned. I will come back to that as well. We have the business opportunity, the product is available on the market. Our global sales team is addressing, let's say, the market and promote the products that we have developed and launched. It stays there in the business opportunity funnel for six months to three years, sometimes even a bit more.
Because it takes time for the customers to adopt the product, to develop his own product with it, and also to bring that to the market and validate that to the market. We get at the end of the funnel a design win. That's when we get the first PO, first decent PO of a product, not a sample PO, of course. With that PO, we'll start, let's say, generating revenue with that specific product at that specific customer for that specific opportunity. That's how we get basically the ball rolling. You see that some product, let's say in consumer range, will be rather a very short life, one year, and then you need to reiterate again the process with a slightly different version, or it can stay five years, seven years.
You know, the typical cycle of the automotive before though that gets a bit shorter these days. But we have product, of course, that get, let's say, used and reused by our customers and they can stay for 10 years or more even in the use. Then if we go now in the detail of the whole journey, the innovation is an important part. I will try throughout that journey to illustrate that we are changing. As Marc mentioned, we want to pivot from the auto to beyond auto or to outside the automotive. In chosen areas though, here we will always illustrate throughout the journey the portion where we have, let's say, the automotive markets and where we have the other markets. The automotive is in blue, dark blue, and the other markets are rather in this greenish color.
What you see here on the innovation that we are definitely, let's say, increasing the proportion throughout the year, the proportion for the other markets in terms of, let's say, the kickoff of pre development and innovation project, de risking project, we do approximately 10-15 per year and as I said, some of them will die, some of them will continue for one or two years in that incubation. Some of them will even move faster into development. First signal you see in innovation we are definitely more focused on the other markets, but we don't abandon automotive. Automotive is still a very, very important engine for us and it will remain that for the foreseeable future. It's not only a couple of years. I think it's 10 years and more where automotive will remain an important field for us. We start with 90%, don't forget.
Therefore it's very important that we still have some blue part there. Otherwise you would say, yeah, but those guys are double down on everything which is not automotive. Is it really wise strategy? No, we have a balanced approach, of course where we still innovate also in the automotive. Some of the examples that you have here where we innovate automotive will be strain sensor for instance will be in cell battery impedance sensing. If we look at alternative Mobility torque sensing, Marc referred to it in inductive torque sensing module there, that's where we are, let's say incubating right now in the innovation. We have also self-illuminating nanoplasmonic biosensor. That's for Digital Health. A pretty complex name but that's really a pretty new technology. It's really far out.
We are dear Horizon three look, you will probably see that product on the market if it goes through all the process, let's say in six, seven years, hopefully for us to get let's say a biosensor there which is coming out of that innovation trajectory. Then you get on product development and you see that there. The blue part is also getting let's say a bit smaller, but not that much. We stay quite balanced. As I said for the product development we have 20-25 kickoff of product development every year there. Because we have de risk everything there. The success rate of those product is pretty high in terms of getting finished. Of course the success of the market still remains sometime a question mark until let's say we get the product and we see real traction.
That's clearly, let's say, the trends you see here where we are a good balance, let's say, between the beyond auto and the auto and the auto. Some example, the first one is the one we already mentioned when we were referring to this, let's say, advanced node or more advanced node, this dual core 32-bit MCU that we use for motor control, for Robotics and alternative Mobility. We have hydrogen sensing, which is a new type of sensors. You've probably never heard about the hydrogen sensor. There we also pivot from our temperature sensor technology to build a hydrogen sensor based on thermal conductivity. That will be a key sensor for battery, for instance.
Battery that can be used in the Sustainable World approach but also can be used in the car. Coreless current sensor is also a new type of sensors we developed to address, let's say, modern needs in terms of, let's say, current sensors in converters as well as in chargers and charger units. Silicon RC snubber. This is the protection of the silicon carbide and gallium nitride device I mentioned too. This is in development right now and we will get the pre-launch at the end of this year. Just to confirm that it's really those products are moving, let's say, in the chain and will start to bring revenues. If we go in product launch, there we are at parity in 2025. Look, we, between the, let's say, outside automotive and automotive, we have, let's see, on average, seven in the 2015, 2019 period.
Since 2020 we are more than doubling that number of product launch. It also fits with the inflow I spoke about, 2025 inflow on the product development. We have an outflow of course of, let's say, 16 this year, 19 product launch, 11 year to date have already been done. You see that there is a kind of hockey stick towards the end of the year on the product launch. In terms of, let's say, addressing automotive application and other markets, we target some of the product launch I'll describe here. It's on purpose, let's say, crowded that you see that we had many launches in 2023. We had offered many launches in 2024. Some example that you see on sensors and drivers. We are quite explicit when it's about the sensors, about the drivers. Look, you clearly see that there we are active.
We also see application like I mentioned the fan drivers for the server farms. You see, that's what we did last year here in terms of a product launch in 2024. We have current sensors, we have LEDs. We spoke about drivers for LEDs. You also see them there. We have application where you see current sensors, where you have a car there and the battery look, that's definitely to show where we are those products. Those are new products that we put on the market. New content that we can address and let's say to meet let's say the next requirements for customers.
In terms of application 2025, you see Halvis populated with real pictures of the product launch we did again, you see current sensors, you see motor drivers, you see position sensors for automotive and for also outside the automotive. Temperature sensor is also on this slide. Just to confirm that we are really combining all those sensors and drivers in our product launch. That we're also addressing not only automotive, but when you see a steering wheel, it's clear automotive. When you see other type of application like let's say a cooker top and so on, those are rather, let's say the beyond automotive aspect. Business opportunity very important. Of course that's where we start to move, let's say the product in the market and start to see that the revenue is at reach.
We have that business opportunity funnel where at the top of the funnel you have all the opportunity that get in first contact with customers, first implementation, samples, change and development and so on. It goes through the funnel and at the end, if it gets out of it, it means that there is a design win, we won the business. The progression is typically monitored in two ways. The unweighted funnel, that's where every opportunity is counted maximum value. There you see that the automotive market is still dominating with 75%-80% dominating there today, the unweighted funnel. It is already more than the 90, it is already changed versus the 90/10 that we are in the revenue. That is an important message there. The weighted funnel is similar. In the weighted funnel, similar proportion in the weighted funnel.
What we want to monitor there is the value, let's say, of the opportunity is depending as a way factor, depending on where you are in the funnel. Look on the left side we consider everything, on the right side we consider movement into the funnel. You see that from a proportion automotive, outside automotive, we are quite similar around, let's say, the 80/ 20 today already versus, let's say, the design win here. Recent design win. You see that we are a bit more than that, more than 75/ 25 on the design win that we have for the automotive market compared to the other markets. I can move further on the revenue today where we have that 10%-11% today on this beyond auto versus auto.
Just to confirm that from the innovation where we are clearly, let's say, more outside automotive, the product development is rather 50/50. As we move through the funnel, you see that that 50/50 will ripple in such a way that we get, of course, more and more opportunities outside automotive. Let me give a deep dive on some of the applications we serve there and how we serve them, digital and for the outside automotive. Automotive again comes after the lunch. Digital Health, here we serve it today mainly with temperature sensors in wearables to measure in a contactless way the temperature at the wrist if it is a wearable like a watch, or it can also be in phones. That is more a temperature measurement, let's say, which is more like a forehead thermometer, but with a phone.
We have also other wearables where you can use, can also think about patch where we measure temperature. That's the way, let's say, Digital Health today is served. At Melexis, we serve in a broad scope the medical market also with some motor drivers, some other temperature sensor applications, and also position sensors, let's say, used more in the urine machine interface of those big medical devices. On the real Digital Health, let's say, that's more this part that we cover with temperature sensor that we measure, let's say, very close to the skin. In terms of innovation, instead of measuring the temperature of the skin, the customer or the patient at the end or the user is rather interested in knowing what is my body core temperature. That's why innovation, we work based on our thermometer.
We are developing algorithm to come to the system that Marc mentioned. System solutions. We are developing algorithm as we speak to derive from that, let's say, wrist temperature or, let's say, the patch temperature to the patch location temperature to the body core temperature. Which is definitely a kind of holy grail in the industry of the wearables is to get a real body core temperature. We are working on that in terms of innovation. As I mentioned already, this nanoplasmonic biosensor, self-illuminated, we have a lot of project innovation there targeting, let's say, biosensing that will become, let's say, outside that are today incubated, let's say, in the innovation area on Sustainable World. Sustainable World, you could say, what is that? What we cover mainly there is everything that has to do with energy.
Of course, typically the renewable energy, because that is what is quite important these days. The Sustainable World and the energy, you start with the energy that you get from the solar, for instance, or the energy that you get from a storage that is in a battery. You need to convert it because the world is an AC world, and those solar panels and those batteries are in the DC world. You need to convert from DC to AC. This is what is called an inverter. Like in a car, we also often refer to inverter. I will come back also to that in the afternoon. You need an inverter, and when you have an inverter, you have a conversion of energy. There is a need for current sensors. We have current sensor measurement in those inverters. Inverters mean also, let's say, high efficiency.
That's why they go to also those silicon carbide and gallium nitride power stages. That's where we can also bring our protection device. Look, our silicon RC snubber will be part of that Sustainable World as well. I spoke about some innovation that we do around battery energy storage as part of Sustainable World. Battery is part of that, is the key element in the storage, of course. There we have our impedance sensors, for instance, our temperature measurement on battery. Our pressure sensors inside the cell of the battery are also solution that address, let's say, Sustainable World need. There is also, although efficiencies everywhere, you need often to still cool down those system because they still produce heat. From that perspective, also motor drivers will be part of that, let's say, Sustainable World. In a high energy usage, inefficient energy usage.
That's why we have also motor drivers to cool those server farms and so on. It's also what we consider as part of that Sustainable World. Look, it's energy from A to Z, from let's say the generation, to the conversion, to the storage and also to the usage. Moving further in the alternative Mobility there we have few examples, but it can also go, as Marc mentioned, to drones or to eVTOL. The electric vertical takeoff and landing devices that will get, let's say, outside the science fiction movie, come in the real world. Look, that's where we want to serve that as of course really pretty adjacent to what we do in the automotive. Because those segments being motorcycle, being bikes, being scooters, being eVTOL, they go electric. Some of them are already electric, others will move more and more to electricity.
Which means you have the same trend as in automotive. It's a battery operated device. You need to measure current and the state of the battery and so on. All the battery sensing will be there with pressure, temperature and impedance. You need drive, those are electric, you need propulsion, you need traction. If we cannot drive with our driver, let's say a big motor of an EV, we can drive, let's say this kind of motors that you have, low power motors that you have in those devices. That's also why we have this product. We already mentioned this complex solution with, let's say, a Digital Die in 40 nm with this dual core combined with a pretty high end, let's say, power stage that we want to address, let's say, those alternative Mobility needs with motor drivers.
I don't forget our conventional, let's say our classic, let's say, sensing technology like position sensors, inductive or magnetic, because it's often using those things in those objects as well. Like for the throttle, you will need position, like also to activate the brake, also in motors. When you have electric motors, we drive them. You also need to permanently measure where the position, where the rotor is, in order to get the good drive of the motors. That's why we have also sensing solution there on the driver. We have also driver solution, let's say, for the alternative Mobility. Look, all the world we have been describing so far are sensor rich and driver rich. It's the same for the next one, the next in line on Robotics already mentioned high multiplier, if you remember in the introduction, you see some example of those Robotics.
For us, Robotics also cover the AMR, this autonomous mobile robot or AGV, automated guided vehicles that you have on the left here of the picture, but also the cobots, some of the service robots, humanoid of course, big fashion today, but that's definitely something we address and you will see in a couple of minutes. Let's say more about that and we don't forget a bit the connection, let's say also with Digital Health and the aging of the population, which was mentioned by Marc. Exoskeletons, let's say rehabilitation robots, let's say robotized kinesis therapy is also something, let's say that we can serve with that exoskeleton that you see on the right here of the picture. Those are sensor rich and driver rich, to give you a few examples. On a cobot arm here you have the highlighted, let's say with the dots.
Of course the dots are not exhaustive. What we want to insist on is there is a lot of motion to be executed, a lot of action to be provided. That is where our drivers are used. In order to get a good drive of those joints of those motors, you need good position sensing. With position and magnetic and inductive, we have the right solution there. We have developed, let's say, a portfolio of resolvers and encoders at the green part on this slide that are dedicated, let's say for Robotics application with very high precision, high accuracy and high resolution, let's say position sensing. You have also temperature sensors that can be used in order to feel the environment temperature that you have on those robots. That is where contactless temperature of course help. You do not need to touch.
You already know, like we know sometimes by simply just close enough to something, we can feel the heat. We have that property also. We can provide that property to robots. Last but not least, that will be even more obvious when we speak about the humanoid. You have also in the gripper the fact that we can there add some force sensing in the gripper in such a way that you can adapt automatically in a closed loop. If you have, let's say, a fruit, or if you have a strong object, or if you have a deformable object that you do not scratch it. Let's say when you start to close the finger, it is important, let's say, that we have there the force sensors. Force sensing is also a new technology that we have developed and that we are developing.
It's also based on magnetic. If you want to understand from where do we come with force sensing, the force sensor we use here on Robotics and that will be described by Julien is coming from a magnetic technology. All our backgrounds in magnetic is used for force sensors. In braking we also use force sensors, but that is a different world. I will describe that this afternoon. Let's go further to the humanoid where there again it's not exhaustive. The number of points mean you have humanoid where we can have up to 46 position sensor need inductive. Typically on some of those, inductive sensor will be used there. Let's see at 46 points on a robo look at confirmed multiplier sensor rich. Each time there is a joint there is also sensors.
There will be also drivers for the motors. As again to repeat myself, we are really dedicated to new product development. Look, next to all the drivers we have done for automotive, we have a very strong development targeting Robotics and alternative Mobility with a very high end. The WEGO 40 nm technology, advanced node to some extent for Robotics. We did not see the need so far to do that on automotive, where we can serve the market, let's say, with technology 180 nm, 110 nm, and 90 nm. As a quick introduction, let's say, for Julien that will give you a deep dive on our robotic solution and module around tactile and giving the sense of touch to robots.
Very important to list here a few clips of the last, let's say, 18 months where you can see that for Robotics and humanoid in particular, the numbers are all over the place. You could even somehow say what will be the end? We do not know. The only thing we know is that all those predictions are clearly, let's say, hockey stick exponential like. You have the bullish one, you have the bear one, you have the neutral one, you have Elon Musk in the middle, referring to 10 billion humanoids by 2040. If you look at that in terms of value, you see how much it would mean in dollars. Others are referring to only $5 trillion by 2050. They are really all over the place, the numbers. What's important again, it's still extremely fragmented. It's still emerging, it's still in the mix.
There is a big momentum and we want to address it and we want to be there. Now let's say when the seats get the first seat available in such a way that we can play like we have played well in automotive. You know, we started also when automotive and sensors were not necessarily super popular. I mean electronic also not. We have now become who we are in automotive, we want to have to secure, let's say one of the first seats in Robotics with motor drivers, with pushing sensors, with also let's say other type of sensors, temperature and so on. Definitely the sense of touch. Why sense of touch important?
Because there is here, and you may have read that post or some of the journalists that took it, that refer to it, Rodney Brooks, who is a guy beyond iRobot and also many other, let's say, robotic, is seen as a robotic guru, let's say, also professor at MIT. This guy said and put really a big debate on the place why today's humanoid won't learn dexterity. Referring to the fact that, and you can see there all the robots today, many believe that with camera they will do everything. I think Julien will explain that. That is why he will not spoil his exercise. What is important here is Rodney Brooks is really mentioning that that vision centric will not make it. If it will not make it, it will probably not make it.
The humanoid big market that we have just seen before, there is a need for a rich sense of touch, true human like manipulation. You know, some people refer to, you know, a robot doing a lot of or many robot types doing singular application or the other way around, a humanoid that can do thousands of actions. If you want to go in that mode, which is more human like where we can basically adapt to everything, you will need a rich sense of touch. I think that's a good segue, let's say to the next presenter, Julien, who will describe, let's say, what we plan to do and how we plan to address this rich sense of touch need with our tactile sensor and tactile module. Julien, the stage is yours.
Thank you, Vincent, for this indeed segue. Good morning everyone. In 2023 we shared a strategic shift, our focus in Robotics as a significant growth vector beyond our automotive market. We saw a clear opportunity, actually that's grounded in the fact that mass adoption of intelligent and highly dexterous robot was actually not a future trend, but an imminent, an imminent reality. Our mission that we set two years ago was to develop within one to three years market specific products actually to address this market and follow this next growth of automation. Today I'm here to report to you on this commitment and to show you an example of how we have translated the technological vision into an actual product, product family.
When we set out in this endeavor, we actually identified a core industry challenge that was already hinted many times before, which is actually the lack of sense of touch for robots. Indeed, while vision, computer vision has indeed advanced tremendously over the last years, right now robots still remain unaware of the types of forces and textures that they actually interact with. We recognize that to achieve this mass adoption, as was shown just before, the sense of touch is actually a need and the robots must become more tactile. This raises an important question. Why actually do we need to give the sense of touch to robots? Why is not vision sufficient?
For the young parents like myself, if you take your one year old child, the way they learn about the world around themselves is they look around and they point out at an object, but quickly they will go to the next step and they will try to reach, grab that object. Why? Because just like you, they already know that intuitively having an object in your hand actually gives you way more information about that object than just looking at it. This is also why when you are in a museum, you're looking at the statue, you have the urge to touch the statue and there's a small note that says, please don't do that. Now there's also another application which we are looking at here, which is Liston Prosthetics.
It is actually the same technology and right now the users of prosthetic hands actually can manipulate the robotic hand, but whenever they're grasping an object, they have to visually control that the object is actually in their hand. They have no feedback. This technology is actually not just giving the sense of touch to robots, but it also has the potential to give the sense of touch back to those people who have lost it. Now, our innovation team has already been at work on this for quite some years, on the basic technology to solve this problem. Based on our core expertise of Hall effect sensing and magnet position sensors, the commission phase of this technology eventually gave us a critical building block to solve this issue. It is today at the core of the development of our products family for tactile sensors.
Now that was our ambition. Fast forward to today. Two years ago we moved decisively from the incubation phase into an aggressive acceleration phase, and a key success to this. It's not just in the technologies, also in the people, it is in the team that we set out and that we have built a bit more than a year and a half ago, a growing team, and whose singular mandate right now is to take that technological building block and actually create a concrete product line out of this. What you see here on the screen, the Tactaxis sensor, is actually the first outcome of this effort. The Tactaxis sensor is a tactile pixel that you also now refer to as tacts.
It's a force sensor that actually is sensitive to the force applied to it, not just in magnitude, but also in the direction of that force. Essentially, it's a true three-dimensional force sensor. To us, this is actually a critical building block to develop highly dexterous robots, highly sensitive robots. This product, actually some samples and prototypes have already been shipped out to our customers across the globe. The feedback that we had was actually very positive and also invaluable for the next product. Now, building a new product family, you need the team, you need the technology, but that's not sufficient. You also need to be acutely aware of your customer feedback, of their pain points.
While the performance of the Tactaxis sensor is actually pretty good and was confirmed by customers, one of the problems and one of the main feedback we got was how do I integrate your sensors into my robotic system? Indeed, this is a very legitimate question, very simple question. However, the answer to that question for our customers is very complex indeed. They would need to spend weeks, if not months, of engineering effort in order to learn the sensor, learn how to integrate, talk to it, overmold it, put it in a mechanical system, and then do all the validation, testing, reliability, and so on. This is nontrivial. Effectively, this complexity of integration is acting as a barrier to adoption for this technology.
While this feedback was positive, it was an opportunity for us to realize that our value is actually not just inside the sensor itself, but also in providing a solution to that integration challenge and actually move up the value chain here in these type of products. This actually leads us to the second product entry. For those here in the room, we have a small video to show you which is the Tactile Fingertip Module. That is actually our direct answer to the integration challenge that the customer put forth. Indeed, it looks nothing like an IC like we are used to because it is this singular self-contained mechatronics module designed specifically for humanoid robotic hands and dexterous grippers.
By packaging inside this module, the Tactaxis sensors, the required processing, and all the robust mechanical interface, it actually shifted the complexity of the integration from our customer to our team internally. Essentially, this new type of product lowers the barrier of entry to our product. It also actually accelerates some design wins for our customers since it is simpler for them to integrate. It opens us the access to new customers, and especially to those customers who might not or will not want to put the extra engineering effort into doing the integration like that. They actually can focus onto their own objectives instead of just dealing with the integration of our sensors. Now, for you, this strategic pivot actually demonstrates two things. First is that we committed on our 2023 commitment of delivering a commercial product. Commercial product.
The Tactaxis sensor that you see here on the right where we have moved from an incubated technology into an industrialized technology product available. Second, with the module, it shows you our capability to respond to the market, be agile in the robotic markets that is fast moving in order to identify bottlenecks, the integration issue, and move up the value chain. Let's be clear, this is actually the foundation of a new high value tactile product family. We're not stopping there. We have other things in the pipe, as the pipe was shown before, that will actually help us address these high growth applications where tactile is actually becoming a must and not just a nice to have. Now, small conclusion on my part.
I showed you here a small example of how we have moved from a strategic vision into a concrete product family. To make it more tangible for those in the room at the end of the day during the demo, I have a Tactile Fingertip Module set up for you to try out and I will be there to answer your questions around the technology or any further questions. Thank you. Right now we're going to have the first Q& A sessions. I invite back Karen, Vincent, and Marc on stage to take your questions.
Hello, it's Philip Ludwig. I just wanted to make one quick comment. We have to be small enough to pivot too sometimes. We're a little bit behind our own schedule right now. I'd ask you to ask the most burning questions from the first part. All of our people will be available during the lunch to discuss with as well. We'll of course see Q&A at the end. With that I would ask you to raise your hand. We'll bring a microphone around. Please state your name and the company you work for and we'll take one question and a follow up.
Thanks. Hi, it's Janardan from Jefferies on the robotic side. A very, very interesting presentation. Can you give us some idea of your SAM which includes all the potential drivers and sensors for those 46 joints and the tactile side that you just showed. What is the potential possibility for Melexis, let's say a fully fledged humanoid robot costing $100,000 or something like that. What can you get out of that? I mean your share will probably be lower but what is the addressable market there? My follow up is, given the 50/50 split on the new product introductions, you have talked in the past of achieving 20% from non-automotive, etc. Are we thinking that in, say, five to ten years' time we are looking at a 50/50 split? Would that be reasonable or is that too optimistic on the non-automotive side?
We take the first. I would take the first answer. Look, first of all it depends on what base you take for the SAM market. I've shown a lot of data. Would you want to believe first?
My question is more on one single robot.
Yeah, on one single. Yeah, that's why I understand that. If you look, let's say in terms of numbers of, if you take humanoid and number of joint and where we would address, let's say all the sensor needs there, which is about the sum, that's not necessarily what we will be able to capture at the end. If you address all of them, I took 46, that's really a very high end example. If you take more moderate and say they are probably 20 position sensors, 10-20 motor drivers, and you add the tactile sensors. If it's about a humanoid where you have also the tactile things, you will definitely get way beyond $100 in terms of pricing there. Just also a comment on the, you spoke about 100,000.
You see Elon Musk predict $20,000-$25,000 I think in 10 years from now. That is clear. What we see also in China, there is a trend there. There was one you probably not noticed, but there was one curve which was going down. That was basically the expected price of those unit. There will be a high and low end, like in cars, you have high end car, low end cars. It is clear that the $100,000 humanoid will not make it. I mean it will never be a successful market if they stay at that level. We are rather doing all our, let's say, our analysis, let's say, with much lower value in such a way that the adoption can be there. Our content, let's say, it is way beyond $100 if we can capture all of them. Thanks.
The split in revenue say in five years time.
Yeah, I think five years probably not. As you have seen it takes time to move all those. The train, let's say from innovation to product and so on. But it remained clearly, let's say the change is engaged and in five years from now we should definitely see a transition probably in the 80/20 that we mentioned already a couple of times. Let's say this time probably more for real. It also depends on how automotive, if automotive, let's say get back into a boost cycle. You need them to catch up. Also that against that one. That's, let's say the one that you refer to is rather more a 10 years time horizon. Thanks.
I think I'm just going to stay here.
Michael Roeg, Banque Degroof . I also have a question about the Robotics. On slide 64, I see four different types of robots. The most sophisticated is probably the humanoid robot. Based on information from the X-FAB capital markets, they had calculated about $70 in sensors for humanoid. Would that be the biggest market opportunity compared to the other three robots that look simpler?
Yeah, it's clear that the humanoid. Again, it will depend on, let's say, how all those things will be actuated. You know, we have some innovation projects on hands, for instance, where only the hands would probably already cover more or will be much, much bigger than that. Only for one hand of a humanoid and you don't have yet the second hand and all the joints that go with it. It's clear that's where you have the highest multiplier is on the humanoid. If you take the other, they are more simple. You have less numbers of joints to drive. Five, six, seven. Look, you definitely lower a bit. There are also many, many people convinced by the fact that they won't have legs. They will rather be like the AMR basis, AMR, which is more on reels and without the legs.
Which means that you get already some reduction on that for the humanoid. Indeed, today the biggest potential is the humanoid. We are not blurred by only that, let's say big numbers. We see the other segments also pretty sensor rich. The AMR probably being the less, you can see them already around. They do not need that much, let's say position sensors and motor drivers. They need few but not as much as we have when you need to control all the degree of freedom.
Okay, it's clear. These are clearly much more expensive sensors than what you have in typically automotive.
Yeah, and also from the fact that we go higher in the value chain, we go higher value chain for the sensors and the tactile sensors. For instance, when you look at the motor drivers, we also go for a more advanced product compared to the one that's what I explained. Why we use those advanced technology? Because we will deliver a product which in Translink do much more than what we do to drive. I could say now a simple pump in a thermal management system. Those products are more complex, which means also then more expensive.
Okay, my second topic is about slide number 24, the Fabless model. Your Chinese foundry partner will be providing you with chips made on smaller nodes, which are typically associated with higher ASP's and on larger wafers, which I typically associate with lower cost per die. Will all those chips have much higher gross margins than your existing business? By 2030, how big will this be of total group sales?
I will answer this. Yes, the 12 in wafer. One of the goals of the 12 in nature is to reduce the unit cost. That is indeed the case. We need also to realize, let's say, that the Chinese market also expects lower ASP. It is why I do believe that the margin of those products will stay close to the corporate margin. The cost will be lower, but the sales price will be also lower.
Okay, and then the final one, before other people want to ask questions as well. In conference calls, you always said that only newly developed products will be made in China.
We do not make copy. We do not. We do not copy an existing product in the China fab.
True, but if an existing generation 4 sensor is replaced by a newly developed generation 5 sensor, is that entirely new product that you can make in China? Or will you consider that an existing product to be made on an 8 in wafer? At extreme?
No, we can. What we mean is we could address the same application with the product, the new product made in China in comparison to the old product made somewhere else. We could address the same application, but the product will have new feature, new performance, but for the same kind of application. If we take the example of the current sensor, because the first product we have received, I mentioned last week, we have received the wafers of the first current sensor. They are live in the chip. The chip is working. It is a new current sensor with new feature, better performance, but it is still measuring current. It is still addressing the same kind of application.
Okay,
it's rather what you said. I mean the gen 4, gen 5, let's say gen 4 developing historical fab. Gen 5 in the Chinese fab, they can serve similar application, but they come not with a simple copy. We add features on it.
Okay. It means that many of your future upgrades, Gen 6, Gen 7 can move from 8 in to 12 in, thus benefiting your margins. Good, thank you.
Still, one question. Yeah.
Thanks, Marc. ING. First question is actually on your allocation of your R&D resources. I think if I compare it today versus two years ago, you already talked about the beyond automotive. It seems that the focus is clearly catching up there or even accelerating on the beyond. Is that also a reason? Did you become a bit more cautious on the automotive opportunity? Or is it really that the beyond automotive is now really catching up? Why did you make the change to accelerate in the beyond?
I think it's clear that first we had to give more attention to the beyond in order to start moving the needle. For all the explanation I gave earlier in the automotive, let's say we are quite present. We have good portfolio already that we have built up over the past years. That's also why we think that we can do that pivot without jeopardizing the whole auto business. You know, it makes also no sense to create generation after generation if there is no real new needs from the market and so on. That's why we try really to look at that from that perspective. That being said, we also innovate in automotive with hydrogen sensors, with impedance sensors for batteries. Look, it's not that we, you know, we are more balanced. Correct. Because we want to develop product in automotive, which definitely bring extra business, we can address new sockets and not simply try to address the same sockets with new product. To come back to the previous question,
okay, thanks. You also addressed it before, the design cycles are changing, as in they become shorter.
Correct.
Are they also in this beyond category? Are they significantly shorter than automotive? If that's the case, do you have to change your way of working because the cycles are different in the beyond category?
Again, that's First Robotics on one end. You could say it's a very old market, but it's not true. I would say the one that we cover, the one we target, is definitely completely in flux today. All those Robotics, humanoids and so on that we have mentioned too. Look, we don't necessarily know exactly the dynamic. There is still, it's a great dynamic also in terms of players today. Look, not only in terms of the speed of the market, but it's clear that we need to adapt to that. I think Marc always mentioned unlearn, relearn and quick. We need to adopt the speed of China. You will see that, it's spoiler alert on one of my slides later. That's the point. I would say it's not only about the market. Let's say a specific market being faster in cycle and so on, in general, we need to be much more dynamic.
Much more agile in automotive.
Yeah.
Also not only in the non automotive. We also see that in automotive the design cycle must be much quicker because of the China speed.
It is not contradicting the fact that we also do less, we balance more the R&D effort because, you know, when they say fast, it is definitely being able to iterate, and that is more the iteration aspect that China likes a lot, to be fast. That is also a mindset we need to have at Melexis more than before.
Okay.
I think it's part of the new behavior when I discuss about the upskilling reskilling of the people. One of the behavior that we want to implement is in the quick decision, more entrepreneurship, more autonomy. Because those are three important behavior if we want to address indeed this speed that is expected by the customer. Which is much more the case today than five years ago. Yes, yes.
Here.
If the lifetime of the product is coming down, is there a risk that in the inventory which has gone up from. About 180 million to nearly 300 million. Over since end of 2022 and end of third quarter 2025 that this inventory contains obsolete products which will have to be written off in the near future and which will impact the gross margin.
The product life cycle today is still very long of our products. The obsolescence risk in our inventory is from that respect very small. I would say so. We are also building inventory in those applications where we know the products will still be wanted for a very long time. That has not changed substantially over the last couple of years.
I would say yeah, high level we have one year of inventory but the life, the lifestyle of the product is much, much longer than one year of inventory. From this aspect the risk is very low. As Karen mentioned, we have carefully selected which product we put in inventory, what we call the toxicity level of the product. I mean we have some matrix, let's say, to assess the toxicity level. Yeah, obviously we put in inventory product with low toxicity level.
We are very diversified in terms of market and application. We serve customers, we serve. Look, it's not because one customer would decide suddenly to change his system more rapidly that all the others will suddenly also do the same. Therefore, that diversification, that will also be explained by Karen later this afternoon. You will see that that helps also to be able to get all those stock inventory, let's say, spread to the customer.
It's mainly wafer banks. It's mainly wafer banks that we keep. It's the first stage of the product of the manufacturing process. That we still have. I mean, the further we go in the process, the more customized the products become. The wafers are sellable to a big variety of customers usually.
Okay, thank you.
Okay, good. I. We just have time for one last question, please, before a lunch break. We will have time for Q&A as well later maybe for a new person, if there are any others.
If not, Philippe, there is on the back.
Oh, sorry. I'm sorry, I did not see very well. Apologies. Yes.
Hi, Martin from ODDO BHF. Thanks for taking my question. My first question, the competition on Robotics for magnetic sensors, ISIS and, you know, the usual suspects, Infineon, Allegro, etc. How do you see competition today and your position there versus automotive?
Yeah, I would say the usual suspects you mentioned are there. You have also seen on the slide from Marc that next to usual suspects. Now we also need to introduce Chinese competitors and has become becoming new usual suspects, look very important. I would say yes, they are there. Our position in terms of position sensor with our combined offer of magnetic and inductive, I think it's very important to notice that we have both aspects. I know some of our competitors are also moving in that direction, but that's a fold that we took already a couple of years back to really focus on those two aspects. We see clearly on Robotics, sometimes even more obvious than in automotive, that that combination in the portfolio is very important. From that position, I would say we want to claim, like we claim, pretty strong position in position sensors in automotive. We want to at least get the same leverage in the Robotics compared to our competitors there.
Okay, clear, and a quick follow up on the business outside automotive. How would you rank, let's say in terms of the size of the opportunities in the next five years of new opportunities? If you exclude Robotics between Digital Health, Wearables, Alternate Mobility servers, etc. What's the most important?
I would say next to the next Robotics, it's good. Alternative Mobility is one where we are also bringing new product. I mentioned this famous motor drivers that we use for Robotics is also targeting alternative Mobility. Position sensors will also be the key. We have torque sensor innovation on that. Look, I would rather rate that one as pretty strong in terms of new business. Knowing that Sustainable World around AI servers, it's something we serve already. Historically, we put it as, and it's not just to make it nice, but it's just to incorporate that in the Sustainable World because that's where it should be. That is a market we serve already for quite some time where we see also a pretty good growth. We are already engaged on alternative Mobility. We are less engaged.
Therefore the product we bring there is really to address new sockets that were uncovered and untapped before from our side and Digital Health, as mentioned, of course we have that wearable which has come with all the consumer cycle type of which are definitely even lower shorter than the one we mentioned earlier for the reduced automotive cycle. That one, let's say there is some volatility around it that we need to cope with. Next to that I would say all the biosensors as I mentioned are rather Horizon 3. They will come later. That's why if we have to rank Robotics, Alternative Mobility, and then the Sustainable World is already covered today, which means there will be probably a less delta vision, but still will be a growing sector for us.
Okay, we tried to do one more question, a quick one just before the lunch. He yes.
KBC security is a follow up on the market position in Robotics. Do you have the feeling that you are leading the pack or that you're more reactive, knowing that for instance for Elon Musk's robots, they already do quite a good job and you're not yet in their products or are you? That's the first question. The torque sensing, so the Tactaxis sensor was also one very important for Robotics. You're not mentioning that or you're not stressing that today. What's your view on that going forward?
Look, first on the first question, we don't give any comments on where we are, where we are not.
We discuss with all the big actors.
I would say that's why we are the main players. I will not answer your question. We are definitely with the main actors. You should also know that similarly to automotive, there is a big center of gravity in China that we address and that we are also, let's say, changing a bit some of the way we are organized to also be able to be more successful there. I would say, yeah, leading the pack is knowing that it's still a very fragmented market. It's still also very dynamic. We innovate, therefore we come with unprecedented product. From that perspective, I would say, yeah, we lead the pack and we have a very nice portfolio. To come to your question on Elaxis, that was indeed a product which was innovation.
It sparked today in that initial form, the one we described two years ago. Thank you for bringing that back. You have probably heard we spoke about torque sensor because Elaxis was about measuring torque and now we have pivoted that innovation project to an inductive one. Look, it is an inductive torque sensor that will replace that. As I mentioned, innovation is not something where you start and you suddenly get millions three years down the road. No, it takes much more time and you have projects that need to be parked because they get some hurdle that you cannot address, you cannot solve, or you do not meet anymore the targeted spec. Look, we did a pivot there and moved from a magneto-restrictive magnetic-based solution to a more inductive solution. We are not starting from scratch. Look, we take some leverage there. We did not speak about it today other than mentioning it. Maybe next time, let's say, it will be one of the highlights that we do for the beyond auto.
Okay, thank you very much for your questions. Thank you Karen, Mark, Vincent, I propose we now pause the live stream. We break for a 30 minute lunch. Please be back here in 30 minutes. Thank you.
Welcome back to the second part of the Melexis Capital Markets Day 2025. We're going to try to catch up a little bit on time now. Without any more delay, we're going to accelerate into our automotive growth drivers. I invite Vincent back on the stage.
Okay, we are back after this lunch break and I need to keep you energized and awake of course during the digestion but we will manage that. I need to speed up. I heard about speeding up. It's good because we are automotive and you know an electric car is a pretty good acceleration. Look, let's be at the speed of an electric car or acceleration of an electric car. Also, a sneak preview on things that have already been mentioned. Also try to work at the speed of China. Major automotive trends. You have seen that electrification, premiumization, ADAS. This is still driving today. We did not change it because there was no need to change it. That's really the three trends that we see in the car today. Electrification, premiumization and ADAS.
We will cover a bit like last time and then I will go into detail on the Portfolio, of course, and what we innovate, what we develop for those trends. Look first, the global vehicle production. You see the tailwind in the car industry is not that huge, 1%, but still little growth. We should be able by 2029 to reach back the peak of 2017, the historical peak of the auto industry. Will we reach again if now we split that number of vehicle in terms of powertrain type or propulsion type. You see that you have the combustion engine in the blue color. Blue because it's making a lot of smoke sometimes. That's why it's in the blue color.
Internal combustion engine is definitely decreasing and - 11% in terms of CAGR, where all the others, which are the electrified propulsion systems, are definitely growing outstanding versus previous capital market days. This is the fact that the hybrid get a second booster and then now they have the same growth approximately as the battery electric vehicle. This is mainly driven from China and also in Europe. There have been some second thought, let's say, on addressing the range aspect, the range anxiety, also the price aspect and the market perspective in terms of electrification. That's why you have then a CAGR of 14% and 13% for electric car and for hybrid electric vehicle. Therefore you see that the pie of course from 2025 get definitely more or less bluish and definitely more green and orange in terms of propulsion segments.
If we go then continue on the electrification and here we have a snapshot where we remove, say, the full electric car where there is only an electric motor, there is no combustion engine. Then you get that curve. That is where there is at least one combustion engine in the vehicle. There, there is only a -2% CAGR. Yes, the ICE decrease. Thanks to this second life of second growth vector on the hybrid, full hybrid, plug-in hybrid, and range extender, you see that the decrease of the cars with a combustion engine is definitely more moderate than it used to be in terms of production. Of course, the one on cars where you have an electric motor as part of the propulsion mix, sometimes alone, sometimes with a combustion engine, you see that there you have a tailwind of 12%, confirming that there is definitely.
Let's see a lot of potential of growth. Let's say when we address electrification and that will be part of the presentation today, of course, how we address the electrification. If we look at the premiumization, that's about, let's say here the segment of the car, premium segment, like the E segment or you have then more the mid range and then the entry level, you see that there is not that much variation in the different segments compared to the growth. That's why in terms of, let's say, the premiumization is rather not changing the mix. Of course, premiumization today requires much more content. Let's say people want more comfort in their car, they want things on seats, they want things on lighting, for instance, that are definitely helping us, let's say, to get extra sockets in the premium car.
Premiumization does not only mean that you get more chip on premium, but also that many premium features go down and ripple down to the, let's say, C and D segment and even sometimes even to the entry level. That is where we are. When we look now at ADAS, and ADAS, we cover it, let's say, exclusively at Melexis, through the braking and steering. Because there is a braking and steering change in the way those applications are done. When the car gets more autonomous, and that is why we project here the level two plus and level four, that is, say, the highest level of autonomy compared to the basic level, level zero, level one, and the level two, which is also pretty basic and pretty common these days. Level two plus and level four are really the step engage towards more autonomous drive.
That's why that's the level of driving automation. You see that there is a 21% CAGR that will trigger the need for new type of sensors for the braking and steering. Because the function steering and braking needs to become more and more safe. That's because to become more and more safe there's a new requirement in terms of what we do at chip level. Having been a player in braking and steering, let's say for in the past, we are well placed to be part of that innovation and address those new needs that are required for those applications as part of more autonomous vehicles cycle. Let's go then now in the detail of our offer and EV Powertrain is the first, let's say growth drivers that we have identified and that we definitely want to consider as a key market. The key segments we focus on, EV powertrain, of course address the electrification. Look, all that 12% tailwind on production vehicle is definitely addressed with those EV powertrain application.
What you have here on the screen is an example, let's say, of a car with two electric motors, one on the front, one on the back, where you have then of course two power electronics, two inverters that are supplying those motors, and the inverter is converting the DC Vage of the battery into an AC Vage which is needed, let's say, to get the motor spin and to get the acceleration, which is, let's say, pretty phenomenal, let's say, from an electric motor you get then with the inverter, and on the inverter we are able, let's say, to address all the current sensor needs on those inverters, and that's also on the inverters that silicon carbide gets a boost in terms of implementation and adoption.
That is where also our silicon RC snubber, which is a protective device or protection device, will be introduced on inverters in combination with our current sensor, to measure the current and then to protect the power stages with this protection device. Next to the current sensor we have also the motor, the motor itself, where you need to measure the position of the rotor. A motor is a spinning rotor. Inside there is a static part and there is a rotor part. The rotor position is a key element to get a high efficient and also high acceleration. All the things that you expect from a car, from an electric car, get driven also from the motor commutation and the motor control. You need position sensors for that.
With our magnetic and inductive, again, I insist on that duality in our portfolio, we are able, and therefore mainly the inductive in this case, we are able, let's say, to address the harsh environment of this electric motor. We can measure the position in such a way that the inverter and the whole control electronic can have the most efficient, let's say, driving of the motors, which is key. Of course, the more efficient you are on the motors, the more range you can do with the same battery size. That influences directly the range. Also important that because there is a lot of power, although it's very efficient, you still have some heat loss, as I mentioned also earlier this morning. That heat loss, of course, needs to be contained and measured.
We do that with temperature sensors which are monitoring the health of the power stage, the silicon carbide. We protect them, let's say, electrically with the silicon snubber, but we also, let's say, monitor them with our temperature sensors in such a way that they do not overheat. If they would overheat, the control electronic will be adapted. We are again data provided to more complex systems in such a way that you have, let's say, a sustainable system, but also a reliable system moving forward. We have also very simple switch and latches in our portfolio. For this kind of block, let's say, where you have 400 V, sometimes 800 V inside, you better make sure that when there is a repair, you disconnect everything. That is where we have also our switching product, let's say, get used.
Once you open the box of the power electronic, everything gets switched off. That's also part of our offer. It's of course a kind of side effect next to the big part which is covered by the current sensors today, by the current sensors and temperature also today, and by current sensors, temperature sensors and RC protection devices in the future. If we move to the thermal management, another big part of the electrification trend is also addressed with the EV thermal management. Thermal management is a key point. In an ICE car you have the heat for free. In an EV car you don't have the heat for free, which means you need to create it.
If you create heat, then you need to dissipate energy from the battery, which means you have, let's say, energy that does not go to the wheel, but that goes simply to the thermal management. Therefore, there have been a lot of, let's say, evolution on those systems. That is why now the most modern car is using heat pumps as part of the heating and cooling of the car. Why do they do that? It is first to have an efficient system, but also to have a pretty good, let's say, modularity in terms of being able to specifically cool down, let's say, the battery or condition the battery, condition the power electronic, and also condition the cockpit. Because at the end of the day there is a driver, of course, and passengers that need to feel comfortable in the car.
The whole EV, the whole HVAC system has now completely been rebuilt around heat pump and the thermal management system with multiple loop and a pretty complex system where you have pressure sensors for all those refrigerant or coolant that are flowing into those different loop. You can imagine that you have like a fridge system or like also your air conditioning system or your heating system at home. Modern house also go for heat pump. That's also why in the Sustainable World that we mentioned earlier, there is also kind of, let's say a move towards high efficient use of energy where all the product we use in thermal management for carbon cars can also be used in thermal management for buildings and houses. Pressure sensors is a key part of the thermal management.
We have also a lot of valves and expansion valve actuated valves that needs to be operated in such a way that you have the good, let's say, thermodynamic cycle at play. For that reason we have a lot of motor drivers to drive those little valves, valves combined with position sensors to measure where this valve is. If it's completely on, completely off, for instance. Those things get measured and are part of the complex system. Next to that we have also motor drivers for pumps. If you have liquids that needs to circulate, you need some pumps there. We have also then drivers, drivers also used for compressors. If you need to do a heat pump, there is a compressor inside. That compressor needs to be driven, typically 48 V.
Some of them go also to 300 V or let's say the high Vage part of the DC Vage of the battery. Those are also applications that we serve with motor drivers and position sensors. Because where there is a motor to drive, if you want to have an efficient drive, you typically combine that also with a position feedback of the rotor. Finishing on that we can also look at the conditioning of the battery is important for the fast charging. That's also why we see clearly the thermal management an important step, let's say, that influence the way you experience an electric vehicle. Thermal management will definitely, let's say, be part and continue part of the architecture, let's say, of a good modern vehicle and an optimized electric vehicle moving forward.
If now we go to the battery, as already mentioned, on the battery we have some innovation project which are looking at on one end, hydrogen sensor. Not to prevent thermal runaway, but to detect it early, earlier enough or earlier than existing solutions which are temperature based or pressure based that we serve also with our temperature sensors, our pressure sensor. Here that hydrogen sensor could give an early warning on the thermal runaway, which is, let's say, an event which is unpleasant because the car gets on fire at the end. Hopefully it's not every day, it's not with a high level, but all the car by regulation, let's say, need to be equipped with a system that give you five minutes to leave the car and probably leave it a bit far away from housing and so on when it's possible.
That early warning could be improved with this kind of hydrogen sensor, full innovation product currently in development. We will get that in the hands of OEMs and battery makers very soon to probe if this is really the right solution to their problem and make sure that we can iterate on that with our technology linked to the battery. Of course, current sensor are always close by. We have our current sensor there that can help the battery, the complete car, to know exactly the state of the battery while you charge it, while you discharge it. Next to that, also our innovation will be targeting state of charge, which is critical. That is what you see on your car when you see only 50% remaining, 25% remaining and so on. That is critical information.
That's the state of charge. There are also other states of the battery which are important, like state of health and state of function. Those are also, let's say, part of our perimeter of, let's say, of exploration. We are definitely focused on state of charge right now with a modern technique on in-cell monitoring to have that at cell level. Sorry, cell level monitoring. In-cell is for even the future. Cell level monitoring of the impedance of the electrolyte of the battery in such a way that we can have a state of charge definition which is much more accurate than today's solution. We do it at cell level because there is a regulation in Europe going for the European passport for the battery, which is something that will get in place in 18 months or early 2027.
That passport, let's say, will definitely focus on having cell level measurement. We want to participate, let's say, with this kind of product, let's say, of those, let's say, battery passport driven application and needs. E braking is steering. Look, we just cover, let's say, with the EV powertrain, EV turbo management and the battery we have covered, let's say, everything that is suitable for the electrification trend that we want to address, which has a pretty significant CAGR, as I said, turbo management, EV powertrain and the battery are also applicable, let's say, to Robotics, to Sustainable World that we evoked this morning, because that's about battery, that's about inverters, that's about conversion of energy that's there. We go now for E braking, E steering, which is more addressing the ADAS and the high level of automation that the OEMs want to have for their car.
Not only the OEMs, also the users would like to get their car more and more, let's say, robotized or helped while they drive. On the braking steering, which is a sector we dominate already today in the existing implementation, which are hydraulic with a certain level of safety and redundancy, we are moving forward with the market, let's say, on a higher level of safety and redundancy in the system as well as we moved from the hydraulic braking to the electro hydraulic and to the electric brake. We have solution that we work on in innovation as well as in the current product development, let's say, to address those needs with position sensors at the caliper level.
Also strain sensors, motor drivers could also be interesting sockets on those calipers of E braking in combination as I said with strain sensors that we are currently incubating, let's say in our innovation track. Next to that, braking system needs to remain and steering needs to remain conventional like today where you need also to have, let's say, position sensors for the pedal as well as for the steering, the steering wheel, wheel angle and torque. Those are segments that we have covered and as I said, we will continue to cover them with more advanced product in terms of functional safety because they support those higher level of automation. Look, our content, let's say, on car is clearly, let's say, increasing on those. Our value on those product is increasing.
As you can see, we will also address new trend related to the E part, the E brake braking part. Last but not least, another big let's say growth drivers that we see for the automotive is the lighting. We had, let's say, already introduced a bit earlier this morning. I come back to it where we cover basically all the need interior. We have pioneer interior lighting many years ago. We have also pioneered the dynamic lighting look.
No longer static means some of the light in cars today are more dynamic because they want to transfer some information to the user and also try to get some good feeling, let's say, of the car by having that modulation of the light as you drive or when you get a call or when you get, let's say, an emergency braking that suddenly the car is telling you some message. Look, we do that lighting application but we also go outside with all those decoration aesthetic light that you have on the rear of the car, that you have on the front of the grille. Also, the normal rear lighting is a segment that we target with our product because there is really a good fit for moving from inside the car to outside the car in terms of, let's say, synergetic requirements for those applications.
Look, I've covered here five growth drivers that are really the, let's say, a subset of automotive application where we are playing, where we are winning. As you have seen earlier by Marc on thermal management on both sensors and drivers. Let's say we have a leadership position on EV powertrain. When it's about current sensor. We are also in a leading position on the inverter side of the powertrain which is the key part, let's say, driving the motors and the lighting. Also seen there that we have a pioneer and a leadership position with the lighting application on E steering, E braking similar. We have been playing in those fields. We know what they want for the next level of those products and we are implementing that with, let's say, all the expertise that we have.
The one not really fully covered today, I would say, or not really extensively covered today, but we work on it, is the battery. We touch it with, let's say, the current sensors to some extent, but we will definitely cover it. And also with pressure and temperature, but we will definitely cover it more in the future with those, let's say, hydrogen sensing as well as the impedance sensing for the state of charge. That's definitely, let's say, something that we want to demonstrate to you next time. Let's say that we have been progressing on those. As a summary, here you have those, let's say, five segments, and if I first introduce you, let's say, the consensus from S&P Global on the autonomous circuit trends, they predict in their tracking in August a 7% CAGR 2025-2030, 2030.
On the automotive semiconductor in general in the play field of Melexis, let's say look where we play because we have part of the auto semiconductor that we don't cover by let's say from the origin and by choice. We have decided not to do MCUs because we thought that we were not necessarily able or have access to the right technology to do that. We let others play there. In the play field of Melexis when we look at that, the sensors and drivers that CAGR get a bit shrunk because there are of course some of the big driving force which are not into it. It's only a 4% CAGR.
When we look at the subset of that that are the ones that we have selected as growth drivers, you can see that we have growth drivers going up to 19% and as low as 7% with a combined CAGR. When we look at our complete sum analysis, look, serviceable addressable market, available market story, we see that we have a CAGR of 11% between 2025 and 2030. All those segments cover 36% of our automotive revenue today and it will be in five years from now around 46%. Look, we are definitely increasing, look, a bit like we saw the outside automotive and automotive, that we invest a lot outside automotive in such a way that that pie, that share of the outside automotive is growing compared to the automotive. The same here.
The share of those five growth drivers will grow in the coming five years thanks to all the development that we have done and also the innovation that we are bringing on those different applications that I've covered at length in the past minutes. Combining all those information, here you see that in a kind of waterfall inverted, you see that our sum in 2025 would be added with a five-year CAGR on the Melexis play field for the other 4% CAGR, the one that is predicted by S&P Global. You get then a combined CAGR of 7% when you do the mix that we have there. It is also important that we are of course focused on those five growth drivers because they are relevant.
We have tried to demonstrate that we will create more content there for us and they are definitely supporting big trend of the automotive. At the same time Melexis remain a pretty strong player in other part of the vehicle. That is what we will see in a couple of minutes. I will probably go to that slide first just to illustrate. Let's say that we are in many other applications related to the seat, related to the tire pressure, related to the suspension, related to the tailgate, the window controller, HVAC systems, HVAC flap. Because we do not look at the HVAC flap as part of thermal management. We see them as a separate comfort function.
All those applications of course part of the body and the chassis and sometimes the safety aspect of the car get also part of the Melexis portfolio that will grow less. That is why we have let's say the growth drivers and those part. Still those are segment that we serve. Just to illustrate, let's say a bit like we had for the outside automotive and automotive the trend you see again that change from the journey from ID to revenue. You see that the automated growth drivers today are dominating all the innovation exercise. We do look when we innovate at Melexis today we look at what do they need in the next step for those five big segments in order to be part of the game in terms of identification, premiumization and ADAS through the steering and braking.
You see that dominance in the blue automated growth drivers in development is also there. We continue to develop for other like the Erco flap or some seat functions. We get still active on those. On the launch, you see back again that we are definitely more launching product related to the growth drivers in the funnel of opportunities. We have rather 60-40 related growth drivers design win, 50/50 this year with some, let's say, a little forecast on where we will land by the end of the year, 50/50. In terms of recurrent revenue today, 36%. As I said, we plan to be around 46% in five years from now thanks to the moving, let's say, from all those, let's say, dominated blue from the left to the right when it's moved.
That's exactly the same journey as we illustrate for the outside automotive, let's say product shift here that's not really a shift. We stay in automotive but we get clearly focused on area of interest and interesting because they grow and they will grow the revenue for Melexis. Again. That car that I already introduced where you see, let's say, many products related to powertrain, conventional powertrain, where we have been playing with and where we adopt the last man standing, let's say, market posture there, and we are pretty successful at it of, let's say, remaining, let's say, the supplier for all those cars with a combustion engine. As you have seen, it's only a little reduction over the coming five years. That's a good, let's say, offset that we have in our revenue.
Look, it's not that we have a lot of, let's say, from that position a lot of headwind, but of course we support a lot the tailwind with the EV and EV powertrain, EV thermal management, battery, steering, braking, and lighting in such a way that we are outperforming that with our 7% sum that you have seen here on the right side. All the chassis, you see many applications related around the seat, the cockpit, the central console, the steering. We mentioned the air conditioning, all the lighting on the rear, some of the lighting inside, the window controller, the trunks, the frunk on the front. In all those applications are served by Melexis as, let's say, not being necessarily part of the growth drivers, but as being part, let's say, of our entire portfolio that we cover with Melexis.
Focus moving forward is clearly on the growth drivers. From that we can conclude, let's say, this part of the presentation with the fact that, and look a bit at some car example, look not the generic car as the one that was below this, but we conclude that we have at least 50% more content in the new EV platforms versus conventional ICE platforms. Why that? Because first we have seen that the EV is driving some specific content. You could also say that some other content goes down, but that's also why we say for the hybrid vehicle there we are even closer to 100% of additional content. What's important is also the EV is typically associated to a bit more premium, automatically they'll get more features inside.
Also typically also the higher level of autonomy because they are more modern and they adopt let's say more modern system. They are less frozen on previous platform. Therefore, let's say we can serve there with 50% more content on those EV platforms compared to ICE. As we said, and we always said, a hybrid vehicle for us is the best of both worlds. That's why when hybrid vehicle get a bit more traction than anticipated or when EV penetration, the full EV penetration, get a bit little bit delayed. We are welcoming that because we know we have a pretty significant stake on hybrid vehicle with an additional content compared to a conventional car. This gets automatically confirmed here on two cars. Let's say for reason that we want to anonymize, for reason that we got sometimes common in the previous year.
Not from you, but from the OEM at stake. We are definitely, let's say now, let's say anonymizing the car in such a way that you have a Melexis car which is presented here. But we represent a real car which is here from a European OEM. It's a mild hybrid. That's also why it's Europe. Typically mild hybrid is famous in Europe. To illustrate, that mild hybrid car which is on the road today in pretty big volume is using Melexis chip. You see that we are on the inverter side with the 48 V EV inverter. We have six product on current sensor. You also see that we are on the front part. The active grille shutter is also part of the in combination, let's say, with the ICE and it's a hybrid car. Look, we have the ICE look.
You have the powertrain function of the ICE. You have also the cooling, the expansion valve, and the oil shut off valve, which are also, let's say, a product where we have drivers and/or position sensors that are covering the powertrain of this car. Just to confirm that. Let's see, we like the best of both worlds. Next to that, you have the different application where you would see lighting dominating. That's the big variable from 20-100 in terms of lighting depending on the options. Many of the sensors, sensors I refer, which are outside the strategic growth drivers. I see power liftgates, seat position, OBC cooling fan, wastegate valve, and so on.
Other applications related to the motors and then to the rest of the car, which are not necessarily, let's say, part of the growth drivers, but which are definitely also key to us, but lighting and as you can see, powertrain is present and partially the thermal management as well. If we now go for an American car EV and there again it's not from the usual suspect when it's about American EV car. We on purpose took another one. Just to give you an example of more historical big three, although they are rather big two today in the U.S. look, that's one of the big two in the U.S. where we are also present in inverter.
Just to confirm what Marc mentioned at the beginning, that we have definitely a pretty good market share, let's say on the inverter to claim a number one position on the inverter, let's say sensing need. To that car you see also again interior lighting as a second big part of our strategic growth drivers. Then other function related to seats, related to power lift gate, to more comfort function, window lift and so on. That's for the U.S. car where you see that we have here content, let's say of approximately 52. We had an accountant on the other one which was, let's say, between 80 and 160.
Just to confirm that we have definitely a rich content in those modern mild hybrid car in Europe and EV here in the U.S. as two example of cars we are in and that are driving on Melexis product from that portion. I wanted to give you then a good illustration, let's say on how we select the market, where we play, how we address them with existing products, with the product development, with innovation. You have seen that those growth drivers are definitely a good tailwind to us. We have still all the rest we can count on. Definitely the growth drivers are the one we focus on and the reality on the market is visible. With that I can move now in the next part of the presentation, where we will remain automotive, but we will do a deep dive in China.
That deep dive in China is driven by one of the statements that Marc made at the beginning, which is that there is a pivot in the industry. Where it used to be ICE centric, it used to be German centric or European to a broader extent. Now it is more becoming electric centric. China is definitely a big player at it and is taking the lead on it. Therefore, we need to look at what does it mean. We are an automotive company. We need to see what we can do, what we do and what we can do, what we will continue to do in China. Therefore, we thought that would be important that you get that message. Today on, let's say, how we profile ourselves in China, similar to the initial presentation on automotive.
I come back to that slide where you see that the CAGR is 1%. I go rapidly on top of it. If you look now how you split it by country of manufacturing, you see that the red part is China is more or less flattish. It's even a CAGR of 0% moving forward. You see that the fact that there are a lot of cars produced in China is already a reality from the past. In the past those cars were mainly driven by JVs of European or American or Japanese combined, let's say with local, let's say local manufacturer. I would say in China that's when China as a manufacturing country was.
Look, not really see with OEMs there, or let's say with domestic OEM OEMs, look, you see that that trend of China producing a lot of cars has been there and it's a fact, but more important. Here you see that it did not change that much over the past 2017, 2025, 2030. What I want to insist now is that slide which show who are the real domestic OEMs. Look now here the map is done by country, but red China means, means a domestic Chinese OEM. What you can see is that since 2017, the peak of the auto industry, you see that the China OEM were still very, very, let's say minimum or modest at that time. Moving forward, they increase a lot. That increase already happened. It's now more in a stabilization because only the growth will be 3%.
That's just a sign to show you that the market, market really pivot. Not from a manufacturing location perspective, but more from the OEM domestic perspective. Those are administration, where you see Europe shrinking and U.S. shrinking, but at the advantage. Let's say China is increasing at the detriment of Europe and the U.S. That's an important fact to realize that the market is. Is in China. It was already in China, but it's now with domestic players rather than with joint ventures between OEMs in Europe or American and the Chinese one. If you look, it's even more represented here, 13% in 2017 for 37 Europe and now 26-27. You see that it will have a slight evolution, but the big shift already happened. Look, the pivot mark meant already happen in China. The domestic OEMs are leading the industry.
When you look at the trends we mentioned earlier, you have a similar, let's say, similar curve. You see that the mild hybrid, of course, is decreasing a lot in China. They really believe a lot in the hybrid and the EV, the full EV. That's why you see that the blue part is definitely increasing a lot. The internal combustion engine, otherwise, you see that the picture is more or less the same, but the speed is different. Look, you see that China is today where we will be in five years, and China in five years will be even further. That's just to show that the trend there is even, let's say, higher and what we like there again, 13% on the hybrid.
Because the big change why hybrid is more on the map today than two years ago is definitely came from China. That's, let's say, a mix in China that changed, which is again a good situation for us. If we look at the premiumization where I told you there is not that big shift over time. You can see here the difference between global. I put also Europe because Europe is often seen as a premium car continent, especially Germany. You see the mapping, let's say, or the share of the different sector segment. And you see again in China that there is a different color, different rainbow there. And they are much more, let's say, on the high end car. Look, the car are on one end more electric hybrid or full electric.
They are also more in the high end segment or premium segment with those C, D and E. You see that orange, blue and green together in 2030 will approximately be at 90% which is a pretty significant part where Europe and the rest of the world definitely have a bigger portion on those cars on low entry or entry level car and then even more on the ADAS. You see the global trend we show earlier. Down you have the one in China where you see that level two plus and level four, which is, let's say, the target higher level of automation. You see that China, China is basically today where, let's say, we will be in five years.
You can see again in 2030, 2035 there will be an 80% in China, let's say planned at least that's the forecast of the OEM there to have much more autonomous car. If you had the chance to go to China, you will probably experience or you can experience already today pretty nice features on some of the car there. Again, will it be, that's also part of the regulation. You know why in Europe, it does not necessarily penetrate that much is also because there is some strong regulation in Europe than in the rest of the world. Clearly you see that China is going also to win that battle. In terms of this higher level of automation, the car will be domestic OEM.
If you look at the overall portrait, the car will be with domestic OEM in China with clear really electric powertrain, hybrid or full electric, more premium segment and definitely also a higher level of driving automation. Look, they have same trend as here or rest of the world, but they go faster and bigger. That is, let's say, the sentiment that you have always when you look at China. That is why many people highlight that China aspect of being big and also being fast. That is also why we need to adapt and we cannot stay where we are with the current mindset. We need to change the mindset in such a way that we can embrace and we can benefit from the growth offered by that market. That is a summary here. Premisition ADAS, they are, let's say, ticking the box on all the three leadership.
Very dynamic market, high speed is needed. We play and win in China. I think that's an important point. Today we play in China and we win in China. An example of course like we did for the other continent is to take a car from a Chinese OEM, rather let's say a higher segment car. As we can see here where we are covering again there all the powertrain related things. Also battery, current, sensors. You see with current sensors we have more or less a grand slam there with that kind of. You see also that we are on the steering angle as well as on the brake position. Look, we are also there on e steering, braking, which is an important aspect. I told you that there is a clear leadership of Melexis.
We are recognized there with our quality track record, with our automotive track record. We are playing there on steering and braking, being ready, being in the right location, let's say to serve those market. Seat fans, seat ventilation, power, liftgate. Those are, let's say, more classic comfort and body function that we have already explained. I don't forget the thermal management which is on the expansion valve that you see on the left again in the green color. Just to confirm that on this car we have many of the growth drivers that we target are covered. Thermal, powertrain, steering, braking, and also the battery. Not with the advanced sensors we bring, but with the existing sensors.
The only one which is not printed on that car is the lighting. We have not on this platform, let's say our lighting solution are not in, but give you an illustration that of course still a lot of potential there. Just a confirmation that we play and we win in China today with our portfolio within also the growth drivers that we have illustrated earlier. The question of course is how do we continue to play? How do we continue to win? That is, I am sure, one of the questions you want to get answered to today. You saw Marc presenting the three growth, the first, the second and the third wave of growth. How do we make that happen? Automotive will remain our core market. We mentioned that we will get at parity probably in 10 years + from now.
There is definitely, let's say, the big growth of Melexis is rely on our ability to grow within auto. We know that to grow automotive you need to grow in China. Not because China is, let's say, dominating in terms of quantity. If you cannot win in China, you will not win the rest of the world. Therefore, we want to continue to win and perform in China in such a way that we can remain a global player, also a winning global player offering growth to the market. How do we continue to play? How do we continue win? Some of the recipe have been, or some of the elements have already mentioned by Marc will be also by me, will be reconfirmed also by Karen. It's just, let's say, one slide to illustrate what we do proactively to do that.
Again, not starting yesterday, starting already a couple of years back that we are building on that. I would say we have definitely understood the speed of change that China wants and the dynamic because we have done probably a lot of changes recently just to adapt and be able to answer yes to those questions. Look, we have first the continuous product innovation. Now, what I described earlier is of course valid for globally, not only for, let's say, the European market. We target, let's say, all our product, all our growth drivers when we innovate are for the global market including China. We have a quality track record as mentioned by Marc is one of the interesting pedigree of Melexis. We have been there for 30 years, we will be there for the next 30 years. We have been automotive driven and focused.
Look, we know what it is that gives a lot of trust to the Chinese customers, OEM and tiers, and we have a good quality track record, which of course helps there. We are not a newcomer, and I think for all the growth drivers we mentioned, not only the gadget, but all the growth drivers that we mentioned, those are not gadgets, those. They rely a lot on our capability, let's say, to make those products, those applications successful. We have a local team, and we have had a local team, let's say, for more than 17 years meanwhile in China. We strengthen that team, let's say, with technical and commercial competencies in such a way that we can address that market because it is leading, as we said, the market, but it remains also very fragmented.
China is a big country, you have of course hotspots, but it's still a big country. Look, we need to strengthen definitely our team there because that's where the market is and that's also why we need to be able to address it at the appropriate level. Product customization, as mentioned also by Marc, also by me, we see that there is a need to evolve and to iterate a bit faster than usual. It doesn't mean that you need to change the product completely, but there is a need for, let's say, some iteration, some customization that people would like. We want to be more responsive to that. We call it VOC Voice of Customers. But it also sounds well with Voice of China.
We listen to what the markets say in such a way that we can, let's say, faster react and be more dynamic in iterating with product. Then we can, because at the end you will tell me there is always an economical aspect linked to that. China is probably willing, very strong, let's say, put pressure on price and indeed they are. That is why we need to remain competitive. Look, we can have all the first bullet point there. If you are not competitive, it is not a long-term strategy, but we need to think and we have thought and we have been working on that, as I said, for the past five years on building, let's say, step by step of building a localization, a local supply chain, China for China to remain competitive, to play in an equal level playing field. That is important.
We have done that local supply chain program, including what we mentioned already a couple of times, the wafer fab, 12 in, 19 nm, still a mature node, but 12 in with all the advantages that have been mentioned by one of the analysts asking a question before the break. Packaging also we do in China. The logistics we want to, I mean if we produce in China for China, we should not bring back the parts back here. We definitely have a logistic hub over there. Also, Premier, since we started, as mentioned by Marc, also in the flow we typically insource at Melexis test of wafer and packaged product. That is what you can see also here in Ypres. If you have selected, if you have not seen it two years ago and you want to visit Ypres, you will see our test center.
Look how we test the product we have described today. We now outsource also the test at assembly house in China. Again, if you do local for local, you do not bring back the parts to Belgium for testing them. You test them where they are made and all of that that we see here. We are addressing it with the mandatory feature, the mandatory attribute which is at the speed of China. I think it is key. We have been reflecting on that a couple of times already. China is very dynamic, it is very speedy. You need to react fast to customers. You need to react fast also in supporting them in service themselves, them. If you are not there fast enough, let's say you get zapped because there are of course other players that are ready to take your position.
Look, the speed of China is definitely, let's say, driving us in all the things we do over there, of course with our team, but also here in Europe. That's the whole change of mindset that also Marc mentioned in terms of people on our side, let's say that's our plan for China. Karen will also, let's say, relate more the financial part of that move in her presentation. To end, and I think that's probably the appropriate time to evoke again a concept that Marc introduced subtly in the morning and that will be covered now because he announced that I would speak about it. That's about antifragility. Look, you have here the concept and I'm sure that you know the same way you were coming here to say what will they tell about China?
We uncover a little bit the part of the China Karen will continue. That is here a bit what we want to describe here. You know, antifragility is something where under stress you get it stronger, you get it better, you improve it, you do not break, you get it better. To come to the point of Mark with the Swiss watch maker, this Swiss watch maker was simply saying, I am not fragile, I will not break. That is what he said. But it did not say what the Swiss maker did not do. Something else, did not say something else. Marc, it is not enough not to break.
We need to be able to, of course, resist, adapt, and innovate to become antifragile, and what we have tried to illustrate today is that on some aspects we have been, and we maybe are still, in resist mode, but we definitely have a lot of potential to adapt. We have adapted already a lot, and we continue to adapt the whole company, not only on portfolio but also on suppliers, on supply chain, on the mindset of how we want our people to behave. We have done that already, and we continue, of course, to innovate to become more and more this antifragile archetype that we always want to be. Look, we are definitely not.
We want to step away from that breaking as Marc mentioned from the first minute of this presentation to go to the more promising adapting and the resilience and moving forward on the antifragile level with the innovation and as I mentioned, product innovation. It's what help us today, let's say to play in China, but to play in the rest of the world to also to be able to move to those, let's say outside automotive, automotive chosen markets that we have described. Where by the way China is extremely strong. Robotics is also a China market as well. Look, we should not say we do that because we will avoid China. No, we embrace even China more when we go Robotics because that's where the market is. But we go that with an innovative mindset and with clearly an antifragility concept.
Let's say to help us to stay strong and go through that and start that third wave of growth. This being said, I think I have already spoke about a couple of times about Karen giving you a bit, let's say the financial part of the house. I've been discussing a bit more the product and the innovation part of the house. Now the financial is of course very important because you are financial analyst. That's where you want to know a bit. Show me the things, figures and you will get that with more than figures. You will also get some of the highlights of our strate gy over there. Karen, up to you.
Good afternoon everybody. Indeed, let's look at antifragility but from a financial perspective. We will look at three different pillars, starting with the diversification. It's been mentioned already by Marc and Vincent, but I will dig a bit deeper into it, into the commercial diversification. We will talk about profitability and how we plan to improve our margins, and we will also talk about the balance sheet strength. Let's now start first with diversification. Starting at the bottom right, Melexis has a strong portfolio, eleven product lines. Three actually are part of the drivers, and drivers is around 23%. The other eight make up the sensor business, and it accounts to roughly 75%. These product lines, as you've seen already with Vincent as well, have a lot of diversification in different applications in automotive, but also more outside automotive. Geographically, we also have a nice diversification.
Asia is becoming dominant, 60% today with a split on the one hand for China close to 30% and the rest of Asia a bit more than 30% today. Europe also close to 30%, equal to China, and the U.S. 8%. The growth in China or in Asia in general has made that also our disti channel has increased in sales. Today we are at 38% of sales for the disti and 62% for actually our direct business. In the direct business also there we are quite well diversified. The top 10 of our customer accounts for around 43% of our total sales. Only two customers count for 2% or more. This makes us less vulnerable for big changes in our markets, in applications, geopolitical events. Let's first look at gross margin.
What is the trajectory of improvement that we can expect in our gross margin? Historically, if you look back, 44% has been the average. Today we are at around 39% of gross margin, so quite a gap with the target of 45% that we have today. How will we get it? In the first place, actually already next year, we will see that improvement. Economies of scale of some products where we use new fab technologies and where we still have a lot of waste in the yields, low yields, economies of scale will bring us back to more normal yield levels and this will already become visible next year. We will also get operating leverage as we continue to grow, better use of our capacity. This will also help.
Next to that we also have been working, it's been mentioned by Marc and also by Vincent. We've been working on our supply chain with amongst other starting with our internal what we do actually internally, our testing and manufacturing. There we are actually also building more concentration and specialization. We have mentioned it already. We are in the process of moving our final test from Germany towards Bulgaria and also towards Malaysia Kuching and this will in the longer term help us also in improving the margins as from 2027. Next to that we've been working also on the external internal supply chain with a lot of diversification with new suppliers, particularly wafer suppliers. This will give us a better cost advantage which was also mentioned and which will also help somewhat the margins moving forward. Of course the diversification is also leading to better localization.
Mainly in China. China local for local with a full supply chain, wafer supply packaging, but also testing in Asia. In China, which again will also help us in our cost competitiveness. Our product mix will gradually help us to move up the gross margin to closer to 45%. Certainly the innovation that Vincent mentioned, actually it will be a growth accelerator because of the fact that we move from chip to more systems, but also higher margin. It is innovation, it comes with higher margins. A bit more on the EBIT margin here. We historically have 24% EBIT margin. The target is 25%. Today we are at 17%. The biggest contributor will indeed be gross margin. We just discussed that. We also expect operating leverage throughout the cycle from actually through the growth.
For R&D we expect today we are short in the range of 13-14%. Throughout the cycle we expect actually to remain in the range of 12%-14%. For SGA we actually expect more leverage as we will consciously make sure that the cost of SGNA will stabilize or grow very slowly, much less than the growth in our sales. All of that will bring us back to an EBIT margin of 25% in time. Looking at the balance sheet, actually Melexis has a very strong balance sheet today. Melexis is one of the few companies that actually expenses all the R&D. We also have nowhere material or very limited intangible assets, so a very clean balance sheet.
Next to that, our net debt, EBIT net debt level is also quite low today at 1.3 and we expect to lower that even more because we have a few years back we prepaid, we made a big prepayment to our biggest supplier. As since Q3, actually as we speak, we get repayment of that prepayment and that will last till 2028. That will reduce overall even further our debt level. Strengthening the balance sheet. Yeah, we also have our free cash flow which we expect to improve. It was already touched upon. We have historically a very high inventory level today at EUR 300 million. As already mentioned, we expect that this is the peak and this inventory level will gradually come down, generating more free cash flow.
Looking then at our capital expenditure or capital allocation, no big surprises here. For Melexis, of course, R&D remains key. 12%-14% of our sales. We want to continue to invest in R&D to bring all that innovation and a big increase or at least the product launches that we can continue there to increase that as well. On the CapEx, we expect that to be depending on the cycle in the range from 5%-7%. We want to keep our strong balance sheet, reducing debt there as well, keeping it clean with limited intangibles. Also, when we speak about dividends, Melexis has a consistency in paying high dividends and we also expect to do that and then also opportunistic. We might also invest in share buybacks if we bring all this together.
What you see here is the return on equity of Melexis, but also the peers. You can see that Melexis has consistently been very high in return on equity because of all the reasons we mentioned before. Moving forward with higher growth, high growth also supported by better margins, we will be able to continue doing that. Let's now have a look at our target operating model. Bringing everything together here, maybe important to say this operating model is throughout the cycle in the past. Two years ago we came with a target based on years. Melexis is in a cyclical business, will always be in a cyclical business. The market is just like that. These targets are made throughout the cycle. If you look at the sales target, high single digit growth throughout the cycle, better than our market.
Vincent already explained we expect 7% growth in our, I mean the areas where we are active in, 7%. We have been outperforming the market in the past throughout the cycles and that's important. We aim to continue outperforming our market margins. 45% remains the target for gross margin and 25% for our EBIT margin. Strong diversification combined with a trajectory of growth in sales, in market margins and a strong balance sheet. I believe this is evidence of the presence of antifragility within Melexis. I would like to now hand over again back to Marc who will do the closure of the event.
Yes, I have now the challenge to recover the time because we are late indeed. Yeah, we are close to the end of the presentation. Yeah. During the presentation we have highlighted to you our strategy, how we are going to win, how we are going to improve the bottom line, how we are going to improve the top line. I think you have already seen that Melexis is changing. We are changing, but we remain a very important automotive supplier. Vincent has explained that in automotive we will focus our innovation on five growth drivers because we do believe that those five growth drivers will grow much quicker than the other one. That remains. We are still an automotive supplier and this is the main booster and it will stay the main booster of the company for a while.
At the same time we are also adding new booster robotic alternative Mobility are for sure two boosters that will be activated in short term. We have shown that we are innovators a lot in those two areas. We have also two boosters that will come later which are the Digital Health and the Sustainable World. We are also changing because we do not plan to provide only a chip, only an IC. We plan to provide more than an IC, what we call the system. The system solution, the module aspect. Vincent has mentioned it. This system solution will be much more visible outside the automotive because in automotive we have our tier one customer but outside automotive for sure we want to play on the system aspect. It is an important change for us.
We have also explained that in our strategy one of the. One of the strategic team is clearly innovation in automotive outside automotive. Also from a geographical perspective in China. China is very important for Melexis. We have also decided recently to create a legal entity in India because we do believe that India will also be another geographical area where we need to play, where we need to win. From a financial perspective. It's also important to mention the. The third trajectory which is the operational excellence. Yes, for sure we can become more efficient from an operational perspective and we have a plan around it. Last but not least, the Melexis people will execute the strategy and they are in the center of the strategic team because the people will execute this strategy. We need also to help the people to develop the people.
People, people being all of us including Vincent, Julien, Karen and myself in order to become a high performing team or higher performing team. I do believe that all of this, when we combine all of this we will indeed ensure and we will trigger this growth of bottom line and this growth of top line as Karen just mentioned it. As a last slide, I would like to come back to the slide about the wave. Now we can add how we are going to become antifragile, how we are going to secure this third wave of growth. For sure, not only in Europe, but mainly in Asia. China and Asia are really important in order to secure this third wave of growth. The non automotive, the beyond automotive application in the future will also take part of this growth.
Vincent has mentioned the high multiplier aspect in Robotics as an example, the module and the system will also help to be more antifragile. For sure all our standard products in automotive, all our innovation in automotive with the five growth drivers will for sure secure this antifragile concept. This is how I would like to conclude the presentation. I think it's the final formal part of the presentation. Now I would like to invite Vincent and Karen on stage and I think we can take some of the Q&A. I don't know from a timing perspective, Philip, but I think we should have time for some questions, please.
Devos from Kepler Cheuvreux, I was just looking at the CMD slides of two years ago where you also identified the sensing and obviously the battery management and the powertrain and lighting and so on. I think for E braking and E steering it was quite surprising. You see quite a deceleration. I think you talked about a quadrupling market for E braking and E steering back in 2023. Now it's about 7% growth forward. Yeah, just curious what happened. Yeah, maybe that's.
It's a good remark. The thing there, we took as data, underlying data for the steering, braking we took. If you come back to those slides, if you go a few slides before, you will see that we take exactly the same CAGR as the ADAS. It was definitely, when we look again in the detail, also looking at, we start with an offset of business that we have at Melexis, that it was not, let's say, it was not possible to get, that this was on wrong assumptions that we took the same value as ADAS growth. You see it's exactly the same percentage. That was an error on our side, let's say a misjudgment of the value.
Okay, okay. Of the 36% revenues that is being serviced by these five which.
We're 30, by the way, three years.
Ago, which was 30 exactly.
It's increasing a bit
and like could. You give a relative size of these? Like are they, you know, 7% each or which one is, like, let's say.
You obviously saw that battery is definitely the small child in the family. I would say EV powertrain, thermal management, lighting. I would say steering and braking, and again, we try to be extremely selective on steering, braking because we have a big base historical on that. That is why we need to pay attention to make sure that we cover really e-steering, e-braking and not too wide a story. I would say probably the second, the four are more or less the same level, maybe EV powertrain a bit more.
All right. Maybe just a bit bigger picture. I think just considering non auto, I think based upon the first segment of the Capital Markets Day, certainly it looks like that will be strongly outgrowing automotive, obviously. Right. I think in terms of business opportunities, developments, design ins, they're all trending very well. I think for those who have been covering Melexis for quite some time, there was always a bit the idea that obviously non automotive would be outgrowing and represent 20% of the portfolio. How do you think about, yeah, non auto? Because I think also two years ago you talked about 50% CAGR for the non auto business. I do not think you explicitly.
No, we did not explicitly talk about.
This figure feet fifteen.
Yeah. One question is why haven't you explicitly given an updated number? Also, with regards to Robotics, I mean obviously it looks like a very significant opportunity for you in terms of the SAM could be a multiple of what it is in automotive. Have you ever considered like maybe providing more disclosure on how you get to the different yardsticks for investors to really see how you're making progress on this front?
Biron, you start first.
Yeah. Why we did not split indeed between automotive and non automotive? I would say there are two reasons and perhaps Karen can complement later, but it's because we are somewhere in the middle of a cycle. There is all the cyclic aspect that blur a bit the picture. The second aspect, it's because as Vincent mentioned, it will take time to change a needle and that there is. It's not that automotive takes time. I have Vincent mention it. There is a lot of time to book the business and so on. In robotic, it's a bit the same also because the market is extremely fragmented, there is a lot of customers that are working on it, let's say. Meaning that for those two reasons, I do believe it will take time really to see the effect on the revenue.
We see already the effect on the customer interaction. It's incredible how many customers are in contact with Melexis on this robotic in China mainly but not only in China. From a customer traction, it's enormous. We see also the effect in our opportunity pipe. The number of opportunities growing in the pipe and the maturity of the opportunity is also growing. I think we need to be a bit patient. It will take time to really create revenue and it's why we want to manage expectation.
I would say it will be. We expect it to be higher than in automotive. That still remains. We did not make a split.
A bit linked to the older uncertainty, I would say.
Yeah, in 2023, you remember we did two months after we book our best year ever. There was definitely also a little maybe a bit aphoristic way that we cover. We correct a little bit in this one. Not to come way down in the fully pessimistic way. Not at all. But we correct a little bit in our review on the future market. All right, thank you very much. Wait, the mic is not on yet.
It's on. Okay. Xavier Van doorne from Homeports. I have a follow-up question about the sales target because indeed, like Ruben mentioned already, it's a bit of contrast between the enthusiasm about the products, the market share, and your sales target. If I use high single digit 9% on consensus estimates for 2025 to 2030, I arrive at EUR 1.3 billion. If I use the more pessimistic side of more than 10%, so 10%, 11%, and in 2023 I arrive at EUR 2 billion. That's a big gap and it cannot really be explained by EBIT or maybe some comment on price erosion or. Yeah, you don't expect market share losses. Can you elaborate a bit on that because it's quite a big gap.
I think in general the whole market has come down because.
Yeah, but we're not on a cyclical high now. You could expect some cyclical uptick as well in the next five years. I mean we cannot remain in a downturn for five years. I guess so.
No, but it's through the cycle. That's what we mentioned. It will be higher at some point, it will drop at other points. It's through the cycle.
I think we need also to realize that when you look at the market analysis, if we compare in 2023, I think from the overall semiconductor market the expectation was 12%. Now today same expectation is 8%. For the playing field of Melexis, it was 8% in 2023, now it is 4%. All the market analysis have also downplayed their expectation. This is one of the explanation ones. We have also a bit adapted to the analyst view. The other aspect is what you mentioned, the price reduction is also playing a role which did not play in 2023, I would say.
Okay, so by it you agree with the market analysis. In the past sometimes Melexis was very fierce in saying yeah, we will get an uptick. We're in a down cycle right now, now and that's not really the case.
No, our ambition is to grow faster than what the market says because I mentioned the market believe 4% growth for the Melexis product portfolio. Yeah, we expect a high single digit. Okay, you mentioned, you mentioned 9. Our sum is going to grow by 7%. We expect high single digit and I.
Think our ambition then they arrive at. $1 billion and so instead of we go from $2 billion to $1 billion. That's an even bigger gap.
Yep, yep.
All right, thank you.
Thank you Nigel from Pitt and Morgan Stanley. Just on that concept of antifragility, I mean I think part of that is also to identify parts of the portfolio that are no longer sort of fit for purpose. Have you walked away from business, business in the last couple of years and is that a headwind for some of the growth targets going forward?
No, we did not walk away from business except, let's say, the Time of Light, which was a very, a very small, a historically very small business. We have decided to stop the development of this product. It does not change anything. It was a very small, a very small business. This is one business where we have decided to walk away.
At the moment you're not seeing any pressure, especially in China to potentially sort of monitor a situation and be antifragile, be sort of dynamic in your approach to some of your portfolio decisions.
I'm not sure I understand the question.
It is just we have seen quite a bit of price pressure, right?
Yes.
Kind of obvious in the correct gross margins. I just thinking has that now been fully sort of right sized in terms of how you look at the portfolio today or is there more action to be taken? I was using your antifragility language but this is the real question here.
We've taken a lot of actions, but it will be on a continuous basis that we will need to keep working on it internally and also on our external supply.
This, this is, I think the price pressure is not over. I mean historically we had price negotiation every year with our customer. Historically the price pressure was already there. It will continue in Europe, in the U.S. and in China. There is a bit more pressure on the price than in Europe than I think it will continue and it's up to us to adapt the company in such a way that we can also reduce our cost base in such a way that we can continue to sustain this price pressure. On the other hand, all the innovative aspect, all the innovation in our product portfolio is also an answer to those price pressure because on the other hand we cannot continue always to reduce the cost, to reduce the price at one point in time.
It does not make sense anymore. It is why we need to pivot or to adapt in a new product portfolio, finding new niches of product with less competition where we can add more value. I think this is the goal of this innovation team that Vincent Hiligsmann introduced, is really to increase the maturity of this innovative product in such a way that we can be on the market with a real unique feature where we discuss less price and more performance or feature of the product. This is really the goal of the innovation. It is also the goal of the. Why do we insist so much on the product launch?
It's because usually when we launch a new product, the product enter in the market with some unique features and then we have a higher margin and then along the lifetime of the product the margin is going down because of the price pressure that you mentioned. It's why it's really important and we insist in the organization, but also with you about the product launch because it's a way to replace low margin products that are fading out by new product with higher margin. This is really the goal of this innovation machine.
More organic, I guess.
Yes, yes,
maybe. Karen, on the gross margin bridge last quarter in the call we've discussed sort of the cost of yield, 2 percentage points coming from inventory that sort of, I know, say contaminated, but maybe not the right word, but it seems to be absent in the bridge you presented today. Where does that fit in?
When I was talking economies of scale and yield, that's. I mean that's a big part of that improvement. Indeed. That's minimum 2% that we will see next year. We will also, if the dollar does not stay stable. I did not mention that because that's not structural. That's really something we saw in 2025 particularly. That will also be a benefit in 2026 on top. Yeah.
Got it, thanks. Maybe a quick last one then on introducing maybe some signposts. Can you maybe disclose systems as a percentage of revenue today and what you're looking at as a target in the next couple years and is that something we can maybe track on a regular basis? That would be helpful, I think.
Yeah. You mean system. The fact that we want to move from IEC to systems. The system and module.
Yeah, system and module.
I think that the best way to monitor it will definitely be the Robotics and the evolution of Robotics, alternative Mobility, because that's where we bring that at the full extent. I would say in the automotive, we typically when we do the product launch, we also mention those. Those products we brand the fact that they are a bit different than the normal ICs that we bring. When we will launch the special motor driver that I referred to a couple of times where we go for 40 nm and so on. You will see from the product launch perspective that. Oh, that's what they discuss here. That's now one of the element. Because the product launch again mentioned by Marc is a key indicator. Will we report, let's say volumes or turnover on that? I don't think that will be. That's not something we do typically.
I don't think we would do that especially for that. The launch will give you an indication. Yes, we see those products that they were referring to are coming. You will see soon snubber. You will see soon these motor drivers. You will see soon the fingertip in all those things. You will become visible. Visible. Of course afterwards that as you have seen that business opportunities. Then you get into the real revenue.
Today it is still relatively small. There is already sales in it, but it's still relatively. We are talking percentages. I would say.
I think the majority today is still ICs. Although we have IC with specific packages that are getting a bit more big a portion of it. It will remain single digit. Therefore I do not think it makes sense to really track that at the time for the time being. Looking at robotization message that Marc will deliver, Marc and Karen will deliver as well as the product launch, for instance. Those will give you right indication that we are on the track. You can always still challenge them in the cold minutes.
Michael Roeg I also have a question about China. When do you expect the Chinese automotive market to reach peak electrification?
We have mentioned again, don't know what you mean by peak electrification. Is it 100%?
No, it means that the benefits from growing electrification, the extra percentage that goes electric positive impact on content is offset or equal. Equal as the negative impact from price erosion on the rest of the mix. When they're equal, you have a peak. From then on the market will turn south.
When the semiconductor.
I gave an example based on two of your slides, number 92 and 101. China is about 60% of electric cars this year. The outlook for 2030 suggests that next year it will be 65%. That 5% will gain a lot of content because they were ICs and will be electric. A lot of positive value. The other 95% of cars do not change powertrain and will have 4% price pressure. That combined price pressure is more than the positive impact from electrification.
Yeah, it depends, of course. You have your model is, let's say, combining those two things. I'm not sure that it's really reduced to those two parameters.
Only, only electrification. I ignore ADAS. I ignore.
Okay.
Premiumization. Because on SL, an electric car, whether it's hybrid or EV, is on average 1.75 x more content. If you do the math, based on those two slides, it will be next year peak electrification.
Okay. I trust your analysis. That's not what we see in our way of looking at it from, let's say, opportunity and business one and so on. But okay. If you, let's look at your math, and I.
Think this is maybe part of the reason why you lowered your automotive targets. ADAS will benefit growth going forward, but if next year is peak, then the years thereafter, it will come down and then others will support the top line, but only to a certain extent because also there you have a growing base that will become more difficult to beat every year. This is not something that you've seen or from S&P Global or your strategist or your market intelligence.
No, because there is also premiumization that is a big growth driver.
At least when we look at our funnel of opportunity, we don't see it at all. The funnel of opportunity in China is still growing much faster than in the other region of the world. I think you should come back to what you just mentioned. The electrification of the car is always coming with a more modern platform. In this modern platform there are a lot of comfort and safety feature. I think you cannot isolate the electrification aspect from the overall platform of the car.
It is easy to calculate because you have the data. The premiumization is still driving, but even that will reach a certain plateau at one moment. That is farther out. Okay.
Okay. Yeah. I can just repeat, in our funnel of opportunity, China is growing, I would say much faster than the other region.
Okay, clear. Thank you.
We'll try there.
One market share leverage that you did not take into account there, that you can still count. That's also what we see in our funnel. Of course, that's.
I think we have time for one last question formally, but of course we'll be with you for the next period as long as you're here. Last question. Yep, thanks.
Hi, thanks. Just want to know what your R&D split would be between automotive and non-automotive. Would that be similar to the launch of new products, roughly 50/50 or would it be? My question is, you're not capitalizing R&D and if you're spending quite a lot on products for Robotics where the revenue may not come in for the next two or three years, but may come quite significantly after that, is there a possibility that your long-term EBIT margin could go well above your target? In the event that those revenue streams start coming in quite nicely in three or four years' time.
It will for sure give some nice leverage on our current cost base. To come back to your first question, it is not 50/50 R&D. It is rather 25% that is spent today in outside automotive and 75% in automotive. The majority by far is still automotive.
Is that because the R&D intensity of an automotive is much higher because you have to engage with the customer much more? I mean, if you're launching the same number of products on either side, why does the intensity of R&D be so much higher on the automotive side?
One of the aspect is if you take the tactile sensor for instance that have been described in the Tactile Fingertip there we use a chip. Look, it's a chip which has been developed, let's say as part of the general portfolio of Melexis. We're not saying necessarily automotive, but let's say when we were not necessarily considering those different split and which mean the development. When you say production development, which is indeed let's say counting there we don't spend chip design and I would say a module. The way we see it in terms of let's say intensity to take your words is clearly lower in terms of when you have a chip design, you are going for two years, you have math set to pay this bigger team to work on it and so on. Look, I would say there is definitely a different type of development cost. I would say that associated an effort to it.
This is my last question. Would you need to increase your selling expenses to address the market opportunities with Robotics or wearables or alternative Mobility in the future as those revenue streams become more real or can you address it with your current capabilities?
As you've seen, we leverage a lot also distribution and we want to do that. It has grown quite a lot when again another pivot that Marc did not mention. Historically we were more or less 100%, let's say internal sales force to serve a very limited market being Germany and a bit France. Of course we grew a lot. Distribution went to a peak that was mentioned by Karen. At the same time, let's say we could again reskill or take other profile, let's say to address more and more specific market. It is clearly that we will move as we see the opportunity arising with no real need I think today to do big jump on that. Big plan on that.
Thanks.
Thank you very much. This concludes the Q&A section part two in the group. As I said, we'll be with you for the rest of the afternoon. I'd now like Marc, just curious if you have a few closing remarks before we close the formal part of the event.
Yeah. First I would say thank you. Thank you to you for coming to Ypres. Yeah. We were all happy, I think, to share the strategy with you. What is important to remind, let's say, is that, yeah, this strategy will strengthen further our antifragility architecture and we do believe it will strengthen this antifragility thanks to the leverage of this innovation inside automotive and outside automotive. I think it's important to remember it's and inside automotive. We'll continue to innovate in automotive, but we will also innovate more outside automotive. This is supposed to strengthen our antifragility. Thank you.
If I get a microphone again.
Yes.
That ends the formal part of the presentation.