Ladies and gentlemen, welcome to AIXTRON's H1 2020 results conference call. Please note that today's call is being recorded. Let me now hand you over to Mr. Guido Pickert , Head of IR and Corporate Communications for AIXTRON, for opening remarks and introductions.
Thank you, operator. Let me start by welcoming you all to AIXTRON's presentation of our half year and Q2 2020 results. Today, I'd like to welcome our executive board, represented by Dr. Felix Grawert and Dr. Bernd Schulte, as well as our VP of Finance and Administration, Charles Russell. As the operator indicated, this call is being recorded by AIXTRON and is considered copyrighted material. As such, it cannot be re-recorded or broadcasted without permission. Your participation in this call implies your consent to this recording. As with previous results conference calls, I trust that all results presentation slide deck, page two of which contains the usual safe harbor statement. I would like to point out that this applies throughout the conference call. You may also wish to have a look at our latest IR master presentation with additional information on AIXTRON's markets and its technologies.
It's also available on our website. This call is not being immediately presented via webcast or any other medium. We will place an audio file of the recording or transcript on our website at some point after the call. I would now like to hand you over to Bernd Schulte for opening remarks. Bernd?
Many thanks, Guido. I also welcomes you to our results presentation of the first half of 2020. I will start, as usual, with an overview of the key developments in the second quarter on slide three, before handing over to Charles and Felix. With orders of nearly EUR 70 million, we had a continued solid quarter for order intake. In Q2, revenues came in at EUR 56 million, which was higher than the previous quarter's revenues, but as expected, still not at the level of last year's quarter. However, this is a result of the corresponding order intake during the relevant period of last year. As a consequence, revenues in the second half of the year are expected to grow significantly compared to the first half, in order to achieve our full-year guidance.
During Q2, upon request of our customers, we experienced a few delays of commissioning of tools caused by the pandemic. For the second half of the year, we see local lockdown measures ending and an overall relaxation of travel bans. We expect no significant influence related to COVID-19 on our entire fiscal year 2020. We will continue to watch the development of this global pandemic very carefully and will remain to be ready to take measures as necessary. In the second quarter, our other key financials were largely in line with our plans. With a gross margin of 41%, we are back to the usual level.
We finished the quarter with an order backlog of EUR 167 million , which is 42% over the same period last year and gives us confidence that we can meet our 2020 full-year guidance, which we communicated to you in our last call and which Felix will reiterate to you later in more detail. The renewal of our entire mobility product portfolio has been continued, is making good progress, and is in advanced stage. We remain confident about our prospects in our addressable markets with our new products, as we believe that this will open new market opportunities for our equipment and get our business in an even better position in the future. At this point, let me hand you now over to Charles for a more detailed overview on the Q2 2020 numbers. Charles?
Thanks, Bernd, and hello to everyone. Continuing on slide four, our income statement. Total revenue for the quarter at EUR 56 million was higher than the EUR 41 million of the previous quarter, reflecting the phasing of orders from 2019. The abnormal underutilization of production and service, which we reported in Q1 2020, has now been eliminated. The resulting 5% improvement in gross margin is largely attributable to the increased volumes. Operating expenses in the quarter of EUR 20 million were higher than the EUR 16 million in Q1 2020. The difference between the two quarters' operating expenses is down to two factors. Firstly, selling expenses in Q2 include an EUR 500,000 external commission. Secondly, the Q1 OpEx included a one-off credit in other income of EUR 2.9 million from the reversal of an impairment charge.
Profit was EUR 3.3 million compared to a loss of EUR 1 million in Q1. The tax rates are very low in both the quarter and the half year, because the EUR 2.9 million gain on reversal of impairment is not a taxable transaction. Net profit was also slightly up to EUR 3 million in the quarter. Turning to the balance sheet on the next slide. Inventories of EUR 91 million are higher than previous quarters in preparation for the scheduled high level of shipments in the second half of the year. The level of prototypes in inventory fell from EUR 12 million to EUR 9 million in the quarter. On an actual basis, receivables were EUR 24 million, representing 30 DSO, and the same as at the end of Q1. Other assets increased slightly in the quarter to EUR 13 million from EUR 5 million at the end of Q1.
This is mainly because of some routine pay ahead and VAT and grants which have not been received at the end of June. Customer deposits remained stable at EUR 61 million in Q2, compared with EUR 30 million at the end of Q1, reflecting our growing backlog. This slide shows cash flow statements. We had a negative free cash flow of EUR 11 million in the quarter, which was mainly due to the increased working capital just mentioned. Our overall cash balance at the end of the quarter was EUR 289 million. With that, I mean, I'll hand you over to Felix.
Thank you, Charles. Welcome to you all . I will give you a short overview of developments within our portfolio, of our approach to handling the pandemic, and of our outlook. Let me first speak about our OLED business at APEVA . We are going through the qualification process with our Korean customer and continue to make good technical progress. We have achieved a number of technical specifications and work towards achieving additional ones. Furthermore, we are now starting discussions with our customer on the next steps of our joint OLED project. In our MOCVD business, we are seeing solid interest around our data com- laser solutions, driven by the ever-growing need of fast data communication. Our equipment for the production of LEDs for fine-pitch or mini LED displays and mini LED backlighting units continues to see healthy demand.
In addition, we have sold a good number of upgrade kits for the production of UVC LEDs. UVC light can be used for disinfection of air, water, and surfaces. This does not represent a large portion of our revenue, but the reduced contribution to profit can help to further strengthen our position in the market. In power electronics, we see strong demand, in particular from our existing silicon carbide customers and a growing demand for tools to produce gallium nitride-based power devices. These devices are used, for example, in highly efficient power supplies and compact fast charging devices for consumer electronics such as mobile phones or laptops. Let me now give you some background information on how we handled the COVID-19 challenge. Our production remains to be up and running without interruption or delays.
As you know, we have implemented a number of measures early on in the crisis, and our supply chain has proved to be very stable without many shifts and delays. Since early June, all our employees are back in the office working in increased distance with each other and wearing masks wherever proximity to others cannot be avoided. Since the return to the office, we did not have any additional cases of COVID-19 infection in the company. As a result of the above- described market demand and our stable operations, we can again confirm and reiterate our guidance for the year 2020 as illustrated on slide seven. You may have noted on our guidance slide that we are now showing orders and backlog figures, which are to be converted into revenues during 2020 rather than just looking at the timing of shipments.
We've made some changes to the way we put together our guidance slide. We now base our assumption of what we previously called shippable order intake and backlog on more exact data, mainly on what we believe will be converted into revenues this year. This means that we are not assuming 100% revenue generation from shipments anymore, but rather 90%. Generally, this is what we are actually booking on shipment, which makes the figure now more accurate. That is the reason why we have introduced this change. With this, we continue to expect revenues to be in the range between EUR 260 million and EUR 300 million. A gross margin of approximately 40% and an EBIT margin between 10% and 15% of revenues for the full year 2020.
This expectation is based on our solid order book at the end of this quarter and healthy levels of customer inquiries, particularly around next-generation power electronics, laser for optical data communication, and specialty LEDs for display applications. Our forecast for US dollar-denominated orders and revenues for the remainder of this year are, as always, based on an exchange rate of $ 1.20 / EUR. With that, I will now pass to Guido before we take questions.
Thank you very much, Felix, Bernd and Charles . Operator will now take questions, please.
Thank you very much. Ladies and gentlemen, if you would like to ask a question, please press nine and the star key on your telephone keypad. In case you wish to withdraw your question, please press nine and star again. The first question comes from Andrew Gardiner from Barclays. Over to you.
Thank you. Good afternoon, gentlemen. If I could ask two. Firstly, a quick one. Bernd, you referenced some slight delays in second quarter, primarily at the customer's request. Can you give us a sense as to what that might have been in, and whether it was significant in terms of revenue, and you expecting to get that back in third and fourth quarters? Also, just around the reframing of guidance and the backlog that you've got to ship later this year. Actually, my question was more into next year. What kind of longer term visibility do you have at the moment as you look to the start of 2021 and some of the relative strengths of the different end markets? Thank you.
Thank you, Andrew, for the questions. With the delays, I mentioned in my presentation, it is pretty much that the first quarter it was mainly in China. We could not travel to China or even within China; our Chinese team could not travel, that delayed some few shipments to China and installations, which, in the meantime, for example, the shipments have been shipped into two. In second quarter, it was more installations dedicated for U.S. and Europe for same reasons. It is not a huge number in terms of revenue because it is mainly, you remember, we take 10% of the revenue of the order with achieving the final acceptance, which basically we get once we finish the installation and meet the time acceptance requirements. The total number is not big, but it is important for us in terms of the profitability.
It is a small one-digit, a million numbers, which we're talking about. From the longer-term perspective, it's very difficult to say. We certainly looking into market analysis, and this is of course not based on bottom up approaches, more on longer term expectations for market development in specific sectors. There we are very optimistic in the growth opportunities of the areas I think as mentioned by Felix . The difficulty always is when does it really come and when does it kick off? Is it next year? Is it maybe some more data? It really depends what end application in the end drives the demand. It's us. We can speak more about the long-term perspective, which is looking very positive. For the short term, it's also looking positive. Unfortunately, in between, it's quite difficult to say.
Understood. Actually, just to follow up on that last point quickly. You mentioned future interest in tools for mini and micro LED, fine-pitch displays. Do you guys feel we're getting closer to an inflection point there? There's obviously a lot of talk about it within the market. I'm just wondering in terms of whether you feel like are we still in the prototyping phase, or are there signs that you might start to see orders for more production volumes?
Andrew, you have to see this, it's a little bit more complex. First of all, there are now products sold to our customers for end-use applications. It's not like visibility. It's happening now. You have to differentiate between the colors. Particular for the blue and green color, the market or the customers are using installed equipment which they have acquired for the general lighting demand. There's enough capacity for blue and green for this application. However, for red it's different. For red, you need additional capacity simply because the red capacity is pretty fully utilized, due to, you may remember, you don't need red for solid state lighting. There is not such a big install base which has been acquired during the solid state lighting boom.
That drives basically when we speak about demand for fine-pitch, mini LED, it is red LED systems, what we talk really about. We receive orders, and we're going to ship tools in the second half of this year, in particular for this application. This is ongoing now.
Thanks for the explanation, Bernd.
Next up is Uwe Schupp from Deutsche Bank.
Yes, good afternoon, gentlemen. Two questions from my side, please. Firstly, on the gross margin and really related to LED as well, just to follow up here, and then secondly on fast charging. First on the gross margin, if my math is correct, you actually had roughly 50% drop from LED in the second quarter. In the past, we have been told that LED orders are typically carrying a much lower gross margin. Yes, gross margin in Q2 was much better than Q1. My question is how to square this up with what we are seeing, and maybe that is related to the comment you already made, that really LED is no longer LED, i.e., more modern goods are maybe more higher margin. Any color around that would be appreciated.
Secondly, on fast- charging and gallium nitride, other people, how much of the CapEx for this opportunity do you think have you seen? Have your customers already been spending in terms of number of mobile phones for 5G that can be penetrated? Just some color on that would be appreciated. Thank you.
Uwe, let me start with the first question about gross margin, in particular Q2. Why is Q2 so good, having such a high LED content? The reason is very simple. The LED content in Q2 was not from fine-pitch or mini LED. We're seeing a customer who, in China, ramping up its opportunity for micro LED, and micro LED requires really a high-performance, high-end MOCVD tool, which is fully automated. With that, the micro LED prices are more like prices we are used in power electronics, et cetera, are l eaning towards higher margin. I'm afraid you may see in Q3 a slight drop in gross margin, because there in Q3, we're going to ship quite a few systems for red LED to China for the mentioned mini LED and signage. That's the explanation.
Let me come to your question on the fast- charging gallium nitride. Gallium nitride-based power electronics have multiple use cases. Fast charging is now the first use case that we see really going into volume. This year we have seen the inflection point, and we see that the market is in full ramp. We see especially, and we can expect to see further, that right now and further in 2021, many smartphone models will be equipped with fast charging modules, chargers based on gallium nitride power electronics. Interestingly, it was mostly Chinese customers taking the lead on this one. In this case, the Chinese smartphone makers being the first ones in the adoption. We talk here about the Huawei, the vivo, the Xiaomi, the OPPO, and these guys. I think other global brands will follow later.
I think we should not only reduce gallium nitride-based power electronics for fast charging. That would be too little. Fast charging is the first application adopting gallium nitride power electronics in volume, simply from the reason that gallium nitride has a good value proposition here. Also the reliability requirements of this consumer electronics market are relatively low. That such a new innovative material finds fast adoption. I'm personally expecting the second wave of gallium nitride-based power electronics to be in highly energy efficient data centers. We speak here about the power supply for the data centers of Google, Amazon, and the like. Also part of the second wave, we can expect onboard chargers for electric vehicles or hybrid vehicles.
Later on, we can expect a third wave of gallium nitride-based power electronics to be integrated for smart power, as some customers are calling that, and exploiting the capabilities that on one gallium nitride we can integrate multiple switches. From that, in a nutshell, we can say we are seeing now the starting point, the inflection point of a multi-year growth opportunity. I would not want to say there is X many units total market size, and we've now seen X-percent of that, as your question was indicating.
Very helpful indeed. Can I just want to follow up on each of you first. Bernd, I actually remember you saying during various conference calls, there is no true micro LED in China. Is that statement now still valid, your comment you made a minute ago? Then secondly, Felix, you said the Chinese smartphone makers have actually leapfrogged the others with the fast charging. Is it true that your customer base is sitting more in Taiwan, and they would be shipping those chips to Chinese smartphone makers? Thank you.
About the comment to micro LED in China, I'm afraid this statement still holds up. There is quite some ambition in China to develop micro LED, and basically, even if you have a micro LED capable tool and you start producing with this tool first what we would call a mini LED, but wanting to develop, let's say, having a roadmap to reducing size of chips and going more towards micro LED, I think this is the plan which the customer is pursuing along. It's true, there is no true micro LED product out of China yet.
To the second question, where our customer base is located. Our customer base for gallium nitride, I would split it into two waves. The first wave of customer installations was in Europe, in the U.S., and in Taiwan, as your question is indicating. In fact, one of our Taiwan-based customers is currently running in very high volume, producing chips, producing gallium nitride-based chips, and many of them are being used in China-based smartphone models. However, in the last 1.5 years, we have also seen very strong demand for gallium nitride-based tools, our G5+ tools from China Mainland itself. I think we have easily shipped one or two dozen of tools in the last 1.5 years to China Mainland, not only one customer, but a number of China-based startups, which are midsize players by now.
Some of them, no question that in China Mainland, there's a very strong and deep knowledge of compound semiconductors, which has been grown over the last decade based on the blue LED industry, which was also based on the gallium nitride material system. Yeah. We are now seeing also local production of local China customers, jumping on that bandwagon. China is becoming a market for gallium nitride by itself.
That's very helpful indeed. Thank you very much.
Next up is Malte Schaumann from Warburg Research.
Yes, good afternoon. The first one is on your pipeline. How confident are you in sustainability in your current pipeline for current future projects, you feel quite confident? Kind of a similar order level in the second half. Does the order level or the pipeline change frequently ? What is your sense of certainty or uncertainty you see in your order pipeline for the medium to short term?
Yeah. Thank you, Mr. Schaumann. So far, the inquiry and quotation activities, I mean, sitting here now, they continue on a similar level like in the first half of the year. It's of course difficult to say what will happen in next quarters. Talking about now, we're seeing similar levels.
Okay. The next part on the application. I think it was pretty strong, especially in the first quarter, probably in the second as well. Shifting towards other application or is that remaining stable ?
I think we see a similar mix in the second half as in the first half, judging from order inquiry levels. Which is strong on the power electronic side, both GaN and silicon carbide. Secondly, lasers for optical data communication, and thirdly, micro and mini LED, which we largely discussed in the last couple of minutes.
Yeah. Good. On the OLED project, are you still prepared to a make a decision this year. In the case an order will not follow up, obviously, do you see any kind of postponement in the project that might lead to the delay in the sudden taking ?
We are now about to complete the Gen 2 project. As we wrote in our report, we have achieved a couple of steps. We are now working with the customer on achieving additional ones, and closing the specification list, and then later on closing the project. With that, we are now starting discussions with our customer on a follow-on project, which once again will be, again, an R&D type development project, however, scaling up to a larger display size. In the first one, on the Gen 2 project, we've generally proven the feasibility study of the OVPD technology, and the next page, which is then to come in 2021, is about proving that this can also work at large scale substrates. That will be the next step. We are now starting the discussions that could conclude by the end of the year.
They can move on early into next year. I think that we can agree on the technical discussions. With such a project, it's not only you sit together with a customer, like on an existing project, and you close a deal, you negotiate a price, you sign a PO. It's a lot of technical discussions about the specifications that you want to achieve, how it fits into the customer line. Only when those technical details are sorted out, you can really make a closure of the project. Those discussions are now starting.
Okay. Last one is one on the finances. Over the past kind of six quarters, you have been average R&D funding of EUR 2 million per quarter. That's a number that you would also expect going forward or is that kind of a change in one of the directions going?
I think that we would expect a similar level coming into the rest of the year, really.
Any change going into next year or is it a little early to tell ?
I don't think there's much change expected with go into next year.
Okay.
The next question comes from Janardan Menon from Liberum. Over to you.
Hi, good afternoon. Thanks for taking my question. Just one question on the silicon carbide side. You say that your orders are still coming from your existing customers. Can you give us an update on how the qualifications with the other customers are proceeding and when we might expect a decision on that to be made ?
Thank you. Good question. As mentioned with the one existing customer, we clearly see that this customer is in the ramp phase and is placing continuing orders every quarter, one, two, three tools. That is very nice and enjoyable. We are positive on concluding the qualification with the other customers, and I think it's just a question of the volume ramp and the production facility expansion at the other customers when an order is going to be placed. It's not a question whether an order be placed. It's a question, rather, is it going to be placed in Q4? Is it going to be placed in Q1? That surely depends on the volume and capacity needs of our customers.
Would those new customers be having a sort of dual platform strategy, you and your competitor, or would they be moving entirely to you?
I think the existing base is with our competitor, and the existing base is already a number of tools. I would expect the largest part of the ongoing expansion to be with our tools, once we can convince the customer of our tools, because our objective is very clearly to have a lower cost of ownership, and there should not be a reason to buy a competitor tool again.
This is one company, or is it multiple companies?
Multiple companies.
Can we assume therefore that these new facilities start expanding sometime in the next 12 months or so, maybe first half of next year, is when you will see any reflection of orders beyond your existing customers?
I think in the first half of 2021, we should see the demand from other customers, yes.
Understood. Just on the OLED side, can I understand from your comments that the customer is now convinced of the technical capabilities of the Gen 2 machine and therefore is keen to proceed on to the bigger machine, whether that is a Gen 6 or a Gen 8? I mean, that question mark is not there anymore. Now it's only a matter of finalizing a price and the technical qualifications or specifications of the larger machine?
I wish I could look into the head of my customer, because then I had a clear advantage in the price negotiation. I cannot answer you that because only my customer knows.
Okay. The very fact that he is willing to engage in this discussion should imply that he is interested in moving.
Interested, I would definitely say so. Otherwise, they wouldn't bother to talk to us.
Sure.
It's never the case.
Yeah. The last question is, to hit the high end of your sales guidance for the year, you will probably have to be shipping in excess of EUR 100 million worth of systems by Q4. Do you have any sort of capability in terms of supply chain deliveries and space et cetera due to deliver that sort of, because you have not delivered that kind of revenues for almost a decade now. Is that possible at this stage?
Well, wait a second. We have Q3 and Q4 ahead of us, right? There's two quarters to come. Yeah.
I'm clearly pricing not a zero in Q3. We're clearly expecting, on a serious note, an increase in shipment levels in Q3 compared to Q2, and we clearly expect an increase in shipment levels in Q4 over Q3. Given from the fact that we have now confirmed and reiterated our guidance, we are very confident that we will meet the EUR 260 million in revenues this year. That implies, I mean, it's just mathematics, yeah. EUR 97 million was in the first half. In order to make that, we have to make at least EUR 163 million in the second half, and we are very confident to make that number. Otherwise, we wouldn't have reiterated and confirmed our guidance.
Of course, Janardan, you're right. If we look in the entire span, between our guidance of EUR 260 million-EUR 300 million, it would imply EUR 100 million per quarter, each quarter.
I think it's not so likely that we will get to the upper end of the guidance, I think as Felix indicated. If we want to achieve, let's say, to the lower or midpoint of the guidance, I think one quarter should get into the EUR 100 million range. Yes, this is the plan.
Got it. Thank you very much.
The next question comes from Charlotte Friedrichs from Berenberg.
Hello. Thank you. We've covered a few, most of our questions. One follow-up, and any additional color that you can share on the third quarter, aside from the tax impact, how it will affect the gross margin because of LED shipment?
Yes. I mentioned this. We are going to ship in Q3 quite a number of LED tools to China for mini and fine-pitch LEDs. Traditionally, our selling price are a bit lower than in other applications. We expect a slight reduction in gross margin in third quarter, due to the fact that we're shipping quite a few red LED tools.
Okay. Thank you.
The next question comes from Jürgen Wagner from MainFirst Bank.
Yeah. Good afternoon. Thank you for taking my questions. First, a follow-up on your OLED answer. You mentioned that the Gen 2 is now about to conclude all the discussions or the development. How much revenues will you push forward in the current year? You also mentioned that your portfolio will be upgraded, completed. The upgrade will be completed soon. What could be the impact on gross margin and CapEx, leaving all that aside in 2021? Thank you.
Okay. Let me take your first question on the OLED topic. As we mentioned earlier, on the OLED, we are booking the revenues in a percentage of completion mode. That is, we are continually booking and recognizing the revenue as we are completing the project. That means an implication that by the moment we complete the project, there's not need to jump in revenue or sudden one-time effects out of it. Rather, as we have been completing the project and have been doing that along the side, there's not going to be a one-time effect out of this.
You have been recognizing sales already this year.
Yes.
Is that right?
Yes, we have.
How much of that?
The revenues from the system was booked in an earlier year. All we've been doing is a joint development program, which is joint expense between us and our customer. There is no revenue booked so far in 2020 for the Gen 2 system. There is no revenue to book for the Gen 2 system, and it's been taken as prior years when the system was physically shipped to our customer.
This means that you don't expect any revenue from that in the second half. Is that right?
That's correct. Yes.
Okay. Thank you.
Okay. Sorry, Mr. Wagner, can you repeat your second question?
You said that you are about to conclude the upgrade on your portfolio.
Yeah.
Sorry, I remember. Your question on the impact on margins, et cetera. You know that we are working to basically renew our entire MOCVD equipment portfolio, and that is not a thing which happens overnight. You know that we have launched the silicon carbide new equipment in fall last year, and we are still talking about getting the first repeat order probably early next year. This gives you a feeling what is the period from introduction to the market until you're really seeing first sales. With the other products, it's similar.
We are now in the process this year, basically, to bring the first demonstration tools to customers for our next generation gallium nitride tool, which targeting for power and eventually blue/green micro LED, but we will start with power electronics and similar for the red color, for lasers, and for micro LEDs. Here, we will start due to customer demand with micro LED. These tools, mostly the first tools, they will ship them maybe the beginning of next year. Then you have to go through the qualification part. Until you really see impact of volumes going through your P&L, this takes a while. I'm mentioning this more for you guys to understand why our R&D numbers are going up. We're now spending the money to developing these tools, and you see this in our P&L in the increased R&D.
When you see the increased R&D, it's not coming from OLED. Indeed, OLED is reducing. It's really coming from the efforts of developing new MOCVD platforms. That is an investment for staying ahead of delivering increased market demand, increased customer demand in terms of performance, but secondly, also to staying ahead of competition. That is basically what we're doing here. Don't expect immediate impact this year, next year.
Okay. Understood. Thank you.
The next question is coming from David O'Connor from Exane BNP Paribas.
Great. Thanks for taking my questions, two on my side, if I may. Firstly, on the OLED side. The next stage of OLED on the R&D, the proving, as you talked about scaling the larger substrate. What's the timeframe for this next stage? That's my first question. Secondly, on the 3D sensing Opto side. Q2 orders, EUR 9 million down quarter-over-quarter, year-over-year . What's your overall general expectation for 3D sensing from your discussion with Opto customers going to the second half and maybe further into next year? Thanks.
Coming to the first question about the timeframe. I think this is going to be a project which will run through the year 2021, roughly. Yeah.
To be seen what exactly the scope of that project is in a similar thing towards the end of 2021 or early 2022. I think that depends on the mutually agreed scope with the customer.
David, on the 3D sensing, it is basically still in the situation that there is capacity for, let's say the ongoing products which are on the market. The increase in capacity is enough, and it requires really an uptick in additional capacity requirements coming from end applications, meaning more cell phones, more high volume cell phones are using on the face and world- side 3D sensing applications, because that's what's driving the short-term demand in 3D sensing. Nevertheless, we are very optimistic about the long-term demand in 3D sensing, looking in industrial, looking in automotive applications. This is more in the long term, but in the very short term, we're selling 3D sensing tools here and there, and basically mostly to customers in China or Taiwan. Basically, we established supplier into the supply chain of iPhones. In the moment, there are no capacity indications for a fast need of capacity.
However, from the past, I remember well, this can change overnight. It doesn't require any development, nothing. You just place an order, and ask us to deliver as fast as possible.
Understood. Thanks. Maybe one follow-up on the power side of things. Last quarter, I think you indicated the split in power orders, about 50/50 between silicon carbide and gallium nitride. Could you give us any indication of what it was in Q2? Thanks.
I think it was a bit more on the gallium nitride side, but I don't have the exact numbers with me.
Okay. That's helpful. Thank you.
Thank you very much, Bernd, Felix, and Charles. Thank you for your sustained interest. With this, today's conference call ends. I wish all of you a nice summer. Stay safe, and hopefully see you again soon, maybe even in person. Thank you and bye-bye.