Hello and, good morning, everybody. A warm welcome to our Jenoptik 2023 Capital Markets Day here in Berlin. I'd also like to welcome all, the participants on the internet for today's session. My name is Andreas Theisen, and I'm the Head of Investor Relations and Sustainability at Jenoptik. From our end here today, to fill the agenda that you see on the screen, are our CEO, Stefan Traeger. We have our CFO, Prisca Havranek. We have our executive board member responsible for APS, Ralf Kuschnereit, as well as Kevin Chevis, Executive Vice President of the Smart Mobility Solutions Division. Today's presentation will cover a mid-stage review of our Agenda 2025 More Value, and we will also provide some dive deeps into our growth platforms during the session. We have dedicated two Q&A sessions in today's program.
Once again, for those of you following us via the internet, please send your questions to Sabine Barnekow of our IR team. She, she will hand in then those questions to the discussion. Please also note that today's event will be recorded, and we will provide a replay of this morning here later on our website. Before we start our program, I would like to show you an introductory video of the amazement of photonics, and here we go.
Jenoptik is directly involved in a range of businesses and manufacturing industries, mainly infrastructure, healthcare, communications, and mobility. We prioritize innovations that have a positive impact on the environment and sustainable industrial practice. In every sector, we continue to find new ways to achieve better solutions by innovating. Our enabler is the power of light, also known as photonics. Photonics touches every part of our lives, from the tires on your car to the globe-spanning network of satellite comms working right now to deliver real-time meetings, conversations, and the internet to you. One prime example is our role in improving the quality of photonic integrated circuits. We see an incredible demand for ever higher data transmission rates.
Photonic integrated circuits, or PICs, offer the potential to improve the performance and lower the power consumption of the thousands of data centers around the world by providing an efficient means to move towards ever higher integrated optical communication devices. That's why we invented the UFO Probe. A single probe card to scan the quality of thousands of silicon photonics chips, which are at the heart of optical transceivers. Silicon photonics chips are essential to achieve high data rates offered by glass fiber communication. The UFO Probe, the world's first solution to test silicon photonics chips at high levels of production on whole wafers. This strategy will give us faster internet at lower power usage. The UFO Probe will also give lower production costs, thereby reducing waste and saving energy, which led to our strategic acquisition of TRIOPTICS in 2020, with the vision of vastly improving manufacturing quality.
Augmented reality and virtual reality, also known as AR/VR, are growing at an extraordinary pace. It's wild how virtual environments can make you feel. You will hesitate to jump out of a virtual airplane, and you will hold your breath in a virtual underwater world, even when you are fully aware that you're not really there. Perhaps more importantly, AR/VR are set to become true enablers of industrial design. Now, we can share a vision of an imagined product before it is even a physical prototype. AR/VR will allow people to work collaboratively together in a metaverse. It could transform the way we work, reduce the need to travel, and contribute to a substantial reduction in emissions from transportation and infrastructure. This will allow product iterations without physically building anything in the real world, creating a leap in design efficiency and a reduction in material consumption.
Adoption of AR/VR is driven by the comfort and capability of the headset, otherwise, it is impractical to use. Jenoptik are experts in lenses, including lightweight, high-aperture lenses such as Fresnel lenses. These lightweight optics are ideal for lighthouses as well as VR headsets. Fresnel-type lenses allow a large aperture and a short focal length without the mass and volume of a conventional lens. This is an ideal approach to designing lightweight and compact VR devices. Takes photonic expertise and drive for innovation, enable many amazing applications for sustainable future. We believe that Jenoptik has a role to play in the sharing and cross-fertilization of ideas across a range of industries. Photonics is our experience, our expertise-... We want to share it with the world. Jenoptik, more light.
Good morning from my end as well. My name is Stefan Traeger, I'm the CEO of Jenoptik, and it's great to have you all here in the room as well as on the internet. We're two years after the last Capital Markets Day, and those of you who had been with us last night, remember that I said last night, "Remember the last Capital Market Days? We wanted to invite you to come to our facility in Berg, and then we ended up doing it all online. At the time, we were still living under COVID restrictions." Last two years, from our perspective, and I think you will all agree to that, have been characterized, if you want, by a lot of changes in the world. COVID acted as a catalyst, really, to the digitization of the way we live.
Digitalization of our world has accelerated big time in the last few years. That, in turn, has provided tailwind to some of our businesses, particularly our semiconductor and electronics activities, driving even more organic growth than originally anticipated. On the other hand, two years ago, the concept of interest rates was, like, almost gone. There were no interest rates. As a matter of fact, there were negative interest rates at the time, and we didn't have a lot of inflation. That has changed. Today, interest rates are back in the game, and interest rates and inflation has risen in the last two years. Which does mean, for us, that the innovation that we want to drive in our core marketplaces, where we do see that almost, like, inflated or very accelerated organic growth, innovation there and the investment into that becomes more expensive.
So we have to be, dare I say, a bit more careful how we deploy our capital and a bit more specific and focused as to where we go for growth and how we, as I said earlier, deploy our capital. For us, though, at Jenoptik, the last two years, we believe, have been very, very successful, actually. We achieved quite a lot of what we set out to do. From a growth perspective, we are really on track of where we want to be in 2025. From a margin expansion perspective, we're actually quite ahead of it. You all have seen that we guide for EBITDA margins of around 19.5% of sales for this year already, and our original target for 2025 had been around 20%.
So clearly, we have to do something here, and those of you who have seen our press release this morning will have realized, I believe, that we are guiding for higher margins now for 2025. We are raising our margin guidance in terms of EBITDA margin of sales to now between 21% and 22%, while keeping our guidance on the top line. All of that is possible by our innovations. All of that is possible by our operational excellence, and frankly, by what we call customer intimacy. By the fact that we are really, really, really deeply integrated with some very, very important customers.
In the next few minutes, the next few slides, I would like to share some thoughts with you as to how we enable, as a company, and frankly, as an entire industry, as to how we enable modern technologies beyond what we all have dreamed of a few years back. Let me start with the one thing that I think everybody has in mind these days, and that's the digitization of our world. When it comes to silicon-based computer chips, it wouldn't be possible to produce those structures that we see here on this image without light. Our vision is enabling brighter futures with the power of light, and a big part of that is, of course, the digitization of our world. Digitization of our world is important. It's not just...
It makes us sort of go faster. It also enables us to do business with less emission in a more sustainable way. So building computer chips wouldn't be possible without light. It wouldn't be possible without optics, 'cause pretty much all of them are actually produced using what's called optical lithography. And within pretty much all machines that are used to produce chips by optical lithography, measures are our sensors. So in a way, we're pretty proud of to say, without us, silicon-based computer chips wouldn't be possible, and that's, I guess, a pretty bold statement, but I guess most of you are aware of what we're doing. So in a way, we enable the heartbeat of the economy these days with our technology in terms of digitization of our world.... However, computing using chips is one thing, exchanging the information is another.
We also enable modern forms of communication. I think what we all have in mind is these little devices. As you probably know, with TRIOPTICS, we play an important role in how these little, for those of you on internet, I'm holding a telephone in my hand. How these little telephones are used today, not just as a means of communication, but also to take images, to share videos, to share a lot of information, these telephones are used for. And I'm not quite sure if you know that we also, as Jenoptik, enable what's called routing of information in big data centers, using grayscale lithography out of our Huntsville, Alabama plant. So again, not only do we enable the production of silicon-based computer chips, we also enable the sharing of that information via internet and other, other measures.
Let me touch on another very important subject, and that's the quality of life. It's our health. The world's population is becoming ever older, and that puts a lot of stress on healthcare systems around the globe. We have to find new ways of treating diseases, and if we learned one thing from the pandemic, then healthcare systems around the globe are an important factor in, as I said earlier, the quality of life and how we feel. Again, with an aging population around the globe, stress on those systems are ever bigger, and we have to find ways to deal with that. A very important way to deal with that is actually to do medicine on molecular levels, on DNA levels, on genetic levels, not just cell science, but even within the cells. We can now do healthcare.
We can understand diseases much better, and we can treat them much better compared to the past. And a big part of that is, for example, DNA sequencing. And here we are playing a very important role with our optics. We do not build machines that do, for example, DNA sequencing or cell biology, but if you open up those boxes, you'll find our optics inside, and that's a very important factor as well. Our way of doing business, typically, in many, many ways, is enabling certain advancements in technology, is enabling life science and healthcare with other partners. We are a partner to those industries. And those of you who have been with us last night to or yesterday, to the factory tour, you have seen how we enable modern forms of dental care, for example. We also help to make our roads and communities safer.
We can all debate about ethnic, ethical rules and speed control and all of that, and in particular, here in Germany, we like to drive fast on the Autobahn. But truth be told, those are actually just a few kilometers in a huge grid of roads. And as Kevin will explain later on, the car is, on the one hand, an important way for us to get from A to B, but it's also actually one of the biggest killers in mankind. And to do something about that is also a mission of ours. Brighter futures with the power of light also means for us to enable safer environments in mobile applications and for mobility systems. So I hope I could show you at least some examples of where we act and how we act.
If you remember and reflect back on the last few minutes, we essentially deploy optics and photonics, and photonics being the mastery of light, science of applying light to a certain means. We deploy optics and photonics, in particular, into marketplaces around semiconductor and electronics, life science and healthcare, and smart mobility. Those are our three core marketplaces. Marketplaces that are driven by really global macro trends, and that are driven by changes in our world. I believe marketplaces, which are here for long-term growth, we enable them. We enable them via partnering with important players in these fields, particularly on semiconductor and electronics, life science and healthcare, and with our products for smart mobility. We deploy our core competencies really into those attractive markets and overall believe that we can create above average growth with that, with our technologies.
If we take a broader view, though, on how we developed as Jenoptik over the last few years, I think it's fair to say that we have seen a lot of portfolio change, a lot of portfolio change in Jenoptik. Those of you who follow us for a longer time, those of you who remember back in the days, sort of the teens of the century, Jenoptik has been really a very diversified industrial conglomerate. Some of you might remember the times when Jenoptik was designing and building, actually, the elevator in the air, Airbus A380. And when Jenoptik did, for example, develop rescue hoists for helicopters and those type of things. That has changed a lot. We have, on the one hand, disposed of a lot of assets in a lot of parts of our, of our company.
On the other hand, we've also added a lot of business to our core marketplaces and to our core businesses. While undergoing a substantial transformation in our portfolio to essentially focus us much more on our core competencies, and what we are really good at in terms of optics and photonics, we also grew the business. From about half of the company being in our core markets and about half being sort of off strategy in 2016, we are now essentially a core photonics company. We have some businesses still in the portfolio that are not necessarily core. We talk about that in a minute, but by and large, the transformation of our portfolio is basically done. We will explain throughout the day what that means for us.
I can sort of reveal already, it does mean for us, we will see way less M&A activities going forward. Our focus for the next two years, for the second half of that strategic period, will be on driving organic growth via innovation and customer intimacy, and expanding margins by providing operational and driving operational excellence. In the same time, actually, our focus on core customers and important customers has increased quite a bit. Today, Jenoptik generates 40% of its sales with seven key customers. Now, you could say: Why is he even pointing out that? Isn't that a risk to the company? We believe it's actually a strength. We believe it's a strength to be highly integrated with big, large customers. I mean, we are not talking small startups here. We're talking big customers.
We're talking big customers in different industries that have different either cyclicities or even not cyclical. Yes, our strongest foothold, if you want, is in the semicon industry, and we are in all big players in semicon manufacturing equipment, providing parts of the market segments. So all those names that you have in mind, if you think about our customers, yes, they are very dominating customers. They are very dominating players in these markets. There aren't that many people who can do, for example, optical lithography or optical inspection at the level needed to do a high-end DUV/ EUV chip technology. So yes, there are only a few customers for us, but those customers, man, they are pretty big, and chances they will survive is pretty big. So I don't have any...
Fear that our big customers in semicon might, for whatever reason, not be here in the next two years. However, we also have very large customers in the life science arena. Life science and healthcare is way less cyclical, and that helps us to balance out potential risks in terms of cyclicity in semicon and life sciences. I will say we don't see any risk in semicon as well. We can certainly discuss that later on today. We do not see any downturn here in the foreseeable future, but should it be the case, we still have our life science and healthcare applications, and of course, our mobility applications. So core message here, yes, we do depend on a few large customers. 40% of all sales are generated with the seven biggest customers. However, we don't think that's a risk.
We actually think that's a strength because we are really, really deeply integrated into these customers. They are large, they are huge, and they are in very attractive industries. I explained earlier that we feel that the portfolio transformation for Jenoptik is almost done. Again, I'm underscoring almost. We still have some homework to do, and I'll come to that in a minute. But by and large, given that we guide for around EUR 1.2 billion in sales in 2025, our dependency on non-strategic business and on assets in NPC is basically very little part of what's left of non-strategic assets, so to say. And on the other hand, we have deployed a lot of money to strengthen our core.... Yes, that does mean that our capital, that the capital we did deploy in the last few years was quite substantial.
For the history of Jenoptik, we actually took a lot of money in our hands, and we made it to work. Basically, made our balance sheet to work, and I have to say, in the past, maybe our balance sheet was a bit lazy, if you want. So now we made it to work, and now it's time to make sure that we get the return on that investment. So first message, a portfolio transformation of Jenoptik is almost done. Some homework left to finish, but by and large, we are done with that. The same time, I think the financial transformation of our company is significant. We have a lot of organic growth in the past, and even more so going forward. And I think what's even more important, we expanded the margins, the profit margins of Jenoptik significantly.
While in 2016, we, as Jenoptik, posted around 14.2, I think it was 14.2% of sales as EBITDA, again, we're now guiding to be at around between 21 and 22% of sales at the EBITDA line in 2025. A lot of times I'm asked, "What is the value proposition, actually, of Jenoptik? What's your strength? Tell me your, sort of, your core, your key differentiator. What makes you unique?" And then there are many ways to explain that. I could start with our optical expertise and how we enable microstructures on advanced optics, and I could talk to you about how we enable, with our life science expertise, DNA sequencing and all of these things.
But if I look at it, sort of, from a satellite view, if you want, there are two factors which makes us strong across all of our businesses. There's, on one hand, our technology. We understand the application of our customers. We're not necessarily always the ones that come up with the crazy ideas that at some point, in a decade from now, may or may not become a product. We are particularly good in spotting new applications and enabling the product of our customers. So application excellence and industrial manufacturing know-how, that's what really makes us strong. Taking technology and convert something that comes out of a university into an industrialized product. That's what makes us strong, and on the other hand, it's our customer access and our relationship with our customers.
We are truly designed in, and in many ways, in these industries we're talking about, once you're designed in, you're designed in. It's very hard for our customers to actually swap us out because they, on their, on their end, towards their customers, have regulatory approvals to fulfill, for example, in medical world or in the semiconductor world. I think the term is copy exact. Once a semi process runs, you do not touch it if you don't have to, right? So entry barriers in our industries are really, really high, and that's why customer relationship is so important for us. So again, if I think about Jenoptik and what are really our strengths, are what really makes us unique, it's the combination of our technology and the access we have to certain really big, key customers, and the relationship we have with them.
As I pointed out earlier, our world has changed, and for us, that means our priorities shift. You could say, "Well, your priority shifts because the world has changed." That's true, but also, frankly, because we actually achieved quite a lot in the last few years. So we do shift our priorities now from a position of strength. In the last few years, the focus of Jenoptik, our focus as a management team, had been to transform Jenoptik from an industrialized... From a diversified industrial conglomerate to a focused technology company. That transformation is basically done. From now on, for the next years of this strategic period, we will focus on organic growth. In the last few years, our business has been characterized really by a series of M&A steps to transform that portfolio.
Going forward, we will focus on operational excellence because we now can. The profitability of Jenoptik in the last few years has been increased, yes, by diligent management, but truth be told, simply because we invested a lot in high profitable businesses. So M&A, actually, the part, the portfolio transformation, played an important part in us expanding our margins. In future, we expand our margins by even more innovation and even more customer centricity. So our priorities shift going forward. Our new priorities for our business in the next few years will be organic growth, operational excellence, and innovation and customer centricity. In order to enable that, we are going to once more change the business setup of Jenoptik. We actually aim to verticalize our APS solutions division in 2025. However, for now, we will keep our reporting structure and our management structure.
We will still have, the next 12 months, the APS division that you know, and the smart mobility division that you know. Underneath that, in the way we act in these divisions, we will basically dissolve the matrix function that we have in APS. You might not be aware of that, but within this fairly huge APS division, the largest part of the company, we actually run businesses in a matrix fashion. We have a joint sales force, and we have a joint operations network to generate synergies. Makes a ton of sense in a way. However, becoming much bigger in these individual marketplaces means that synergies, while they are there, they're preventing us sometimes from actually growing, because they're preventing us from focusing even more on particular customer segments.
From an operational setup, you will see us talking way more about verticalized segments within the APS division in the next 12 months. Our intention is, in the more distant future, to even possibly dissolve APS and run the company completely in four verticals: semiconductor and electronic-semiconductor and advanced manufacturing, biophotonics, electronics and metrology, and smart mobility. That's for the future. That's for the next strategic period. For now, we stay in this structure that we have on the top level and manage the business around in those divisions that you are aware of. But underneath, if you want, under the hood, we start to verticalize our businesses much more to run the company in those segments. We will see more customer focus. With that step, we will see more direct business responsibilities and more efficiencies in those verticals.
I have to talk about innovation, obviously. If innovation is driving our business, obviously, we have to put even more focus on the innovative power of ours. We will continue to spend, I should say, substantial funds for innovation. Not always do you see that in our P&L. I think those of you who analyze us a bit more closely know that we have a, we have two parts of innovation, basically. One being in the R&D line, in the, in the OpEx, but a substantial part of our innovation is actually in our COGS, because we do customer-specific innovations. If we innovate for a particular customer, then under IFRS, that shows up in the COGS.
So you will see us to continue to allocate substantial funds in our innovation power, but we also will increase our sort of scouting for new ideas, new technologies, because that's what makes us strong. That's why customers come to us in the first place. So innovation will remain a major driver for Jenoptik going forward. Quick word on the famous NPC segment. Within the NPC, the non-photonics companies, we have today two companies left. Everything else is already gone. So we have Prodomax left, and we have Hommel left. Our strategic plan remains intact. We fully expect by 2025 to have sold Prodomax. Prodomax is a business that's very strong, runs very nicely at the moment, highly profitable, enabling a lot of lots of growth.
So it's an attractive asset, I would think, for potential acquirers, and we intend to sell that because it's strategically not fitting to our, to the rest of our business. Prodomax does not use optics, and the synergies for us are very little. And frankly, we also do not want to be that much disposed or exposed, I should say, towards the automotive industry. So Prodomax is to be disposed within the current strategic period, and really, that remains the case. Hommel is a bit different. Hommel actually has a number of different product lines. About half of the business of Hommel, 40%-50%, is actually in optics. It's called the optics line and the vision line, and only 50% or so, 56% is in non-optical businesses.
We have to understand and have to do a better job in analyzing what's the future for those non-optical businesses. The optical business we wanted to keep anyways, so we will continue to investigate the future for Hommel. Maybe the best future for Hommel is actually how, and that's sort of the idea here, how Hommel, skills and capacities of Hommel in future could possibly support the growth in our optics businesses, where we need more capacity and, and need more, more investments, basically. So Prodomax, to be disposed of within the current strategic period. Hommel, the business could be developed either internally or externally, depending on how it goes. So to wrap it all up, again, going forward, our focus will be on driving organic growth, driving operational excellence, and driving innovation and customer centricity.
With that, we believe we can, on the one hand, continue to aim for EUR 1.2 billion in top-line sales. At the same time, now actually aiming for between 21% and 22% of that sales to be posted at as EBITDA in 2025. With that said, I'll hand over to Kevin, who is going to explain way more in detail what we are doing in terms of smart mobility. Thank you very much.
Thank you, Stefan, and good morning to everyone here and online. It is my pleasure to be able to spend the next 15-20 minutes talking to you about smart mobility solutions, what we do, why we do it, and most importantly, to talk to you about our plan for organic growth over the coming years. Now, many of you, some of you who have been here before, will think about us and say, "Yeah, we're the team, they're the people that make speed cameras." That's true, we do do speed cameras, but we do a lot of other technology, functionality, and services in the smart mobility marketplace.
When you look at our expertise, our core competence, we actually use imagery created from a camera technology to see things and to link that with other measurement devices, laser, Lidar, all these technologies, to measure moving objects in difficult environmental circumstances. So if you imagine a car traveling down the road at night, it's dark, you can't see very well, they're driving very fast, particularly in Germany, on the Autobahns. And our expertise is to use photonics to capture imagery and to measure moving objects. And yes, that ends up as a camera of some form or another, but we also use AI and other techniques to see from that image, moving objects. And we've had to measure things precisely, and we have to do that in a very consistent manner.
The reason for that is if we are to issue a speeding offense, a red light offense, or something of that nature, that ticket, that offense, needs to be precise. It needs to be accurate, because our clients, which is often the police, local government, transport authorities, need to make sure that we are always correct. Giving out an incorrect speeding ticket is not acceptable in our marketplace. So it's high precision. Constantly, we have to do that in a repetitive way. And so those camera platforms enable us to create functionality, applications for different things. Are you entering a yellow box? Are you turning in the wrong direction? Are you using your mobile phone, not wearing a seatbelt? All these topics, all the functionality from that can be created from imagery, which we do. So our strategy is quite straightforward.
We want to leverage that expertise and that functionality, and rather than simply selling it and maintaining it, which we've done a lot of in the past, we want to move up the value chain, broaden our service provision, provide longer-term, higher recurring revenue services. And that means not just supplying the technology, it means processing the tickets, the offenses. It means communicating with the members of the public who may have committed that offense at that time, enabling them to pay their fines so that we can transfer the fine revenue to our clients. And the reason we want to do that is because those revenues will grow year on year, and over time, the margins in those revenues increase. And that gives much more certainty to our growth plans.
In the past, and many of you will know that our business performance in smart mobility has been centered around one or two major projects each year. You have the project, it's great, then the project finishes. So we're making a transition to provide those projects more as services across a wide business service. The second thing that we're doing in our growth plan is investing in new technology. And yes, we are being quite successful now at delivering new, new functionality for our existing cameras, but what we're looking to do is to create a new platform for the future, and we're making investments this year and over the coming years to make sure that that, that happens. So when people talk to me about speed cameras, it's not a popular subject, often, but the market we operate is a serious market.
It's estimated that every 24 seconds or so somebody dies. It's not just about people that die, it's about the people who may be injured in a car accident. 50 million people is the estimated number. That's a huge number. It's a human cost, and to every country, there's a financial cost because you have to have the infrastructure to care for these people, mental health, critical care, all those things. In the young age group, 5 to 29, it's estimated to be the biggest killer of human beings. If the motor vehicle was a disease, there would be all sorts of initiatives, foundations, and so on to do research to reduce that number. We take it very seriously, our role.
The technology we put out, in every case, we can demonstrate a saving of life and a reduction of injured people. That's a really positive, positive thing. And of course, cars are also used to commit crime. And criminals need to move around, whether it's organized crime, you know, people trafficking, burglary, all these sorts of things. So the data we can collect and the information we can process is very helpful to the police and security services. If a child is abducted, it's really helpful to know where that car with that number plate, if you know the number plate, where it might be, where it might be going, where was it last seen? All of these things have tremendous value to our client base.
And also, we all know this, the world has to reduce emissions, and the motor vehicle is one that is quite a serious contributor to that. If you can moderate speed, and by that I mean on a stretch of road, reduce the fastest differential to the slowest and bring speed more consistently, you reduce acceleration, you reduce braking. That reduces emissions. And we have some technology out there which has been put in precisely to do that, to moderate speed at certain times of the day, to reduce emissions in given areas. And generally, around the world, everybody needs to improve road safety. It's a global problem. So let me tell you a little bit about us. You can see on here in 2022, EUR 114 million of revenues, and about 40% of that is recurring revenue.
So we already provide some services. About 500 people, and we operate in three key segments. Traffic law enforcement, which is what you expect, speed cameras, all those sorts of topics. Civil security, this is where we provide data and intelligence to the police services so they can track vehicles. And we can identify suspicious vehicles, vehicles that might be doing reconnaissance, vehicles that are identified with individuals who shouldn't be in that place. And that makes policing more efficient and more proactive. And more recently, road user charging. That's not just providing camera technology to tolling, but it's also about emissions control. Can a vehicle be in this place if it's got this emission profile? And we have our own offices in Germany, of course, the U.K., various places in Europe, North America, and Australia.
We have sort of two different ways of approaching the market. One is through our own direct sales force to our client and others through third parties. We operate with nearly 50 partners around the world currently. We are the B2G part of the company, so we deal with police forces, local authorities, governments, and so on. We actually put things on the roadside, and we put computers into data centers and so on. There's three key growth drivers in our marketplace. I mean, firstly, all our clients want more functionality. They want new applications, and the current one, which is important, is distracted driving. Are you wearing a seatbelt? Are you using your mobile phone?
So to do that, you've got to be able to see into the vehicle through the windscreen at high speeds, multi-lane, at night, bad weather conditions, and so on and so forth. We see lots of our clients now want to have service-based technology. There's less capital around to spend on new projects, so we're seeing quite a shift now and clients being receptive to having a service-based operation. And also in new countries, emerging countries, Latin America, Africa, places like that, we're seeing the concept of Vision Zero, which is a global initiative to try and reduce deaths on the road to zero, which you're probably thinking is impossible, but nevertheless, that's what people are striving to do. We're seeing new countries come out and say: "We have to do something. How can we do that?" And service-based revenues is the answer to that.
So our response is, yeah, we are doing a lot more work using AI, and fusing sensors, the different technologies you need to be able to see and measure what's going on. And we are gradually converting our business, and we're in a transformation mode, to provide more services, more business services, the whole thing. Technology through to the ticket, to collecting the fines. And we're also seeing in this new marketplace, in new countries, a whole host of new opportunities, and this year we've won our first three contracts in those places... which is really, really great news. If you look over time about our marketplace, what does it look like on the roadside? Well, I mean, back in 2010, it was pretty straightforward. It was a speed camera, a red light camera, working in isolation.
Today, it's that, but it's illegal turning, it's yellow box, it's other moving offenses, and it's a requirement to provide data to the police services in some countries. So quite a change. So we now provide our platforms, provide a lot more integrated functionality. Going forward, the market requires us to be able to see the entire junction from every direction, and to be able to monitor and measure the direction and speed and performance of vehicles in every direction, but also other vulnerable road users, bicycles, people, children. So going forward, our technology developments are headed in that direction, so that we can plug and play functionality, we can plug and play other sensor technology, so that we can give information, real-time information, to vehicles. We can give real-time information to the people, the organizations that manage the traffic flow across a city.
So let me just talk about some of the things we've been doing, because we've been working on organic growth and increasing our share of recurring revenue over the past 12 months. And particularly, a key area for us is the Americas, and North America in particular. We used to provide all our technology there to a third-party company, and that relationship has now come to an end. So our response to that was to build out our own service provision. As I said, put in the technology, run it, process it, collect the fines for the customer. And the reason for that is that the value to us is much higher. If we sell something, and we then maintain it, the ongoing revenue is quite low. If we run it as a service, it's significantly higher.
These contracts will run 2, 3, 4, 5 years, some of them 5 years, +1, +1, +1. We see an acceleration in our top line through these contracts, and an increase also to the percentage of recurring revenue going forward. I'm pleased to say, we've already won a number of important contracts in the Americas, and the first 2 have gone live in the last months. As we go through into next year, we will then bid for larger ones. Very exciting opportunity. We have been investing in our business proposition, we've been investing in our sales channel, and all the people required to support that. We've also been expanding our market reach in new countries.
So the opportunities here often are around us supplying technology to a third party, and us getting back a share of the recurring revenue, which is really important because we can supply. As we're the designer and the manufacturer of the equipment, we can supply that pretty much at cost. We get a long-term share of the recurring revenues that they get. So that also is something we've done, and we're now operating in 5 new places, which is really good. We talk about new applications, distracted driving, for example. This year, I'm pleased to say we went live in Victoria in Australia with a revenue-based service for the supply of distracted driving. It's the first one that we've done, and we see far more of those coming over the next period.
So we are now putting in technology in other countries to demonstrate what we can do. Really exciting opportunity for that. And we will further invest in new platforms. It's absolutely key to us that over the next this year, next year, and the year after, we'll be investing more money, more of our time, into developing a new platform for the future. So to sort of summarize that, it's quite simple, quite straightforward as a strategy. Now we're gonna continue to invest in, grow our business in the Americas, North America, Latin America, and various other places, and get a better share of the wallet. It's important to us because those services can only be delivered with our technical expertise. So we're in a very good place to provide a better service because we actually know how the thing works.
We're expanding our global reach, as I said, in new countries, and we are gonna continue to invest in new technology going forward so that we have a platform for the future. Okay, that's pretty much my comment. There's now an opportunity, I think, for questions.
Take a seat?
Yes.
All right. That looks, that looks pretty cool.
Yes. She, she gave me the microphone. I don't know. Should I go first?
Oh, right.
Sorry. Hi, good morning. [Craig Coben] . Yeah, thank you very much. Kevin, perhaps I'll start. Just, two questions for you, please. One, you mentioned a couple of times, they're increasing your recurring revenue share.
Yeah.
But I don't think you actually mentioned what the current share is, just to give us at least an indication, and how you see that progressing over the next couple of years. And the second question was, I just didn't quite understand. You mentioned that you can only provide these services, or Jenoptik is the only one positioned to provide these services. I didn't quite understand, what exactly is the USP that Jenoptik offers that your competitors don't offer? Thank you.
Okay. I mean, the recurring services we offer include the technology and the processing of the offenses all the way through to collecting the fine revenues. And one of the things that we excel in, and this came out from what Stefan was saying earlier, is that our relationship with our client base is based upon trust and delivery. We always deliver, and we solve their problems, and we don't make mistakes. We're not perfect, but we always create a relationship where there's an element of trust. And if you operate in the police marketplace, I often say this, police officers are pretty much trained not to believe anything you say. So the key thing is working with them, not for them, because they're doing a serious job.
If they're looking for a missing child, or they're trying to reduce the accidents on this given stretch of road, it's really serious to them. They make a real positive impact, so we have a role to play in that. So we focus very much on, you know, being proud to be a part of that, and making sure that we act in a way that helps them achieve their objectives. So our relationship and service, apart from the fact, we know how to measure things precisely without failing, and we do that very, very well, and there are very few companies in the world that actually do that. In terms of the recurring revenue developing, and we're currently at 40%, we're looking for that to increase in a very positive way over the coming years.
Over time, each year, that will incrementally grow. Most of these contracts that we have now, that we're starting to deliver, you have options to increase the scope of supply during that contract. So, managing that relationship and managing those contracts, absolutely key, key to success. Next.
I think in the front, you have to decide. Colleagues, does the microphone-
Me or him?
Microphone basically have the power to decide who is next.
Right. No, thanks. Martin Jungfleisch from BNP Paribas Exane. Two questions, maybe. First one is, you mentioned that you target a growing customer concentration, which is part of the business model. Can you remind us, what the top three customers are in terms of sales, today, and how you see this develop by, let's say, 2025, or maybe even farther out? And then, how can you exactly gain share of wallet with ASML or maybe any of the other larger customers? And then also maybe if you can talk about competition, and you mentioned joint R&D, what this could do, if this would require any joint CapEx and so on. And then the second question is more on the margin side.
I mean, so you obviously hiked the margin guide for 2025, but a lot of your semi peers and customers are obviously seeing a bit of a downturn, expecting flat revenues next year. And so how much does the guidance actually require a recovery of the semi market by beginning or mid-next year? Thank you.
For obvious reasons, we do not share specific customer names in terms of number 1, number 2, number 3, number 4, number 5, number 6, number 7. But I can disclose, as I said earlier, the largest 7 together are representing around 40% of our sales. I think it's not a big secret that our largest customer has its headquarters in the Kingdom of the Netherlands. There are large customers in the Netherlands, and one very large customer of us is in the Kingdom of the Netherlands. And the other up in the top customers are also semicon customers, and there are not that many semicon machine companies out there, you know, that do optical inspection. In particular, there's no other customer for optical lithography.
Then there are two customers for optical inspection, and those are sort of making up our largest customers. Then we have large customer in life science and healthcare to do with the picture that I showed earlier. We see a DNA thing; it's a large customer of ours. And we have shown you last evening what we do for the dental area, and here we disclose that we have a large customer that is very important part of the dental group. So please do understand that I will not tell what customers, which rank and the specific values, but to give you at least a qualitative understanding who those customers, who those customers are.
In terms of margins with the semicon industry and development of the semicon industry, I think I'm getting that question fairly often. So how come that, you know, the sales of chips itself sort of are a bit flat, and why don't you see that, and stuff? And my typical answer is, look, I mean, between us and any fluctuations in the semicon market, it's a fairly big reservoir in a way, or a fairly big tanker, and which is our biggest customer. And if you listen to what they're sort of saying, and they're saying, "Well, yeah, 2024 might be a transition year." And actually, we see that as well.
2024 might be a bit more of a transition year, and 2025 will be a huge growth year, and that's fairly typical in this industry, so it's not something that we're not used to. What it means for us, though, is we have to continue to produce. We are limited by capacity at the moment, in particular in the semicon arena, and we have to use 2024 to be prepared for even more growth in 2025. As we will continue to produce, and then according to POC, IFRS revenue recognition, we will basically... You will not see that much of a, of a downturn in, in, I believe, the semicon market of ours in 2024. You'll see continued growth and margin expansion in the semicon.
But Ralf is going to detail that a bit more, in particular, when it comes to the business models and how we can gain more, more share of wallet. I'll refer to the to the afternoon session, to the later, later session after the break. You have the decision-making power here.
Yeah. Thank you for taking the question, Adrian Pehl from Stifel. On your group guidance, I mean, obviously, there are two vectors on increasing the margin. One is mix, because probably APS is growing faster maybe than the rest of the business, and the other one is margin growth within the segments. I was just wondering if you could give us some ideas on how to weigh these-
Yeah
two vectors there.
Typically more mix than anything, to be honest. As much as our semicon business grows and the other high-margin businesses grow, then, you know, we do see mix effects. I would add, though, that I think a few people have been surprised, or actually, a number of people have been surprised about the margin development in NPC, and why that developed that positively lately. In a way, it's also mix, but it's basically stopped the bleeding in some of our assets. In the past, we had Interob and a particular customer not too far from here, in the automotive industry, doing electric vehicles, and we lost a lot of money there. So it's operational excellence in terms of stop the bleeding in parts of the business where we are less profitable.
It's mix, and frankly, it's also overhead coverage. You know, if we grow and we keep our sort of overhead fairly flat, then we see that obviously as a margin expansion on the bottom line.
Here.
Yeah, good morning. [Roger Sher waburg] . Kevin, two quick questions for you. First one on competitive positioning. Do you think with your platform, you're able to gain market share because you have the better offering than what peers developed? Then on growth, you talked about the new functionalities. Do you think that these should... I mean, growth had been good in some years, had been bad in other years. Do you think that growth will be more stable going forward? Maybe you can share a number. And then thirdly, on the margin, do you think that the new functionalities already reach some leverage of your platform which already raises the margins, or is that something you would then rather expect at some point in the future as you have to continue to invest in the things upcoming?
Yes. Okay, firstly, in terms of our current technology, I mean, we are adding functionality to our existing platforms, and we're making really good progress with that, and we're winning new contracts competitively with that. So we're quite confident about that. In terms of the longer term, having what we call a plug-and-play platform for the future is something we're really focusing on, sort of separate from design work we're doing for customers now. Because you have to differentiate the two, because we're very busy doing design for now and for next year and the year after. So what we're investing is a new platform for the longer term. That's... We know what to do. We just need to make the investment, which we're now committed to doing, and execute that over the next 18 months, 2 years.
The margin development is. It's coming very much from these recurring revenue services, because the longer these contracts run for, the improvement in margin goes year on year. And we are very fortunate, being the equipment supplier and manufacturer, our cost to actually do it is lower than many of the companies that have to buy the technology from people like us to actually do that. So we see top-line growth and margin expansion over the period through those increased recurring revenues. Does that answer your question?
Yes. [Stefan Rethmeir] from LBBW. A question for Kevin. I mean, your order intake is rather lumpy due to your project, correct, of your business?
Yes.
So, to speak about a product or the project pipeline by regions currently, and going to margin, is there a chance to stabilize or to improve your EBIT margin this year, in 2023?
... So, you're absolutely right. If in a given year, if we have a large project, we get a really strong order entry. And if that project is delivered the following year, that year, we don't get another project like that, then the order entry is, as you say, it's lumpy, it's project-based. One of the things we've done over the last 18 months, and we've probably discussed at the last event we had, is to reduce our dependency on those big projects, because we don't want to run our business being up this year, down the next. So our recurring revenue over the last period has, as a percentage of the overall revenues, has increased, and we see that going forward.
The other thing you have to bear in mind is that when we win a service-based contract, you can't book that all into the order book, because under the accounting rules, you have to book it each month when you send an invoice. So what is important for us going forward is what we call the framework contracts, which we've won, which don't actually appear in the order entry. And that's something. I don't have the numbers today, but that's something which has increased well over the last 12 months, and going into the next year, will continue to increase. And then you will follow that by seeing the revenues coming up, because we'll be booking those month on month, year on year.
And on the specific sort of EBITDA margins per division, we don't give any guidance in it within the year.
Hi, good morning, [Felix Wafromundi]. Kevin, maybe a question for you. I was wondering, I mean, with the change of the you know, just the way that you generate revenue in SMS, I would wonder whether you can give us a bit more granularity on the software-based revenues that you're making. And I mean, you had in the past, always, this 50% target, software revenue target. Maybe you can give us a bit of a view how that is going to develop into the next years. And then also, I mean, with just the... I mean, now you gave us a sense how the, you know, the business is changing. Will you report also that in the future, you know, how much project-generated revenue you will make, and how much, you know, service-generated revenue you will make?
Is that something that you plan to report and to give more granularity in the future?
I expect Stefan will answer part of that question. We, as an organization, we're big on photonics, and imagery. That platform requires software to develop the functionality. So yeah, we are increasingly writing more software, for sure. We have quite a large AI team that does artificial intelligence work, which again, sits on the platform. So there's a combination of the two. In some cases, the software is run as a service for some of our clients. We've got a number of clients that want our back office technology, as well as our cameras, as well as competitor cameras feeding into our back office. So again, those are revenue-based solutions. We've got solutions running in the UK, in London, with the Metropolitan Police, in Australia, and they generate good recurring revenue year on year.
We don't normally break out that from our numbers at this particular point. But nevertheless, software is an increasingly important part of our business.
We do not have any intentions to change the reporting structure in the next 12 months, at least. Should that change, we'll let you know.
Thank you.
A question for Kevin. Thank you for the presentation, and when I listened to you, it sounded like you're running a huge growth business, also from simple cameras to complex solutions, more software, more recurring revenues, and so on. Now, given your historical top line, you're probably the slowest growing part of the group. It's roughly 10% of revenue. You have, obviously, the semiconductor business and the medical business growing much faster. So probably, if you can't really accelerate your top line number, you're gonna basically, the importance of smart mobility is going to further slow down. Is your aspiration to live with that and say: Okay, yeah, from 10 to 9, to 8, to 7 every year, you know, from revenues? Or do you think...
Is your view that you are able to at some point keep up a bit? You know, probably not one to one, but keep up a bit with the rest of the organization.
Yeah, and I think there's a number of things I'd respond with on that topic. I mean, in the past, we have always been reliant on one or two major projects every year. And you rarely get two or three in any given year. And so we may have a huge input of revenue one year, and they're not there, so the next year, you're trying to recover that with other technologies. We've also had a period where we've had, through COVID and various other things, we've had to do quite a lot of R&D work because of obsolescence of technology. A lot of companies, people like Sony, for example, end of life camera sensors earlier than they planned. So we had to do some work around that, which slowed us down a little bit.
But we've overcome all those topics now. And in the last 18 months, we've been developing new, but generally new technology, which we're starting to sell. And now that we've built out our business service, where we can do the whole process, the opportunities have really opened up for us, particularly in North America. Through our opening the sales channel directly ourselves, we've got an extensive prospect list, all of which is qualified. And so we've been investing in that area with people, operation support, and I do see growth, you know, starting to take off. And, you know, we want to be, you know, in line with market expectations on growth in our business. There's no reason why we can't do that.
There's no reason why, you know, once we've proven we can do this and it's successful, we could do better. And so yeah, we're really excited, and I think the recurring revenue is underpinned by technology, good service, good client relationship, will help us get on that hockey stick.
I mean, maybe something that for Kevin is more difficult to say, but I can. I know that Kevin-
I know what you're going to say, yeah.
I know that Kevin and the team have been disappointed when we, from a group's perspective, had slammed the brakes on certain acquisition projects. Okay? So we, Kevin and the team, they spent a lot of time, a lot of effort in certain M&A projects, processes, and we were, in one or two, we were pretty-
Close.
Pretty close.
Close, yeah.
Very close. And we talk large deals, right? I mean, like, the size of SwissOptic and the Berliner Glas, large deals. And then given the changes in the environment that I described earlier, we basically pulled the plug at the eleventh hour, and it was a big disappointment, I know, for Kevin and his team. And the more so I'm very grateful, we're very grateful for how the team dealt with that, and how the team had been able to, yeah, shake a bit, and then.
It's interesting because we have been very focused on M&A, and we got close to a number of targets, and some were not successful, and some were stopped, and that's fine. But we've also been investing in R&D and salespeople and channel over the last 18 months, and what you realize, it's obvious, isn't it? You can spend quite a lot less the longer that... But providing you invest in your business, you make progress. So we're making progress, and our sort of need or like to make an acquisition has become less, for sure. 'Cause we are really focused on the R&D. We've been expanding our sales channel. We've won our first contracts. We're on a different trajectory now, which is not dependent on M&A.
Okay, so no further questions for now. Then, we'll break now or carry on right away with Ralf?
Yeah, exactly. Thank you very much, Stefan and Kevin. Thanks for your-
Uh
... for your questions. For everyone, we are now heading for a coffee break here in Berlin for about 30 minutes, so be back right before 11 o'clock, and suggest to do the same for those who are online. See you later on. Thank you.
Okay. All right.
All right.
Good morning, everybody, ladies and gentlemen, from my side. My name is Ralf Kuschnereit. I'm the responsible board member for the APS division. I want to give you a little bit an input and an update on our that division. Right between the strategy from Stefan Traeger and the numbers from Prisca Havranek, I'm trying to actually explain what kind of business that is, how we do it, why we do it, and why it matters. So that's my job today, and I'll try to walk you through that. First, I want to start... You probably don't know most of our very, very important products. Even if you would try to find that out, you would not be able to do that because we provide optical systems that go into the products of our customers.
So small systems going into big boxes of our products, and you won't see any naming of the optic unit. There won't be a press release, because most of our products are protected by very strict NDAs, and even most of our customer relationships are. So that makes it always a little hard for me to give you a nice, interesting presentation, but I still would do, try to make it insightful and interesting for you today, and, and understandable. So we actually have two, two kinds of business. The one I just described is like, we build optical systems that go into products of our customers. So every time our customers ship a product, one or several of our products will be shipped with it, right? That's, that's the business model. So our customer sells, then we sell.
The other one is that we do in the electronics side is we build capital equipment. So this is capital equipment that goes into the production line of our customers. So it's machines that help our customers build their products. So it's two different parts. The biggest part is the supply to the OEMs. Well, as you can see here behind me on the slide, we mainly serve three markets: semi, Biophotonics, and Electronics. And last night at the dinner table, somebody asked me very nicely, saying: "Hey, how do you make a decision which markets you serve or even on the specific projects?" And I think we developed a very clear pattern for that. So first of all, in our corporate strategy, it says we do optics and photonics. This is what we are all about.
And that's very important because we actually have a long heritage in optics and photonics. We even go back, like another optics company, to Carl Zeiss. So we inherited all that knowledge, the secret sauce of building optics, but then we also built on that with modern technologies. We're using semiconductor technologies to build optics. So we have a really broad portfolio from optics, micro optics, light sources, sensors, detectors, so we are able to provide full solutions for our customers. So that's number one. So is it optics and photonics? And the second one, we looked at different markets, and of course, we're interested in markets that grow long-term, stronger than GDP. And there's a couple of markets, but the more important factor is, or the additional factor is, in that market, does optics and photonics play a differentiating role?
Can we make the products of our customers better? Can we help them differentiate? Can we create value in these markets? Because otherwise, we are not a high volume, cheap manufacturer. We need something difficult, a problem to solve. That's the second part. This is how we select the market: semiconductor, life science, and electronics. But the third element is also important, that we developed over the last couple of years: Is it scalable? Because we are not an engineering house. We're not just solving a technical problem for somebody else. We solve a problem. In the ideal case, we solve a problem together with our customer. We do a manufacturing introduction, then we ship the products for, hopefully, in higher volumes, for us, higher volumes over a long period of time.
So that's actually, and also in hindsight, when we look at it, this is where we make good money, where we make good profit. So, so the rule of thumb: Is it optics? Is it hard? So is it a difficult problem to solve, and is it scalable? This is, this is how we work through this. And the important part is, and also we have to get close, close to our customers, to, to drive that, to drive, to drive the revenue. So our experience showed us that when we work very closely with our customers from the very beginning, so co-develop with them, do some innovation and then do serial production, this becomes most profitable and most reliable. And as you can see here with the numbers, so we created similar statistics as you, as you have seen from Stefan early on.
If we look at 2021, with our top seven biggest customers, we did 37% of revenue. Now we're doing 50% of revenue, or we're planning in 2023 to do 50% of revenue with our biggest customers. We have the clear ambition to expand the share of wallet with our customers, and that requires very strong and very capable key account management. We have very capable, technically capable key account managers. We're getting close with our customers, and what we call it is actually, we are planning for virtual integration. We do this with our customers. We actually offer this to our customers. So over time, we understand their processes, we understand their way of working, we understand each other's strengths and weaknesses, and we fully align and become a strong partner with them.
So this is how we drove the business in the past, and this is how we want to grow the business in the future. So strong focus on the key customers and expanding their share of wallets. So that's the overview on APS, Advanced Photonic Solutions. Now I want to deep dive into the semi part, the digital age, the biophotonics part a little later, and then the measurement technologies. Well, the digital part is of course interesting. So I want to start with a question. So, actually the processes we use today, why are they so powerful? I see all the tablets here on the tables. You have your smartphones, you have your laptop computers, probably right now connected to the cloud. Maybe what I'm saying is just transcribed by an AI into a text.
Somebody can download it later. So these processes are so incredibly powerful today, and why is that? The reason is because their processes have many, many transistors today. I think the new Apple M7 has, like, more than 100 billion transistors on it. And that is possible because the structures on the chips get smaller and smaller. So right now, I think the iPhone 15 has a chip that has a 3 nanometer structure in it. It's also a marketing thing, honestly, but it's made one layer. But this is going to come. So the smaller the structures, the more processes we can create on a chip and the more power we can create, and we can create more calculating power with less energy consumption, too. And how is that done? And bear with me, I'll get to where we come into play.
So on the left-hand side, you see, lithography. So lithography is the step to projecting a mask on a semiconductor... on a chip. So the small structure, the 3-nanometer structure, 10-nanometer structures, are projected on the chip, very small. And you need incredible optics to do that, which is in the big machines of ASL, ASML, Nikon, Canon. Only ASML can do 3 nanometer, by the way. So it's a big projection lens, which is highly complicated and has a lot of other features to be manipulated to do that. The other challenge, though, is... I hope I'm not talking to too many physicists. I apologize if you already know everything on this.
So there's a big silicon wafer going into this machine, and it's built step by step, lithography step, then there's a coating, some etching, and then it has to come back in the, in the lithography machine, and you have to find the spot. I mean, you have to make a crossing on a nanometer level, right? So you have a nanometer structure, three nanometers, and then now the thing comes back, and you have to bring it in exact position. And that's the other big challenge in the lithography system, to do the so-called overlay. You have to find the spot. And to do that, it's another big optical system that does that, to find the right spot. So projecting it very small and finding it again and overlaying it. So these are the two big things, and we are involved in both of them.
That's the end of the story. Can't tell you much more about it, but it's a unique tech- unique technology, can't be quickly replaced. We are supporting lithography companies to do that. So that's the one step. So building the chip, and the chip is built layer by layer. Modern chip has about 100 layers, and if you think about it, it looks like New York City with all the high rises and lots of connections in between, right? It's a three-dimensional structure. And this also has to be inspected. The second word here, I see inspection. And these machines, the inspection, the lithography machines look like buses. These are the size. The lithography probably is like a city bus, and then, like, a small transport bus is the inspection machine.
And the inspection machine is not a machine that from time to time comes at the end to look at it. It's an integral part of manufacturing of integrated circuits, of chips. It happens all the time. You have to check the bare wafer, you have to check the chip, you have to quality control, and you look for defects. And one of our customer calls it, "We're looking for the ant in the streets of New York." So you have these high rises. You just look for something as small as an ant. Ant, right? The little animal, ant on the street. So you have to look from a high distance in this very small spot. Why I'm saying this? This is, in principle, a gigantic, complicated microscope that does that. If I say microscope, it's optics.
So we are providing classical, very high-end optical systems for the inspection. So we are, say, on both sides of manufacturing chips that require optics. There's other machines in a chip factory, of course, but the ones that require optics, lithography and inspection, we are in with micro optical systems. Talk a little bit more about this later, what that means. It's not just small lenses, it's diffractive optics, meta structures, it's optical components, optical systems, and we have this of both sides, both important steps of manufacturing it. So if we are in this business, and it's a semiconductor equipment business, it's the machines that go into these big fabs that we read about every day in the newspapers. So, so is this a good business to be in? Of course, this business is driven, and there were a couple of questions earlier.
This business is driven by the chip market itself, right? And what we believe is that this is an excellent market to be in. If you look at it, if you just look at the newspaper, right, there's an announcement like there's a new NVIDIA AI chip today or tomorrow or yesterday. We're probably all connected to the cloud right now. We're doing edge computing. I mean, data centers are built every day somewhere where it's cool, close to a river or something like this, to cool it down, because we need so much calculating power over and over again. And the big multinational companies, Google, Meta, and all these companies, build their own data centers every day just to increase capacity, to be able to actually specifically run the AI that is coming up for all of us. The big driver.
Then, of course, we all read that was not long ago, we read, "Oh, the German car industry can't produce cars anymore because we're missing chips," right? We have the energy transformation, we have the need to reduce CO2 emission, so everything in energy has to be controlled and steered, and this is done by algorithms, intelligence, and that all drives that market. Last but not least, my hardest argument would be if we doubt that, every day, we read in the newspapers about export restrictions, about chips, right? There is a little trade war on chips, and I think we can say if a country doesn't have access to chips, processor technologies, I think we can even say if it doesn't have access to the highest level of industry, chip performance, it is a strategic disadvantage.
I mean, this is happening because it's important. This, this trade war is happening because it's so important. And I think we can say that the real world is running on silicon these days. It's probably still running on oil, but definitely it's running on silicon in the future. So I think, and if we look at now, you can trust my beliefs or look at the data that we bring, and we look at, of course—I mean, we see a continuous growth for the semiconductor industry over the next couple of years. Most people say at least a decade. And yes, there can be fluctuations, and we talked about this in the break, right? What is 2024 like? You can expand it a little bit more, and then 2025, it goes up.
There might be fluctuations, but because of the fact that other than 5 or 10 years ago, there's so many more applications for this chip industry, so the fluctuations actually are leveled out a little bit. They're not as strong anymore. So we believe that the chip industry is gonna grow, and it will drive the semiconductor equipment industry that drives our business. So I gave you a couple of high-level technology indications that we are a good, good company in that business and a relevant company in that business. And what I want to share with you is that in the last couple of years, we actually developed from a supplier for these companies, actually, for all of the important companies, to a strategic partner.
So internally announced, officially a strategic partner, won couple of supplier awards because we increased the strategy of increasing share of wallet work. We increased our revenue share, and we got very much closer to our customers there, and they appreciate that because they also want to keep their, the size of their supply chain controlled, and they want to have a close relationship because it's so important. And what that takes is not just the technology. So we need, needed, and we still need to develop further in R&D capabilities, so we help our customers innovate. R&D capacity, we need to perfectly control our supply chain, and at the end, to make it simple, it's an interesting business, so the expectation is that you're just ready every day. So if you wake up the next morning, something happens, you got to be ready.
You need to have resources to deal with that. So these are all requirements that we try to develop, and we keep developing further to intensify the relationship with our customers and strengthen these relationships to be an integral part of their supply chain. So business can only happen with us and not without us. And the last point that any of our customers is pointing out, that we need to be ready to ship. Resources, shipping, capability, being ready for the ramp-up is of utmost important to them. Continuity of supply is their first goal, and then just after that comes price. And this is one the reason why we built this new factory in Dresden, that you probably have heard about. I just want to display it here one more time. It's a super high-end factory.
It's very close to the airport in Dresden. If you know the area next to the Bosch semi fab, right there, it's built on pillars on the bedrock of Thuringia to be vibration-controlled. It has huge clean rooms. It's a state-of-the-art fab, and we are in between the semi fabs. We're not doing semiconductors. We're using semiconductor technologies and applying them to optics, which differentiates us very much. But we need all this quality and these kind of facilities and infrastructure, and we're making the investment. You see the number, EUR 90-100 million.
I know I'm speaking to investors, and I know the famous line, "Cash is king." One of my customers told me, "Yes, but capacity is king if you have it when your customer needs it." So we're making that investment, and I'm pretty sure it will pay out. And we're going online in 2025, and we're bang on time with it. So I hope this is gonna be ready and fuel our next step of growth in that industry. Okay, now taking a step back, now we're moving from silicon into the bio world, which is an interesting step. Well, if I think about last time I went to a checkup at my doctor, probably do that too, from time to time, it just feels like 20 years ago, right?
I mean, you go there, checks a couple of things, and then you maybe get a blood test, and it looks like the same, like if compared to 20 years ago, maybe the values are different, but the lines are the same, right? Nothing has really changed. But if you get sick, the world is very different today than it has been 20 years ago. There's so much more capabilities that we have today, and it's... I mean, immunotherapy, new medications for cancer treatment, understanding, and it's all based on understanding that sickness life happens in the microscopic. Stefan talked about this earlier, and of course, because this is part of our business, right? I mean, about 20, no, exactly 20 years ago, 2002, the first genome, the human genome, was sequenced the first time. It was a huge effort. I mean, it took like 10 years.
Today, I mean, if you do a PCR test, it's pretty close to something like this, and for $100 bucks, you buy ancestry.com or 23andMe, you get, in principle, your gene sequence, right? For $100. This was a huge thing. We have all, medicine has understood, life has understood there's a lot in the genes, in the cell biology, in the molecular biology, and it changed our world in life science and healthcare. Again, unfortunately, we are typically experience it only when we get sick, so... Why I'm telling you that story? Well, as a person coming from optics, it's in the microscopic, so you need a microscope, and optics companies can do microscopes. So the microscope, it's always a kind of microscope, to be honest, right?
So the microscope I'm talking about is not a microscope you have on your desktop. In a gene sequencing machine, in one of the other analytic machines you find in a lab, there's something in it that's probably looks more like a high-tech electronic box when you open the hood, but it's, it's an optic, it's an illumination system, like a laser, an LED, or a lamp, it's a sensor, it's a detector, it's electronics, and it's software. And we are building, in this business, we're building this kind of optical systems. And they go into... And that's I have to now become more specific. Research applications, applied science. They go into these systems, and this is a growing business. That's why I was making the story. It's a growing business.
There's more and more; it becomes more common to analyze genes, molecules for your health, and it's a growing business, and we are part of it, and also here, we are participating with the biggest players. And if check my rule of thumb, it's optics; it's hard to solve, and it's scalable because this is scaling right now. The other part that we do in healthcare and life science, yeah. Oh, this is not following me. Okay. On this side, is more visualization, right? It's what you saw in the factory early on, like a 3D scan of your teeth, but digitization is driving that side of it, right? It's dentistry, it's surgery, and I'll show you an example in a minute. So digitization is driving that.
So yes, we had microscopes, and we had visualization, like surgical microscopes before. It all changes now with digitization. There's more. Systems can create data, and data is used to do better work with the tools, and I'm gonna show in a second. So we have these two areas that we're serving, also do lasers a little bit. With these areas that we're serving that we think are up for growth. Just quickly, one more time, the dynamic. So we have. The market is driven, like in comparison to what I said about the semiconductor part, right? The market is driven, the end consumer is the lab, the hospital, the doctor's office. They're buying these kind of machines.
Then there's the huge and the big OEMs that have made huge investments into these applications, into the clinical studies to prove that this analysis or this treatment does help a patient at the end. They have very big pockets, they're huge companies, and they design, they design systems, but they're very happy to have a partner in the photonics sphere to outsource that part to them. So this is what we do. We partner with these companies, and we help them succeed and differentiate in the market. And we're building, of course, and decomplexing in that way also their supply chain, no question. And then optical components, we only do in that field if it's not available for - we can't buy them on the market, right? So semiconductor, we probably, most of the time, very often, we have to build the lenses ourselves.
Here, we can also partially acquire it. So we have this, this position in the middle. But we are not only, and this is a little bit of mixture, so we are mainly basing our business model on the big, on the big customers, on the, on the global players, because, of course, there's a codependence between, between the two parties, the supplier and, and, and the, and the end customer or the OEM. But we also make some bets, very dosed, not too much risk. So we're working with small companies and startup that come to us because they have a very specific, difficult problem that they can't get solved somewhere else. And we think just from the idea that this is very fruitful and will help, the society in the future, so we believe and this can be successful.
I'm just showing without names here, one, which is a robotic exoscope. This is for brain surgery. Not sure if you ever witnessed brain surgery, probably not, but it, it's always done through a surgical microscope. So a doctor stands in front of a microscope, looks at the brain of the patient, does surgery, which is sometimes taking hours, 3, 5, 7 hours, which is very straining on the doctor because he can't move, has to have a microscope between the patient and himself or herself. Here, it's decoupled, so it's an electronic system. It's a robotic system, just positioned above the patient, and then the doctor can do surgery while looking at the screen, so much more comfortable. This is a new innovation, has been tried several times, but we believe that this company is very successful there.
They've placed it in different hospitals. They're in clinical trials, so we're hoping that this will pick up someday. And then also digitization plays a big role because fluorescence can be added, of course. And the other one is endoscope. We actually acquired a lot of knowledge about endoscopes, with the acquisition of Berliner Glas, and we're using that additional knowledge, combining it with knowledge we had before, and using something like a multispectral or developing something like a multispectral endoscope, which helps us diagnose, or helps the doctor diagnose, for example, cancer in the bladder, because you can differentiate different colors, fluorescence, and photodynamic, induced photodynamic therapy.
So again, I know I'm not explaining it in all detail and good enough, but I just want to show we are adding some of these projects to the big multinational companies to kind of participate in the opportunity that we see in these markets. Also here, like, like in the semi market, technology is a prerequisite to be in the business, to be in the discussion, but it needs more to be a partner with, with the big multinational companies. And this is where probably also the advantage of, of Jenoptik comes in. The big multinationals don't want to work with a small optics shop or a startup.
They want to work with a company that can pull through if things get tough, technical problems occur, supply chain issues occur, and our job is to be there and also in the development phase or in the serial production phase, when issues occur, to be a stronghold in their supply chain. Of course, they're discussing price, but they want R&D competency, they want continuity of supply, and they want a strong relationship, so they have people to work with, to discuss with, to be successful in their endeavor. I mean, for them, we are a supplier. Their task to build such a device is typically much bigger than what we can do. Well, last but not least, you have seen that. I can take that short.
So, after the acquisition of Berliner Glas, again, where we acquired a lot of competence, specifically for the dental and endoscopic part, we had to find a new building in Berlin, and we are very happy that this worked out. We built it for growth. It's a state-of-the-art clean room for this kind of business. And, yeah, we spent about EUR 20 million to build it that way where we are, but we're now ready to grow with our customer in that field. Okay. So third part of APS. It's about optical test and measurement. And so why is this an interesting market? As you know, we started this in a significant way with the acquisition of Trioptics. We had optical test and measurement equipment.
We built that very specifically for certain customers, but it was a very small business. It was the absolutely high end. We recognized that you need to have some serial products to take a certain share in this market of optical test and measurement. Maybe to understand where we are going, it's maybe good to understand where we're coming from. In 1991, the founder of TRIOPTICS, Eugen Dumitrescu, founded the company. He's been working for a German optics company, and he quit his job and opened his own company and said, "I want to build optical test and measurement equipment, and I want to connect it to a computer." Well, seems to be an obvious move today. At that time, it was still, obviously, at least in the optics industry, a little bit revolutionary.
So he wanted to use computer power to connect it to the test and measurement equipment. So he did this, grew the company slowly, and but he was successful. He managed to build this combination, which was fruitful for the optics company. And where he sold it, it's you see, what's the optics manufacturing. At that time, it was just classic optics manufacturing, right? We still remember we had photographic lenses, like real cameras, and of course, a lot of technical optics in the industry. There's a whole industry of optics, and he sold these products there. Today, we have many more markets. We have optics entering the advanced driver assistance systems in our cars, right?
It's not just the backup camera, it's all the cameras that are surrounding our cars, telling us there's a risk coming from left or right. We'll talk more about artificial, AR/VR, augmented reality and virtual reality, not artificial reality. And then we talk about smartphones, and this is what actually made TRIOPTICS big. So the transition from the photographic lens and bringing the lens into the smartphone, I mean, people probably still remember the first Leica camera was pretty poor. And to really do that transition, it was important to get to image quality that was really replacing the camera, right? So you don't need a camera anymore. I mean, most people don't have a normal photographic camera anymore. It's the smartphone. And to do that, the precision of manufacturing these lenses had to improve significantly.
So what we have today on our cameras is several lenses mounted on each other and glued together, and then they're mounted on a sensor chip. TRIOPTICS developed test and measurement equipment that is in the manufacturing line, helping to adjust the lenses above each other, glue them together, and then in the right position, glue them at the sensor. So to create 100% quality control. What we have today in our pockets is a 100% quality controlled camera in the smartphone. And as we all know, we started with one, now most of us have three, four lenses in our smartphones. And this is still the case today, and it's still a big business. Of course, it has matured more, right?
So it's not growing as fast anymore, but there's still a lot of drivers in the market that keep innovation alive. So I mean, social media, photography, Instagram. I mean, if I go on vacation, I see a lot of people just taking these photos all the time. And there's a driver for better imagery. And again, if you know Internet behind Instagram, there's a whole business, too, right? So telezoom, zoom optics, there is innovation going on, on the optical side. We all have face recognition on our iPhones or other smartphones, other brands, that is driving innovation, and then, of course, weight and shape, right? So they're still sticking out of our cameras, not a little bit ugly. So there's still a lot of requirements that are driving the industry to improve smartphones.
In addition, we see, let's say, a little bit an unclear situation with China. So most of the smartphone factories are in China today. There is, there's a drive to look to other countries, especially Southeast Asia, and if factories move, there will be also a push for more equipment in that market. So we have to say, so the smartphone market has matured, right? It's not like this super steep growth anymore, but it's still very active, and we see this as one of the pillars of the business today. So we have the classical optics, and then we have the smartphone optics. So the big growth driver for the future, we think, is gonna be ARVR. We all know the big companies like Apple, Meta, Google, and others have committed to bring ARVR to life, right?
The gaming companies already did that, too. So, there's a whole set of applications that is thought of to create new services and values for the world using such an ARVR device. So initially, it's supposed to be happening today, and we know it didn't. So it has been announced by Apple of last year. There is a Meta lens out there, but it is postponed a little bit. So, and the reason for that is not that the companies are giving up on this. They're still pushing very hard to bring this out, but the reason is that technologies are not ready. And I'm not talking about the ARVR glass itself. We'll look at this in a second. I'm talking about other technologies. There's not enough content, the software is not done at that level.
So there's a lot of things still happening and investing, but it is a little bit postponed, yeah. But the key players are still doing significant investments, the innovation is continuing, and we are expecting it. I'm not saying any dates, I'm not committing any dates, but we are expecting that this business will grow and will be happening. Because there's lots of applications people think about. I think the obvious one, I think this is what was already started, is gonna start, is entertainment, but it's navigation, it's servicing, it's aerospace, it's defense, it's manufacturing. So all these surrounding of the reality with augmented reality is giving more value to customers. I mean, the one... I just met somebody who was actually jogging with his AR glasses, having a trainer in his glasses.
So he would run with him and tell him to go faster, go slow, checking the heart rate. So I mean, there's things we don't think about today, but I think this is gonna come. And again, the big multinational players are very committed to drive this through. So why is that important for us? Because these AR/VR glasses are optical devices, and they're very delicate, and they have to be tested very carefully and aligned very carefully. So the first glasses that were on the market, if you put them on, you'll be motion sick after a little while already. So because they're providing a stereoscopic, which means a 3D view, and if angles are off, you get sick, so you don't feel well. So there's a lot. So it's a mass product like the smartphone.
It's a mass product that has to be produced at a very high precision level to make it, to make it usable and also affordable for everybody. And I don't want to read the list to you. So the dark blue part is, these are things that we at Jenoptik, with TRIOPTICS, know how to do. This is where we're good at, what we're good at, and we already have products, actually, standard products for AR/VR manufacturing. And then there's a couple of adjacent technologies that we are looking at, that we are partnering with, with others, to be ready to be a full solution provider for somebody who starts producing AR/VR glasses. And of course, that you can see, it's like, like a main theme in, in APS.
We are already in contact with the big companies, so we're always starting in the R&D phase, trying to build a relationship in the R&D phase, helping them to develop a manufacturing process and the glasses itself. And then, of course, our hope and wish is then to be ready and ship the devices when we're going into serial production. Last but not least, I mentioned earlier, just one sentence. So the world is using advanced driver assistance system. I think most of our cars have, like, blind spot control, like a radar system that controls your speed. You can follow the car before you. You have a backup camera. You see new electric cars that don't have mirrors anymore, so they have cameras to look back. So there's a lot going on.
I mean, with the whole change in the automotive industry, that people start asking what kind of engine is in the car, it's all going to be electrified. The differentiator in the car has become more and more on the electronic systems. It's advanced driver assistance system, of course, it's car entertainment and other things. So it becomes a differentiator, so it becomes a topic for innovation. And even then, I connect it to what Kevin told earlier. So if eventually, really automated driving occurs, and maybe even connected to some other system that are maybe in the streets to really steer the traffic, to reduce carbon emissions, to really improve the flow, it will be a requirement to have these kind of systems on board.
So there's a whole kind of vision for advanced driver assistance that goes beyond our blind spot control and so forth. But thankfully, there is a business today, right? So because the cars already have cameras, and we have a couple of products in the market, and we are already also in this market as a supplier, from high flexibility and low volume to high volume and lower flexibility. So again, we're here, we are providing methodologies and equipment for the R&D area and to the line in the manufacturing. So the whole spectrum of devices, so we can enter on the R&D phase and then go into the manufacturing. So from lab to line is here a little bit the tagline. So in summary...
So the optical test and measurement business is addressing several markets, and these markets are on different maturity levels. I mean, so the smartphone market is still a very strong market, but of course, innovation is not as strong anymore as it has been five or 10 years ago, so it's not growing as fast anymore, but it is still a big market, and we are the market leader there. Advanced driver assistance systems is going to grow very surely. It's already happening. All major brands have these systems, and, and they're using it and, and going further. And AR/VR is our big growth opportunity. We keep our finger crossed that it's happening rather sooner than later. That's just not just in our hands, but we, we are making sure we are prepared to, to take that ramp, that steep ramp, when it's happening. Okay.
So this was the deep dive into the three areas. Of course, we are serving many more smaller markets, like advanced manufacturing, and Stefan mentioned we're also going a little bit into the data transfer. But these are the markets and our main revenue drivers. And I just want to summarize for the overall APS division. As you've heard, I mean, technical excellence is like the foundation of it. And again, here we can benefit from our history as well as our investments over the last couple of years, that we are really one of the top optics companies in the world. Customer centricity has shown to be the one very strong success factors in the business we're in.
Building very strong relationships, performing, being very reliable with our customers, build, build these strong relationships, not just with one customers, but with a foreseeable number of customers. So also has, of course, an impact on our P&L, so we don't need a thousand sales reps on the street. We have very dedicated teams working with specific customers. And then manufacturing expansion in many areas is important. Semiconductor, again, we are looking at the ramp-up to come, so we need to build capacity, because if you, if you want to be in that business, you need to be ready to ramp up. But also on the Biophotonics side, as you saw it maybe yesterday afternoon, we need to be ready to grow the business, and we're building the capacities there.
So I was not showing you a lot of numbers, so I try to convince you by explaining, hopefully not too technically, what we're doing, that we have a strong position in the market, that we have a strong position with our customers. That we are performance critical for our customers, so which strengthens this relationship, and that the investments we are doing are very targeted, so they're not random. I know it's a lot of money going out, but it prepares us for our further growth, and I think the numbers we could show in the last one or two years kind of underline this. Thank you very much. With this, I hand over to our CFO, Prisca Havranek, and she has all the numbers that I haven't shown.
Good morning, everyone. I'm very happy to have you all here, both in the room and online. My name is Prisca Havranek, and I'm the CFO here at Jenoptik. And if we recap the morning today... By the way, we have—I think we are pretty good in time management, so I'm the only one who can screw it up from now. I won't. I'll try, at least. But if we look at the recap of the day, what we've seen, we've seen Stefan talk about how we execute our strategy and where we are midway our strategy. And also, I think, most importantly, what our key priorities are for the remainder of the strategy period. And if you remember that it was, will be organic growth, operational excellence, and innovation and customer centricity.
Then we had Ralf and Kevin going into our most important growth platforms and trying to explain both what we do there technologically, but also how we interact with our customers, because that, going forward, will be a key value driver for us, even more so than in the past. And now I would like to take the next 15, 20 minutes or so to try to explain to you our thinking about the financials and how we think this all ties together, and providing you with some more numbers. And when I do that, I would like to re-emphasize three, three topics or messages for you. One is, how we think, double-clicking into our growth and margin ambitions, how we think about them, and what are the reasons to believe in our view to deliver this profitable growth.
The second one is around balance sheet and capital allocation. So what is our thinking about where we deploy our capital, and why it's the case, and why we believe that, that makes sense. And third one is to go a little bit more into detail on our updated midterm targets, and also for those, where it's needed, provide some assumptions that may be helpful for the modeling that some of you may be doing after this day. So going into growth first. Stefan talked about the CAGR, in the past, and this was around 7%. However, if you dissect that, you actually see two different trends that I've tried to, to show on this slide. So you see around about 5% CAGR through the period up to COVID.
Then we take out the COVID impact, because there was a little bit of a mess, obviously, in the growth per pattern there. And then since that, in the last three years, we have grown by a CAGR of 10%. I think that speaks to what Stefan alluded to, the transformation of our portfolio. We think that's a good performance. Now, I would say the critical ones of you may say: yes, but, you know, there was a high inflation or environment. Yes, given that. And then, of course, also, there was a bit of a special situation in semi, particularly in the year of 2022. But overall, we still think that's a very good performance.
The fact that we have a higher share in semi revenues now as our total revenue, and also our life science business has increased in the total revenue composition, we think that's a good reason to believe that we'll be able to carry this acceleration into the future. So that's on the growth side. If we look at profitability, Stefan has talked about it already. We are ahead of plan, so this is why we are updating our midterm guidance. The second one is around balance sheet and capital allocation. So what is our thinking about where we deploy our capital, and why it's the case, and why we believe that makes sense?
And the third one is to go a little bit more into detail on our updated midterm targets, and also for those, where it's needed, provide some assumptions that may be helpful for the modeling that some of you may be doing after this day. Yeah, okay. So going into growth first, Stefan talked about the CAGR, in the past, and this was around 7%. However, if you dissect that, you actually see two different trends that I've tried to show on this slide. So you see around about 5% CAGR to the period up to COVID. Then we take out the COVID impact, 'cause there was a little bit of a mess, obviously, in the growth per pattern there. And then since that, in the last three years, we have grown by a CAGR of 10%.
I think that speaks to what Stefan alluded to, the transformation of our portfolio. We think that's a good performance. Now, I would say the critical ones of you may say: Yes, but, you know, there was a high inflation environment. Yes, given that, and then, of course, also, there was a bit of a special situation in Semi, particularly in the year of 2022. But overall, we still think that's a very good performance, and the fact that we have a higher share in Semi revenues now as our total revenue, and also our life science business has increased in the total revenue composition. We think that's a good reason to believe that we'll be able to carry this acceleration into the future. So that's on the growth side. If we look at profitability, Stefan has talked about it already.
We are ahead of plan, so this is why we are updating our midterm guidance today. We have seen a significant expansion of our EBITDA margin, particularly in the last two years. Please note that, of course, there's also been the mix effect in this, but there's, of course, and relating to the mix effect, also the turnaround of our non-photonics businesses, where losses have been stemmed or businesses have been dissolved. That has helped that. I also think it speaks to our pricing power, that we have been able to roll over cost increases during a period of high inflation. Last but not least, we've also seen economies of scale in our functional costs, and I'll be talking about that a little bit more further on, that have supported this margin expansion.
So what we believe is that with this, we have created a sound foundation to grow profitable going forward. Our aim is to deliver high single-digit growth mid-term, and we believe that if we talked today, we heard about our strong end markets, we talked about AI and digitalization and trends in the medical and life science space. I want to reemphasize the share of wallet that we have increased with our key customers, and this through our strong relationships, and we are going to further increase that. We've talked a lot about our technological edge, the sound technological base, the innovation that we do with our customers together, and we believe all of that together will help us to drive this profitable growth going forward.
And we will not only grow, but we aim to grow profitable, so that means obviously margin expansion, and that will come through mix. We've been talking about Semi a lot today. I will touch about that further on a little bit, but obviously, as we grow our assembly business relatively stronger to the rest of the group, that mix effect will also show up in our margins. And talking about the scale effects in functional costs, I think Stefan mentioned that we aim to prepare or verticalize our parts of businesses within our APS division. That, and also the foundation that we have laid already and will continue to lay in our G&A.
So namely, implementing S/4HANA in IT, you know, creating a global accounting function will help us to further leverage our functional cost, and give us, give us a tailwind on our margin expansion. So then switching gears, balance sheet and capital allocation. And I think what you see on this slide, and Stefan has been talking about it, is on capital allocation, we have somewhat changed our priorities. We were coming from M&A as an enabler for our portfolio transformation to now our first priority going into investment into our organic growth. Both, obviously, that's CapEx, capacity, expansion, but of course, also selected R&D investments. So going forward, this is our first priority for allocating our capital. Our second priority, this is unchanged, is returning to shareholders through dividends. Our aim here is to be predictable, so we haven't changed, anything here.
And then third one is M&A, bolt-on acquisitions. And maybe let me touch a little bit on M&A. So it's still part of our strategy, but there's less appetite for this, and I think the key, if we were to do M&A, is to be disciplined, to apply stringent criteria. You know, we haven't yet defined them in much detail, but in order to basically focus on value creation, so short term, being accretive, except for technology acquisitions, where we would allow for a little bit longer time, but I think you get the gist, right?
So that will be the focus, but as Stefan mentioned before, we don't really have to do that much in the near future because we have already transformed our portfolio, and therefore, we believe our capital is best deployed in our organic growth support. Which leads into the next topic, which is, of course, capital expenditures. So you know that we are, at the moment, in a quite heavy CapEx program that is supporting our growth, that will enable us to grow the capacity so we can support our customers' growth. Of course, short term, that also means that there is an impact on our cash generation. But of course, once that program tapers off, we will see a step up in cash generation. We've talked, Ralf has talked about our flagship project in Dresden.
Very happy about that. And we do not disclose returns of individual projects, so I hope you can understand that. But what I can tell you here is that this project is strongly accretive to our ROCE. So it's a hot project that we are very happy with and that we will continue to build, and then it will come online early 2025 as planned. Maybe last point on CapEx is, because we always get asked, you know, how much is gross CapEx, how much is maintenance CapEx? We believe that our maintenance CapEx need at the moment is around 5%. Now, is that maybe slightly elevated?
Yes, it may be, because there is some parts of our infrastructure that needs updating time over time, and we expect, our CapEx once, sort of our, our key investment program is over, to gradually move towards, our maintenance CapEx level. So just as a little bit of a model assumption, maybe. And talking about, balance sheet and leverage, I don't think there's any news here, but maybe let me reemphasize, we have a very strong balance sheet. You know that. It's the basis for our transformation of the portfolio, but also for the future growth. We have reduced leverage quite considerably from around 3.5x to about 2.3x at the moment. How do I see gearing, or what do I think about leverage? First and foremost, we have a very clear commitment to investment-grade rating.
There's no doubt about that. I think historically, when we were asked about target leverage, we said we will be comfortable around 2x-3x. I think given the current macro environment, if you would ask me, I would say we probably see ourselves a tad lower than that. So that, of course, means we continue to have, first and foremost, our priority to bring down our leverage, continue that good trajectory, and delever our company. Financing structure on the next page is very flexible. We have plenty of headroom in our RCF, which we have just extended by one more year to 2028. So we have roughly EUR 400 million available there. We have a balanced portfolio on our debenture bonds with maturities going up to 2031.
So, very good structure here. And maybe as a quick reminder, of course, we have high interest rates right now, but we think we are actually quite protected from that because two-thirds of our debt is in fixed. So overall, a very sound financing structure. So then as next one, going back to our revenue growth ambition and our updated targets, and maybe let's talk a little bit about the assumptions and what has changed. Stefan has told you the target hasn't changed. We aim, revenue-wise, for EUR 1.2 billion revenue for 2025. But what has changed somewhat, if you look at the assumptions we had basically in 2021, when the plan was made, is that the composition has changed.
Stefan has been talking about divestments and acquisitions, and back then, there was a quite heavy plan for divestments, but there was also a quite heavy plan to acquire additional revenue, other, often beyond the, the SwissOptic, Berliner Glas acquisition. Yeah? And that has changed. So that means we have actually less support from the acquired phase, because we basically, we don't need M&A anymore, acquiring to get to our target, because we have accelerated our organic growth, and we intend to do that for the rest of the strategy period. So in that sense, the target hasn't changed. The key message is the composition has somewhat changed, and that is also, I think, hopefully rounding up the story of why we believe organic growth, profitable organic growth, is important to us.
Now, for the models, if you look at the midpoint, for example, of our current revenue guidance for this year, and you extrapolate that to our midterm guidance, you'll see you get to around 6% average growth for the next two years. We believe that's a realistic assumption. However, it does contain a certain buffer to reflect the macro environment across some parts of our portfolio that is, I would say, dampened at the moment. I mean, I don't have to tell you that. So there is a certain buffer in that.
As you know, we have a fairly high order backlog that will also carry into next year, but obviously, we do not have the whole order book until 2025, which is why we, of course, have to make sure that we have a prudent assumption in there. So then, looking again at the rest of our targets, we just talked about revenues, EUR 1.2 billion for the current portfolio. We are able, Stefan mentioned it earlier, to upgrade our margin expectations from 20% EBITDA margin to 21%-22%. We have already discussed it, I think, during the current A. The key levers here will be mix, with Semi and our Micro Optics business, of course, supporting this.
We also see a good growth trajectory. We saw the medical facility in Berlin yesterday in our dental business as an example. And we also see continued headroom as I mentioned earlier from our functional costs, so operating leverage there. We have also changed our ROCE target. Maybe let me also briefly touch on that. Obviously, ROCE is a KPI that is heavily impacted by M&A activity, like we've seen for us, right? Personally, I believe it's a good yardstick, but it has to be an all-encompassing yardstick. So that, in my view, means you also have to include goodwill so that you have basically full capital in your equation here, and therefore we will change this metric as of today.
We will hold ourselves accountable to ROCE in the newly defined definition, including goodwill. We have a strong commitment to improving this ROCE, but you know that this isn't done overnight. It's a gradual approach. Our goal for 2025 is to have our ROCE above our WACC. So before I move on, maybe for some assumptions for the models that may be helpful, you know, to give you some data points here. Depreciation, amortization, we expect largely to be flat, as we have, of course, you know, increased depreciation from our investment program, but also amortization tapering off, so largely flat. Interest, we expect to peak this year based on our interest rate scenarios and then gradually come down afterwards.
Tax rate, we expect to be around 27%-28% for the period. For this year, we have a slightly elevated tax rate estimate, about 29% because of our transaction in Korea. Working capital, you know that we have some work to do in our working capital, particularly on the inventory side. I personally believe executing on the operational excellence here will be key in the future. However, as you know, we have the factory in Dresden coming online, so that will also potentially mean a bit more working capital, extra working capital, during the time of the move. So overall, we have only included in our model a moderate improvement of our working capital ratio for this period. CapEx, I think I've already talked.
Free cash flow before taxes, obviously very much impacted by the cash effect of the investment program, yeah, and with that, that is sometimes hard to predict. Therefore, from a cash conversion rate, in our definition, I would expect a volatile cash conversion rate somewhere in the range of 40%-60%, for that period. So that was the financial targets. Last but definitely not least, non-financial targets. I personally, and I think we as a management team, believe that corporate responsibility is more important than ever in this day and age.
So I'm actually particularly proud that we are also upgrading our non-financial targets, as similar to the financial targets, we have partly reached them, particularly in the area of environment, where we are upgrading our targets, because our performance has been quite good, I think. And at the same time, we are introducing a new commitment to reach net zero for Scope 1 and 2 by 2035 at the latest. I think our ESG efforts have also been recognized by our customers, but also the fact that we have improved our sustainability ratings, I would say, across the board. So important topic for us, and we'll continue to perform on that one, similar to our performance ambition on the financials.
With that, bringing me to a close, what I would like to leave you with is Stefan mentioned that before. I think we have transformed, and I think that's a very important measure, if not the most important for me, at least for today. We have transformed an industrial conglomerate to a leading photonics company. That is the achievement of the last couple of years. We will continue, but it's a very important message. We have, because of that, significantly enhanced our business and our business portfolio. Investing in organic growth takes CapEx, but we'll step up cash generation once the investment program is over. Value creation is important to us, and we are committed to ROCE improvements.
We have been able to update our financial targets despite the macroeconomic, let's say, uncertainties that definitely have surrounded this financial year and probably also the next 12-18 months. So with that, I would like to close, and I'll be handing over to Stefan to wrap it up.
Many thanks to Ralf and Prisca for your presentation. There's not much left to say, actually. Prisca, you, you said it. We have transformed what has been a diversified industrial conglomerate now into a focused technology group, focused around our core competencies in optics and photonics. With that, we actually have focused our company, our investments to our core markets.... We're really strong in semiconductor and electronics. We are really strong in medical life sciences. We're very strong when it comes to smart mobility. Over the last few years, that transformation has meant a lot of portfolio transformation. It has meant divestments and M&A activities. And whilst we have some homework still left to do in terms of focusing our company even more on our core marketplaces, by and large, that portfolio transformation is over.
From now on, we will focus predominantly on organic growth, driving operational excellence and expanding margins by even more innovation and customer centricity. Today, we've upgraded our margin guidance to an EBITDA margin of between 21% and 22% of sales by 2025, while maintaining our top line guidance of around EUR 1.2 billion in sales for the portfolio as we know it today. I've been asked in the break the question, so if we do sell Prodomax, what that does mean? Well, the current guidance does include Prodomax, but you guys can figure the size of Prodomax in a EUR 1.2 billion corporation. It's not that meaningful, actually, but I'm expecting questions around that in the Q&A session. So anyways, I think we've made a lot of progress.
The world has changed in the last two years, there's no doubt about it. From a geopolitical perspective, from a financial and economic perspective, and for us, as a company, on our company level, we are proud of what we've achieved in the last years. I think we made a lot of progress. I think Jenoptik is very different from what it had been a few years back. But even more importantly, I think Jenoptik has a future that's maybe even brighter. Yes, today, we talked only about what we wanted to achieve until 2025. That's our current strategic period, and we are halfway through that current strategic period. But it's very dear to my heart to point out there's a life beyond 2025, and there's more to do. And beyond 2025, we can still grow. Obviously, we're not guiding for that at the moment.
– we're going to cross that bridge when we come to it. But I am absolutely convinced there's even more margin expansion beyond what we guide for 2022 possible. So we will continue to grow this business. We will continue to expand margins even after 2025. There is a mid and long-term future here. But for now, we guide for 2025, again, continuing our growth plans, focusing on organic growth, focusing on operational excellence, focusing on innovation and customer centricity, in the next years. That's it. Thank you very much to everyone online and here in the room, and we are happy to take questions.
Yes. Pal Skirta from Metzler Bank. Thank you very much for the presentation. I have a question regarding your new semi fab in Dresden. So how much additional capacity do you expect from this fab in your semicon business? And, maybe you can already give some color on the ramp-up phase. So how much additional semicon capacity should we expect in 2025 and in the full year 2026? Thank you.
I guess, Ralf, you're best positioned to answer that.
Yeah. So first, so that semi fab is not covering the entire semi revenue. Just to be very clear, this is a part of it. We're doing semi in Jena, in the United States, and in different places. And this is a rough number. We are roughly doubling the capacity on that specific technology, today. So, today we're a little bit distributed, mostly within the Dresden area, in different facilities, which is a disadvantage, of course. So now we're building it, and this is doubling that specific capacity. Second part of the question, sorry. Yeah. So, I mean, we're following the demand of our customers, so that's the idea. So with that step, we think we can cover the capacity that the customer requests from us, and ramp up throughout the year 2025.
I mean, I think this should be good for two or three years. Yeah. Yeah. So there's always a good equation, right, to create the value out of this, right? So just it's a little more complicated. Yeah.
Yeah. Thanks, Adrian, from Stifel again. Just a question on your dividend strategy. I mean, obviously, you say-
... We're gonna deleverage a little bit more. On the other hand, you're already quite low, and we see peak CapEx anytime soon. The same time, you're guiding for higher margins. Obviously, it sounds to me that you're probably getting a dividend story at some point. So will we see a more defined, more positive dividend story anytime soon, maybe early next year or so?
So, we explicitly do not have an explicit dividend policy. That was a good sentence, I think. Very smart sentence. Explicitly, we do not have an explicit dividend policy. We did say in the past, a number of times, that we want to be predictable. So don't expect any big surprises from us when it comes to dividends. I do believe in many ways we are a growth share and growth stock, actually, hopefully. I think many investors, but, hey, it's obviously for everyone here to judge, but many investors look for growth more than dividends, I think. But we do wanna pay dividends. We do wanna make that very, very clear. We will continue to pay dividends and, in a way that we are predictable, so no huge surprises there.
I have a question for Prisca. First, you guided for a flat depreciation and amortization line, or you hinted towards that. Now, given the fact that, the Dresden facility will kick in, and the CapEx, basically, you made will kick in, can you please explain further why you just expect flat margins? I will expect the depreciation and amortization.
So maybe as a disclaimer, this is a model assumption to help you, right? It's not a super exact statement. However, the reason why we expect flat is that we have significant amortizations that come from purchase price allocations from the recent acquisitions, which of course amortize over time. And we see that compensating the increased depreciation from the additional CapEx. So that's why we are roughly saying it cancels itself out, and it's that, so.
Okay, thank you. Then the first, the second question would be about the increase in the margin that you're guiding for, from 19.5% to, let's say, 20%-21.5%, roughly two percentage points. Also for modeling purposes, would that come mostly from... Or can you give the split where this is coming from? Is it coming from an increase in the gross margin, or is it more from the operational leverage and, let's say, less selling costs, you know, because you only sell the product once to the Netherlands, right? You don't have to sell it a second time,
for example.
Yeah.
So, like OpEx versus CapEx.
Yes. So I think I'll obviously, I'm not able to give you the exact mechanics around it, but what I can say is, it will be, there will be mixed effects. We expect parts of our portfolio, we talked a lot about Semi or certain parts, Micro Optics and Semi, that to be growing above our group average. So there's a mixed effect coming from that. And then the operating leverage, well, the leverage, I would see mainly on the functional costs. So basically aiming to keep functional cost increases below or significantly below our revenue increase. So those two levers will support the margin expansion.
Yeah, there's not much to that. I think it's mix and, overcovered.
Is it a good assumption to assume 1% from OpEx, 1% from-
We don't guide on that.
Yeah, Michael Kuhn from Deutsche Bank. Mr. Traeger, you anticipated the question, so I'll still give it a try. The target for the standing portfolio, if we try to exclude a Prodomax, what would be the very rough implications? That's the one. And the other question on ROIC above WACC. So based on your interest scenario and the other parameters you anticipate, what would be your expected WACC by 2025? Thank you.
I think it's sort of really back on the envelope, what one could do. What if, if I would be in your shoes, if I would have to build a model without knowing the details, I know the details, but if I would be in your shoes, what I would do is I would take the NPC sales, and I would assume that it's not correct, but by and large, give or take, NPC is half Prodomax, half Hommel. Not quite, but by and large, and that gives you an indication of how much of the EUR 1.2 billion is attributable to Prodomax. And it come...
If it comes to margins, what I would do is I would think, well, the fact that NPC came up so much in terms of margins from negative to now, pretty, or right through to around 17% now, I think we've disclosed that it's by a huge amount due to actually interrupt and the project in the factory near Berlin being flashed through the P&L last year. And we always said that Prodomax is very, very profitable, and Hommel is around, I mean, it's above break even, but not highly profitable. Which indicates that Prodomax is around fleet average, actually, when it comes to 2025 margin guidance. So the impact of the Prodomax sales to the margins is actually not that big in 2025. That was pretty precise, actually, already.
Good. And then maybe touching on the question on WACC, I mean, I guess you can all run this through your own models, but I, so I'm not probably giving you a huge surprise when I say that our current WACC is probably, so for the group, probably somewhere around the 11%-12% neighborhood. For today's view, obviously, I can't predict 2025 WACC with that exact measure, but just to give you a rough yardstick, that's how we think about current WACC for the group.
Hi. Question for Mr. Kuschnereit. I would wonder whether you can differentiate a bit on the content of the TRIOPTICS in the smartphones and in the AR/VR glasses. So I know maybe you can give roughly an indication how much more content, you know, I don't know, maybe on, like, per device is in the AR/VR versus the smartphone, just to get an idea how the total addressable market looks like. Thank you.
Yeah. No, great question. I think we can't answer that yet. So, let me describe just my thoughts, right? So, the smartphone, which runs in high volumes at the moment, right? I mean, this is a market we're really in, but it's compared to the AR glass, less complex, right? The AR glass has many more components, has displays, has waveguides and so forth. But the question is, I mean, what is the final product? We still don't know. What does it look like, and which share of it can we get for the measurement technology? Of course, we're looking for the whole thing, if we can.
So I would say generally, technically speaking, the AR glasses would be more complex, but I think it's not possible to predict it right now. But maybe just to give you an indication, yeah.
Hi. Yeah, a couple questions, please, for you, Jessica. Regarding, first of all, your goodwill position, because you mentioned the ROCE calculation will now be including goodwill. But irregardless of that, we are now in a much higher interest rate environment. I just wondered if there are any thoughts you could share with us in terms of the goodwill impairment testing procedures. Obviously, you know, you have quite a bit of goodwill related to the TRIOPTICS and the SwissOptic acquisitions. I would presume in terms of the operational assumptions there, and obviously, if anything, have probably even been raised a bit since the times of the acquisition, due to all the growth potential that you've shared with us today. But obviously, the discount rate is now a different one.
If you could maybe give us some thought process there. Secondly, on the working capital efficiency, you mentioned—you talked us through that, but I just wondered if there are any measures you can maybe be implementing to, nevertheless, in the meantime, perhaps further improve your free cash flow conversion. And my third and final question is, if we were to assume Prodomax were to be sold, presumably this would have quite a positive impact on your working capital efficiency, because if I understand it correctly, you have to now pre-finance the automation lines up until the moment the customer actually completes the transaction, and the lines are up and operational at the customer site.
I just wondered if you could give us some broad indication on what the positive impact on your working capital efficiency would be, should Prodomax be sold? Thank you.
Maybe let me start with the last one, which is actually, I think, a quite easy question. So don't expect, I mean, just like Stefan said earlier, don't expect too much of an impact from a potential divestment on Prodomax on overall our capital employed. I mean, obviously, leverage will have an impact, but the working capital, you're right in the assumption, but don't forget that there's also customer prepayments, you know, that you get in some of those businesses. So I don't expect any sizable, you know, impact on that. On the question regarding our impairment tests, I mean, we don't change the structure of our group. You know, we keep our three divisions. We have the same procedures as always, you know, when we...
Obviously, according to IFRS, when we do impairment tests, and as every company will, of course, factoring in, you know, our weighted average cost of capital for all three divisions. So no, anything else, just to add to that. So it's basically business as usual. And the third one was on working capital, if I remember correctly, right? Operational excellence is the name of the game here. We have already taken down our safety stocks largely, I would say, in our portfolio. There's bits and pieces of supply chains that basically, in Kevin's business, for example, where end-of-life topics require us to have slightly higher stock levels than we would maybe want to, but that's because of just making sure that we have the components.
The name of the game on the inventory, and I think that's really the focus, is operational excellence.
... particularly in the APS division, and that has much to do with planning and scheduling, manufacturing, to really reach potentials that are above and beyond, you know, what we've so far delivered. And therefore, we have a plan. We will execute around that, but it will be gradual improvements. And I already mentioned earlier that we will be moving into our new factory, and we would never safeguard, you know, or we would never risk the operations on that factory, ever, for a working capital short-term consideration, right? So that will basically go short-term against it. I hope that gives you some data points.
Yeah, I think there's nothing to add, actually. Maybe it's worthwhile pointing out that this topic of working capital is really across the industry.
It's not a Jenoptic specific topic, and we all know it's driven by, you know, supply chain shortages in the last, whatever, 24 months or so, after COVID, and everybody was, like, buying whatever was possible. And to change that behavior, it's funny, but it does take time. I don't know. It's really funny. You would think, "Hey, come on, that's simple. You just tell the purchasing people, right? Change, times change now. You can go back to what you were used to do four years ago." But somehow people... Yeah, we're all human beings, I suppose, and then there's a real reason. I mean, we have long-term contracts, and so it takes a while until it flashes through PNL and balance sheet, stuff. So, yeah, it's an issue across the industry.
Wherever you go, everybody has a working capital reduction program at the moment, so do we.
Hi. Two questions, please. One is on healthcare, and the other one is on metrology. In the healthcare market, I mean, in semi, you have a couple of, or one, at least, a single supplier relationship. Are there any such relationships in the healthcare market? And then maybe can you talk about what competition and pricing in healthcare compared to semi? And then in metrology, I mean, is the demand for your solutions mainly tied to semi volumes, or is it also, you know, increasing content and more complex semi structure? So what is your the feedback that you get from your customers in terms of growth outlook from these two elements? Yeah, thank you.
Yeah, on the life science side, it's more like on the project, on the case-by-case basis. So we win project with some of the big customers, and then if you win the project on the R&D side, you're typically designed in, because they can't run parallel. So you win it, and then, of course, if you don't really fail, you are in. So that's kind of... I'm not sure if that answers the question, but then you're kind of, for that project, exclusive, and you're in that device exclusively, and if you perform and do everything right. That is, this is how we grow.
And then what we see is, if you win a project, it's getting easier to win another project because you prove your capabilities, your competencies, and your reliability. And that's kind of what we've been talking all day about, that's kind of the profile we're giving ourselves and trying to fulfill 100%, yeah. I mean, there's a couple more customers, there's a couple more suppliers in the semi business, a little bit different, but we're driving in that direction. On the inspection side, it's... I mean, there's a couple more suppliers for us, customers or suppliers on the inspection side, semi-inspection side, in the market. And I have to say also, we don't understand all the dynamics in that market. They seem to suffer a little more in this year than on the litho side.
Still, the demand is very strong in our direction. And, yeah, they seem to be a little bit more volatile on the direction of the markets, but specifically what's because they also have other devices, like etching systems and so forth. But I think what's on the optics, on the optics inspection seems to be quite stable, yeah. If we have the same multipliers, like on the litho side, I cannot say for sure, but it's growing strongly, yeah.
Ralf, maybe if I add to that, in very simple terms, in the litho part of semi, in optical lithography, I mean, there's one key player, one key customer for us. There are two other players, but this one customer of ours is dominating that marketplace, and it's dominating the marketplace for technology reasons. Because really, what these machines do is just... I mean, Ralf alluded to it. I mean, we're talking about 3 nanometers. I mean, that's... I mean, I'm a physicist. A nanometer is amazingly little. An atom is one angstrom. So, I mean, it's really amazing. And as much as these machines can do amazing stuff, the product we have in the machine, I'm pretty convinced nobody else on the planet is actually able to do that at the moment, at an industrial level.
You can get that technology from an academic institute, but on an industrial level, I'm not aware of anybody that's doing this type of optics, nonlinear optics we're talking here, at an industrial level. And obviously. Yeah, that has an influence on margins. In the other parts, in the inspection part and in the life science parts, there is competition. There are others who can do it, maybe not as good, or they have their strengths, we have our strengths, we have our weaknesses, they have their weaknesses, but there is competition. It's not like 10 other companies, but there are other people out there can do it, which again, has an impact on margins.
Yes, Stefan from LBBW. You want to focus on innovations to strengthen your top line. However, this will trigger some R&D expenses. So could you provide your R&D ratio target for midterm? And the second one is on the allocation of these R&D expenses on the portfolio. Will there be a change midterm, or will it be the same as in the past? Thanks.
Yeah, we don't have any specific sort of guidance on R&D targets. We do, though, on the OpEx line. But we did say in the past, and I would, I guess, repeat that, that about 10% of sales for the total innovation is a good ratio in our industry. There are people who spend more, there are people who spend less, but I think about 10% is a good ratio. And that does include explicitly what we put on the OpEx line and what we put under IFRS to the COGS. Because, again, if we do innovation for a specific customer under IFRS, that's recorded or that's basically shows up as in a COGS line.
So it's a combination of two of those two numbers that will get to around 10%, and we are at, I think, at 9 point something at the moment. So what we, what we have at the moment, we feel very comfortable with. I don't think, Ralf, we will change a lot in terms of, like, the composition of it. Obviously, we need to invest into the SMS business, Kevin, for, for the platforms you were talking about. But other than that, I don't see any significant changes at all.
No. So, so we are, we're continuously, very slowly, increasing our efforts on the, on the semi side specifically. We've done that on the bio side, but I don't think there's... You won't get any surprise there, yeah.
Okay. Walter?
On new applications, over the past 3-4 years, do you think that the product pipeline you might have has developed better, that, that there are more projects, which might come to fruit or not? So has that changed during that period in time? I think you once said maybe every 2 years, there's a major application which not has been there and then starts to build. So that's still the case, looking into the picture, or is that?
I say something for APS?
Yeah.
So, I mean, if you look at these, if you look at the optical test and measurement, if you look at these consumer-driven markets, some of the companies have a two-year cycle. So, like, the next phone comes out two years from now and so forth. And some, we're guessing that some of the other products they have also come out in this kind of cycle. So you have a little bit the cyclicity in there. On the semi side, we have a continuous pipeline, and I think what we're really proud of is that, in the same terms very often today, but still, like the share of wallet, we're in many more products with the same customers today. So we actually have more projects already today, and we try to continue that. Yeah, so...
That, that requires R&D and at the beginning, and then getting into our serial manufacturing. So we already have done that, and that's a continuous process, at least on the semi side, yeah, and on the bio side, too.
Maybe let me add a view here as well, also in the sense of prudence. Of course, we have within our business still some portfolio work to do and the projects. I think sometimes we talk about our bio space. There are some projects where we still need to have some work to do. So it's not that we have done all our homework. I think we've done a lot of it, right? But going forward, there will be some more work to do. That's also related to projects and the transformation of sort of a product portfolio within a business.
Going on, Hommel. Do you think maybe in a year from now that you have clear visibility on what to do? 12 months.
Yes.
I have a question regarding the semiconductor business. So some companies in the equipment space, so the OEMs, the AMATs, and Lam Research, and so on, they're exposed. Basically, they grow in line with the number of wafer starts, generally. But some they are growing with the number of processes and layers and stuff like that. So basically, which is much higher than the number of wafer starts, because the ever-increasing more complex processes, up to 3,000, I've heard. I don't know, I'm not an expert. But are you rather growing with number of laser starts, or is it more with the number of actual layers and processes and so on?
Well, so we're growing with the number of devices our customers sell, and I honestly don't know exactly how this is correlated. So, you're making the connection to the wafer starts to how much of the inspection equipment is sold, right? What we're trying to do is, and whatever that is, that's then true for ourselves, too, right? So what we try to do is with being more components and higher value components in the machine. So whatever is true - so I don't know. So whatever is true from that space, from that area, so how wafers affect the machine sale, we try to increase our share of wallet in each and single machine. So that's our strategy. And, yeah.
We know overall, like, litho steps will probably increase with more complicated processes, but then I'm a little bit out of my comfort zone. Also, I technically can't say that perfectly, yeah.
The second one regarding the tool you've described in the medical for the surgery, the brain surgery you've mentioned?
Oh, mm-hmm. Okay.
Like the camera system instead of-
Yeah, yeah.
the microphone. Now, I'm sure I would be able to buy a 4K camera, video camera from many other players out there-
Yeah.
Who can do very precise optics, but this is visible light. This, I think, for me, 4K is a very low resolution. Every camera has 10 x more today, the consumer camera. So can you please explain what is your USP in such an application?
So what the system does is creating a three 3D image. So this is about... So first of all, it's a stereoscopic image, so you have to have at least two cameras, two plus cameras, that creating a stereoscopic basis. So they have to be aligned in a way that they can build a 3D image, and then the data has processed in the right way. So it's a lot about an alignment, and then a surgical microscope is always a specific microscope that works in a high working distance. Without getting too technical. So it's again a very specific solution that... And then probably it needs to be sterilized. So it's a very specific solution to a very specific problem, which is more complex than it seems to me at the first point.
It's in the medical side. It's typically the system solution that is the unique selling point, and it's not the single lens. I'm sure if that answers the question, yeah. It's about understanding all the challenges, because putting it together and not working, that's the typical way, right? So understanding the challenges that are actually coming up, yeah. That's why customers very often come to us, yeah.
Okay, so if there are no further questions, then let me just close the session today. Every so often, it's worthwhile reflecting back, you know, and then sort of sit there and think what changed in the last few years. I vividly remember when I started in Jenoptik in 2017, it took me about 20 minutes to explain what Jenoptik is doing, and I'm not quite sure if I was comprehensive within these 20 minutes. I think today we can explain our company maybe in 90 or 120 seconds. I think that's quite something in terms of change in the place. It means a lot to the people, it means a lot to us, and I hope it means a lot to you as well.
Very important, though, is not only did we change the portfolio of the company, the culture of the company, the financial attractiveness, if you want, of an investment. I think, yeah, the word culture that I used, that's probably even dearer to my heart. I think, you know, as a management team, as a CEO and the board of a, at least mid-size company, culture is actually very, very important. And we, I keep saying, keep using this, this Peter Drucker quote, "Culture is strategy for breakfast or lunch or dinner," or whatever. And I think it's, in this day and age, probably the most important task of the leadership of a company to actually create the right culture. If we do not have the right culture in a company, all the strategies will fail.
And that's the thing I think we are most proud of, how the culture of Jenoptik changed from a fairly traditional German industrial conglomerate to, hopefully, a bit more modern and agile tech company. And we want to keep that. We want to keep building on that going forward. As I said earlier, we will focus on organic growth, we will focus on operational excellence, we will continue to focus on innovation. And from a cultural perspective, we will focus much more on customer centricity. While we talked about our financial targets for 2025, there is more. There's more to come. There's the world behind and the life behind 2025, hopefully.
I'm very convinced that what we revealed today as our upgraded guidance for margins and our guidance for top line for 2025 is only the next step in a continuous improvement journey. So look for more. Thank you very much.
So one, two... All right. Okay. We should be ready now for having lunch upstairs in the first floor. You can keep your stuff here during lunch, so we make sure that everything is, you know, that the room is closed. We're just checking whether everything is ready upstairs, so maybe we, we-