Ladies and gentlemen, with our board members, the entire executive management board, the management team of Jenoptik is on-site to give you more insights into our strategic plans today. Stefan Traeger, President and CEO of Jenoptik Group, starts with an introduction and an update on our group strategy. He will be followed by Professor Stefan Nolte. He is the deputy director of the Fraunhofer Institute for Applied Optics and Precision Engineering in Jena. His presentation will be followed after the first Q&A and coffee break at roughly 10:20 A.M. by the high-speed talks on our businesses. The board members, Stefan Traeger and Hans-Dieter Schumacher, will conclude the discussion with presenting some interesting perspectives and group's outlook. The entire management team will then happy to answer your question.
After the official end of the event, what we plan for around 1:00 P.M. local time, we invite those of you that are here to spend more time with us over the lunch. Afterwards, you will also be able to experience our products and solutions in some more detail on our factory tour. Before this more relaxing part of the program, let us focus on join me in welcoming Stefan Traeger on stage. Stefan, the floor is yours.
Thank you, Thomas. A very good morning from my end as well to everybody here in the room, and, of course, also to those of you out in the webcast. I do hope that you had a very relaxing evening yesterday. Highlight like a nice tour at the museum, and I certainly think we had a nice dinner last night. Before we get started, let me just remind all of us as to where we are in the development of our company. You all might remember that beginning of 2018, we have rolled out a new strategy. A new strategy for the whole of Jenoptik, a strategy that calls for three major building blocks. We wanted to make and bring more focus into Jenoptik. We wanted to focus our business more on what we are really good at, more on our core competencies around optics and photonics.
We were also promising that we are going to streamline the company. More focus for us didn't just mean more focus on our core competencies. It also meant for us all the time making our business set up easier to understand and quite frankly, also easier to live. We've also said that we want to bring more innovation to the company. All the time we were saying, well, you know what? Jenoptik is a very innovative company. After all, we are competing in innovation-driven marketplaces. Over the years, for a lot of reasons, the pendulum between R&D was pretty much sort of swinging towards the D side, shall we say, of the house.
We were saying that in the strategic period, we aim to invest a bit more into advanced research, into modern technologies, in a way bringing the pendulum more back to the middle between R and D in our R&D and innovation efforts. We've communicated that we aim to step up our research expenses by around 150 basis points in the strategic period. I believe that those of you who are listening into the talk yesterday by Violette has got at least a glimpse of what we're talking about when we talk about modern and advanced technology. Third major building block of our strategy was to truly build a global enterprise. Again and again, we were saying we don't need a lot of facilities overseas. We have production facilities in China. We have production facilities in America and certainly in Europe.
We have offices really around the globe. Often I was saying we have offices in Bangalore and Kuala Lumpur, and God knows where else. However, our managerial bench has been pretty, did use the analogy of German males a number of times, has been pretty narrow in the sense that we don't have or didn't have a lot of diversity in our managerial bench. When we talk about more international, what we predominantly mean is to bring a more of an international spirit into Jenoptik. I'm pretty convinced that the program today can absolutely show what we mean by that. We have a very interesting presentation, I think by Jonathan Qu, our president of Asia. We have another couple of interesting examples of that.
In a nutshell, the strategy for Jenoptik that we have communicated beginning of 2018 is to transform what is a fairly diversified industrial conglomerate into a much more focused technology group. That is essentially what we have put together and explained in the last capital market days. When we've been here all in this room last time. We have communicated this strategy. The day today will predominantly be about where we are today. What's the status? We would like to finish today with a sort of looking forward section, trying to come up with some ideas and our thoughts about the future for Jenoptik going forward. Since the beginning of this year, since the beginning of 2019, Jenoptik is operating and reporting numbers in a new setup. Since the beginning of this year, we are really operating in four major divisions.
We have, on the one hand, VINCORION. All our non-optics activities, our electromechanical activities, we have carved out of the group and put together under the roof and under the name of a new brand, a new branded division, VINCORION. All our non-optics activities are now essentially under the name of VINCORION. VINCORION does cater electromechanical based products and technologies to customers predominantly in aerospace and defense industries, i.e., to customers that are operating in very challenging environments, and quite frankly, also in highly regulated marketplaces. The rest of the group, our photonics businesses, are grouped together under what we call Jenoptik. VINCORION stands for roughly 20% of the group. 80% of the group is optics and photonics and operates under the headline Jenoptik. We have three divisions within Jenoptik, our Light & Optics division, our Light & Production division, and our Light & Safety division.
Light & Optics is responsible for developing, producing, and bringing to market modules and components based on photonic technologies for large customers to pop it into their product, essentially, for those key accounts to sell it onto the end marketplaces. End marketplaces being predominantly in semiconductor and biophotonics. We go into that a bit more during the day. The big sort of tagline to Light & Optics could be Jenoptik Inside. When you think about Jenoptik, think about an OEM business. Think about Jenoptik Inside a bit like Intel Inside in the computer industry. We have Light & Production. The colleagues at Light & Production, their purpose in life is to help our industrial partners to make their production processes more effective and more efficient.
Here again, the tagline, if you want, could be Industry 4.0, as the Germans call it, or the Fourth Industrial Revolution, smart factory, smart manufacturing. That's essentially the tagline behind Light & Production. In Light & Safety, we're the ones that help communities to make their roads, their public places safer. I believe it's a very noble thing to do. Here the tagline again is, we're saving lives at the end of the day. We are helping our governmental partners to make roads and communities safer. If we dive a bit more into these individual divisions and into the strategies that we have, they all have one thing in common. Within Jenoptik, we are using light, photonic technologies. Using light, harnessing the power of light, we use light to measure something, to analyze something, to communicate something in terms of data.
We use light to influence metal or influence material, influence tissue. It is always about using light, as I say, to measure something or to produce something or to transform information. Within Light & Optics, as I said, we do that in an OEM fashion. We bring our products to large key accounts for them to put it into their products. The end markets for Light & Optics are essentially the semiconductor manufacturing space, where we have a fairly good business. We are addressing two different segments predominantly in semiconductor. We are addressing inspection businesses, optical inspection businesses, and we are addressing the optical lithography space. We cater to customers in the biophotonic arena. Again, here we also have essentially two sectors. We cater to customers that use our products for bioimaging solutions. We have products, modules, and components that are used for tissue work.
In other words, bioprocessing, if you want. We also have an industrial solution section. In terms of strategy for Light & Optics, the strategy essentially is to maintain that position, to build the position in biophotonics, to strengthen the position in biophotonics and maintain and grow share of wallet, if you want, in the semiconductor manufacturing space. We go to Light & Production. Light & Production, we also have three essentially business lines or business units, as we call it within the company. We have metrology. It's our legacy business. Metrology, we basically analyze surfaces, we measure shapes, we measure sizes. The metrology products are predominantly used today in quality and inspection type environments, often in quality laboratories of our production partners. They're predominantly today used in the automotive industry. We have laser processing.
In laser processing we use automated lasers, in other words, light sources that are somehow coupled to robotic arms, they're used by our industrial partners to produce something, to cut steel, to weld metal, and all that type of stuff. Last but not least, we have now automation integration. It's a new business that we've acquired, in 2018. Most of you are aware of the Prodomax acquisition. Prodomax is a follow-on, something that we started with the acquisition of Five Lakes Automation, followed on with Prodomax. Prodomax and our colleagues in the automation integration basically take those components and build it together into entire industrial streets and production streets. Strategy for Light & Production, again, we are partners to large industrial accounts. The strategy for Light & Production is going to be, over time, to offer integrated solutions, more and more integrated solutions.
Yes, we have great products for metrology standalone. Yes, we have great products for laser processing standalone. We believe that our customers predominantly, and first and foremost in the automotive industry, but also in other industries, are increasingly asking for solutions. Product is good, but solutions is what people really want. Therefore, we want to build out the capabilities of our automation and integration business. The second part of the strategy, further down the road, we also want to go into adjacent sectors, not just focusing on automotive, but also into adjacent sectors. Last but not least, we have our Light & Safety business, in which we essentially address two sectors today. We have our typical and classical law enforcement business, your traffic light control, your speed control and all the rest of it.
All of you are somewhat aware of, I don't know how often you come in contact with our products. I have to admit, I do at times. I'll try to reduce my interaction, not with the colleagues of Light & Safety, but with their products. We also have a relatively new sector in this division, that is our civil security business, in which we use our technologies, our products, to offer additional services. In essence, once a camera is deployed on the street, you may as well just use it for more than just speed control. Again, that's very different in different jurisdictions. In Germany, we all have our debates about data security, we don't judge that. We just follow the rules there. The rules in other countries are very different.
Only if you have to go to Austria or to, let alone, to England, where the rules are different and people have a different opinion about data security and what you can do with data. In essence, the strategy for the group is to focus on those photonic-driven marketplaces. We will talk throughout today much more about the individual strategies of the division. Yes, there is one division missing on this chart, and that is VINCORION. As you all know, we have kicked off a process to sell VINCORION. We'll say a couple of words around the process later in the presentation, at the end of the day or at the end of this morning. I think it's very obvious that we want to, and aim to, take the possible proceedings of that process and reinvest into growth in those three divisions.
That, by and large, is the strategy for the group, and that should turn a fairly diversified industrial conglomerate as Jenoptik to some extent still is today, into a much more focused technology group, a group that's focused around optics and photonics. Strategy is important. Structure is important. We've talked about structure, talked about strategy. I very much believe that an organization needs a bit more than just strategy for numbers. Yes, we all want to grow our business, obviously. Yes, we want to expand margins, obviously, and we have midterm guidance out, and we have a strategy out that calls for growth and margin expansion. By the way, even in 2019, we guide for growth and margin expansion. That's just a side remark. I do believe, though, that an organization needs a higher purpose. It can't be just about numbers. We need a higher purpose.
For us, the vision that we have is that we want to provide brighter futures with photonics, brighter futures with the power of light. We use futures in plural very intentionally because we have different sectors that we address. We use one technology to address those different sectors. We are pretty convinced, we are very convinced that our technology base will enable us to provide brighter futures in many sectors with the power of light. Our mission is to be really the leading light and recognized in the marketplaces as the leading light in the application of photonics. That is essentially what's our vision and our mission? Talking about vision and mission is one thing, but we can have the best strategy of the world, we can have the most inspiring vision and mission.
If we don't have a culture in the organization that matches our strategy, that matches our vision and mission, we will not win. Therefore, throughout the last 12, 18 months, we have spent a lot of time talking about our culture, thinking about our culture, talking with many people who we are as Jenoptik. How are we seen in the marketplace? How do our partners see us in the marketplace? How do our associates see us acting and interacting? We have created values that we want to communicate to the world, of course, internally, but also to the world. I think they're very inspiring values. Before we come to that, though, we have put together a little video that I hope will be a better illustration of what we're talking about when we talk about brighter futures with the power of light.
I, for one, don't have any sound here.
Light, the single source of life on our planet. Transforming the microscopic, to the multitude, to the miraculous. From the wild to the civilized. Our primitive fears drive us to mobilize human comfort and security. Enlightened by nature, we dream bigger than ourselves to connect people through the power of light. Light creates feats of wonder, inspiring us to feats of imagination. Days of light become nights of light, with memories that eternally delight. Driving our childlike curiosity to harness powerful technology. The power of a giant idea enlightens another innovation. Our mastery of light sets us on the road that we've only just begun. Light is our origin, our progress, and our future. Light will contribute to the next leap of humanity. We believe in better futures with photonics. The power of light. Jenoptik. More light.
All right. The little rover, by the way, is a real thing. We have a nice project together, and I think a few are going to talk about it, at least in some detail. We have a nice project together with the friends, the American Space Agency, to put a rover on Mars. If you put a rover on Mars and you want to know where it is, you better have good technology in terms of cameras up there. I think it was Jay that was saying in this room last year, this thing is going to be the most autonomous vehicle in the solar system for years to come. Talking about autonomous driving, the rover on Mars, that's a very autonomous vehicle. Anyway, as I said, we have put together a set of values that we communicate to our employees.
We have put together some role models. We've called them Helmut and Alex. I don't want to go too much into Helmut and Alex. Some of you might have been to our news since up to beginning of the year, seen them acting in the crowd there. What we have said to our teams throughout the world, whether in Asia, in Europe, or in America, is we want to be open. Maybe a bit more open than Jenoptik had been in the past. We want to have an open culture and culture that embraces differences and culture that embraces new ideas. Doesn't mean that we have to discuss everything. We're not a grassroots democracy, but we want to at least be open to listen to new ideas and other approaches. We want to be driving. We want to take our future in our own hands.
For an organization that has a pretty large part of its business in an OEM environment, that's a pretty bold statement to say we want to drive. It does not mean that we don't want to understand what our customers need. On the contrary. What it does mean is that we want to expand a bit more, as I said earlier, on our R&D activities. We want to not just follow the trends in the marketplace, we want to set trends in the marketplace. We want to be confident. Confident in a positive manner. I think we are humble enough to listen, but we also know that we have a very strong technology background, and we can be proud of that. Therefore, we can listen to our customers with confidence.
Essentially, those are the values that we are trying to roll out and communicate: open, driving, and confident. I'm pretty sure that everybody in Jenoptik these days can sort of be woken up at night and can say open, driving, and confident. We use that. We use the new culture that we are trying to roll out also in our communication. We have changed our brand imaging. You all have seen now slides that are colorful. You have seen, hopefully, our new webpage. If you go online and punch in your devices www.jenoptik.com, you'll see that the colors are constantly changing. We have changed even our logo. We now have a much more open logo. We have a logo that can work on different colors, on different backgrounds. We are saying to our employees, "You know what?
If you want to put the logo and the colors on the lower right, lower left, upper right, upper left corner, we couldn't care less. That we are very confident, we are very driving. Use whichever color you want within the organization. We want to demonstrate that we're open, driving, and confident, and we want to also show that we are more than just one color, sometimes even quite literally in the room. We use that also to get new talent on board. Jenoptik, as a high-tech environment, as a high-technology company, needs brains. We need talent, and we need to be able to attract the best talent from around the globe. Now, here in Jena, we have the fortunate situation that we have a network of very good photonics and optics environments. We have other strong companies in our space around, which sometimes we share common roots with.
We have a network with our academic partners. Stefan and the Fraunhofer Institute is a very good example of that. We use our new brand and our new brand image also to attract new talent. We call that genius. We say, "Be a genius. Work with Jenoptik. Work at Jenoptik. Become a genius by genius with Jenoptik. At Jenoptik, you have geniuses at work." With that, I would like to close it from my end for now. I'm very grateful to have Professor Stefan Nolte here today. Stefan and I actually go back donkey's years. We studied together in Hanover way back then. I'm really proud that you're here today. I have seen the slides. It's going to be a very fascinating talk, Stefan. The floor is all yours. Thank you very much. A very inspiring talk. Thank you very much.
We have time for questions now, I understand. 20 minutes, if you have questions now. We also can have a continued discussion over our coffee break later on. We have time for questions now, so floor is open for questions. We have somebody going around with a microphone so that folks on the web calls can give their questions.
Stefan. Hi. Stefan Meyer from LBBW. A question for Professor Nolte. Do you see any new laser applications which might disrupt the current technologies, fiber lasers, CO2 lasers in the production arena? The second question, 3D printing is a future technology or current technology which has some problems in terms of productivity. Do you see any laser innovations which might solve this in the near future? Thanks.
Very much, for these questions. The question about what we'll see in new laser technology is, of course, not easy to answer. We have seen this transition more from solid state lasers to fiber lasers, which is, by the way, still a solid state laser. Personally, I believe that the current limitations we have with fiber laser technology will be overcome in the future, so there will be an additional increase in output power, in pulse energies. It will, from my perspective, also go into the direction that these new approaches that are currently under development will lead to a more, let's say, integrated way of tailoring the output of the laser source. That might be in terms of the temporal emission of the laser light. It might be in terms of the spatial emission of the laser light. Yeah?
We're talking about coherent control in these laser systems. That's for sure some of the routes where we'll see bigger improvements. That goes beyond what is currently possible. If you think about how is the laser processing currently done, it's basically you have a certain type of laser that more or less matches perfectly your application. You have a circular output beam of the laser, and then you're redistributing your intensity to the workpiece. This redistribution is done by either specially shaped optics, some adaptive optics that are limited, let's say, in speed. You have moving mirrors, et cetera. There are certain limitations to this technology, et cetera, especially with respect to speed.
Here, by coherent combining outputs from different lasers, for example, you could immediately vary the intensity profile on the workpiece, and that, at a tremendous speed, actually goes down to the nanosecond, so literally as fast as you want. There I believe we'll see more, not necessarily a new type of laser source or new material, whatever. There will be also different wavelengths or new wavelengths ranges, going more into the mid-infrared, for example. I believe strongly that we'll see more an integration of all these manipulation techniques into the actual laser source. The same is true actually for 3D printing. I believe 3D printing is a technology which should not be seen as a replacement for the traditional techniques.
It's a real added value in certain regions, but it needs, as well, a complete different design approach to really make the most out of it. It will come down to the point, if it will be commercially a success or not. That depends, of course, on productivity. Productivity is just one side. If the parts that you're producing with this technology have additional advantages which you couldn't do, like saving, for example, some weight. Especially if we're talking about space applications, there it's obviously essential. The load you put on a rocket has a tremendous effect on the price. The same is true if you can, by 3D printing, produce artificial materials that are much stiffer and lightweight that have a tremendous influence on the whole workpiece.
Let me just follow up on that interesting train of thought with maybe even a perspective from the Jenoptik side, for it does go pretty much to the heart of our strategy, actually. I think in essence, what you were saying is that the production of a photon in and by itself might become almost like a commodity. A lot of people can produce a lot of photons. The application of it or sort of to do something with it at the end, I think that becomes the interesting part going forward. Essentially, that's where we come in play. Some of you might have wondered over the years, how come that Jenoptik isn't calling itself a laser company anymore? Jenoptik does come from a strong laser background, and we do still have some laser production, but it's very small compared to the rest of the group.
It's certainly not something that we have in our strategy going forward. We believe that the laser source itself, the light itself, is a commodity. We're not very good in competing in commoditized marketplaces. We want to compete and win in marketplaces where technology differentiation enables price premiums. Therefore, this whole idea of the application of light is so important. Actually that goes very well with what you were just saying, that the application of the light is what's important in future.
Kevin Reeder, BMT. Thanks for the really interesting presentation about the mega trends. I'd be interested how Jenoptik thinks about these trends internally. Is it something where each division or subdivision kind of develops their own technologies based on how they're seeing these trends developing? Or is there a top-down screen for which trends are going to really drive our future growth, and then you kind of push it down? How reliant are you on the OEM partners to drive these towards you? Yeah.
Yeah, Kevin, thanks for the question. That's a very good one. Some of us discussed that last night, when Violette presented her talk last night about how we use artificial intelligence and deep learning on image analysis across the various photonic divisions within the group. Violet and her team comes out of one of our divisions. Now we're trying to bring it across the different units and the different businesses. At some point, together with our scientific advisory board, we had a discussion. Should we actually centralize those type of activities that really go into the future, those future trends? Should we come up with a, if you want, a centralized think tank or something like that, for corporate? We, for now at least, came to the conclusion that we do not want to do that.
We believe for now that, given the size of the company, we want to keep those activities anchored and rooted within the businesses. Essentially to keep sort of the touch between, or the link between the business needs and the modern technologies. We want to build more of a network of interaction between those activities rather than to centralize those advanced resources. We might find that at some point we do want to centralize some of those technologies, but for now, we believe it's better. It's a bit of an experiment. I don't think there's a right or wrong way. Some companies do centralize it very intentionally. The advantage being you have more focus on it. The disadvantage being at some point, the businesses often say, "You know what?
Whatever you're doing, we have a lot of problems. To keep it in the business has the advantage of it being strongly rooted and good market link. Risk, of course, as we all know, is that, once the business comes under pressure, the first thing to cut might be the advanced technology. There is no right or wrong way. We, for us, at Jenoptik have concluded, at least for now, we keep it in the businesses and build out strong networks amongst those groups. I hope that the talk last night showed that at least we begin to see the fruits of that. In terms of what we are going to focus on going forward, we have communicated that we want to focus on optics and photonic technologies, and we have certain search fields within those arenas.
We did say that the artificial and intelligent analysis of images using deep learning algorithms and technologies is important for us across the group, therefore, that is an additional technology field which we would like to invest into, and we will invest into. If you want an additional field of technology that we're not just screening anymore, or where we already made a decision, this will be important for the group going forward. For a very simple reason, Violet said last night, the advantage we have is we have the data. In other words, our products are actually very often data-producing devices. Our products very often are exactly at the interface between, shall we say, the machine and the human. Those data-producing devices can be used to analyze, and to come up with some of the digital information afterwards.
We have also talked about quantum computing that Stefan has laid out a lot. We have together with our colleagues at the scientific advisory board, discussed whether we should right now already strongly invest into quantum computing. We are convinced that quantum technology is the future. There's no doubt that quantum technology in essence is photonics, right? This is all about light and how you said this, how you use entangled photons and I couldn't have said it any sort of better, obviously, but how you use entangled photons, disentangled, for all of that. You can always argue, is this a technology that determines our lives today or tomorrow or maybe the day after tomorrow? We for one have said we put it on the watchlist, because you can't do everything. We're big, but we're not that big.
We've said the artificial intelligence, the deep learning part is what we have in our products now. We're going to watch the quantum technology and to see if there is a business opportunity for us in a not too distant future. Now, if I see my 10-year-old playing with his smartphone, I know that things go much faster than maybe it had been in the past. Maybe we have to come back to that pretty soon.
I completely agree here. Quantum technology, it has been in the fundamental labs for ages. People were playing with this. Now it's, let's say at the edge where you can really foresee that you have some applications, not today, maybe not tomorrow, but on Saturday.
Yeah. We make money out of it on Monday then. The following Monday, I believe.
Morning, Dirk Schlamp from DZ Bank. I have a question on semi. We saw ongoing shrinking in the semi segment. I think we are now at five nanometers to seven nanometers. When do you think will be the endpoint reached? Is there a technology after EUV?
Who goes first? Let me just, maybe I start and then Stefan, you can talk about the future.
Thanks.
I take the easier part. Well, first of all, there's this good old Moore's law, I think it must've been around the 2000 year, maybe 1999 or so, that I, for the first time, heard somebody predicting that Moore's law comes to an end. Every other year it was about to come to an end, yet we still have Moore's law. Moore's law being the link between the dimensions of a chip and/or in the structure and cost to produce it. I'm still a believer in Moore's law, actually. I think there is still room to go. If you go into SEMICON and you talk about EUV and overlay and immersion and double overlay and then it gets complicated, and then even I sort of pass out and I hand over to Ralf and he can explain.
I'm pretty sure he'll kind of do that later today, what we're doing there. There's room to go in SEMICON from my perspective for years. Of course, at some point, the question is, if you have the dimension of an atom being the critical dimension, then what? I pass over to you, and then you can talk about quantum computers.
Thanks. Yeah. I completely agree. We have seen a tremendous trend in shrinking the critical dimensions in SEMICON over the past years. That trend goes on and on. Obviously, there will be a physical limit. As you said, if we are reaching the dimensions of individual atoms. In two hours, I will teach a lecture on atomic physics. We're just at Bohr radius or the diameter of a hydrogen atom, which is about an angstrom. It's one tenth of a nanometer. We're not that far away from this anymore. There will be really a physical limit where we cannot go beyond. That's currently not in reach. There will be an additional shrinkage in technologies. We have seen all the deep UV technologies that have been around.
People have played so many tricks to actually reduce the dimensions, even with larger wavelengths that with EUV, I believe, will still go a strong or a long path to tinier dimensions than we have now. We're going beyond EUVs. That makes even shorter wavelengths to produce tinier structures. There will be a physical limit in the end, but not within the next years.
Malte Schmidt from Robert Bosch Research. When you look at your technology portfolio, when you are investing into image analysis, quantum technologies, do you see any white spots where your internal capabilities might not be sufficient and where you might need external know-how acquisitions to fill these gaps?
Yeah, I think that's a very good one. I think we have started with the whole idea of deep learning and software. We have an internal group, fantastic group. We have to see how fast we can be to build this up internally. I could see that at some point, we add from a technology perspective, even more image analysis capabilities from the software side. Not from the hardware side, from the software side. I wouldn't call it a white spot because obviously, as per yesterday, we do have that. I could envision this to become bigger, as a bigger part of the group, going forward. I think another interesting learning experience from us is actually Prodomax. You could say Prodomax is modern technology, but it's not quantum. With all due respect. What you guys put together is fantastic. You use classical technologies.
You use robots and lasers to cut and weld and stuff. The point is that in industrial processes going forward, I'm pretty sure, well, we all agree, we have more and more sensors, more and more all integrated holistic solutions if you want. Customers don't want to have a product anymore. All that's over-exaggerating, but more and more people are saying, "Well, yeah, a product is good, but I actually don't need a product, I need a solution." Therefore, the ability to, from the software side, integrate it all together, to have an integrated software suite, if that makes sense. That's something where we can do better. Maybe at some point we add to that also from an inorganic perspective.
You hear me talking about software more than about optics, actually, which is a bit funny, but I believe that photonics isn't just polishing glass and putting together nice detectors or output of light, lasers or whatever. Photonics means that you harness the light, and therefore you use the power of light, and that does mean there's a lot of computing power that we need for that. If you talk about real sheer technologies, it's not quite a white spot, but I would say it's a weakness of ours, and that is computing, computing, software, software. If there are no further questions for now, we have some coffee break prepared.
10:20 A.M. You've got 24 minutes left to be precise. We're in a precise company here. At 10:20 A.M., we will restart also the webcast. Thank you very much for now. With respect to our OEM business. Following Ralf is Martin Kuhnen. Martin came to us, when was that? Beginning of this year? It feels like ages ago already, Martin. Martin joined us coming from KUKA, and he has our Light & Production. Martin has a wealth of experience when it comes to automation and automated production environments. He is going to talk about the future of our Light & Production business. We have Kevin. Kevin is, dare I say, a veteran in the industry. That's not to do with your age or anything like that, Kevin, it's to do with your knowledge. Kevin has actually been acquired in a way.
Kevin has run his own company for a while, which then has been acquired by Jenoptik, he's now heading our Light & Safety division globally, he will talk about our ideas and our strategies in our Light & Safety division. We have Jonathan. Jonathan Qu from China. Jonathan and I, as I said earlier, we go back donkey's years. We actually worked together at Danaher, for Leica Microsystems, part of the Danaher group. Jonathan and I worked together at Tecan as well, I'm really grateful that we can work together now here at Jenoptik. Jonathan is Shanghainese. He's born and raised in Shanghai. It's always a pleasure to go with him through his city, he can explain how a city can change in such a short time frame.
It's very fascinating to hear him talking about his sort of teenager years at the Bund in Shanghai, when the city looked completely different and when Pudong was, I understand, more of a industrial and agriculture area. If you go to Pudong these days, it's obviously very, very different. As I said, Jonathan has not only a Chinese background and is from China, but he always worked for international companies. He worked for GE, he worked for Danaher, he worked for METTLER TOLEDO, for Tecan, and he's now with us. He knows both sides of the aisle, if you want. The Chinese way of living and culture and economy, as well as the Western or Western approaches. Last but not least, we have Don. Don Leslie. Don Leslie is president and co-CEO of Prodomax.
Don is going to share with you his experiences being with Jenoptik now for, it's almost a year now, is it? It's a year. Over a year already. My God, time flies. Don is going to share about his experience in a post-merger integration phase, for we've strongly believe that post-merger integration is an important field. I always say when it comes to M&A activities, first and foremost, we look for strategies, as for sure. If we acquire companies, we want to make sure that we have a growth path there. Right after that, and even before we look into numbers, we look into culture. We typically try to see if there's chemistry. Do we believe that we can work with each other? That's a both way. It's a two-way street. It's not a one-way thing. It's a two-way street.
Do we believe that we can actually work with each other after integration? Most acquisitions, as we all know, fail post-integration. Don will share his experience with us. Followed by that, Hans-Dieter and I will try to give you sort of an outlook and some ideas about how we see the future of Jenoptik possibly evolving. With that said, Ralf, the floor is all yours. Thank you.
Thank you. Thank you very much, Stefan. Warm welcome from my side. Good morning. I have to say after James Bond and Woody Allen, Professor Nolte, you're a very hard act to follow. I try to get your attention for the short business part I'm presenting here this morning. I want to talk about one of the divisions of Jenoptik, the division Light & Optics. I want to describe the progress we've made in the last year. I want to give you some more insights in our strategy. Let's start with that. Let's start with the strategy. Light & Optics. We, Light & Optics, use our broad and deep understanding of optics and photonics to be a partner for OEM customers. These customers typically come to us because of the brand of Jenoptik and what it stands for.
You typically don't find our name of Jenoptik on any of the products. Our products are somewhere in the systems, which are machines and devices of our customers. You will find their brand label on the outside. As Stefan already mentioned, we're kind of a Jenoptik Inside, just with a little difference. There's no plaque on the outside saying Jenoptik Inside. You will not know that we're inside there. More specifically, customers come to us if the optics and photonics parts in their devices are mission-critical, are giving them differentiation. It's a better way of saying, well, we are more in the high end. They are looking for a partner that can really do that, and they can hand over that kind of problem to us. That's our role. What is our specific position?
You can see here, we are offering a broad technology portfolio, and this is how we've built this new division that actually went live on the first of this year. We're about 10 months into the new division. We took all the different technologies. We have capabilities in micro-optics, in optics. We are doing our own light sources, like lasers. We have digital imaging capabilities, and we do entire systems. For that capability of doing entire systems, people can hand over to us complete and complex systems, so we take care of them and be a partner to them. That's the overarching idea. Well, most of our customers don't want to be named, so we're not allowed to talk about 90%, 95% of our customers.
Before I continue with Sergey, I, though, want to give you a couple of examples of the few customers we can name so you understand a little bit more what kind of business is that I try to describe more theoretically here. The one thing came up last night, if you have been there, you have seen a little bit about it. I just want to give you a little bit also different perspective on that. We work together with Google on the so-called Google Microscope. If you Google Google Microscope on the web, you will find that, and you can watch a small video. The idea of Google was, let's help pathologists to do their job because it's tiring and it's a challenging job. Of course, you don't want to replace the judgment of the pathologist, but you want to help it.
The idea was to use artificial intelligence to make a judgment call and outline suspicious area in the pathology sample, which is a great idea. To be very clear, that was not the Jenoptik idea, but this is Google's idea. This is a huge idea, and you need a big company with a lot of resources to follow such an approach. We also haven't been the company providing the basic microscope. There's lots of standard microscopes out there with famous brand names you can buy off the shelf. That was not our role.
Our role was to partner with Google and build a system that captures exactly the image from the microscope that the pathologist sees, digitizes it, gives it to the algorithm of Google, gets back the information and bringing indicators, like putting a frame into the path of the pathologist in the binoculars that he can see what the suspicious areas are without changing his way of working. This is what they trusted us with, this is a customized system that we built to enable such a technology. This is a very typical example of how we work. From the very beginning, thinking about the application, helping our OEM customer to build such a system and succeed. Second one also, it was already a spoiler presentation there. We're very proud of it. It was even mentioned last year.
I just want to say we made a lot of progress. We're pretty much done with that. Next year, it will be launched. We were asked from NASA, we partnered with NASA to build for three cameras that go on the Mars rover, the lenses for that. You could say, well, it's just another lens, but besides the optical specification of that lens, the challenges are, of course, building something that can go to Mars, right? You probably can think about just the temperature specification that these lenses have to handle are very challenging. Actually, it's three lenses. If I know it right and describe it correctly, so there's cameras observing the environment, so the autonomous vehicle can run autonomous.
There's a camera looking for obstacles for the arm, and then there's a camera looking at the samples that the rover will capture and put there in to see are the samples captured, are they complete? That create another requirement, which is the cleanliness specification. Because you don't want any contamination from Earth on Mars, so you don't want to find anything that you already brought with you. Again, a lot of challenging specifications. We're very proud. It was a very challenging project, too, to be on that project, and it will be launched next year, at least as far as I know. Well, the third example to illustrate what we do is a project we just did with HELLA. It's just been published, I think, yesterday. It's a little bit more volume production, so we can do that, too.
It's a particle sensor that is meant to check air quality within your car and around your car. If you go in big cities, and unfortunately on this planet, we still have cities that are strongly polluted, the car can regulate and protect the driver and the people in the car from, let's say, a lot of particles coming from the inside and can automatically regulate this. Again, very different specification and different volume of products, but very interesting for us and a different market. After these examples, I want to go back to finalize the strategy outlook. We said we go to OEM customers, we use optics and photonics, and there's a third, I call it always a filter that we put on us because we want to be able to scale our business.
Scaling our business means we need to know our customers and our markets well to be more effective and efficient to build products. We chose three target markets. The one is semiconductor advanced manufacturing. That is everything in semiconductor like lithography, inspection, display. Then advanced manufacturing like laser material processing as a module, as an OEM supplier. We have biophotonics, life sciences, laser therapy, and lab analysis products as an OEM supplier to others. Then industrial solutions which go in different areas like industry automation and automotive. Why these three markets? These three markets have two things in common. One, these markets we expect to grow in the next years. There might be some cyclicity, but they have all the fundamental right things to grow in the next years, and we can participate in that growth.
The second one, which is important, optics and photonics is mission-critical to these markets. If we work with innovative companies, they will require more innovation from us, which is exactly what we think is our strength and where we see our role. That is the market view. OEM, optics and photonics in these three markets. Some person I once worked for, and which I really admired, always said, "Well, don't talk about organization. Customers couldn't care less how we organized." That is true. I still want to spend one short slide on that because we did a lot of changes in the organization to prepare our strategy, and I think it helps maybe you also to understand us better. We have been more technology-driven, and our structure has been in technology segments. What we did is now building an organization that is market-oriented.
What that means is you see the three markets I just mentioned here, and we've built internally what we call strategic business units that will actually develop these markets within the division. They own the market development, the product roadmap, the technology roadmap, and they're very close to these markets and the customers to further develop it. That's the one organizational part. Then we chose to move from a more fragmented sales approach to a global sales organization with a regional footprint. Starting from, let's say, small units with technology knowledge to sell worldwide. We have regional, and we'll see later one of those regional entities and sales forces that are selling the entire portfolio of Light & Optics, and this will give us a lot of leverage in the markets. The last point, we also globalized manufacturing.
We still have our different factories, but we have management now overseeing all of them so we can drive synergies between the different factories, and we can very classically and professionally improve our KPIs like quality, on-time delivery, reduction of lead time. We already see some aspects of that to drive efficiency within the organization. That is organizational implementation of the strategy that I described. Finally, I want to just quickly go, because we don't have a lot of time, just go through the three markets and give you a little bit of insight how we see these markets and how we act in these markets. Talked already a lot about semiconductor, and I want to point this out here. I don't have to say a lot about this business, I think, in a way of what are the market drivers.
We all use more data, right? We all have our laptops here. We stream the data. We watch Netflix. Even German public television has streaming applications in the meantime. We're all using a lot of data, right? We store data, we process data. We use AI. I mean, just look at Siri. There's AI today used every day in a lot of ways, and it uses a lot of capacity. The companies like Google, like Facebook, they build these huge data centers. They're using artificial intelligence. That drives the semiconductor market. There's more memory, there's more processor power built, and there's more factories built to do that. That's the fundamental thing, and if one reads, well, data is the new oil. Well, if data is the new oil, we want to be in the business of helping building pipelines, refineries, and gas stations.
Somewhere with our little part that we can do, we try to do that. That's why we're convinced this is a great market. Furthermore, if you look in the details for the experts, while there's technology changes that came up, EUV is a whole new technology that builds smaller structures, makes our processes faster. Well, that drives actually that the specifications for what we call today cutting-edge technology, DUV, deep ultraviolet lithography, has to catch up to be able to build chips together with the other technology. There is new technology and new development coming in. Then at the end, you have to inspect all these wafers en masse. There's another drive. There's a lot of technology drive in this industry, which we can participate from.
Since we have relationships with many of the big companies in that area since 10, 15 years, we are in the game. Of course, we always challenge, but I think we have a good opportunity here to further grow. On the second market, biophotonics. Here, everybody knows we have a growing population. There's more people getting access to healthcare. We get older, so we get more disease. We all experience disease. Due to a lot of facts, like international travel, infectious diseases are spreading. There's a lot of need for more and more effective care. This is another good business to be in. Well, one other macro factor is that China's government decided to build hardware in their own country.
Since they're doing this, it's actually not a threat, it's an opportunity for us because they're looking for partners helping them getting in that industry and having the specific expertise, for example, in optics and photonics that they. There's all these trends, and I just want to give you a quick example. What we're doing in this is, you probably already know that we do lasers for laser sources that go into ophthalmic applications. Helping people to preserve vision and see better. Well, in jokingly, I could say we also, in the bigger market, is even not seeing better, but looking better. There's a lot of application in removing tattoos and hair removal. It's a growing market where we can supply laser sources. Well, finally, our industrial area. Industrial automation, automotive industry. Here, as an example, you see our capabilities in thermal imaging.
There's lots of requirements and increased requirements for safety and security application that gives you infrared pictures. One very interesting and strong application is firefighting. You want to see through smoke, if you see people behind somewhere in the room, in a building, but also, of course, hotspots. If you look at this here, one more particular quality we can provide is not just giving you a nice thermal picture, but measuring actually specifically the temperature. In industrial applications, you want to know in a process like here, like a machine, like an oven, like a hotspot. Show this big solar plant. There's cameras observing solar plants for hotspots. There's something going wrong there because there's a lot of temperatures created there. There's lots of application infrared imaging at the high end, which we can participate in.
The LiDAR piece I want to cut short you. We have this demonstrator out there. We built a demonstrator to show that we understand this technology completely, but we see our role more in a supplier to tier 2 company that would bring technology to automotive OEMs or industrial applications. We have lasers, we have diffractive optics. When you have challenging requirements because it needs to be small, lightweight, this is what we can provide. This is the toughest challenge for a LiDAR system, like a laser radar. The little cute Bohr is very hard to see on the street. That is still room for innovation. This is just a slide that's in the presentation for you to read. For completeness, I want to finish up with a summary of our strategy. We are serving OEM customers with optics and photonics technology.
Selected three markets, semiconductor advanced manufacturing, biophotonics, and industrial applications to be present in and to develop more scalable business. We've built an organization to execute this strategy, and we're already working in that organization since about 10, 11 months successfully. Finally, if you look at these three markets, in the semiconductor advanced manufacturing, we want to defend and grow our position and increase share of wallet with the current customers. The biophotonics, we want to just grow and increase our customer base, because there's a huge opportunity. The industry, we have to establish our brand furthermore as an OEM supplier in the box with these technologies. Thank you very much.
Good morning, everybody. Allow me to welcome you to the world of Light & Production. Thanks, Stefan, for the very kind introduction. Nothing else to add from my side. When Stefan and Hans-Dieter hired me, they gave me the assignment to implement the corporate strategy, which you have outlined this morning, into the business of division Light & Production. Not only that, they had a second request, and that was, "Martin, please build a basis for a much stronger growth period to come than what typically this division has performed, so to speak." That goes hand in hand with the transformation of the division. With my speed talk, I would like to give you today a little bit of an insight into that transformation.
I would like to talk about who we are, what we do, what is our core competence, where are we really specialists in, which markets are we addressing, and what is the outlook of those markets. Last but not least, the most important thing, what strategic conclusions are we taking from this, and how do we follow the trends in the marketplace with our transformation? Before I came here, I thought I have some sexy pictures in my presentation, but after the presentation of Professor Nolte, I think I still have to do some homework. Nevertheless, let me start to introduce what we are really doing. If I have to say what the division Light & Production is all about in one sentence, then it's what you'll find here on the slide.
We are a global player with competence and solutions in photonic-based applications for smart manufacturing industries. Today, we consist of three business activities, business fields, we call them business units. You see them here, laser processing, metrology, and automation integration, as Stefan has shown in the morning already. All of these businesses are already global active. Just for these activities, we have today five development and production facilities around the world, actually in all three continents. It's already a global footprint. On the laser processing side, we do offer laser processes for perforation, pitching, cutting, and welding of plastics, metals, and other sensitive materials. We do offer these processes in standalone machines, but we also offer these processes in fully integrated solutions. That is what we essentially do in the laser processing business unit.
We do that primarily for the automotive industry, and we are working, for example, on interior and exterior parts which go into a car, whether it's plastic or metal. We have seen, hopefully, some examples outside there in the town hall. Our typical customers are, as a consequence of that, automotive suppliers. That's what we do primarily in the laser processing side. What are we really good at? We are really good at when it comes to master a really unique challenge, so to speak. If there is a really strong challenge, technically speaking, that's where we are good at. For example, we are global market leader when it comes to the perforation of dashboards for airbag lights. A very sensitive application, because what we essentially do is with laser, remove material to have a defined breaking line in the dashboard.
If you do remove too much material, it's not very good for the design because you see it from the inside of the car when you look on the dashboard. If you do not remove enough material, then you can have a safety issue, because maybe the explosion is not happening in a defined way. It's a very sensitive process. On the other hand, on the metrology side, we have a very broad portfolio. With this portfolio, we offer optical, pneumatic, and tactile measurement and inspection processes. Here we are traditionally mostly active in more on the powertrain side. Those high accuracy measurement devices you need, for example, in the manufacturing of combustion engine when it comes to crankshaft and camshaft, et cetera. This is the traditional activities.
These machines and technologies in metrology, you can find more or less everywhere where ships are cut in metal processing. When metal is processed and workpieces are created, most of the time they have to be inspected and measured afterwards. Also, I would like to point out that we have here a second leg already developed because Jenoptik acquired a company last year called AutoVision. AutoVision is in the high-speed 3D inspection business, and they do that for electrical connectors. Also, very challenging environment because the throughput is incredibly high when you see how connectors are being produced. That's also a second leg already for this business. Here we also offer our technologies in standard machines, which you can even order from a catalog, all the way to customized solutions.
When you ask our customers where Jenoptik is really good at is, we are really good at bringing high-precision metrology into the production environment. High-precision metrology has been traditionally away from production, and to execute that in the production nearby or even in-line, it's a totally different game because you're not talking about climate-controlled rooms and all of these things. It's a different environment. That's where we are really good at because we understand those industrial processes. Automation integration, we have Don Leslie with us as the CEO of Prodomax. He will talk later a little bit more in depth about automation integration. However, in the nutshell, we are designing, manufacturing, and constructing in the automation business field, complex automated manufacturing solutions. A deep engineering competence is what really makes the difference, combined with customer closeness. That's what we are currently.
Would like to get a little bit more into what is really our core competence. It was addressed already this morning. We are really in the applications, in the processes. Our core competence is the intelligent and efficient integration of multiple technologies with the application and process know-how. That's our core competence. That's what we are focusing on. I brought you the example of the laser processing business, just to illustrate a little bit in graphics. We purchase a lot of components because most of them are meanwhile commodity. We put the intelligence around, we create software algorithms to combine, in a smart way, a laser source, for example, with a sensor. That's what really we bring to the table. If we have to enhance the performance of the system by adding innovations, then obviously we do.
Here you see the example of innovative beam guidance through the help of cooled mirrors. That's something we do then because we have the performance of the process of the application in mind. That's our core competence. You can see now here on the picture, it can come out as a machine for specific purpose and process or as a completely automated solution and completely in line. It's all possible. Which markets are we addressing? Our reference base is a so-called smart manufacturing market, and that is a very strong market, which I would like to bring across. On the left side, you see what this market is about. It's created as a summary, so to speak, from a market performance from machine vision, control, 3D printing, collaborative robotics, but also software products for data management and so forth.
Everything which is really needed to create intelligent and flexible solutions in manufacturing. It does not include statistics about standard machinery business, for example. That is our reference base. Obviously, if we look into metrology and laser processing and automation integration separately, there are other market statistics, so to speak, specifically for those applications. This is our reference. You can see it's a 220 billion market in 2019 U.S. dollars, and it is proposed to grow very strong, 10% CAGR. It's really an attractive market. We see that as a strong indicator for our photonics applications. If we look into that market, I've highlighted the share of wallet from automotive. Automotive is today the largest share, as you can see here on the slide, and it's also proposed to remain the biggest share, so to speak, in this market.
It is a key market for Jenoptik today, and it will remain also a key market for Jenoptik. We see other parts of the cake as well here in different colors indicated. The next large one would be aerospace. Aerospace is something Jenoptik traditionally has not addressed in a systematic way, but it's also a very big portion here, and we all know that the situation in aerospace is different than in automotive. The backlog is given to produce planes for the next five to 10 years. Their problem is how to produce them fast enough. Throughput increasement, that's their challenge. If we go through, there are other segments. Oil and gas, obviously not so interesting for the technologies we have in our portfolio. Electronics, my colleague, Ralf Kuschnereit, already addressed.
Vision, light, and optics is very much focused on electronics, but we can also help to grow this market as well. Last but not least, industrial equipment, which goes in all kind of manufacturing environment, whether it's woodworking industry or plastic or so forth. There are also other possibilities. There's really room to grow from the segmentation perspective, but also that this market offers a lot in general. Since I mentioned automotive is an important market and a key market for Jenoptik, at the same time, we all know that there are currently a lot of negative messages. There's a lot of turmoil from OEMs, with OEMs, about their parts suppliers, the suppliers of machinery equipment. We all know that, and the reason is that the transformation in the automotive industry is taking place much faster than it was anticipated.
It's really shaking the whole system, that is what we see at the moment. If we look a little bit more deeper into it, in particular on the, for Jenoptik relevant segments, which I have demonstrated here or illustrated on the slide, we see the following situation. We know that in conventional powertrain combustion engines, obviously the investments are going down at the moment because other concepts are rising up the OEMs and also suppliers need to free up resources. They basically save where they can, they also increase the pressure, if you want, on introduction of platforms. Also in the chassis structure business. We will see decreasing investments going forward. Process is not any longer a differentiator for automotive players. Even across brands, they are now pushing more platforms in order to free up cash, so to speak, for other investments.
If we look on the middle of this slide, that's a different story. When we talk about the actual body, the car body, and also the interiors, that's different. Regardless what new vehicle programs, so to speak, are launched and what efforts are undertaken to consolidate, that is the thing where automotive OEMs can differentiate. They can differentiate through the design. We see rather constant investments, even in a critical situation when it comes to the parts I've illustrated here. You can also check that for 2009, the last big crisis was exactly the same story. The dip was much smaller than anywhere else in automotive. Obviously, we know that investments are shifted towards the new drive technologies. The reality is also there that investments are still relatively small. The mass production lines, we don't see everywhere on the planet yet.
We know the reasons, because the portfolio of cars is still being assembled. The investments will come. What does it mean for Jenoptik? When I look on the middle, that is already the focus of our laser processing division and even more from our friends from automation integration. We are, even in the automotive industry, under the given circumstances, on an attractive segment, generally speaking. We are shifting a little bit our portfolio from the traditional side, on the left side, to the right side, and basically participate there also on the years of growth which will come. If we put that all into perspective, what is our strategy in a nutshell? The strategy in the division Light & Production is basically built on three pillars, and I'll try to illustrate them here on this slide.
We want to utilize our existing customer base in the automotive arena and leverage that for growth through additional applications, which I will explain here in a moment with concrete examples. We want to leverage existing customer relationships there, and we will see here also why they are so important, the existing relationships. At the same time, we are transforming the organization to an integrated organization from those three business units in order to be able to smarter combine the offerings which we have in those business areas. We have done that as a first step in the sales organization. Only if we have one sales organization for those three offerings, and we can offer it and consult it to our customers, synchronized, so to speak, and out of one hand, we can find those opportunities for growth.
Last but not least, we really systematically transfer our knowledge, our products into new applications outside of the automotive industry. Build up additional, basically legs to stand on and to be much more stable, and obviously more growth. Those three pillars is what we are essentially driving in our division, Light & Production. We have implemented strategic initiatives, which in a structured way implement and check, so to speak, the progress of these initiatives. Let me give you now some concrete examples of what we are doing, what we have already achieved, and what we are still doing and have in mind to do, so that you don't have not only the buzzwords here. I would like to really give you some concrete examples. First one is on the metrology side.
On the left side, you see these traditional work pieces out of the combustion engine we have been focused on in the past. With the same customer base, a lot of other pieces in braking systems, in steering systems, for example, in automotive industry, they need same or similar measuring accuracies, and we can apply our technologies to them as well. We simply haven't done that in the past, we are going broader with our applications, but based on the same products. We do that in a structured way, this year, a lot of efforts have been done in order to find applications, to describe them, to do reference cases internally as externally, do sales trainings, and those kinds of things in a very structured way.
I'm happy to see that as of today, if I analyze the orders, 67% are on the left side and the rest already in the middle. That is quite a shift from what it has been traditionally. Also on the e-mobility, while they also need brakes and steerings, yeah, so number one, we have the same parts, like in other situations, but also the new parts, they bring a nice request with them, because in e-mobility, when we talk about, let's say, the drivetrain, the RPMs are much higher than on traditional combustion engine. That requires even higher accuracy, so that you don't have steerings and not steerings disturbance later on in your car. Yeah. It's really good, obviously, for a company who does high-precision measurement. On the laser processing side, we are also focusing on new applications based on existing machines and products.
The more you order more individualized cars, the better it is for us. With laser processing, as we have seen before, we can support flexible production systems. That's why it's called smart manufacturing, because you can produce various products or kinds of products on the same machine. We have an example outside, a plastic bumper where we can cut structures into already painted plastic bumper. At the same time, with the same machine, we can weld on the backside, thanks to this bumper. These parts are becoming much, much more complex. It's really based on individualization trends. You see here other applications which are currently developed together between our customers and ourselves. We have a big technology center, and you have the chance to see it today.
You will see there are 15 machines installed, 15 different machines with different applications. Our customers are coming with their parts and we do demonstrations and feasibility tests and so forth. They are used for pitching, but also for laser structuring, paint removal, to give basically a chance for backlight design elements, but also function elements. A lot of new applications are on the horizon here. That is not mass production yet, but it's supposed to come really short period of time because I think you know the trends by yourself. If you see the right picture, obviously with e-mobility, there is a big challenge for the OEMs because they don't need the cooling opening anymore for the engine, and how to fill the gap without making the car ugly, so to speak. Design requests are coming into play.
Those were basic examples, metrology and laser processing, leveraging our existing customer base. We talk about the transformation of the organization, an integrated organization, and even more important, integrated offerings from all of our business units. I brought you an example. It's anonymized because it's mostly the request from our customers, but it doesn't matter. The story, I think, is important. Here we have a North American tier 1 who is producing for a European OEM in the new electrical vehicle platform, a liftgate. The request is that this customer wants to produce that on all three continents, Americas, Europe, and Asia, in this case, China. In Europe, we have already delivered laser cutting systems to this customer, and the customer is taking care of, let's say, integrating this into a bigger production environment. Same customer in the U.S. and in China has a different request.
He wants to have only one supplier, let's say, for the whole thing, for the entire end-to-end process. Same customer, same product, but on different continents, different requests. With the help of our automation business group, we can combine now our photonics applications with other conventional applications in order to deliver an entire production system for this. We discuss with the customer end to end, and that flexibility, that capability allows us to get into a stronger position with our customers because we are then considered as a strategic supplier rather than a supplier of a core component, so to speak. That flexibility is really what is needed going forward in the automotive industry based on the transformation and the disruption we are all seeing. This is really a key element going forward.
I think, Don, you will talk a little more about the details of the project, here on the right side, you see the combination of processes which are requested here. More laser, like the laser cutting, the laser brazing. We have also optical inline measurement and inspection, another photonic application, and that is combined with conventional application. Last but not least, aerospace, I mentioned before. What we are doing, and we are taking now a much more structured approach. We have gained market knowledge, market insight. We brought people into the organization who have worked forever into the aerospace industry. They know all the OEMs, they know the suppliers, they know the processes which are being applied, and they also know the challenges, which, let's say, the actual processes really bring with them in the manufacturing.
These help us to bring our technologies and qualify them for the aerospace. Unfortunately, there is here a lot of confidentiality associated with that, and we cannot show a lot of detailed technical pictures, so to speak. That's why I brought a picture, at least of a group of people which are from Jenoptik and also the CEO of, in this case here, Mitsubishi Canada Aerospace. A very strong player and growing player currently. We have already established a good and strong relationship. We are awarded to be a global supplier, and Prodomax is even named as a preferred integrator. There's a long quote list out there where we offer automated drilling and sealing systems, for example. That is very promising on the aerospace side. Right side, I brought an example from the Metrology group. Outside, I believe, a lot of hydraulic parts, they're also safety related.
All need 100% inspection. Well, with that, I would like to come to the end and would like to summarize that with all the activities I showed you, we are exactly on track what the corporation wants to do when it. We manipulate, with the help of light, materials. Thank you very much for your attention, and I'm happy to have your questions later on.
The effect you're really seeing is the fact that all the people I work with now are simply getting younger. Think about that. Without further ado, when I last spoke to you all, I think last February, which was very recently after I had been appointed to run the division, which was Traffic Solutions as we then described it, I explained we were making the transition from being a product company into a public safety. That transition is reflected in our new branding of Light & Safety. It's important to know what is it we actually do, and we talk this strapline about making roads and communities safer. What does that really mean? To reflect on a few facts. Every second, more than two people die on the roads in the world. Staggering thought. Many reasons for that.
Speed, bad driving, drugs, seat belts, mobile phones, all those issues. That is a big factor in driving our marketplace worldwide. Secondly, when we start talking about making communities safer, yes, of course, we mean making communities safer on the roads, but we also talk about we need to reduce emissions in given areas, near housing estates, in city centers. We also talk about if a child has been abducted, can we find and locate that child quickly, may or may not save a life. All of those things are what we're talking about. We're looking to leverage the technology we develop and crucially, the data we capture to do that. That underpins very much everything that we do. I thought it'd be helpful to just try and simply segment the markets in which we currently operate. They're labeled A, B, C, and D.
A, traffic law enforcement. If you've known Jenoptik a long time, you will know we are one of the leading players in the world for speed cameras, spot speed, section control, point to point over a distance, and red light enforcement. That is very much our heritage from the past. What we're doing now and have been doing successfully over the last few years is to expand that experience, blend it with other technologies to do new things. Clearly, a sector of our market in the safety side is about driver behavior. How are you driving? Are you driving sensibly? Are you being distracted? These types of things. We're also very interested in the concept, if you moderate speed in a road, and by that I mean reduce the difference between the fastest car and the slowest car.
Government agencies, road agencies are starting to realize that's a good thing. I'll talk a bit more about that later. Also, sector C, which is civil security. This is using the data we can collect at the roadside to help our security services combat crime, combat terrorism, and so on. That, again, is very much related to saving lives. Very serious. We are very proud to be involved in that. The other sector, D, which is very much about tolling and road user charging. Many people will be familiar with the contract we had some years back, Toll Collect, which dominated this division for nearly three years. I am pleased to say we delivered over 600 systems last year. We are now in a support contract for that. That now gives us the opportunity to accelerate our innovation, accelerate our development.
Clearly that experience, there's opportunities to resell and do other things in those markets. Four key markets in that sense. In order to describe our strategy, this is a very simple slide to describe that. It's very clear when you look at those markets, we need to offer more functionality to our client base. There is a big part of our roadmap dedicated to doing that. As you heard from Violet last night, we're using artificial intelligence deep learning as one of the technologies to leverage that. Many things to a very high standard at relatively low cost. Part of our plan is clearly to provide better value.
More functionality, lower cost of manufacture, more value, more business. Second thing is that we need to use other technologies, blend those technologies together to then are a position to do more things for our client base. That's something which, again, I'll talk about a little bit later. Third point, Traffic Solutions used to bid for everything. We're very much a project-based company, and it's very clear if we want to be successful, we want to be more international, you have to focus on key regions and put effort into those regions. I've got some examples of what we've done over the past 18 months to describe that and give you some indication of the success that's starting to come back. At the end of the day, you need a strategy. We need to grow. It needs to be reflected in the numbers.
That's the acid test at the end of the day. In the marketplace, all the markets I've described are growing, and you will have heard in the past, and I've spoken about it before, this concept of Vision Zero. It started in Scandinavia, and the idea of this strategy is to reduce deaths on the road to zero. That is probably an impossible task, but for politicians and people in society, it is the right target. Aim for zero, you'll get close. The interesting thing is that this started in Scandinavia, it spread throughout Europe. It's now, if you go to North America, it's a real hot topic. Go to some of the Middle East countries, some Middle East countries now encouraging tourism, drop in oil revenues. One of the things they've got to do in that sense is to improve safety on the roads.
The next point about this is that very few governments have got additional funding, and they have less and less. Revenues from petrol tax, diesel tax, revenues from road tax for efficient cars is going down. There's less funding available. We have to find ways in which to assist that. The positive thing from that is if we, in this digital world, we provide more digital-based services which are more revenue based, we improve our recurring revenue, and our client finds it more affordable, too. Our strategy includes, and we talk about this a lot, the use of big data and intelligence. What do we mean about that, and what do we mean about extended functionality? Well, it's quite clear. If we have what we would describe as an intelligent photonics device at the roadside.
It has power, it has communications, a camera of high quality, which can do processing locally, and it can transmit to a database. We can capture lots of different things. In the civil security perspective, we can capture the vehicle, we can determine its color, we can determine its number plate, we can determine whether that number plate's the right number plate for that vehicle. We can detect the Bluetooth signature of that car, detect the Wi-Fi signature of that car. Blending that data, we can enable our clients in the civil security area to actually combat crime, people trafficking, and terrorism. That's an important part of what we're doing going forward. We have a long history of 25 years of doing technology. We have a very positive roadmap to change from the old technology to the new.
We're building a new series of hardware platforms that have a common technical architecture so that our software that we create is scalable. This ranges from a very small camera we could fit in a car or on a car, to larger devices which have multiple functionalities. We are at the first stages of that. We've just, in the last month, delivered the first phase of that program, and that will be ongoing for the next 12. It's really important when we think about opportunities, we have thousands of cameras around the world, that this technology also can be retrofitted. Great opportunity for us to do that. We can provide increased performance and a lot more functionality and data for those. I talked about focusing in regions. Our strategy is about technology, of course. It is about photonics. It is about data.
If we want to succeed and be more international, it's really clear we have to focus on certain territories. A good example of this is in North America. North America, we were discussing, Stefan and I were discussing this the other day, is about the same size as Europe, and yet we have more business in Europe than we do. One of the things we've done is we've invested in people, local content in North America. I noticed there was a President Trump slide earlier, but he said something, "Make America great again." We've had to respond to that because our client in North America, over a period of years as our single biggest, wants more local content. Why is that?
Because they want to say, "Assembled in America." They want to contract with an American company, not a German company. We have to switch the contractual mechanism so they can say, "Bought from an American company." These political initiatives are really important to us and really important to our growth. Now, we've done a number of technical things in America. We've aligned some of our product roadmap. We've created a stronger and closer relationship. What we've learned from that this year is a significant increase in order entry is also going up. I'm confident that by the year-end, we will be able to announce some important order entry from this region. It's important we do these things. We need the numbers to come. That's a great example of what we're doing in that.
It's also clear in these new things that we do, because we have to influence the policymakers. It's not just about us having fun with that and selling things. We've got to influence the market. We are, in a targeted fashion, talking to policymakers, talking to security services, talking to governments about what is possible. They understand the possibility, they understand the benefit, because in some countries, laws may need to be changed. We see laws changing in America. There are discussions even in Germany about the use of data. That may change if the governments change from one to another. I won't make any comments about that. Nevertheless, it's an important part about our strategy to drive the marketplace. In the Middle East is another area of our focus. Traditionally, we've done quite well in the Middle East.
We won a big contract one year. Three years later, we win another big contract. That's okay, there's lots of other business that goes on in between that we simply miss. The reason for that is because we have in the past pretty much sold it from one. One of the things we've done, we've invested in some new people who are from that region, who are very skilled at interpreting the culture there and the culture within this company and bringing that together. That's really important because we have to understand how the Middle East works, and they have to understand how we work, and we need to find a way to bring that together. We're having some successes in new areas. In the civil security space, we are the nominated supplier for a national surveillance system.
In the past, we could not stood a chance because we would-- Everything. A key aspect to this, and I think Violet touched on this last night, is deep learning and AI helps us differentiate. If you look at the vehicles, and this is a picture of one such vehicle in the Middle East, it's quite difficult to even see where the number plate is. With OAM, we can look at that picture and differentiate and say what type of vehicle is that. AI is really important for us in. We've had other uses of AI, and it's probably worth touching on that briefly now, where, as Violet said, if you can see something and if your brain and eyes can read it and interpret it, you can get our cameras to do that.
We have some examples in certain countries, in one country in particular, where the number plates are very difficult to read. They're very small. There are non-retroreflective plates. They have pictures all over them. Very difficult. No, I won't say where that is. In traditional technologies, you could expect to get a 60%, 70% read rate. With deep learning, we can be in the 90%. Our client base is really excited about that. Talk a little bit about road user charging. I said there's a big gap between government funding to improve roads and the revenues they collect from vehicles themselves. In America, there's a big deficit. In Europe, in each country you go to, there's a deficit. We are doing some work now to look at how we can take our experience from Toll Collect and our business.
We have some opportunities where we might be able to sell the same equipment. We are in some interesting conversations with a number of government agencies about doing that. We can't simply rest on what we've done in the past because using our new platform, using artificial intelligence, some of the work we did, which was more physical electronic work, we could now do in software. There's been a number of discussions with various people I've had last night and over coffee this morning about what is the impact of autonomous vehicle world for us. What is interesting is no one can actually say when will there be 100% autonomous vehicles doubt in our lifetime whether that actually be achieved. That's my personal view.
What is clear, we're entering a period where the vehicle, the traffic on our roads, some will be independent, some will be assisted, some will be semiautonomous, and some might be fully autonomous. It's going to be very difficult to manage that situation. People, drivers, pedestrians, cyclists, they act in a way where they assume a vehicle will behave in a certain fashion if they do something. For example, you could say, "I think all those vehicles are autonomous. I will simply step out and walk across the road." That's a new, dangerous maneuver. In the automotive industry, they can see a very short distance around them. Our strategy is developing. What we see is, and you see from this picture, where we have an infrastructure of technology, cameras at the roadside, we can use this as a platform to do new things.
We blend other radar technology we can see a long way down a road. We can see vehicles, pedestrians, cyclists approaching. Closer to the intersection, we can then use video and artificial intelligence to do more sophisticated things. We can be the independent eye that looks over that section of road or that intersection. Most government agencies who are interested in road safety that we talked to all agree this has to be independent of the other vulnerable road users on the road. That's where we see ourselves. What we're trying to do right now in our strategy is make good decisions about what we develop, what platform we use, what technology we use that will position us to take advantage of. Finally, this is the slide that we started with, describes how we fit into the company.
I think you will see that not only am I the oldest, but I'm also the smallest in this thing. Our strategy is to grow. We have aggressive plans to grow. That's really, really important. I wanted to just summarize about our differentiator, and I've changed this slide from Stefan's slide slightly. We're about generating data at the road, leveraging that with sensor fusion, with artificial intelligence to provide a multitude of our clients. In a nutshell, that's it. Thank you very much.
Good morning. I will give you a summary of China and Asia, the strategy, and what we have done. In Asia, we have about 200 employees, we have seven legal entities and nine offices. From the revenue point of view, China takes more than 50%. That means if we want to grow Asia, China growth is very critical. In China, there are R&D team and a manufacturing team for China and for Asia. Except China, all the other countries, legal entities, and offices are all commercial. What we say sales feed or commercial, it's a sales team, service team, and application team. We also set up a Waigaoqiao in Shanghai. Waigaoqiao Free Trade Zone company with bonded warehouse to support China and Asia. Now let's talk about China. Jenoptik China started the business from 2006, currently we have around 110 employees in China.
The business has gained a very significant growth momentum in recent years. We also expect Jenoptik business could have CAGR of 25% in the next several years to achieve that more than EUR 50 million by the end of 2023. We have two offices in China, Shanghai office and the Beijing office. Afterwards, I will show you the pictures. Let's look at the macro and the political data. From the research agency reports, the worldwide in this year, 2019, worldwide the GDP is 3.0%, and in Asia we estimate would be 4.8%. In China, we estimate that its latest information is 6.1% growth. In China, we're also facing some slowing down trend, mainly due to the China and U.S. tariff conflicts. I think you also read many news from the newspapers.
In China, the investment in the new energy automotive and artificial intelligence manufacturing, Industry 4.0, life science, and aviation defense are still very attractive, very booming. The Chinese government, I think it's very obvious, Chinese government also highly encourages high technology investment in China. I think it's the German government also has a very good relationship with Chinese government. Yeah. Let's look at the semi industry. I think just now we're talking about semi. The semi business in China, we got this information from China Semi Association, the research agent. During 2018, the global semi business is about $478 billion, China takes $158 billion. The share of 34% and grows at 15%. Japan takes EUR 40 billion, the share of 8% and grows at 9.2%.
Whole Asia for this semi business, takes about $322 billion, and the share of together is 69%, and grows at 11.5%. It's a very attractive market in Asia for semi business industry. The Chinese government also plan to invest $150 billion on the integration circuit chips industry in the next 10 years. We also got the information from the agent that from 2017 to 2020, globally, there are about 62 new invested wafer design and manufacturers. Among them, 42 from China. I think that it's a very, very attractive and promising market. Let's look at the automotive market, we estimate that the market for automotive equipment and manufacturing would be in the existing platform and the new platform together, all we say, all platform will be pick up from 2021.
Chinese government is also trying very hard to influence and then regulate the automotive market, the VAT tax reduction for car manufacturers. Chinese government highly encourage the new energy vehicles. China has a very good growth. Even we estimate that China in the light vehicle production in 2019 have a -8% growth. Overall, the market size is still 26 million units. This is a big market of light vehicle. Now for Jenoptik China, the strategy. First, it's we increase more sales feed in China market. We double our sales headcounts of Light & Optics, and to develop more key accounts. Meanwhile, in China, we have a very good life science market growth. This give us a big opportunity for biophotonics. We developed the direct exposure for biophotonics in China.
Meanwhile, we also built up the Light & Optics R&D center in China, this greatly help us to close to the customer and sell premium as what we discussed. Always sell premium. Meanwhile, this is highly build the Chinese customers' confidence or Asia customers' confidence on Jenoptik. Because when they have developed the new R&D projects, want to work with Jenoptik. We have expertise from Germany and in China for Asia, have a closely discussion. This greatly build the confidence on Jenoptik. Meanwhile, we actually also implement and strengthen the daily management to drive all these things happen. I just want to point out, this is Shanghai office building. Absolutely, this is not the whole building. We just rent a room, okay? Rent a room in this. This is the Beijing office in this building. Thank you. Yeah. Yeah.
Second strategy in China, we try very hard and increase the coverage, and penetrate the new segments, and develop the new solutions. We try very hard and also implement many programs to develop the regional dealers and segmented dealers to increase the coverage. We also have a technology and service training for all these dealers. Most important, each dealer should strictly go through the compliance training and compliance checking by outside third-party company before Jenoptik sign the final agreement with each dealer. Besides the automotive, we continuing penetrate and gain share in automotive. We also develop the new customers and the new solutions for non-automotive segments. Especially mainly currently we developed in the hydraulic machine tool, medical, and civil aviation. These are our four focus for China market, non-automotive segments.
This is the first time that the national dealer meeting and these are dealers join the training in Jenoptik. We also spend a lot of efforts and resources to develop the China organization and the team. In 2019, we launched the new Jenoptik brand, inspired by you, invented for you, putting you in the lead. We also developed more end-user seminars to build the number one brand of technology leadership. This is we need all the team and all the customer in China understand we are number one brand of technology leadership. We also have built up the process and set up the regular training programs for compliance by internal compliance officer and outside professional lawyer to give us the regular training for whole Jenoptik team and our dealer team.
We try very hard and implement many programs to develop the Jenoptik China team by more internal promotion and more education and coaching program for young talents. We also have more motivation programs to build the whole team's winning spirit. We also strengthen on-time recognition to encourage and to reward the best and to encourage the surpassing. This picture, it's the whole Jenoptik China team, the half-year town hall meeting, just after the compliance training. Thank you. That's for the briefing for China and Asia.
Good morning, everyone. My name is Don Leslie. I'm the CEO of Prodomax Automation and the head of the business unit automation and integration for the division Light & Production. It's my pleasure to be here today and share our post-integration experience with you. I'm actually going to start off with giving you a little bit of background about Prodomax, just so you have some idea of who Prodomax was prior to the integration. Going to go through a deal recap, which is really some highlights of the due diligence process.
There is a couple of key highlights that I think is worthwhile sharing, as well as talk about some first initiatives and programs post-merger that were important to the success of the integration of Prodomax into Jenoptik during that first year, as well as share our experience throughout the PMI process and why that process is so important to the success of bringing somebody new on board. Last is share a couple of success stories related to the cultural fit between the two organizations. Who is Prodomax? Prodomax is a specialized industrial engineering firm focused on designing and manufacturing complex manufacturing systems, primarily for the automotive industry. You've kind of heard that before. What does all that really mean? Put it in more in layman's terms is our customers, being primarily tier 1s in the automotive market, come to us with a component assembly.
They come to us and they say, "We need to build 200,000 of these a year." They rely on our process knowledge, our expertise, and our creativity to come up with the most efficient manufacturing process that suits their needs. That's really what they look for us to do. I'm going to show you. To assemble telephones. Fast-forwarding a little bit in history, second generation ownership was also a tool and die maker, and the business focus at that time, albeit wasn't there, was primarily machining centers for various manufacturing companies. In the early 1990s, we had two individuals that were employees of the company at the time, acquired Prodomax as part of a management takeover, and the company at that time, to put in perspective, was a little bit less than EUR 10 million in annual revenue.
They really rebranded the company at that time, really established a footprint in the automotive industry and brought robotics and welding to the organization. At that time, really the niche that the company was really focused in was becoming an underbody specialist, and that was doing a lot of underbody components in the vehicle, frame rails, suspension components, engine cradles. Since then, we've moved up into the upper body of the vehicle, per se, but that was really the focus of the company, and that's really when the company became, we would say, a solutions provider to our customer base. More than just building machining centers or assembly systems, it was really providing a complete turnkey solution to our customers.
In 2012, I note this on here because I think it was a pretty important stage in our history where Ford, one of the major OEMs in North America, actually, as part of establishing a global program for their tooling suppliers, they hired an outside consultant and traveled the globe and actually audited all of their tooling suppliers. At that time, they had actually named Prodomax as second in North America and the top 5% globally for suppliers supplying automation. Another important key milestone in our history is 2014, Prodomax was awarded Canada's Best Managed Companies Award. What that means is, put it in perspective, you need to get nominated, and 2,000 people get nominated, and there's only 50 winners. Prodomax was named one of Canada's Best Managed Companies Award. We've actually won that in four consecutive years, and in 2017, obtained a gold status.
Why is that important for a company like Prodomax? Well, one of our keys is our people, and this is a really good tool to attract key talent to our organization. You got people graduating university or people that are even senior in the industry, you're looking to attract people. Why are you going to move to Barrie, or why come to Barrie? Well, this is a pretty good reason. We're a Best Managed Company, which there's a lot of key things that go in to be able to win that award. In 2015, our previous owners, in their words, get some of their chips off the table and get out of the way to allow the company for the next stage of growth. Prodomax was sold to a private equity firm by the name of Kensington in Toronto.
That plan was really, like I said, to allow Prodomax to get beyond that EUR 45 million-EUR 50 million range that we were stuck in for a few years and open the doors to expand growth, but with the intention of five to 10 years down the road, position the company to find a strategic partner like a Jenoptik. In 2018, we had actually become part of the Jenoptik family. That was in July. Stefan Traeger actually came to Prodomax, and we did the announcement to the company and actually signed the final papers on site that day. At that time when we first started really talking to Jenoptik would've been late 2017 and early 2018 when we entered into the due diligence phase. A lot of people ask the question, well, the company was doing well, we were growing, we're profitable. Why look for a strategic partner?
I've got four reasons that I'll explain why our motivation to find a strategic partner, but I could almost change this question because I've been asked this question so many times in the last 18 months as, why Jenoptik? These are the answers. Number 1 for us is finding a strong financial partner, and that would allow us to take on larger projects. Our customers are coming to us, looking for us to take on larger, more complex projects, being able to support them globally and be able to design and manufacture systems that we can install a location in Mexico, maybe one in Europe and another one in Asia. Number 2 is expand our technology portfolio, which really is what gives us a unique value offer to our customers. I think this one is key.
That's combining Prodomax's offering with Jenoptik's best-in-class photonics technologies, in essence, differentiating ourselves from our current competition in North America and be able to provide our customers with a unique value offer, which is essentially a one-stop shop. Third one is international expansion. It intermixed with all of them on here, but historically, Prodomax had only built and supplied systems to the North American market. We would typically install about a third into Canada, a third of our equipment went to the United States, and another third into Mexico. Again, our customers are looking for us to be able to support them globally. Jenoptik already having a global footprint becomes very attractive for us because now when we get a request to be able to support an installation in China, we have a location in China.
We can develop a strategy to further expand the resources there to be able to build equipment in China. Those are opportunities that we're already working on. Benefit from Jenoptik, looking the other way, is an accelerated expansion into the North American market. Prodomax name carries a fair amount of goodwill in the North American market. All the tier ones and OEMs already know who we are. Now we're just bringing in Jenoptik, being able to offer Jenoptik products to that North American market. I think what our customers, in speaking to them prior to the acquisition completing, was really having that strong financial backer and a larger organization that can back us and support us in taking on these larger programs. The last one is diversification in other markets. Martin spoke about that as part of our divisional strategy.
Again, we're capitalizing on the extended technology portfolio and the application know-how to penetrate those other markets. We've already had pretty good success, at least penetrating the aerospace market and hoping to win our first contracts here in the next quarter or two. I want to talk about a couple of highlights or at least things that I remember from our due diligence process. Going back early in 2018, we had a management presentation with Stefan Traeger. A key part of that discussion was exploring what is the strategic fit. We had some additional workshops as part of the due diligence process when we had teams from the different functional groups come over from Jenoptik and spent a week at Prodomax. We further explored that.
What was interesting at the time, at least for me, is for all the reasons we said that we were looking for a strategic partner, we found alignment with Jenoptik's and the division's strategic goals, which is our extended value offer, integrated solutions, a global footprint, and diversity into other markets. There was an automatic fit. Second thing is a series of business workshops. I'll explain this a little bit because I tell people this was not only one of the highlights of the due diligence process, but was actually one of the most interesting weeks of my career. That's, imagine we've got a team of people at Prodomax and a management team, and there's 20 people from Jenoptik representing all functional areas, and we're coming over for one week, and in my mind, the due diligence process happened in a week.
There's a lot of other financial models, all that synergy cases, a lot of other stuff that goes on. During that week, we had an agenda with these intensive breakout workshops, management teams going with groups of people with Jenoptik, and really drilling into every aspect of the business. What that told me at the time was, I could see it firsthand, is how well our teams were working together. We weren't even a partner yet. I get goosebumps just talking about it because I'm not just telling a story, like, I believe this. That will stick with me for the rest of my days. First initiatives. Now we're post-signing, we're in the integration phase, and really to ensure business performance, we have to build a framework for sustainable and successful integration.
We kind of had four key initiatives that have occurred over the past, I'm going to say 12 to 18 months. First one was finance. We're a Canadian company, privately held, and we had to transform our entire financial group and our revenue recognition from Canadian GAAP to International Accounting Standards and IFRS 15. This was no easy task. Along with that, we've got to align and comply with Jenoptik corporate financial reporting. Being a public company, we've got reporting, well, weekly, monthly, quarterly, and every day in between. The key to this is, again, we're establishing a framework for future success and growth because our team worked so hard for those four months, and we put in really robust systems and even automation on the financial side to be able to now much more easily provide the reporting that's required.
Now even more importantly, as we look at future acquisitions for automation and integration globally, we can take all the work that we've done and we can apply that to those other acquisitions, which will make that integration process so much easier. The second is organization. About a year prior to the acquisition of Prodomax, there was another acquisition of a smaller automation company in Rochester Hills by the name of Five Lakes Automation. Because Prodomax was a more established business, a more mature business, we had a lot more mature systems and tools, project execution tools that allow us to efficiently execute projects profitably. We were asked to take over responsibility for automation and for laser processing in Rochester Hills. Over the past year, some reorganization, some implementation of some low-hanging fruit in terms of systems and tools.
What we've actually done now is we are already working together executing projects. It goes in both directions. We're assisting Rochester Hills in a large battery structure project that they're actually doing. Flip side, we have a very large project that we have for a key customer that they're actually, due to capacity limitations at Prodomax, they're actually assembling and building fixtures, and have already delivered them to Prodomax. We're already working together, and we've already aligned our tools, which I'll skip number three and go to number four, which is systems. 2.5 years ago, Prodomax implemented a new ERP system at our company, and that allowed us to get the islands of information that existed for multiple systems, have them all in one place, so that we've got live data to manage and make important business decisions.
Following the acquisition, it was decided that for the reasons of taking over Rochester Hills, we're going to implement that same ERP system there. We established a dedicated team, much like we did at Prodomax, and they've been working on that for the last eight months, and I can say November 1st, we officially went live with the system successfully.
We now have complete visibility on the Rochester Hills facility, which not only allows us to continue to integrate our businesses and work seamlessly together, but I can now actually look at, when we're strategizing on what business to go after, I can actually see what their capacity is, overlay it with Prodomax's capacity, incorporate opportunities from our sales funnel and our sales team, and be able to switch on and off opportunities, so I can get complete visibility on automation and integration, what our capacity looks like, develop strategies to go after new business, and actually make decisions which business or which opportunities fit best with our core capacity. Last but not least is compliance, is introduction and training of Jenoptik corporate guidelines, obviously very important. Code of conduct, risk and compliance, corporate contracts. We had our first internal audit completed in last June.
In the PMI process, I got to tell you that the key to me to this whole process is having a dedicated individual that was basically moved to Prodomax, came from Jenoptik, had been in Jenoptik for several years. Having a dedicated person that obviously Jenoptik has checklists and stuff like that to be able to go through the integration process, but having someone with the experience and the connections within Jenoptik that lives at Prodomax, that can not only manage and report progress on the PMI process itself, but the ability to allow us to be able to integrate into the organization for communication, processes, decision-making. I'm happy to say that a process that was anticipated to be one year was actually completed in seven months. We started it in September, we were actually completed in April.
That individual has now become part of our senior management team, is in a role where he's actually part of our advanced integrated business planning. He's very involved with capacity planning, incorporating sales, operations, as well as even interfacing with our suppliers in terms of frame contracts as such. A couple of quick success stories. This one to me means a lot because it's one of our divisional strategies for the operations side of the business, and we've created a project execution team. The idea here is to leverage the best practices, lessons learned, and execution strategies from all three BUs. Take the best of what everybody does, and build a robust system, so that we can execute projects more efficiently and also do it the same way.
We always know they won't be absolutely identical, but at least it gives us a common framework by which to work. Some short-term results is that team officially kicked off. We assigned a team that has representation from project management, engineering, and production from all three BUs. They meet weekly. They've had several strategy workshops to identify not strategies on how to execute projects, but a specific project come up with strategies on how do we drive efficiencies and gross profit within every project. We actually have identified 12 projects in 2019 that we're currently not only tracking, but reporting through September, October so far, I'm going to go out on a limb and say a little better than on track for meeting our performance targets from that initiative for 2000. The last one is actually the same example that Martin gave.
I just got to put a little bit different spin on it because, again, we're speaking to the cultural fit of the company, and in this case, within the division. In support of our P2 strategy for integrated solutions, again, we've assembled a team. It consists of subject matter experts from not just the three BUs, but across three different continents. We've got representation from Canada, the U.S., from Germany, and from China as part of this team in terms of going after this global program. It's attractive not only because it's a global program and it's a key account for us globally, it's also an electric vehicle program. The particular assembly that Martin explained, it's a lift gate. It consists of a high-pressure aluminum casting.
There are a number of different processes that are involved that include straightening, trimming, grinding, brushing, material handling, auto-racking, a lot of stuff that we typically do on a regular basis. The key here is the incorporation of the other BUs, laser processing, inspection, and measurement as part of these systems. Again, divisional collaboration is important here, especially from a key account like this one. I can't say the name. Having a global customer strategy, demonstrating that expertise and collaboration across all BUs is very important to our customer. Because then they actually see us as one team. Leveraging the local relationships with the customer as well, so now at the plant level, which then builds confidence in our customer to be able to choose Jenoptik as their strategic global partner. Thank you very much.
Thank you, Don. Much appreciated. I hope we could show that for us at Jenoptik, post-merger integration is not a one-way street. We don't see ourselves as the big gorilla that is going to dominate everything, and everybody has to sort of become like us in a way. Of course, we have certain standards. Of course, we do. We have certain compliance standards, financial reporting standards, which we want everybody in the group to fulfill. We have certain values that we want everybody in the group to at least adhere to or at least sort of subscribe to. By and large, for us at Jenoptik, post-merger integration is a two-way street. We want to learn from companies that become part of the family.
I think the sheer fact that two of the presenters today came from acquired companies in a way shows that we are capable of doing that. Thank you to my colleagues for the presentation this morning. Hans-Dieter and I would now like to share with you our view of how Jenoptik could look like going forward in a few years from now. Before we do that, though, we roll back a couple of months, 1.5 year . I would like to talk just to say a few words about VINCORION. I did say last night, please do understand that given the status of the process we're in today, we can't go into any details with respect to the sales process of VINCORION. What we would like to share with you is just sort of where we are today and what the next steps would be.
Rolling back and looking back, though, you might remember beginning of 2018, we were standing in the very same room. We communicated for the first time our new strategy for the group. A strategy that calls for more focus on our core competencies around optics and photonics. I think at the time, we already did say, "Hey, we have businesses within the group that are not optics and photonics-based. Businesses that use electromechanical, mechatronic technologies and cater those to customers in the aerospace and defense industry." We did say that, quite frankly, it's hard to see any synergies between those businesses, which are now VINCORION, and the rest of the group. That view has not changed since. There are just simply no synergies. I was looking hard for quite a while to find any. There simply aren't any.
We've established a new brand, we've communicated the new brand in September 2018. We spent 2018 pretty much restructuring our businesses internally, regrouping those mechatronic businesses, and put them all together in one group under the name of VINCORION. Actually, the better way of saying it would be, well, we have carved out the non-mechatronic, the optic and photonic businesses that were under the former DCS division. We have carved those out and put them over into the photonics businesses. The remaining mechatronic businesses we have relabeled as VINCORION. We have also spent the better part of 2018 in disentangling all the back office processes. By now, VINCORION is really actually a standalone company that can function by itself. Beginning of this year, we have rolled out and communicated the new structure for the group with the new divisions.
We have talked today entirely about our photonics businesses. We've communicated that beginning of this year. In summer, we have communicated that we got the approval of the supervisory board to start a process to sell VINCORION. We are now in the middle of a structured process. The status today is that we have collected non-binding LOIs. We have received a number of non-binding LOIs. We are currently in management presentations, or the management of VINCORION is in management presentations. We have visitors on our sites. Site visits are going on. There is a data room open in which partners, potential acquirers, are active. That's where we are today. A typical structured process, let's call it phase 1. The next critical milestone is going to be submission of binding offers, actually, which we anticipate, there's the date, obviously. We anticipate that in early December.
Once we're through with that and done with that, once we clear that milestone, SPA negotiations would go on, followed by, again, a round of board approvals. Last but not least, since this is a defense and aerospace business, we need approval for any potential transaction by governmental bodies. Why do we say all of that? You might say, well, all of that is obvious. The process is well on track. We are happy as to how the process goes at the moment. However, it's not as if this is a done deal already. We have just cleared the first milestone. There are milestones to clear still. By the sheer nature of that business, it's not without risk. We wanted to stress that just to be sort of on the safe side in a way.
Again, we are happy with how the process goes, but I think it's important to point out that there are many milestones to come. Therefore, we do not believe that we can close a deal to sell VINCORION by the end of this year. It's very unlikely. It's almost impossible. If this all works, we expect the deal to be potentially closed in 2020. Let's assume, though, and we have good reasons for that, let's assume that we can close the deal in the first half of 2020. If we can close the deal in the first half of 2020, how would Jenoptik look like as a group after such deal? Well, obviously, Jenoptik, after a potential disposal of VINCORION, will be a company that's entirely focused on attractive photonic markets.
We heard a lot today about our market spaces, about technologies we can bring, about applications we can develop together with our customers. Absolutely important, why we believe this is a very attractive market from a growth perspective, offering very attractive opportunities from an entrepreneurial point of view. It's a market that, at the end of the day, we believe grows twice as much as the global GDP. After a potential disposal of Jenoptik VINCORION, Jenoptik will be a group that's entirely focused on these attractive photonic markets, which enables, for us, sustainable organic growth and further margin expansion. Jenoptik already has a strong balance sheet. It's not as if we sell VINCORION for the lack of cash. As much as VINCORION is in no way, shape, or form a distressed asset or an unattractive business. On the contrary, it's a very attractive business.
There's just a strategic reason for us to sell VINCORION. As I said earlier, we have enough cash. We don't need to sell VINCORION to generate additional emergency cash. We already have a strong balance sheet. However, a potential disposal of VINCORION will obviously give us an even stronger financial position and cash position, an even stronger balance sheet, and therefore, decent amount of incremental firepower for further acquisitions. Then there's a third point, which we don't talk about that often, but quite frankly, once we dispose, potentially, VINCORION, the Jenoptik share, the stock of Jenoptik, the group, is a group that can be open for much more ESG-related funds. For a simple fact that the amount of business to defense customers will be the low single-digit range. I think it's going to be below 5% at the time.
We still have some products to defense customers, also from the optical side, it's fairly little. It opens up our stock for a whole different universe of investors. I would like to hand over to my colleague, our CFO, Hans-Dieter Schumacher. He's going to explain to us what that means from a financial background perspective and from a firepower perspective.
Yeah. Thank you, Stefan. Does it work? Do you hear me? Okay. Thank you, Stefan. Let's come now from the power of light to the power of money. I like this approach. Finally, it all ends up with cash because cash is king. As our CEO already mentioned, we have done some exercises. We have talked to a lot of banking partners. The Treasury team, under the leadership of Andreas Wiederhold, who is joining us today, and I, we have talked. In the meantime, though, we have double-checked our internal calculation with our partners. Here we have brought with us a scheme, because we don't want to be so transparent in this process we are in VINCORION concerning the amount. I've gotten some questions in the coffee break with which amount we are calculating.
We are sorry, we cannot make it transparent, so it's only in the scheme. We have calculated, based on our latest forecast for the year end 2019, our, so to speak, standalone firepower. We have some ideas concerning the net cash position we will get from the sale of VINCORION. This gives us the standalone debt capacity, and then we have made our, so to speak, Jenoptik stress test concerning our balance sheet. Included a smaller part of own capital measurements. As you know, we have the allowance to increase our capital by up to 20%, but we have only taken 10% into account because it allows us to find an investor or partner without the other shareholders. All in all, we finally end up at a financial M&A firepower of around EUR 800 million to EUR 1 billion.
This is all under the assumption, and this is a very important point for both of us, that we always keep the target to stay as an investment grade in the community and the capital market and the finance community. This means not being above a relationship of net debt in relationship to our EBITDA of the group, which is higher than three times. This is our target. Then we have discussed it with our partners, and they have confirmed our assumption as of today. We have asked the question, what could it mean in the transformation process with this firepower? What can we afford to acquire in terms of sales and EBITDA margin? We have done some assumptions, which you see here on the slide. What we have taken into account are some assumptions. We have written it here.
All in all, it finally ends up with approximately EUR 500 million in sales and EUR 70 million in EBITDA, which can come to the Jenoptik Group after the sale of VINCORION. This shows you this slide here. I now would like to hand over to Stefan again because he shows you what does it mean in terms of sales and profit development in the years to come as an assumption.
The numbers to keep in mind are the ability to acquire around EUR 500 million of sales and around EUR 70 million of EBITDA, if we would use the entire financial firepower that we believe we have. Let's have a look at what that would mean and how we calculate going forward. Let's start with the sales side of the house. As you can see on the slide, in 2016, the company had been at EUR 685 million turnover. Our current guidance is for between EUR 850 million and EUR 860 million turnover for 2019. I think we're more than happy to say that we fully and entirely believe in this guidance. We can make that guidance, which does show that even in 2019, where I think many economies are under pressure and markets are under pressure, we can generate growth for Jenoptik even in 2019.
We have given a guidance to 2022 that calls for mid to high single digit growth. We think about it, if we divest VINCORION, we'll lose some of those EUR 850 million to EUR 860 million. Again, you will understand we can't go too much into numbers, but you all know how big VINCORION roughly is. You could, if you wanted to, take a ruler and calculate what the other columns and bars are here. There is another red bar on it, another red column rather, and that calls for further divestments. We do know already that we will have further divestments in the years, maybe even in the months to come. A particular one that I would like to mention is Hillos. Hillos is not actually a divestment, it's a deconsolidation.
Hillos, for those of you who are not aware of that, is a 50/50 joint operations between Jenoptik and Hilti. The Hilti company that produces tools for the construction and the construction industry. As I said, 50/50 joint operation. Joint operation does mean that the company can only sell to the partners of the joint operation. In such joint operation, both partners can consolidate sales and profit 50/50. We consolidate in our numbers 50% of sales and profit of Hillos. Now, we have chartered Hillos to acquire more outside business. It's great. They grow, they sell to other parties. It does mean, though, that Hillos, at the end of this year, becomes a joint venture. It's not a joint operation anymore, but it becomes a joint venture between Jenoptik and Hilti.
As per the rules, a joint venture is not consolidated anymore, but it goes into what the Germans call the Beteiligungsergebnis, so the financial results. In other words, there is a chunk of revenue that we are going to miss next year from the deconsolidation of Hilti or Hillos rather. Yeah. Hilti would be another one. A deconsolidation of Hillos. That's the chunk of revenue we're going to miss. We are also working on a bit of product line pruning. I think we have communicated throughout the year, particularly the Q3 earnings call, that in some of our businesses, particularly in the industrial solutions area of our OEM business, we have businesses where we're not very strong at the moment, and we are looking into potential product line pruning here.
Not necessarily selling whole companies, but reducing our exposure to certain end markets, reducing our exposure to certain product lines where we don't actually see that much of a growth potential. Quite frankly, we're actually losing money at times. We will have additional effects taking down our top line to some extent. Overall, let's say, there is going to be a few EUR million that we are going to lose in the next few months and years from those effects of deconsolidation, maybe divestments, and certainly product line pruning. On the other hand, we of course have organic growth. You see the green bar here, which is supposed to show that we expect organic growth for the rest of the company, Photonics piece. We have calculated with mid-single-digit organic growth, which is basically by and large market growth. You could say, isn't that conservative?
Well, you never know. At the very moment, our markets aren't necessarily growing mid-single-digit everywhere. I think no surprise here. We have calculated with mid-single-digit growth for our organic pieces. If you take it all together, deconsolidation or divestment of VINCORION, deconsolidation Hillos, divestment of smaller pieces, product line pruning. On the other hand of organic growth, we would see the business on the Photonics side, the remaining parts of the portfolio, under the assumption that all these processes work as I just described, to be around EUR 750 million by 2022. However, of course, we would also do acquisitions. We've just described how much firepower we have. We have an interesting funnel.
I know that you all would like to know way more about what we have in the funnel, and you know that I know that I can't tell about it, and I can't really talk about it. What we can give sort of as an indication is that we are in processes, we are constantly in processes for bolt-on acquisitions. We have some interesting discussions for maybe even some transformatory deals, but it's way too early to talk about it in any detail. In our models, we have dialed in. We've dialed in that we can generate definitely EUR 250 million of additional incremental revenue from M&A. Now we have just said we could acquire around EUR 500, but we think we are definitely on the safe side. At least EUR 250 should be possible.
Now you can all do the math, what that would mean for 2022. I'm not going to do it for you because I don't want to speak about the number. I'm rather speaking about the growth of the group. It does show that our mid to high single-digit projection that we've put out in 2018 is absolutely valid, even with the possible divestment of VINCORION. We still stand behind our target for 2022 to come up with mid to high single-digit growth rates throughout the strategic period on average. Obviously, not every year, but throughout the strategic period. Let's have a look further out, maybe.
Once we have done such portfolio transformation, once we're on the other side of such portfolio transformation, of course, we expect further growth from the businesses, maybe even more than the organic growth that we have today, because at some point we expect top-line synergy effects, and we will at that point be maybe in even faster-growing marketplaces. We could think about further M&A activities beyond 2022. However, what we would like to sort of at least indicate is that further out, we would, for a while at least, see more bolt-on type acquisitions.
If we just assume for now, for a minute, that we have spent all this money and have done larger M&A activities, then at some point, of course, one also needs to sort of get things settled down and generate the synergies actually that we expect from it and yeah, consolidate the portfolio to some extent. It does mean, though, by and large, and sort of as a summary, we believe that this mid to high single-digit growth arrow that we have, the vector that we have on top of the slide here, it points to 2022. Mentally, we see going further out. We believe that we can maintain that growth rate throughout the years, and maybe even into 2025.What does that all mean for the profitability of the group? In 2016, Jenoptik as a group had 14.2% EBITDA margin, EBITDA to sales margin.
We have guided for this year to be around 15.5%. Here again, we're pretty proud that we, by now mid of November, still believe that's possible. We still stand behind that guidance of around 15.5%, give or take, EBITDA of sales for 2019. With the possible or potential divestment of VINCORION, we would lose EBITDA, obviously. VINCORION, as I said, is not a distressed asset. They produce profit for the group. We would lose profit in absolute terms, not necessarily in margin terms, but in absolute terms. I think it's an important hint. We also lose some profit contribution from the divestment activities, deconsolidation activities from the product line pruning that we do. On the other hand, we would get additional margin contribution or EBITDA contribution from the organic growth piece.
We have shown earlier that we believe that roughly EUR 70 million of EBITDA we could acquire with the firepower that we have in our model. Again, we have not used all of it. We've dialed in a bit more than half of what we could afford from a firepower perspective, that gets us to somewhere between 17%-18% EBITDA of sales as a margin for 2022, under the assumption that those processes, in particular the sales process for VINCORION, can be a successful note. This is not a guidance, we'll come to that in a second because I have too many disclaimers on it. I think it gives you an indication of where the group could be in 2022.
If you look further out, like we've just did on the sales side, if you look further out, then we believe we can create additional EBITDA, obviously from the additional top-line growth that we anticipate. We can create additional margin expansion from generating the synergies or harvesting the synergies from the acquisitions. Again, you don't get the margin lift up on day one, typically. You have to integrate and all of that. There is potential further margin lift up from synergies. We believe that, if everything goes according to plan, in 2025 the group can be at or above 18% EBITDA of sales in terms of profit margins, according to that model. Again, those are the models that we build internally.
In summary, a successful sales process would enable a further margin lift up for the group in the strategic period and beyond, assuming a successful disposal of Jenoptik. Sorry, I did that. Shouldn't do that really. I really should not do that actually. Assuming a successful sales process of VINCORION, we anticipate mid to high single digit revenue growth for the group in the strategic period and we see a margin potential in the range of between 17% and 18% by 2022 and above 18% by 2025. You all know that we have a guidance out for 2022 that calls for mid to high single digit revenue growth and around 16% EBITDA margin for the portfolio as we know it today. Let me stress one more time, this is not an official change in guidance.
The guidance is the guidance that we have out there. We say that because in the sales process of VINCORION, there are a number of milestones that we need to clear. It's one thing to have interested parties and it's one thing to have attractive offers. Another thing to go through all these SPA negotiations, let alone get clearance in the political environment. As much as I believe that's all doable, we want to be a bit careful. Nothing is worse than putting out a guidance and then having to paddle back because somebody, for example, in Berlin thinks that maybe it's not a good idea to sell VINCORION. I don't anticipate that, don't get me wrong.
We're stressing that it's not a guidance, but it gives you a perspective on how we think and how we model the group going forward. In summary, the key takeaways for us, maybe even for the day and from those last few hours, we believe that we have strong fundamental business potential. We have very good business underpinned by attractive long-term trends. We talked a lot about photonics today and how photonics is an enabling technology in a lot of marketplaces and how photonics enables growing markets. We believe that we have delivered on some of our key building blocks for our strategy already. We already have a new organizational structure. We have started the VINCORION sales process. We are in the middle of that process. We are already more international. We have set up a new business structure in Asia. We expanded our footprint in America.
We have delivered at least partially on those things, but we still have a way to go. Nobody here is saying we're done with that. We still have a way to go. We have to establish this new strategy that calls for more focus and for more international. In particular, on our innovation side, I think we have shown good examples of what's possible, and we have communicated that we want to spend more on it. We have started a corporate-wide initiative. Innovation is something that takes time, and it's certainly something that we are continuing to focus on in 2020. We also are going to focus on our company culture. As I said earlier today, we can have the best strategies of the world, we can have the most inspiring vision, we can have the best financial ingredients if you want.
If we don't have a culture in the company that enables that strategic dream, we will fail. We are going to continue to work on our corporate culture and our brand and our values in 2020 and beyond. However, in summary, we believe that Jenoptik is a very attractive company. We're very proud of what we can deliver for our customers. We are very proud of what we can do from a strategic point of view, from a managerial point of view. I think now it's also a good time to say that we're also very proud of all our associates in Jenoptik around the globe. Without them, without everybody in the group, it would be possible to generate yet another record-breaking year in terms of sales and profitability.
Although we don't have that many associates in this arena, I would like to use the opportunity to thank everybody out there that contributes to the success of Jenoptik. With that said, we're here for questions. We thank you for now for your participation, and expect your questions. Yeah, maybe the colleagues come up here as well so that Following a good old tradition, I think, Craig, I saw your hand first, so why don't we start with you?
Use this microphone. Oh. Okay. Still not on, is it? On? Okay. I have two questions for you to begin with. Stefan, maybe the first one for you. Just looking a little bit at the competitive landscape in the photonics space. There's been already some significant consolidation moves amongst your competitors, and I just wondered if you're-
Somebody is doing this clutch here. We have music going on here. Okay. Okay, very good.
Yeah, let me start that question again. Sorry.
Okay.
The first question for you, Stefan.
Yeah.
Within the photonics industry, actually, there have been some significant consolidation moves already. I just wondered if you've seen any material changes in the competitive landscape in any of your businesses. The second question is just on the Light & Production division. You very kindly showed us this chart of Sorry. There you are. Sorry. Where you're seeing declining investment in some of the legacy areas and then the areas where you're seeing at least stable investment now and expecting growing investment in coming years. Just looking a little bit in the interim period, the short period here, 2020, 2021. Because you said 67% of the orders are still in the legacy business. Could you give us some feel, without being too specific on the numbers, on how you think that process will proceed in terms of impact on revenues and earnings during that transition period? Thank you.
Craig, thanks for your questions. Let's start with the consolidation or marketplace question. Photonics is a fairly fragmented marketplace, actually. There is some segments where there's a lot of economy of scale, a lot of commoditization already going on, in particular if it comes to solar panels and the like. By and large, if you think about the whole marketplace, yes, there have been significant consolidation steps, but it's still a very fragmented marketplace. I think I want to use the example of if you want to win in the big car manufacturing industry, it's like conquering Texas. You shoot a lot of money, big guns at a lot of territories. You'll hit something. If you want to win in photonics, it's a bit like trying to conquer the Caribbean. You have a lot of little different islands. They're all attractive, yet they're all somewhat different.
Shooting a big gun at the Caribbean means you probably hit a lot of water. One has to be very knowledgeable about all those little islands and the rules of engagement. Which I believe is the reason that we, as much as we have seen consolidation, we didn't see mass consolidation like in other industries where there's more scale. I don't think that, as far as I can see, there's a big acquirer out there that sort of dominates everything in photonics. There are a couple of spaces where you even have almost like bifurcation going on. Like if you take, for example, the biophotonics arena, the life science and healthcare spaces. You have a couple of very big players, Danaher, Thermo, but still a bunch of small to mid-size entities that can be consolidated. We talked automation integration.
I believe there are about 100 or so Prodomax type of companies, maybe not as good as Prodomax, but Prodomax type of companies around there worldwide. There's still a lot of room for us to be a consolidator. You are right, there are others as well that try to play the same game. Not a fundamental shift in how the market is structured at this point, I think. Martin, over to you.
Thanks for the question. Obviously, a very valid question. Let me try to answer it in a way. I tried to point out in my presentation that it's so critical for us to become that strategic partner. With one foot already in the door, to get really into the door and to have that flexibility and to get these larger contracts. When you also consider that in this arena, in particular in the exterior parts industry for car industry, there was a big consolidation going on the last 10 years. Once you are taking the first orders, you have really the potential for significant growth, and it can accelerate that on that path very strong. At the same time, yeah, I understand, question for going out of, let's say, combustion engine, but at the same time, this year, 80 million engines are being produced, combustion engines.
That will not change dramatically very fast. It's still a big number to be produced, and also there is a trend now that trucks, for example, are following what cars have done, much more efficient engines. All of a sudden you have to inspect those cylinders if they are properly coated inside and things like this. It's a good reason also to stay in that.
Yeah, I think, Martin, you're up next. Yeah. Oh.
Yeah. Thank you. Thank you so much.
Sorry. You're next, that's for sure.
Norbert Kalliwoda from Kalliwoda Research. I have two questions, referring to my colleague. If you take the two industries, Internet of Things and Industry 4.0. My second question is for Kevin Chevis. You spoke about LiDAR, but I think there are also camera systems, radar. LiDAR is not so cheap and all sensors are not completely reliable, even when you have bad weather conditions. What is the next milestone and what was the way we have done and which way is in front of us? Did we manage 50% to have the in LiDAR?
I think the LiDAR question goes to Ralf rather than to Kevin, actually. I'm not quite sure if I understood the first question. I think Ralf, you're going to take the LiDAR question?
What's your feeling about the general market of Industry 4.0 or Internet of Things?
Okay.
Can we expect better figures generally and maybe in your applications?
I think the general answer is yes. Always an easy answer, isn't it? I don't think we have bad figures, though, to be honest. I think if we talk about Internet of Things, smart manufacturing, if you look back three, four, five years, it was in, I wouldn't say a dream, but it was in its infancy status. Now, after less than half a decade, maybe half a decade, what is labeled Industry 4.0 in Germany or smart manufacturing, I think that's what we're talking about, is everywhere. There is not, I shouldn't say that, but Industry 4.0, smart manufacturing, a way of enabling smart ways of producing something, is really everywhere and it will continue to grow. I think that's for sure. I'm not quite sure if I answered your question.
In terms of Internet of Things, well, I for one, when I watch one of my sons with his smartwatch. He doesn't even have a telephone anymore, right? He goes like, chi-chi-chi-chi. I can't even follow that fast, but they communicate with their watches, and there are smart rings out there and God knows what else. Hey, yes. Yes, there will be growth in that arena, that's for sure.
Yeah, on the LIDAR question, I want to take it from a different perspective, try to answer it. First of all, we always have to think about we consider ourselves an OEM supplier. We are not building a final system, we're positioning ourselves somewhere in the supply chain. We're just showing a demonstrator out there to explain that we understand the technology to our customers. In the LIDAR game, I think that's what you're referring to, it's not clear how a LIDAR system finally will look like. There's different technologies applied, like flash LIDAR and scanning LIDAR and all these things. The beauty of our business is we're very flexible. We can cater different tier 1 suppliers and then go to OEMs with our technologies. You always need a light source. You always need some kind of optic.
You need a cover glass of high quality to cover something in the front of your car. We can provide all these kind of things, and we do that. We try to keep ourselves flexible in that game. Whatever succeeds, we try to get in, and if it might be an infrared camera, we can do that, too. Actually, I personally don't know. I'm convinced that some LiDAR technology will be in our cars in the future. Exactly what technology will be there and when exactly this will happen, we stay tuned.
Thanks. Yeah.
You talked about the sensors with the sensor project with HELLA, the incubator we had earlier in the year. Over three, four years, what is the additional sales potential out of new projects, new applications you have in your pipeline, that can then lead to significant contributions? What's the opportunity be?
This is the industry business with all these sensings, where I would say we don't have such a precise plan yet. We're trying to position ourselves in this market. In automotive, we have some legacy in automotive on a small level, and we're trying to grow this. I think we don't really have a hard number to that, but we're trying to position ourselves in the automotive market. Give you another perspective on that. I think there's opportunities for companies like us. If there would be a request for mechanical assemblies, that would be companies who are super professional automotive industry. We are at the start of that. That's why I'm careful with calling out numbers. Since the automotive industry comes to sensor companies, comes to companies who understand optics now, it's an opportunity for us.
For us, it's a little bit more an upside potential.
Maybe, Alfred, we could add to that, as you're referring to the science platform and the collaboration that we have as a very, I think the largest life science tool provider on a lifestyle imaging within incubators. I think we've communicated that already. The potential for this particular project is a sales potential for around EUR 30 million over a few years.
On the sales projection until 2020, you mentioned something around 5% organically. You already had a setback in the base level in 2019. Previously, you were guiding rather for mid to high single digits. Is that just healthy cautiousness or has anything changed in your view of the business?
When I look at the light gray bar until 2025, it appears to me that organic growth should then accelerate, a bit.
What gives you confidence?
seeing slightly lower growth in the earlier years to accelerate growth than in the later years?
Yeah. That's a very good question. Very good observation, actually. Look, we were saying mid to high single digit. We have had two years of double digit. On average, thank God it works out. We did say that because we anticipated back then already that at some point, there will be softness in the marketplace. I think, 2019 is a year of softness in the marketplace. 2020, God knows who that's going to go. Then we're in 2021, 2022, and I would think that at latest at that point, we will see markets starting to grow again, maybe next year, but we would be very careful. Your notion of saying 5% on organic, is that conservative or is that just cautiousness? Maybe it is.
Here again, we didn't want to end up in a position where we have to paddle back in three years from now. Don't take it as a literal figure. Don't say it's 5.0. If it's four or six, it's fine. I think we just wanted to give you a hint of that. Do we believe that going further out, it will accelerate? Yes, we do. As I said earlier, well, first of all, I think the markets will come back in sort of stronger fashion. We have pockets where at the moment, the markets are not very strong. Automotive is the obvious one, or industrial automotive applications, the obvious one. Yes, we will see a sort of tailwind from the marketplaces further out. At least we assume that in our models.
In terms of synergies, we will have to generate also top-line synergies from potentially acquired companies. First and foremost, the answer is, yes, we have dialed into the models that go further out. We will see tailwind from the marketplaces as much as we see headwind in some marketplaces at the moment, and additional growth opportunities.
Kevin, the cybersecurity, data use, whatever, is behind that. How long will it take to really commercialize to surface in the numbers in significant or potentially larger sales contributions?
That's an interesting question. We have already some business where for one particular client, we connect a network of cameras together, some of which are ours that we have installed, and some from other companies. We connect them via a network to a database, which is run in a secure private data center.
We then use our database and analytics systems to then offer the data back, the intelligent searching of that back to our customer as a service. They own the data. We don't have any access to it, but we're providing that as basically a monthly charged long-term service. We've already started. I think I said earlier, in some countries, that's quite an easy thing to do. In others, for example, in Germany, that would be less easy. We've started. We have quite a lot of interest in North America right now, and we're doing a number of trials. We have another pilot system running in another country where we operate, which started about three months ago. It started. It will take some time.
Thanks. This is Volker Heinemann from Deutsche Bank. It's another question for Kevin, and it's about speed control, which we all love, I think.
It's your best friend.
Yeah. It is an important pillar of your business, and you see lots of opportunities in this field. On the other hand, when it comes to autonomous driving, I think I won't have any influence on the speed anymore, so I can't speed any more as an individual. There will be a time when we won't need speed control anymore. Do we have an idea of when you reach the peak for speed control, and then it turns into autonomous driving and you have much more and lots more of cameras? I don't feel for your business, but.
Yeah. That is a great question. I wish I had the answer to that. Many people do speculate, as I mentioned earlier, as to what point in time where there'll be 100% autonomous vehicles. We are absolutely entering a period where there's going to be a mix. As I said earlier, that also means there'll be new dangers on the road which need to be enforced. You can quite clearly see our strategy is to use our infrastructure, and we, over time, become less dependent on speed control. It's an element in what we'll do. In our current projections over the next few years, we don't see it declining. Ultimately, as a single product, yes, it will decline. No question about that. That is really what we're looking at. Also, in the era of autonomous vehicles, there will always be hacked vehicles.
Exactly.
No self-respecting criminal is going to drive an autonomous vehicle. In today's world where things get hacked, again, there needs to be external independent infrastructure to actually look out for that and manage that. Again, in our future, in our vision, that's where we see our space will be.
Kevin, I'd like to follow up on that thought, just for fun.
I'm getting all the jokes today.
Hey, sorry.
You're all right.
Hey. Our cars today know how fast we drive, right? It's not as if somebody could collect the data and control it. Why do we think people speed today, and why do we believe that some autonomous vehicle doesn't speed tomorrow? As you say, Kevin, it can be hacked, it can be accelerated anyways. I don't even think that at least not going to do the same joke again, but in our lifespan, shall we say, that there will be all autonomous vehicles and they all drive the same speed, because they don't do it today, and they could.
I don't see that as an imminent threat, at least.
Olivier Parein from Crystal Asset Management. Thank you for taking my question. I would have only one. I am a little bit new to the company. I would like to better understand the market positioning and market dominance that the company enjoys. I understand geographically you may be stronger in Europe than other geographic areas, are there segments within the group where you would say that you are dominant, in Europe, let's say, you would have 30%, 40% market share in that segment, which means that you are dominant there?
Yeah. You're absolutely right. We are a European player. We have our home turf here in Europe and in America. I think that's important. We are already very strong in America. I think a better way to answer the question, if I may even turn it around and say, where do we not dominate well enough, or where do we have potential? That is in Asia. That's why Asia is so important for us. From a regional perspective, our stronghold is Europe. We have a good presence in America, and we have a fairly good room for growth, definitely in Asia, dare I say, a small position here in Asia. That's a room for growth for us. From a product line perspective, that varies across the portfolio quite a bit.
I think in some of our semiconductor businesses, in the specifics of what we do. We have dominance, shall we say, in the specifics of what we do. If you talk about the particular technologies for optical lithography that we provide, I don't think anybody is in the same position as us, but that's a very specific technology domain. In other areas, in the biophotonics arena, for example, we do not dominate that, for sure. There we have room to grow. If you go into the Light & Production arena here as well, yes, that's a good one. We have niches in, like the abrade preparation that Martin mentioned, where we clearly dominate the whole space, but it's a fairly small niche, and we have opportunities in the other spaces. Long answer to a very clear question, and it does show that we have regional layers, shall we say.
Regionally stronghold Europe, good business in America, room for improvement in Asia, and across the portfolio. In our specific niches, very strong dominance, actually, but often in niches. The potential is to get out of the niche and get into larger market spaces.
A question for Martin. In the metrology business, you want to penetrate new markets, aerospace, defense, named occupied markets. You have to create USPs, probably with higher R&D. You might also have to reshape your portfolio to strengthen some new technologies and to pull down some others. This all seems to me might burden on your margin perspective in the near future. Could you give an outlook for your margins, which might come down or might be stable? Also a question for Hans-Dieter, laughing now. Hans-Dieter, you have spoken a lot about EBITDA margin perspective with VINCORION divestment. What about cash conversion rate? Could you give an outlook for that KPI in the near future and also on the balance sheet? What might change? Pension go out or will stay? Okay, thanks.
I'm curious to hear the answer as well.
Well, I think you know it already.
I do.
No, you asked for the margin development in the Light & Production, and in particular in metrology. Obviously, we are planning and targeting for an increasing margin in the division as well as in this specific business metrology. The changes, how does that affect it? Well, we simply do portfolio analysis. Since we are not having now to run a portfolio anymore, separate business units, where you have to have a broad range of portfolio to compete with your specific competitors in the marketplace. Now we are going more towards integrated offerings. We have totally different competitors. We do not have to have the whole portfolio anymore. Then you have to also invest into maintaining your portfolio, and that can obviously now use for other purposes. We are, of course, shifting the portfolio.
Yeah. I think that's exactly right.
Thank you, Martin. Yeah. Concerning the cash flow development and the margin development influenced by a potential sale of VINCORION, I have to come back to the statements from us, so to speak, the disclosure. It's not yet done, but we are optimistic that we can bring it to a successful closing. If we do so, yes, our intention is to get rid of most part of our pension liabilities, which is at the moment EUR 50 million, it's 5% of our balance sum, which is roughly EUR 1 billion. If we get rid of it, and it's not 100% VINCORION, but let's say of a big part of it will have an influence of our balance structure, that's for sure. It's highly appreciated, of course.
Concerning the cash flow, VINCORION is very much in the situation that they have years with a very strong cash flow in the past, mainly due to Raytheon Patriot business and Leopard business. There are years that is not strong like this year because they are missing it. Now with the allowance of German government to deliver our Patriot solutions to United Arab Emirates, it will improve again. Finally, the margin of VINCORION is below fleet average. Having listened to the colleagues in the past hours and to our CEO, it's a clear target for us as a photonics group then to participate at the higher margins in this business area. Our margin outlook we have shown to you is of course influenced by the higher potential in these other businesses without VINCORION.
The cash flow we think should also improve because in the photonics businesses where we are looking at targets we see, and we in our business as well, see a good cash flow.
opportunity. Improvement of cash flow. Yeah.
Yeah
summarize. Do you agree, Stefan?
Absolutely.
Yeah.
Nothing to add to that.
Thank you.
Yes. Hi, Gordon Schönell, Bankhaus Lampe. I have a couple of questions for Dr. Kuschnereit. You can give us an update on how your semiconductor business is currently doing. How do you assess the short-term prospects for that business, i.e., in 2020? I think your business has not really suffered in 2019 from the weak semi cycle. What are the implications for 2020? You can also provide us an update on the inspection business within Semi and what the recent feedback from your largest client in Semi has been. Thank you.
I think I can do that. Let me describe the market and you can draw your conclusion, here into the reporting standards that we have. I think the way the semiconductor business overall, if you look at Gartner data, has been tanked in 2019, and it will be still negative growth numbers in 2020. Not everybody is affected by that so strongly, and I think the reasons for that is if we have a business in the installed base. We are participating in the installed base. We are participating in upgrades and updates in the field of the installed base, and there's of course, also spare parts. That stabilizes our business significantly. There's new technology drive.
What always happens in the semiconductor industry, be it in inspection or in lithography, end customers will buy new technology, because if they don't, they will lose their competitive edge. Even if, whatever memory prices go down and nobody's investing in standard equipment, they will continue to invest into high-end equipment. This is another part where we can participate. For us, actually, as you said, 2019 was not a bad year because of these effects. We're also expecting Can I say that? 2020-.
I don't know what you're about to say.
2020
To be okay.
the market to be
To be okay.
decent market. Yeah.
Maybe I'll support you to some extent at least. I can't talk about the market as much as Ralf can, because he knows it much better, and also from a technology perspective and all the technology trends and changes there. Fundamentally, sort of a bigger picture. First of all, yes, you're right. We cater to two segments, the lithography space and the inspection space. Both optical. The inspection space has been weak for us already since summer 2019. There we have seen a downturn. We have seen it in the inspection space. The inspection space for us is much smaller than the lithography space. The lithography space is much bigger, and the one big customer you're referencing to is not in the inspection space, but in the lithography space.
The lithography space, we haven't seen a downturn in our specific segment. That is driven by a very important customer to the northwest of here. This very important customer of ours grows simply because of its technology leadership, which we, to some extent in our little part of the machine, enable. Essentially, yes, there is a downturn in the semicon industry in 2019. Yes, we have seen it, but we have seen it in a sector of ours that's over-dominated, shall we say, by the other sector where we haven't seen a downturn. First part of the answer. The second part is that as much as we haven't seen a downturn in 2019, I would also not anticipate a big growth in this in 2020.
For us, it didn't go down, but it all does mean that it's not going to go back up big time in 2020. We're okay. I think it's more of a sort of a stable business for us. There is another effect if it comes to our semicon business that's also important to keep in mind, and that is the way this business from a mechanics point of view works. We get big frame contracts, typically. Most of the time, we book those frame contracts when we get call of orders. We book it as order intake, and then we cut the invoice and write the revenues. By the way, as a sort of side comment, we did get a very big frame contract for space for us, for the lithography space.
In the end of December 2018, it was important to remind everybody of that, which has been structured such that we, in this particular incident, had to book the whole contract as order intake in one go in December, because of rules that we can explain if need be. Obviously that's order intake that we haven't got this year. We have it in the books already. Back to the revenue recognition piece. We get a frame contract. We produce such that we essentially keep the output of the factory, shall we say, at an optimum level. We level load the factories, essentially. We produce and we revenue recognize according to IFRS 15 or 16, 15, in percentage of completion revenue recognition terms.
We revenue recognize, we write the profits, and we cut the invoice and the cash flow comes in once the customer basically pulls off the inventory from the finished goods inventory from stock, and that works automatically. In this particular segment, there is almost like actually quite literally an ERP link and the customer pulls it off. He doesn't even realize that. Out it goes into, and automatically the invoice is generated and cut. Of course, that does mean that we have a leveling in the system. Yeah. We keep producing, we keep revenue recognizing, we keep writing the EBIT. The fluctuation for us is more in the cash flow, actually, when it comes to this particular semiconductor piece. Wanted to clarify that, because yeah, that's just sheer mechanics.
From a business perspective, from a demand perspective, back to what Ralf said, from a demand perspective in the industry, in the segment that dominates our semicon space, the demand is strong because we have a very tough but good customer. I underline the tough part. A very tough but good customer partner. They're just fantastic at what they're doing, and we enable them in our pieces. You can sort of draw your conclusions to our customer and how that works. You need a mic for anything.
I'm HSBC. I have a question concerning the automation systems business. If I understood you correctly, especially that you have Tier 1 suppliers in your customer list, which is the group which is especially struggling at the moment as far as I see it, at least here in Europe. The headlines are pretty bad at the moment. How does this affect your business and what type of business do you see? What type of projects are still going on with your customers, and how would you judge the product pipeline going forward here? Thank you.
Yeah, thank you for the question. I think the best way to answer is to understand how these programs impact our business in particular. We're not so directly reliant on production volumes for the Tier 1s. Our business is primarily driven by new programs being launched, new vehicles being launched. It's been predicted for quite some time now from IHS and other information that's been available to us in the market that we've predicted this downturn to come. It's not like we didn't know it was coming. They were predicting 2020 and 2021 to be the big decline. In which case, we see that actually 18 months to two years prior based on RFQs coming in.
Yes, currently the automotive industry both in Europe and in North America is seeing a downturn. Essentially how we've been able to grow during that time is increased market share. The divisional strategy of targeting integrated solutions puts us in a position where we have that additional value to offer our customers that a lot of our competition cannot. We're targeting those integrated solutions. Like I said during my presentation, we've done primarily work in North America, but by opening up the globe to ourselves and doing work in other continents and integrated solutions in collaboration with the other business units, we can still increase our project portfolio.
I think, Don, I'm right in saying that the total amount of project isn't necessarily growing, but the total amount of dollars per project.
Right
are growing.
Correct.
The customers want to have bigger and bigger projects, I think that's.
Just to further answer your question, I'll give you an idea of where we fit in the North American market in terms of market percentage. The automation component of automotive in North America is about $10 billion a year, just in automotive in North America. The body and white portion of that, we primarily do a lot of our business in, is a percentage of that, let's say 20%-25% of that. Prodomax, we're less than 1% of that. We can gain substantial market share by gaining points of percentages of that market share, if you get what I mean.
Okay. I think we have to come to a close. Otherwise, you folks are all missing the factory tour, which of course, we hope you will attend. It's very interesting. We would like to share and show you lots of interesting production technologies. Let me use the opportunity, though, to thank my colleagues dearly. I know that you are eager to stop producing nice PowerPoint charts and actually produce product, ship product, get orders, and make money. Yeah, you can go back to your daily work, shall we say, of actually producing product rather than nice PowerPoint charts. Nevertheless, let me thank you one more time. I think it is important. At the end, we are not just competing for sales and orders, we're also competing for shareholders. Thank you all of you for coming. We hope you had an interesting morning.
I'm pretty sure that those of you who participate in the tour, you will also have an interesting afternoon. With that, thank you very much, and also thanks to everybody on the web call.