Today's earnings call of the SÜSS MicroTec SE on the occasion of the publication of the half-year figures of 2025. I'm delighted to welcome the CEO, Burkhardt Frick, CFO, Dr. Cornelia Ballwießer, the COO, Dr. Thomas Rohe, as well as Manager Investor Relations, Florian Mangold. The Management Board will speak in a moment and guide us through the presentation and the numbers. After the presentation, we will move on to a Q&A session in which you will be allowed to place your questions directly to the management. We are looking forward to the results. Having said this, I hand over to Mr. Mangold. Please, the stage is yours.
Thank you, and welcome to the conference call on our results for the second quarter in the first six months of 2025, which we have published in our half-yearly financial report this morning. As you probably know from earlier calls, this call is being recorded and considered as copyright material. It cannot be recorded or rebroadcast without permission. Participating in this call implies your consent to this procedure. Please be aware that our safe harbor statement on page two of the slide deck applies throughout the conference call. I hand over to our CEO, Burkhardt. Please.
Thank you, Florian. Also, from my side, dear investors, analysts, and guests, a warm welcome. After a moderate order intake in the first quarter, we now must realize that the order momentum is not as positive as expected. Order intake of EUR 166.8 million marks a 13.2% decreased year- on- year. On the other hand, sales peaked in the second quarter. After only six months, we are already at a record high of EUR 266.4 million, which is a growth of 38.2% compared to the previous year. Growth is driven by both segments. While EBIT is still at a solid level of 15.7%, gross profit margin came in only at 37.2% after six months. Compared to the first quarter, we have not seen an improvement, but more details in a moment. Now, let's take a closer look at the main topics. First, the order intake.
We observe greater uncertainty in the market, probably also due to the far-reaching tariff announcements. We are noticing greater reluctance to invest. Further, after huge AI-related capacity expansions in recent quarters, we see certain saturation effects, especially in the HBM sector. To make this clearer, the growth that, for example, major memory manufacturers achieve this year is based on equipment installations in recent months and quarters. In terms of sales, we have also benefited massively from this development since the beginning of 2024. This is obviously reflected in our sales performance. SÜSS has never generated a higher first-year sales result. After six months, we are at EUR 266.4 million. Considering the upper end of the sales forecast of EUR 470 million-EUR 510 million, we have already achieved more than 50% of our 2025 sales target. This is an outstanding performance of our operations team.
In terms of gross profit margin achievements, however, we are unfortunately falling short of our own expectations. After 37.9% in Q1, the gross profit margin in Q2 has not improved and was now at 36.5%. There are two main reasons. First, the preparation and training of our employees in Taiwan for the production of the UV projection scanner. These costs of our very big ramp in Q1 and partially Q2 were higher than anticipated. Secondly, major one-offs, especially in the second quarter. Here, we had to write off materials we had ordered for a project which was terminated. This is not unusual for our sector and innovation projects in general, but it was not anticipated. Let us now look at developments in our two segments. First, Advanced Backend Solutions. Here, the order intake in this segment was down in the first half of 2025.
Developments in the three product lines varied. Demand for our 300 mm coating solutions from packaging customers in Korea and Taiwan was very strong, particularly in the second quarter. However, the surge in demand could not compensate for the more restrained orders for our temporary bonder and debonders. Despite a few follow-up orders, we still do not see a big momentum in demand from our memory customers. Demand for imaging solutions was slightly up in the previous year, especially due to higher orders for our UV projection scanner. Sales momentum continued to be strong at plus 25% year- on- year for the first half of 2025. All three product lines contributed to the sales growth with double-digit percentage growth rates. Coaters recorded the strongest percentage growth, while the execution of AI-related bonder projects continued as planned.
Meanwhile, the gross profit margin fell to 35.1% in the second quarter, and the situation did not improve due to one-off effects. Now, to Photomask Solutions. After the order intake in this segment in the first quarter was the same as in the previous year, new business acquisition in the second quarter, however, amounted to just EUR 12.9 million. There were no orders from Chinese customers for new tools in Q2, which once again shows the expected decline, particularly in the high-end segment. This underlines the importance of launching a dedicated tool for the mid-end sector in 2026. At the same time, the execution of customer projects gained momentum once again. Q2 2025 sales amounted to EUR 56 million. Growth now stands at a strong almost 70% after the first half year. Looking at both order intake and sales, the low book-to-bill ratio of 0.48 naturally stands out.
The order book has fallen to EUR 106 million due to accelerated execution of the backlog. Visibility is still sufficiently high for 2025, but the outlook for 2026 is limited in light of the recent demand situation. The higher sales volume and associated scaling effects, as well as a better product and customer mix, have led to a significant improvement in margins in the Photomask segment compared to the first half of 2024. With a gross profit margin of 40.2% and an EBIT margin of 28.8%, the segment achieved strong half-year margins. Now, let's take another look at our new production site in Zhubei, Taiwan. As you probably can see, my Board colleague, Thomas Rohe, was recently on site, and he's on that picture in the middle, to monitor the project status. He was very pleased because the installations for our production clean rooms and the warehouse were almost completed.
The outfitting of the office space and the plaza is also progressing very well. Up to now, we have made investments totaling EUR 9.4 million. We currently anticipate a total CapEx of EUR 14.5 million in 2025. This means we are below the initial announced budget of EUR 15 million-EUR 20 million. Here on the next picture, you see on the left side one of the clean rooms where we will build the new increased output for the UV projection scanner. We are nearing the completion of our build-out. With that, I'd like to hand over to Cornelia Ballwießer for a closer look at our financial key figures. Cornelia.
Thank you, Burkhardt. Hello, also a warm welcome from my side. I will now provide an overview of the most important developments at the group level. The muted order intake of EUR 78.7 million in the second quarter leads to an order intake of EUR 166.8 million for the first six months. This is a decline of 13.2% year- on- year. After the very strong year 2024, we expected a more muted order intake. Currently, our customers install the tools delivered to them and start production. Also, the current uncertainty does not help with the order situation. Orders are being pushed out into late 2025 and early 2026. The order backlog is down year on year. Even at EUR 325 million, we still have decent visibility for the full year, and we have even roughly EUR 60 million of tool orders for 2026 in the order backlog already.
Sales revenue, on the other hand, developed very strongly. The first half of 2025 is the best first half year in the history of SÜSS with sales of EUR 266.4 million and outstanding growth rates in both segments. A look at our forecast implies that sales in the second half of the year will not be on the same high level as in the first half. Gross profit margin, however, was down year- on- year due to several reasons. As Burkhardt already said, product-customer mix, costs to ramp the UV projection scanner production in Taiwan, as well as inventory write-offs. EBIT margin, however, is with 15.7% in line with our expectation for the first half year. Net cash development is driven by the increase in leasing liabilities. Please keep in mind here that all financial liabilities, including the short and long-term lease liabilities, are netted with our cash position.
Cash and cash equivalents were at EUR 99.1 million. Short and long-term leasing liabilities added up to EUR 51.1 million, which was substantially higher than the sum of EUR 8 million at the end of 2024. This has even been driven mostly by the expansion in Taiwan. Free cash flow was at -EUR 27.6 million after the first six months. The main driver here are less advanced payments, in particular of our Chinese customers. Since the orders from China are down significantly in the first half year, there are also less prepayments. You can see this effect in the balance sheet. The current contract liabilities are EUR 28.3 million lower compared to December 2024. However, we expect free cash flow to turn positive for the full year, ending up in a dimension of EUR 20+ million for the full year.
A major driver here will be the reduction of inventories, which is linked to the expected lower business volume in the second half of the year, as well as to improving working capital management. Capital expenditure is also up. Most of it is also related to the Taiwan expansion, especially for technical building installations and equipment, and equipment for the offices in the new factory. As already said, we are in budget and on time. This page shows the development of our four performance indicators over the last six quarters. Overall, the second quarter was a strong quarter, the second best in the company's history in terms of sales after the best ever in Q4 2024. This really shows that we can handle a large number of customer projects simultaneously.
We have already booked more than half of the sales we need to meet the upper end of our sales guidance. Gross profit margin was outside the corridor that we have achieved in the recent quarters. We have already discussed the reasons for this. EBIT margin in the quarter was also lower. In the segments, we see that the one-offs are attributable to the Advanced Backend Solutions segment. This is why the profitability in the segment has suffered particularly. In Photomask Solutions, we had another great quarter. The first half year compared to the first half, sales are up 69.5%. Gross profit margin again came in strong at 40.2%. EBIT margin was lower. In the segment, profitability depends on relatively few tools and the customer mix. If we ship to one of our major customers, margins are not as high as if our customers from China, for example.
Overall, the segment performed strongly in the first half year. EBIT margin for the segment was 26.1%. We already talked a lot about the order intake today, so I want to keep it brief here. The book-to-bill ratio for the first six months was 0.63. This is the result of strong sales in a muted demand. When we look at the regions, we see some movement, but the overall picture remains the same. Demand from China in the second quarter was weak, down to 20% of the order intake in the first quarter 2025. Finally, let's go over the main development balance sheet. Total assets increased by EUR 32 million. The increase of the non-current assets was driven by the Taiwan expansion with the right of use asset for the site in the amount of EUR 42.8 million and further installation at the site, as well as CapEx in Germany.
In current assets, we have a strong increase of contract assets by EUR 20.4 million, linked to the overall increase in business volume. Inventory trend, inventories are down by EUR 7 million or 3.3% since the beginning of the year. We expect also positive effects for the remainder of the year. Inventories will be lower due to the decrease in business volume. At the end of December, inventories could be up to, let's say, EUR 30 million plus lower. The cash position, our cash and cash equivalents are lower because of less advanced payments, as I already mentioned. However, our cash position of around EUR 100 million remains strong, and we are still in a comfortable financial position to shape our future and withstand headwinds. The liability side, we also have an effect from the new Taiwan site. The non-current liabilities increased due to the lease liabilities, as I already mentioned.
For the current liabilities, we see the effect of the change in the volume of the advanced payments. This effect is due to lower business in China. The advanced payments were mostly from our customers in China, but there are also some customers who made some advanced payments in the last year, more or less as an exception. We finished the first half of 2025 with an equity ratio of 55.8%. Basically, still very solid and where we started at the year. With that, I hand over back to Burkhardt.
Thanks a lot, Cornelia. Now, let's take a look at the full- year of 2025, starting with an update on our sales guidance. As you know, our forecast here is to achieve sales of between EUR 470 million-EUR 510 million. After six months at EUR 266.4 million, we have already reached 56% of the midpoint of the forecast and 52% of the upper end of the range. This means that this year will not be as back-end loaded as previous years, when we still needed to have a record Q4. Therefore, we anticipate in the second half lower sales volume compared to the first half. In the first half of the year, we demonstrated that this operating performance has improved steadily in recent years. In view of the latest order intake, we can also see that production capacity utilization is slowly declining in some products as early as the fourth quarter.
We have already started initiatives to improve the profitability in H2. We will pause headcount additions and focus on internal cost savings. However, we are sticking to our plans, advancing research and development, as well as our strategic structural projects, since this is the foundation for our future and further growth. Now to my final slide. We have adjusted the forecast of our gross profit margin and EBIT margin downwards for the financial year 2025, to which our stock has responded quite sharply. Whether or not a 2 percentage points cut to the midpoint of the forecast justified a response like this, I don't know. What I do know, these were mainly one-off effects which say very little about the development of the overall profitability going forward.
SÜSS is positioned to profit strongly from the increasing demand for solutions in the backend and frontend of the semiconductor industry in the years to come. We are working on and introducing the relevant solutions for the next big steps. Even if you expect 2026 to be a transition year, we have successfully laid the foundation for future success in the coming years. With that, we're looking forward to the discussion. Let's open the floor for the Q&A session, please.
Yes, thank you very much for the presentation, and we will now move on to the Q&A session. For a dynamic conversation, we kindly ask you to ask questions in person via audio line. To do so, please click on the Raise Your Hand button. If you have dialed in by phone, please use the key combination star nine followed by star six. If you do not have the opportunity to speak freely, you can also place your question in the chat box. We have already some participants raising their hands. Mrs. Winkler, you should be able to speak now and place your question.
Yes, thank you for taking my questions. I have four, if I may. Starting with the first, which is more of a general question, do you face an increase in postponements or even cancellations from your customers? What is your current view on this?
Currently, we don't see any postponements or major postponements. There can always be shifts, but we don't see any general push-outs or even cancellations.
Okay, that's good news. The second one would be related to the write-downs in connection with the discontinued project you had. Can you give us some more color on the discontinued project, but also on your current project pipeline when I'm thinking about hybrid bonding, wafer-level cleaning, and whether there's a shift in the risk profile of these projects?
I can start, and I think Thomas can continue. I think we made clear that this discontinued project is none of our strategic projects like hybrid bonding or wafer cleaning and so on and so forth. You know this is just part of life in the high-tech industry that some projects fly and others have to be stopped. You have to face the consequences, like in this case, and have to do some write-downs. This does not by any means impact our future pipeline of innovation projects. It was one project which was discontinued, and therefore we had to take measures in hand. Thomas, would you like probably to add something?
Yeah, there's not much to add, only the confirmation that the other projects, and especially the strategic projects, are still in our first focus for sure in the R&D department, also from the business unit. From that point of view, the other projects are continuing and making progress as planned, more or less, because, as always, you have some deviations in R&D because you cannot really 100% predict it, but no major deviations.
Okay, understood. My last question, I guess, Thomas, I would think it's rather for you. It's geared towards the Photomask Solutions segment. In your opinion, what was the main contributor to the strong top-line performance in this segment? The increase in processor capacity or the actual reduction in production throughput time?
I think the major improvement came really from increasing the headcount and training people from outside. This was a major contributor to this really big success there. It took some time to get the people on board and to train them, but this really realized right now in the first half of this year. For sure, we also worked on the lead time in the manufacturing, but this was only a minor contribution. The major contribution is really headcount.
Maybe a small follow-up question here, the people you were referring to, the trained people from outside, are these more temporary or kind of normal personnel?
The majority is flexible workforce in terms of really contractors and temporary workers.
Okay, understood. Thank you. I would step back into the line.
Yes, thank you very much. We now move on to the next participant. That's a participant from Apus Capital . Please be so kind and state your name while answering and putting your question.
Yes, Johannes Ries from Apus Capital . Good afternoon. I'll do some follow-on questions to Mrs. Winkler's questions. First, maybe on the order development in HBM. You said the customers first maybe to grow in the new capacity, but are there any signs or hopes from the forecast of the customers that there could be a recovery of this business sometimes later in the year or beginning of next year?
Yeah, Johannes, thanks for that question. I mean, this is, of course, a situation we are monitoring very carefully. We are still installing and delivering bonders in the HBM space, which were ordered last year or even early this year. As I said in the last call, we also did receive, in the meantime, follow-up orders, but not at this big scale we were facing in 2024. Yes, of course, there's always hope, but we see there's a saturation effect. We see that the capacity at some of the customers is not fully utilized. Therefore, I think there's some headroom left. The moment that headroom is consumed, we do anticipate follow-up orders. This is also what we plan for.
Okay, thanks a lot. For 2026, you mentioned you have EUR 60 million of equipment orders. How high is maybe maintenance and aftermarket revenue you normally have per year, therefore, which comes on top for next year already?
Yeah, that's a good question. I mean, these were equipment orders only, and to a large extent, of course, Photomask business because of the long lead times. The maintenance and service portion historically has been around 15%, but that's a portion we want to structurally grow. Don't mark my words on that. That next year will be as low as 15%.
Okay, so for around EUR 70 million, EUR 75 million for 2025. For next year, okay. Maybe a question on the mask cleaners and the scanners where there come new product versions, and you mentioned also an entry product for the mask cleaners. How much maybe there is also an impact that the customers know their new products are coming, that they're holding back a little bit new orders?
That could be a reason, but of course, we have solutions to address the market right now. If people familiar with the subject know that there is a next-generation tool, they might hold up orders for the current tool. However, we already see interest and we already see pre-orders for the non-launched products. This is currently not holding customers back. The interest for, to be precise, the MaskTrack Smart , which is our next-generation high-end tool, and also for the mid-end cleaning solution, where we have quite some chances also to recover some of the decline we see in China, is strong because that tool really addresses the needs in China. As you know, there are less and less high-end tools allowed in China. Therefore, a mid-end cleaner is a more perfect fit for Chinese requirements.
That is a tool where we have high expectations to recover the current declining Chinese order intake for Photomask. For the scanner, I think the third product you mentioned, we use the scanner primarily right now in the Cobos process. Those customers are pulling, and they are pulling on the existing scanner as high as on the new scanner. I think the moment the new scanner is available, they will immediately switch to that one. New customers, however, are also holding back engagements because we want to expand the sale for our UV projection scanner business with the new platform.
Okay, super. There was some mainly discussion in the market of the TG Time news two days ago. There is no slowdown in the demand for scanners from your major customer, which itself in its conference call said it doesn't see maybe a balancing of demand and supply for Cobos even in 2026. Therefore, it was a little bit surprising to read that there should be a slowdown there.
Yeah, we currently don't see this. We are still ramping up. We have more than tripled by now the capacity, and we are not there yet. We will make one more step. This is pulled by hard orders we have from a Taiwanese customer.
Great. Finally, one question to Cornelia. The impact of the U.S. dollar weakness, how much did it influence your figures and maybe also maybe an influence of your exchange guidance?
In the first quarter, the impact in terms of our operation and the result from the U.S. dollar was roughly EUR 500,000-EUR 600,000.
Okay, not a lot.
We assumed in our guidance FX rate of EUR 1.19.
Okay.
Hopefully, it is in the range of EUR 1.19, EUR 1.18.
You are more on the cautious side, in other words, expecting the dollar to.
Yes, hopefully. Yeah.
Thanks a lot. That's all my questions.
Thank you.
Thank you very much. We quickly get back to Ms. Winkler, but maybe there's a follow-up question from her.
Yes, indeed. Also a question to Ballwießer. Can you give us more information about the shift within the upfront payments that led to the reduction in operating cash flow?
The upfront payments are around EUR 28 million less than at the end of last fiscal year, mainly because of the lower business in China, because the most advanced payments are from Chinese customers. In 2024, there were some few prepayments from other customers that we consider as an exception.
Understood. Thank you so much.
Thank you. We move on to the next participant, Mr. Devos. You should be able to speak now and place your question.
Yes, good afternoon. Thanks for letting me on. I just had one related to Photomask demand. Just wanted to think about a bit the risk for this activity with the order intake dropping, but obviously, the margins were the highest in the group. How do you think about the high-margin Photomask business becoming maybe further underutilized if China demand does rebound? What are your thoughts around that?
Yeah, no, that's a good question, of course. I mean, we are still, as we, I think, hopefully explained well enough, we are peaking in the output for Photomask business because we, for the first time, really have the ability to work on the backlog and get these orders executed. At the same time, we see a lower intake. If it stays like that, you have to also contract somewhat. Thomas, I think, mentioned clearly we have a flexibility in our workforce that we can breathe in that sense and deal with those fluctuations. The margin improvements, yes, is driven, of course, also by volume, but also by many means in improving the margins internally. Even with the decline in sales level for Photomask, we expect we know we can do well. We also expect a higher order activity in the second half of the year.
Therefore, that's a question I think I'd like to postpone until we can look at the total picture.
All right. Thanks. Just a bit higher level, I think you probably touched upon it already, but you highlighted different solutions being ordered now versus during the AI peak. Just thinking about the implications for your entire product portfolio, what that means in practical terms, fewer temporary bonders possibly, and then more, I'd say, semi-automated products like spray coaters, etc. How would you expect that type of business to evolve, I guess, in the next 12 months? There is still massive spend in the downstream markets for anything AI. Just curious for your thoughts here.
Yeah, of course, there are multiple effects here. Of course, you know, those huge waves of initial capacity spend, we kind of chewed those big orders. We see now follow-up orders, and they come more sporadically, you know, one by one and not in this bulk as we have seen it before. The different solution comment is more towards the Cobos process where less temporary bonders are being used due to different Cobos flavors which are being implemented moving forward. However, that is kind of exchanged also by the overall demand growth where the UV projection scanner comes in, which goes also in that process. It is really a mix of the products, and luckily, we have those products in our portfolio. Of course, all these products, you know, have different margin spectrums, so different maturity levels.
That's why you also see fluctuations in the margin performance based on the product mix.
Okay. Okay. Just a brief question on the coating solutions. I think you called it out as sort of a demand driver in Q2. I was curious, is that tied to new customer wins or shifts in packaging architectures or just replenishment, I guess, from existing accounts?
Yeah, it's more the latter. It's replenishment of existing accounts, mainly in the Advanced Backend Solutions space, where we see, you know, that our tool is the process of record. We received quite some big orders, you know, for 300 mm spin coaters, and we're quite happy about that. As I said before, that only partially offsets, you know, what we are missing in the temporary bonding space.
Okay. All right. That's all for me. Thank you.
Thanks very much. We move on to one participant dialed in by phone. We try to give him the opportunity to speak. You should be able to speak now. Please state your name. That is not possible in the moment. We move on to the next participant, Avazel Tays. You should be able to... Oh, now we have the opportunity to hear the participant on the phone.
That's great. Sorry, it's Madeleine Jenkins from UBS . I had just two quick questions. The first is on the EUR 60 million backlog you talk about for 2026. Roughly, how does this number compare to kind of where you were at a similar time last year? Also, you mentioned it was largely for your Photomask Solutions business. Is this more for Chinese customers that want deliveries in 2026 or the rest of the world? Thank you.
Madeleine, I hope I understood your question. You're referring to the EUR 60 million order intake, which are for 2026 delivery, right?
Yes, exactly.
Okay, yeah. That's indeed to a large extent, as I said before, for Photomask Solutions. It's not for Chinese customers because that's where we see the decline. Luckily, we have many non-Chinese customers in Asia, but also in the U.S. who are placing orders for high-end tools. That's a process we expect to be ongoing. That's also why we are slightly positive about an increased order momentum for the second half of the year.
Okay, thank you. In 2024, sorry, what was your backlog for 2025? What was the kind of comparable number versus the EUR 60 million?
Yeah, that number I don't have on hand right now, but you mean at the same point in time last year what our next year's backlog is? We have to look that up. I don't have it on hand here, and I don't want to point you in the wrong direction, Madeleine. We get back to you answering that question.
Of course, no worries. My follow-up is just on HBM. Do you see any reuse within generations of your tools, or would it be typical for a next-generation HBM to see a big order for your temporary bonders? Thank you.
No, that's a good question. I think the basic process, we don't see changes. What we do see, however, is after we installed dozens of systems at our key customers, we see improvement areas. We are working on those to refine the process, to make those machines run faster, improve the throughput, availability, and whatnot. We have ongoing improvements on the current generation of the platform. You also rightfully point to a direction. We also work on next-generation bonding platforms for temporary bonders, and that's also one thing, but this will not show any traction on short notice.
Okay, thank you so much.
Thank you. We move on to the next participant on the audio line. Avazel Tays, you should be able to speak now and place your question. Your microphone is on, but we can't hear you. We first move to another participant placing a question in our chat box. I'll read this out for you. How should we think about the potential carryover impact of late 2025 underutilization on gross margins in 2026 compared to 2025?
This is the call for the first half 2025 results. We kind of stay away from making, you know, indications for 2026. Now, with early signs of underutilization, we are taking measures to counter that. I think we said before, we have a flexible workforce, and we also reduce spend. We took various saving measures in place to counter that and to balance this if it really materializes. However, we still have hopes that the second half of the year will be better. In terms of order intake, we can compensate this with a stronger order book. Maybe Thomas wants to comment on the flex capability we have.
Yeah, concerning underutilization, I think we have the measures in place to avoid underutilization, but really adapt our workforce to the demand which we have coming from our order book. I see not a really big risk that we have underutilization, but really adapt our capacity to the needed capacity. Also, even if the order intake slows down a little bit or stagnates, I think there's not a big issue. This is why we really increased also in the last year the headcount really mainly with temporary workers and also contractors, so that we have a pretty high flexibility to adapt to changing circumstances.
Okay, and the second question in the chat box. As you begin ramping NextGen tools in 2026, do you anticipate a margin uplift from the new platform architecture, or should we expect early-stage launch dynamics to continue weighing on profitability?
Yeah, also a good question. Next to introducing new features and next-generation tools, which are demanded by our lead customers, we also, with those tools, want to address the profitability. We improved the cost structure of those tools by design. The right answer is we expect margin actually to improve with the launch of those tools and not to deteriorate. Of course, this has to be proven in the field and in real life. They were designed with improved cost structure while we offer higher performance. That's why we usually are able to maintain our price levels or even increase price levels because of the additional values we provide to customers.
Thank you very much. We try to get back to Avazel Tays on the audio line to place the question. You should be able to speak now.
Can you hear me?
Yes, we can hear you.
Great, great. Right. Yeah, a few questions. The first one would be a little bit around your guidance. If I go through the guidance, second half versus first half comparison, do you expect in the second half a better gross margin versus first half? Then the EBIT margin will decline versus first half. It implies a little bit, if you do the math, that your OpEx will increase versus first half. Quarterly run rate around EUR 30 million plus in the second half. Why exactly? If I remember correctly, you had in the first half a few one-offs, right? Is there further one-offs or what cost items are expected to go up in the second half?
Yeah, thank you for your question. First, OpEx will, I would say, slightly increase, but our operational result in absolute numbers are not able to cover all the general costs and fixed costs. This goes or burdens the EBIT percentage, or it's just mathematics, let's say this way. The second was with the one-offs. Yeah, we will have some one-offs we expected already in our guidance. For example, our double counting for the leasing contract in Taiwan this year for the new site and some of the old sites. We have here double leasing expenses. I would say really a one-off, and we will have maybe some more impact of the tariffs. I don't know if this is a one-off. Maybe it is the future. We will have also some expenses on our digitalization projects in the second half. That is more than in the first half of this year.
The major project will also go on in 2026. That's more or less, let's say, what we expect as a one-off in the second half of the year.
How much was the amount in the first half? Can you give a little bit? If I remember correctly, mid-single digit, but maybe I'm confusing the number. What was really those kind of one-offs you had in the first half?
As we already mentioned, the one-offs are the inventory write-offs, then the expenses for the ramp-up of the UV projection scanner production, and also some customer product mix effects, and are also a little bit more training costs, even in the R&D. That's the main topics.
What was the amount roughly?
The amount was roughly all over this mid-single digit million amount.
Okay, got it. It implies like in the second half, it will be a similar amount again?
No, no. It will not be a similar amount because the write-offs of our inventories hopefully will not occur again. That's a big amount. We expect that we improve with our ramp-up costs and also will have less training costs. We also have some cost-cutting measures in place for the second half of the year.
Got it. Yeah, maybe I follow up on the OpEx topic for the second half quarterly run rate. On the order entry, I mean, if I look now, your scanner business was down, so the China risk, then temporary bonder, debonder, so the AI-related business, particularly the HBM part, was in the first half not really strong. Some cyclical recovery in the little business. Now the question is, if you look now into the second half of the year, what is your feeling? Are we now at the bottom of the order activity? What we have seen in the first half as a quarterly run rate, as some of the things are down and the cyclical component is a little bit up. Is that the kind of the bottom you... What is your impression there?
Now, I really have to polish the crystal ball here, but I think it's really difficult to predict. The outside circumstances are very unsecured. One day you have an agreement on tariffs, and still people are discussing how it's being implemented. There are many factors you cannot influence. We cannot influence the order behavior of our customers either because they have their own risk assessment. They are very cautiously spending their CapEx. There are, of course, some big projects we are involved in. That's also what makes us look a bit more positive in the second half because we are anticipating some orders. If and when they come, it's very hard to predict. We currently see some of them to come in in the second half, but then more in 2026, together with all those new orders for the new products we are launching.
That, I think, has to be seen in context. Whether we have reached the bottom or not, I think this is very hard to predict. I think we also stated in our half-year report that we expect a more positive momentum in the second half. Yes, we think it will improve, not by major steps, but it will improve somewhat. Therefore, we are still looking at this from a positive angle.
Maybe ask related to this, ask a little bit differently. You mentioned in your presentation the Allsart part, basically the traditional backend little business with quota, etc., doing better. Do you think this cyclical part has still legs to go, or what is your feeling from the discussion with the customers? Are the Allsart customers really investing more after years of lower investments, or are they now at a level where you say, yeah, they are now okay with their investments? What is your impression there?
Yeah, I mean, again, I think we were often even moving against the cycle. You know the whole AI boom was somewhat triggering a big wave. There was, just to remind everyone, a down cycle where we had a record order intake. The cycle, of course, does affect kind of the big players and the global industry. With certain products, you know we as a niche player are offering, we are sometimes decoupled. Therefore, I think, yes, in general, we are following the cycle, but it depends how and when our big customers are placing orders. Some of our orders, for example, a high-end Photomask tool, which can easily reach $8 million a piece, if they order one or two pieces of that, you know you have a higher order entry than we achieved, for example, in Photomask business in the entire Q2.
This has big spikes and can move greatly. Now, on Allsart's order, you know when they scored business, when they have to expend, and they are following big CHIP Act developments and the big scaling efforts of big fabs. They kind of follow. They follow, and then we follow them. This is how it works. Therefore, predictions are difficult. We are very closely working with them. Some had plans to invest earlier, and they kind of, they're a bit hesitant. When they invest, they usually invest very solidly, and then they immediately ask us to confirm delivery times because they know that they can expect faster deliveries from us now where we have the capacity. We get less warning because of our improved operational performance. Therefore, we can then also realize much faster.
That's very different than two years ago when we had a massive backlog, which we could not execute. It's almost a miracle that this backlog remained for such a long time that customers did wait so long. Nowadays, this has changed. We have short-term forecasts and pretty short-term orders from customers. We have to still run like hell to execute them.
Can I squeeze in two quick ones? One is, can you confirm again that your lead times have improved? If you get in 2026 orders within the first eight, nine months, you can still ship them in the same fiscal year. Can you confirm that?
Let me answer this question. For sure, we've improved our lead times. I wouldn't say that if you order a really complicated big tool after nine months in 2026, we can still deliver it in 2026. That would be a little bit too fast. I think in general, we adapted our lead times to the expectations of customers, which is around six to nine months, depending on the complexity and the volume of the tool. This is really, I would say, well-accepted and well-known lead time also in the industry in our business. From that point of view, we adapted to the really good lead times also the competition has, and even sometimes even better.
Got it. Final one on hybrid bonding. Can you give a brief update on your side? My impression is a little bit it looks like hybrid bonding is going to be adopted in the Nvidia Rubin Ultra, so basically HBM4E. It looks like 2027 timeframe. Some of your competitors seem to be more optimistic now that we are going to finally see hybrid bonding in HBM memory. What is your, I know your roadmap, but any updates there if you have something?
I think the situation hasn't changed compared to when we talked last time. Our anticipation is earliest HBM4E, if not HBM5, for a broader introduction. Also, bear in mind that the current hybrid bonding solutions often stand alone. Flip chip solutions are not integrated solutions which are being deployed. That's a tool which we are not offering. We had, for the time being, completed our lineup for hybrid bonders. We have now a die-to-wafer , a very compact tool which is also very accurate. That one is good for the time being. We don't see yet a huge launch window coming up for any of the players, at least not short- term. Therefore, the overall sentiment hasn't changed.
Thank you.
Thank you very much. That is on point for this scheduled call. We do not receive any other questions or raised hands. We therefore come to the end of today's earnings call. Thank you very much to all the participants for showing interest in SÜSS MicroTec. Should further questions arise at a later time, please feel free to contact Investor Relations. Thank you very much to Mr. Frick, Dr. Ballwießer, Dr. Rohe, and Mr. Mangold. I wish you all the best and a lovely remaining day. With this, I hand over to Mr. Mangold for some final remarks.
Yes, those final remarks are also very short. Thank you much for your participation in our call and your interest in SÜSS. Don't hesitate to get in touch if you have any further questions. Take care and goodbye.